Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Q2 2023 Earnings Presentation
42 slides from Old National Bancorp's earnings presentation, Aug 31, 2023
Slide 1: 2nd Quarter 2023 Investment Thesis
Exhibit 99.1 2nd Quarter 2023 Investment Thesis August 31, 2023
Slide 2: Executive Summary
Slides 5 — 13 Executive Summary
Slide 3: Forward-Looking Statements
3 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 contained in our future filings
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: The Best of Offense and Defense
5 4.47x 2023 earnings estimate The Best of Offense and Defense Financial data as of or for the quarter ended June 30, 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
Slide 6: Commitment to Excellence
Commitment to Excellence Bloomberg Gender-Equality Index 2023 _ ie ) D=| aeons Moobpy’s 100 DISABILITY EQUALITY INDEX INVESTORS SERVICE a OLD NATIONAL BANCORP 6
Slide 7: Snapshot of Old National
7 Snapshot of Old National Key Financial Metrics3 Cost of Total Deposits 115 bps Cycle to Date Total Deposit Beta 23% Insured deposits to Total Deposits5 >70% Loans to Total Deposits 90% Tangible Book Value $10.03 Efficiency Ratio As Reported/ Adjusted2 51.2% / 49.4% Net Charge Offs / Average Loans,
Slide 8: Accomplished an Exceptional Transformation
8 $9 $12 $33 2016 2019 2023E $11 $15 $36 2016 2019 2023E $202 $326 $863 2016 2019 2023E $0.95 $1.45 $2.05 2016 2019 2023E 1.71% 1.88% 2.05% 2016 2019 2023E 12% 16% 20% 2016 2019 2023E Loans ($ in billions) Deposits ($ in billions) Adj. PPNR2 ($ in millions) Adj. EPS2 Adj. PPNR / Avg. Earning Assets2
Slide 9: ONB - A Premier Midwest Banking Franchise
9 7th Largest wealth management platform among banks <$100 billion in assets2 6th Largest commercial bank headquartered in the Midwest by assets1 ONB - A Premier Midwest Banking Franchise Top 30 Largest commercial bank in the country by assets3 1 Includes depositories headquartered in the Midwest; e
Slide 10: Granular & Diversified Loan Portfolio
10 Retail 4%Warehouse/ Industrial 5% Other 4% Multifamily 13% Office 4% CRE Non- Owner Occupied 31% CRE Owner Occupied 11% C&I 30% Residential Real Estate 24% Consumer 4% Granular & Diversified Loan Portfolio1 As of June 30, 2023 1 Includes loans held for sale 2 Based on review of top 80% of CRE non
Slide 11: Peer-Leading Deposit Franchise
11 Peer-Leading Deposit Franchise Key Performance Drivers • End of period deposits up 4%; core deposits up 2% • Reflect continuing effective competition for new client relationships • Include normal seasonal patterns in public funds • Noninterest-bearing deposits represent 30% of core deposits • Spo
Slide 12: Granular, Long-Tenured Deposit Base
12 Core Deposit Tenure 25% 25%20% 30% <5 years 5-15 years 15-25 years >25 years 75% >5 years Deposit Highlights • Insured deposits2 >70% of total deposits • Granular low-cost deposit franchise • Top 20 deposit clients represents only 5.1% of total deposits; weighted average tenure > 30 years; ~75% c
Slide 13: Outlook
13 Outlook Category 2Q23 2023 Guidance Period End Loans1 $32.5 billion • Mid to high single-digit growth for the full-year 2023; moderating second half of 2023 Period End Deposits $36.2 billion • At or above industry deposit growth Net Interest Income2,3 / Net Interest Margin2,3 $388 million/ 3.60%
Slide 14: Financial Details
Financial Details Data as of June 30, 2023
Slide 15: Strong Second-Quarter 2023 Highlights
15 Strong Second-Quarter 2023 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 NCOs - net charge-offs PCD - purchased credit deteriorated TCE -
Slide 16: Liquid, Well-Capitalized Balance Sheet
16 2Q23 1Q23 2Q22 % Change End of Period Balances 2Q23 vs. 1Q23 2Q23 vs. 2Q22 Available-for-sale securities, at fair value $6,501 $6,687 $7,568 (3)% (14)% Held-to-maturity securities, at amortized cost $3,055 $3,071 $3,084 (1)% (1)% Total loans1 $32,547 $31,833 $29,580 2% 10% Total assets $48,497 $4
Slide 17: Total Loans and Earning Assets
17 3.64% 4.01% 4.54% 5.08% 5.42% % $29,580 $31,833 $32,547 2Q22 1Q23 2Q23 5.42% Loan Yields Total Loans and Earning Assets Total loans1 • Disciplined growth of $714 million,+2% from 1Q23 • Commercial growth of $581 million, +3% • Sold ~$300 million of C&I loans, at par, in 2Q23 • Total consumer2 gro
Slide 18: Second-Quarter 2023 Results
18 $ 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 the provision for unfunded commitments PCD - purchased cr
Slide 19: Impacts on Net Interest Margin
19 Impacts on Net Interest Margin 3.69% 0.27% (0.02)% (0.01)% 0.03% (0.36)% 3.60% 1Q23 Rate / volume mix Accretion Excess Cash # Days IB Deposit Costs 2Q23 $ in millions 1 Fully Taxable Equivalent Basis; Non-GAAP financial measure that management believes is useful in evaluating the financial result
Slide 20: Noninterest Income
20 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 Key Performance Drivers • 8% highe
Slide 21: Noninterest Expense
21 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 • 2Q23 adjusted noninterest expense1 well- controlled • Salaries & employee benef
Slide 22: Credit Continues to be Stable
22 Allowance for Credit Losses $333 $(1) $6 $338 Allowance 3/31/23 Economic Forecast & Other Assumptions Loan Growth Allowance 6/30/2023 Credit Continues to be Stable Asset Quality 0.17% 0.14% 0.12% 0.78% 0.74% 0.91% 30+ Day Delinquency Non-Performing Loans 2Q22 1Q23 2Q23 $ in millions 1 Includes re
Slide 23: Key Areas of Focus
Key Areas of Focus = OLD NATIONAL BANCORP’
Slide 24: CRE Non-Owner Occupied Maturities
24 >4% <4%>18 Months 78% <18 Months 22% CRE Non-Owner Occupied Maturities As of June 30, 2023 Maturing CRE NOO Loans • Manageable volume of loans subject to refinance risk • Predominantly multifamily; continues to experience stronger demand and rents • <1% of total loans that are CRE non-owner occup
Slide 25: Commercial Loan Production
25 Commercial Loan Production $ in millions As of or for the three months ended June 30, 2023 Production & Pipeline • $1.9 billion total production • $1.2 billion on balance sheet • $3.1 billion total pipeline Retail 1%Warehouse/ Industrial 12% Other 8% Multifamily 13% Office 4% CRE - Non-OO $773 CR
Slide 26: Strong Capital Position
26 Key Performance Drivers • 2Q23 ratios increased as strong retained earnings more than offset loan growth and merger-related charges • HTM securities pre-tax unrealized losses of $452 million (~$340 million net of tax) • No shares of common stock repurchased during 2Q23; future repurchases paused
Slide 27: Appendix
Appendix = OLD NATIONAL BANCORP’
Slide 28: Projected Acquisition Accounting Impact
28 Accretion on acquired loans and borrowings • $7 million recognized in 2Q23 • $10 million contractual for remainder of 2023 Discount on acquired loan portfolio • $90 million remaining as of 6/30/2023 • $69 million related to First Midwest Contractual Accretion $10 $20 $18 3Q-4Q 2023 2024 2025 Proj
Slide 29: Commitment to Strong Corporate Governance
29 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 Salary below $250,000 2X salary in stock or 25,000
Slide 30: Commitment to Corporate Social Responsibility
30 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 • Strengthening our communities • Sustainability To
Slide 31: ESG At A Glance - 2022
ESG At A Glance - 2022 in Community Reinvestment Act (CRA)-ellgible community development loans that supported affordable housing, economic development and community revitallzation/stabilization } $870,000 seen , Cee ™ 100% $386 MILLION = 46,73Q “Sor erm In CRA-etigible loan originations completed r
Slide 32: 2022 Executive Compensation
32 Short-Term Incentive Compensation 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’s 50% Service-based CEO 40% All other NEO’s 50% • Tied
Slide 33: Board of Directors
33 Director Market Background Barbara A. Boigegrain Chicago, IL Former CEO and General Secretary of Wespath Benefits and Investments Thomas L. Brown Chicago, IL Former Senior Vice President and CFO of RLI Corp. (NYSE), a specialty insurer serving diverse niche property, casualty and surety markets;
Slide 34: Non-GAAP Reconciliation
34 Non-GAAP Reconciliation 2Q22 1Q23 2Q23 Net interest income (FTE) $341.8 $387.2 $388.0 Add: Fee income 89.1 70.7 81.6 Total revenue (FTE) $430.9 $457.9 $469.6 Less: Provision for credit losses (9.2) (13.4) (14.8) Less: Noninterest expense (277.4) (250.7) (246.6) Income before income taxes $144.3 $
Slide 35: Non-GAAP Reconciliation
35 Non-GAAP Reconciliation 2Q22 1Q23 2Q23 Noninterest income $89.1 $70.7 $81.6 Less: Debt securities losses 0.1 5.2 0.0 Adjusted noninterest income $89.2 $75.9 $81.6 Noninterest expense $277.5 $250.7 $246.6 Less: Louisville expenses1 0.0 0.0 (3.4) Less: Merger-related charges (36.6) (14.6) (2.4) Les
Slide 36: Non-GAAP Reconciliation
36 Non-GAAP Reconciliation 2Q22 1Q23 2Q23 Net interest income $337.5 $381.6 $382.2 FTE adjustment 4.3 5.6 5.8 Net interest income (FTE) $341.8 $387.2 $388.0 Average earnings assets $41,003.3 $41,941.9 $43,097.2 Net interest margin 3.29% 3.64% 3.55% Net interest margin (FTE) 3.33% 3.69% 3.60% Net inc
Slide 37: Non-GAAP Reconciliation
37 Non-GAAP Reconciliation 2Q22 1Q23 2Q23 Shareholders' equity $5,078.8 $5,277.4 $5,292.1 Less: Preferred equity (243.7) (243.7) (243.7) Shareholders' common equity 4,835.1 5,033.7 5,048.4 Less: Goodwill and other intangible assets (2,131.8) (2,118.9) (2,112.9) Tangible shareholders' common equity 2
Slide 38: Non-GAAP Reconciliation
38 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 bank properties, other
Slide 39: Non-GAAP Reconciliation
39 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 Net income $134.3 $23
Slide 40: Non-GAAP Reconciliation
40 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)1 (27.2) 0.0 Less: G
Slide 41: 2023 Peer Group
41 Associated Banc-Corp ASB BOK Financial Corporation BOKF Cadence Bancorporation CADE Comerica Incorporated CMA F.N.B. Corporation FNB First Horizon Corporation FHN Hancock Whitney Corporation HWC Synovus Financial SNV UMB Financial Corporation UMBF Valley National Bancorp VLY Webster Financial Cor
Slide 42: Old National Investor Relations Contact
42 Additional information can be found on the Investor Relations web pages at www.oldnational.com Investor Inquiries: Lynell J. Walton Durchholz, CPA SVP - Director of Investor Relations 812-464-1366 lynell.walton@oldnational.com Old National Investor Relations Contact