Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (May 2022)
45 slides from Old National Bancorp's investor presentation, May 31, 2022
Slide 1: Investment Thesis
Investment Thesis FINANCIAL DATA AS OF March 31, 2022 DATED: May 2022 Exhibit 99.1
Slide 2: Executive Summary
2 Executive Summary Slides 5-14
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. These statements include, but are not limited to, descriptions of Old National’s financial condition, results of operations, asset and credit quality trends, pro
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: Commitment to Excellence
Commitment to Excellence Corporate Engagement ETHISPHERE AWARO OF ETHICS INSIDE CERTIFICATION WWW.ETHISPHERE.COM 11-TIME HONOREE fee] | BEST PLACE TO WORK FOR [Xi = | DEES NATIONAL ORGANIZATION ON: LEADING | DISABILIT DISABILITY Josssuiry = OLD NATIONAL BANCORP [ivers: Points of Light Institute Bloo
Slide 6: Commitment to Corporate Social Responsibility
6 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 • Stre
Slide 7: ESG at a Glance - 2021 Metrics
7 ESG at a Glance - 2021 Metrics
Slide 8: Snapshot of Old National Bancorp
8 HELOC 4% CRE Non- Owner Occupied 29% CRE Owner Occupied 11% C&I 30% Residential Real Estate 20% Other Consumer 6% Snapshot of Old National Bancorp $ in millions, except as noted 1 Market data as of 05/26/2022 2 Non-GAAP financial measures that management believes is useful in evaluating the financ
Slide 9: Accomplished an Exceptional Transformation
9 Accomplished an Exceptional Transformation 2016 2019 2023E1 Loans $9 billion $12 billion $31 billion Deposits $11 billion $15 billion $37 billion Adj. PPNR2 $202 million $326 million $802 million 2016-2023E CAGR: 21.8% Adj. EPS2 $0.95 $1.45 $1.97 2016-2023E CAGR: 11.0% Adj. PPNR / Avg. Earning Ass
Slide 10: Creating a Premier Midwest Banking Franchise
10 7th Largest wealth management platform among banks <$100 billion in assets2 6th Largest commercial bank headquartered in the Midwest by assets1 Creating a Premier Midwest Banking Franchise Completed February 15, 2022 - Next Steps (ONB + FMBI) Transitioned to execution phase of our integration pla
Slide 11: Meaningful Upside
11 Meaningful Upside Key Performance Catalysts1 • Record commercial pipeline of $5.4 billion • Asset sensitivity better than peers • Deposit betas better than peers (23% last cycle) • $1.5 billion of excess cash/liquidity • ~$109 million of merger cost saves • Timely branding and systems conversion
Slide 12: Quality Low-Cost Deposit Franchise
12 Quality Low-Cost Deposit Franchise Cost of Deposits $12.4 $14.2 $14.5 $16.9 $18.6 $35.6 $3.7 $4.0 $4.1 $5.6 $6.3 $23.1 $8.7 $10.2 $10.4 $11.3 $12.3 $12.5 Noninterest-bearing Interest-bearing 2017Y 2018Y 2019Y 2020Y 2021Y 1Q22 Deposit Growth 2017-1Q22 CAGR: 23.5% Time Deposits 7% Demand Deposits 3
Slide 13: Granular & Diversified Loan Portfolio
13 Granular & Diversified Loan Portfolio1,2 $ in billions As of 03/31/2022 1 Includes loans held for sale 2 Excludes PPP loans $11.1 $12.3 $12.2 $12.9 $13.5 $28.2 $2.7 $3.2 $2.9 $3.0 $3.2 $8.4$4.4 $5.0 $5.2 $5.9 $6.4 $11.3 $4.0 $4.1 $4.1 $4.0 $3.9 $8.5 C&I CRE Consumer 2017Y 2018Y 2019Y 2020Y 2021Y
Slide 14: Outlook
14 Outlook Category Outlook Commercial Loans • Record pipeline heading into 2Q bodes well for future growth • Expect majority of the remaining PPP balances to run off in the first half of 2022 Net Interest Income / Net Interest Margin • Net interest income and NIM, excluding PPP and accretion, shoul
Slide 15: Financial Details
Financial Details FINANCIAL DATA AS OF March 31, 2022 DATED: May 2022
Slide 16: First-Quarter 2022 Highlights
16 First-Quarter 2022 Highlights ▪ Completed transformative merger with First Midwest Bancorp, Inc. on February 15, 2022 ▪ Strong full quarter combined commercial loan growth2 of 8.3% (excluding PPP and acquisition accounting adjustments) ▪ Credit remains benign with net charge-offs of 5 bps related
Slide 17: First-Quarter 2022 Results
17 First-Quarter 2022 Results $ in millions, except per-share data 1 Excludes PPP loans and AAAs for legacy First Midwest and combined Old National - growth annualized for the combined full quarter 2 Non-GAAP financial measures that management believes is useful in evaluating the financial results o
Slide 18: Total Loans and Earning Assets
18 Total Loans and Earning Assets $26,828 $27,354 $27,596 $27,830 $28,258 $12,801 $13,064 $13,230 $13,432 $26,486 $12,139 $12,387 $12,440 $12,429 ONB FMBI FMBI Transactional Loans 1Q21 2Q21 3Q21 4Q21 1Q22 Total loans1 • Combined growth2 of $432 million, +6% annualized • Commercial growth of $405 mil
Slide 19: Commercial Loans
19 Commercial Loans $18,732 $19,079 $19,348 $19,422 $19,827 $9,019 $9,269 $9,441 $9,603 ONB FMBI 1Q21 2Q21 3Q21 4Q21 1Q22 Commercial Production Pipeline $2,632 $2,630 $2,682 $2,474 $5,394 $718 $1,067 $975 $1,096 $1,547 ONB Pipeline Production 1Q21 2Q21 3Q21 4Q21 1Q22 Total commercial loans1 • Combin
Slide 20: Commercial Loan Production
20 Commercial Loan Production Production by Product Type 42% 28% 28% 2% CRE Business Banking Corporate Small Business Production by RM Location 46% 15% 8% 7% 7% 7% 10% Illinois Indiana Minnesota Wisconsin Michigan Kentucky Healthcare Vertical Strong $1.5 billion of production throughout the entire c
Slide 21: Deposits / Funding
21 Deposits / Funding $33,898 $34,838 $35,142 $35,551 $26,905 $35,760 $35,607 $20,591 $20,600 $12,495 $12,463 $2,674 $2,544 Transaction Noninterest-Bearing Time 1Q21 2Q21 3Q21 4Q21 1Q22 4Q21 1Q22 $ in millions 1 For illustration only; represents historical combined balances as reported by Old Nation
Slide 22: Net Interest Income & Net Interest Margin
22 Net Interest Income & Net Interest Margin1 Net Interest Income Accretion Income PPP Interest / Fees 1Q21 2Q21 3Q21 4Q21 1Q22 Key Performance Drivers • Net interest income increased $77 million • PPP 1% coupon + fees • $4 million decrease to NII • 8 bps decrease to NIM • NIM increased 11 bps vs. 4
Slide 23: Deposit Betas and Asset Liability Management
23 Deposit Betas 23% 44% 6% 12% 4Q’16 - 4Q’18 Asset Liability Management 1 Represents average legacy ONB and FMBI deposits betas during last rate hike cycle; legacy FMBI historical beta 27% Disciplined balance sheet management & well-positioned for rising interest rates Interest Rate Risk Profile •
Slide 24: Noninterest Income
24 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 Production for the combined full quarter; residential mortgage production includes quick home refinance
Slide 25: Noninterest Expense
25 Noninterest Expense Adjusted Noninterest Expense $115 $121 $118 $123 $173 $68 $73 $71 $72 $101 $15 $14 $13 $13 $21 $12 $12 $11 $11 $19 $20 $22 $23 $27 $32 Salary & Employee Benefits Occupancy Data Processing/Communication Other 1Q21 2Q21 3Q21 4Q21 1Q22 Key Performance Drivers • 1Q22 adjusted noni
Slide 26: Path to Cost Saves
26 Path to Cost Saves1 $235 $223 $212 $4 $7 Combined Expense Incremental Intangibles Merit & Strategic Investments 2Q21 4Q22 Expected $ in millions 1 Excludes tax credit amortization as well as merger related charges 2 Adjusted expense, combined Company view; excludes $14 of merger related charges a
Slide 27: Credit
27 Credit (3.81)% 4.46% 39.80% 14.18% ONB FMBI Peer Average 2017Y 2018Y 2019Y 2020Y 2021Y 1Q22 0.92% 0.88% 0.70% 0.54% ONB FMBI Peer Average 2017Y 2018Y 2019Y 2020Y 2021Y 1Q22 (0.03)% 0.05% 0.27% 0.06% ONB FMBI Peer Average 2017Y 2018Y 2019Y 2020Y 2021Y 1Q22 0.11% 0.34% 0.44% ONB FMBI Peer Average 2
Slide 28: Allowance to Total Loans
28 Allowance to Total Loans $86 $114 $109 $108 $107 $281 0.79% 0.82% 0.79% 0.79% 0.79% 0.99% ACL Allowance to Total Loans 1/1/2020 1Q21 2Q21 3Q21 4Q21 1Q22 Allowance for Credit Losses $ in millions 1 Excludes loans held for sale Merger Impact • $79 million of allowance established on $1.5 billion of
Slide 29: Capital
29 Capital 1Q21 2Q21 3Q21 4Q21 1Q22 Regulatory Capital Ratios: CET1 capital to RWA 12.01 % 11.95 % 12.08 % 12.04 % 10.04 % Tier 1 capital to RWA 12.01 % 11.95 % 12.08 % 12.04 % 10.79 % Total capital to RWA 12.84 % 12.73 % 12.84 % 12.77 % 12.19 % Key Performance Drivers • As expected, 1Q22 ratios dec
Slide 30: Appendix
Appendix = OLD NATIONAL BANCORP
Slide 31: Projected Acquisition Accounting Impact
31 Accretion on acquired loans and borrowings • $16 million recognized in 1Q22 • $49 million contractual for remainder of 2022 Discount on acquired loan portfolio • $162 million remaining as of 3/31/2022 • $132 million related to First Midwest Projected Acquisition Accounting Impact Contractual Accr
Slide 32: Commitment to Strong Corporate Governance
32 Commitment to Strong Corporate Governance 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 be
Slide 33: 2021 Executive Compensation
33 2021 Executive Compensation 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% • Tied to long term shareholder value
Slide 34: Board of Directors
34 Board of Directors Director Market Background Barbara A. Boigegrain Chicago, IL CEO and General Secretary of Wespath Benefits and Investments from 1994-2022 Thomas L. Brown Chicago, IL Senior Vice President and CFO of RLI Corp., a specialty insurer serving diverse niche property, casualty and sur
Slide 35: Non-GAAP Reconciliation
35 Non-GAAP Reconciliation $ in millions, except per share data 1 Tax-effect calculations use management's estimate of the full year FTE tax rates (federal + state) 1Q21 4Q21 1Q22 As reported: Net interest Income (FTE) $151.6 $150.2 $226.6 Add: Fee income 56.7 51.5 65.2 Total Revenue (FTE) $208.3 $2
Slide 36: Non-GAAP Reconciliation
36 Non-GAAP Reconciliation $ in millions 1Q21 2Q21 3Q21 4Q21 1Q22 As reported: Net interest Income (FTE) $151.6 $153.4 $155.1 $150.2 $226.6 Add: Fee income 56.7 51.5 54.5 51.5 65.2 Total Revenue (FTE) $208.3 $204.9 $209.6 $201.7 $291.8 Less: Noninterest Expense 117.7 129.6 121.3 131.9 226.7 Pre-Prov
Slide 37: Non-GAAP Reconciliation
37 Non-GAAP Reconciliation $ in millions 1Q21 2Q21 3Q21 4Q21 1Q22 Noninterest Expense As Reported $117.7 $129.6 $121.3 $131.9 $226.7 Less: ONB Way Charges (1.5) (0.4) 0.0 0.0 0.0 Less: Merger-Related Charges 0.0 (6.5) (1.4) (6.7) (52.3) Noninterest Expense Less Charges $116.2 $122.7 $119.9 $125.2 $1
Slide 38: Non-GAAP Reconciliation
38 Non-GAAP Reconciliation $ in millions 1 Tax-effect calculations use management's estimate of the full year FTE tax rates (federal + state) 2 Certain reclassifications were made to conform to the current presentation 1Q21 2Q21 3Q21 4Q21 1Q22 Net interest Income As Reported $148.1 $149.9 $151.6 $14
Slide 39: Non-GAAP Reconciliation
39 Non-GAAP Reconciliation $ in millions 1 Certain reclassifications were made to conform to the current presentation 1Q21 2Q21 3Q21 4Q21 1Q22 Old National Commercial Loans $10,143 $9,990 $9,796 $9,772 $19,962 Less: Old National PPP Loans (1,124) (721) (355) (169) (205) Legacy First Midwest Commerci
Slide 40: Non-GAAP Reconciliation
40 Non-GAAP Reconciliation $ in millions, except per share data 1 Tax-effect calculations use management's estimate of the full year FTE tax rates (federal + state) 1Q21 4Q21 1Q22 Shareholder’s Common Equity As Reported $2,979.4 $3,012.0 $4,988.4 Less: Goodwill and Intangible Assets (1,079.9) (1,071
Slide 41: Non-GAAP Reconciliation
41 Non-GAAP Reconciliation $ in millions, except per share data 1 Tax-effect calculations use management's estimate of the full year FTE tax rates (federal + state) 2016 2019 As reported: Net interest Income (FTE) $424.0 $617.2 Add: Fee income 252.8 199.3 Total Revenue (FTE) $676.8 $816.5 Less: Noni
Slide 42: Non-GAAP Reconciliation
42 Non-GAAP Reconciliation $ in millions, except per share data 1 Tax-effect calculations use management's estimate of the full year FTE tax rates (federal + state) 2016 2019 As reported: Net interest Income (FTE) $424.0 $617.2 Add: Fee income 252.8 199.3 Total Revenue (FTE) $676.8 $816.5 Less: Prov
Slide 43: Non-GAAP Reconciliation
43 Non-GAAP Reconciliation $ in millions, except per share data 1 Tax-effect calculations use management's estimate of the full year FTE tax rates (federal + state) 2016 2019 Net Income Applicable to Common Shares As Reported $134.3 $238.2 Add: Intangible Amortization (net of tax)1 8.1 12.8 Tangible
Slide 44: Peer Group
44 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 C
Slide 45: Old National Investor Relations Contact
45 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
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