Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Q3 2024 Earnings Presentation
29 slides from Old National Bancorp's earnings presentation, Oct 22, 2024
Slide 1: 3rd Quarter 2024 Financial Review
3rd Quarter 2024 Financial Review October 22, 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: Strong Third-Quarter 2024 Highlights
Strong Third-Quarter 2024 Highlights Key Performance Drivers Reported Adjusted1 EPS $0.44 $0.46 ▪ Granular, peer-leading deposit franchise • Core deposits up 10.1% annualized Net Income $140 $147 • NIB deposits grew nearly $100 million • Low total deposit costs of 225 bps Return on Average Assets 1.
Slide 5: Liquid, Well-Capitalized Balance Sheet
Liquid, Well-Capitalized Balance Sheet % Change End of Period Balances 3Q24 2Q24 3Q23 3Q24 vs. 2Q24 3Q24 vs. 3Q23 Available-for-sale securities, at fair value $7,432 $7,105 $6,415 5% 16% Held-to-maturity securities, at amortized cost $2,969 $2,986 $3,028 (1)% (2)% Total loans1 $36,463 $36,217 $32,70
Slide 6: Earning Assets
Earning Assets Total Loans1 Total loans1 Up 12% YoY • Disciplined growth of $246 million, +2.7% $36,217 $36,463 $32,700 annualized from 2Q24 • Commercial growth of $248 million, +4.1% annualized 6.36% • $1.7 billion total commercial production 6.24% • 77% of commercial production is floating; 5.98%
Slide 7: Peer-Leading Deposit Franchise
Peer-Leading Deposit Franchise Period End Total Deposits Key Performance Drivers • Period end deposits up $847 million, +8.5% $37.3 $40.0 $1.8 $40.8 $1.7 annualized; core deposits up 10.1% annualized $1.2 $3.9 $4.1 $4.2 • Increases in commercial and community $13.5 $14.0 $14.9 deposits and seasonal
Slide 8: Third-Quarter 2024 Results
Third-Quarter 2024 Results % Change 3Q24 2Q24 3Q23 3Q24 vs. 2Q24 3Q24 vs. 3Q23 Net Interest Income (FTE)1,2 $398 $395 $381 1% 4% Provision for credit losses - excluding CECL Day 1 non-PCD provision expense 29 21 19 38% 53% Provision for credit losses - Current Expected Credit Losses (“CECL”) Day 1 n
Slide 9: Net Interest Income & Net Interest Margin
1 Net Interest Income & Net Interest Margin 1 Net Interest Income Key Performance Drivers • Net interest income1 increase reflective of loan $395 $398 growth as well as higher asset yields and $381 accretion • NIM1 decreased modestly 1 bps vs. 2Q24 3.49% • Strong low-cost deposit franchise; total de
Slide 10: Noninterest Income
Noninterest Income 3Q24 2Q24 3Q23 Key Performance Drivers Bank Fees $32 $30 $29 • Increases in majority of line items; growth in bank fees, mortgage, capital markets, Wealth Fees 29 29 27 and other income Mortgage Fees 8 7 5 • 3Q24 mortgage activity • Production2 was $439 million compared Capital Ma
Slide 11: Noninterest Expense
Noninterest Expense 3Q24 2Q24 3Q23 Key Performance Drivers • 3Q24 adjusted noninterest expense1 Salary & Employee Benefits $142 $145 $127 well-controlled • Includes $3 million of market fluctuations Occupancy & Equipment 36 35 34 related to compensation plans • Adjusted efficiency ratio1 of 51.2% Te
Slide 12: Credit Quality
Credit Quality Asset Quality Net Charge-Offs 1.22% 0.25% 0.94% 0.19% 0.80% 0.16% 0.24% 0.16% 0.11% 0.18% 0.16% 0.26% 3Q23 2Q24 3Q24 3Q23 2Q24 3Q24 30+ Day Delinquency Non-Performing Loans ONB ONB, excluding PCD Key Performance Drivers Allowance for Credit Losses 1 • NCOs of 16 bps excluding 3 bps im
Slide 13: Peer Credit Data
Peer Credit Data 30+ Day Delinquency Net Charge-Offs 0.50% 0.40% 0.40% 0.30% 0.30% 0.20% 0.20% 0.10% 0.10% 0.00% 0.00% (0.10)% 2017Y 2018Y 2019Y 2020Y 2021Y 2022Y 2023Y 1Q24 2Q24 3Q24 2017Y 2018Y 2019Y 2020Y 2021Y 2022Y 2023Y 1Q24 2Q24 3Q24 1 2 1 ONB Peer Average ONB Peer Average Non-Performing Loan
Slide 14: Strong Capital Position
Strong Capital Position 3Q241 2Q24 3Q23 Key Performance Drivers • Strong retained earnings drive capital CET1 capital to RWA 11.00% 10.73% 10.41% • HTM securities pre-tax unrealized losses of $365 million (~$274 million net of tax) Tier 1 capital to RWA 11.60% 11.33% 11.06% • No shares of common sto
Slide 15: Net Interest Income Outlook
Net Interest Income Outlook Quarterly NII Outlook Managing to Neutral Rate Risk Position • 55% of loans are variable/floating-rate ~ $400 • ~$4.8 billion fixed-rate loans and securities $398 $395 expected to reprice over NTM • 34% of total deposits are exception priced at an average rate of 3.92% •
Slide 16: Outlook
Outlook 4Q24 Outlook Full-Year 2024 Outlook EOP loans up 2% - 4%, annualized up 5% - 7%, excl. CapStar (Including HFS) Net interest income (FTE basis)1 ~$400 million ~$1,555 million Noninterest income1 ~$86 million ~$345 million Noninterest expense1 ~$260 million ~$1,030 million Net charge-off ratio
Slide 17: Appendix
Appendix Lo OLD NATIONAL BANCORP’
Slide 18: Diversified Loan Portfolio
Diversified Loan Portfolio CRE Non-Owner Occupied $11.9 billion Office Total Loans 4% $36.4 billion Warehouse Multifamily Industrial 5% 14% Total Loans By State Other 6% IL $8.6 24% Consumer Retail 8% 4% IN 5.4 15% MN 3.9 11% CRE Non- Residential Owner Real Estate WI 3.7 10% Occupied 18% 33% MI 2.9
Slide 19: CRE Non-Owner Occupied Maturities
CRE Non-Owner Occupied Maturities CRE NOO CRE NOO Maturing <18 Mos. Maturing <18 Mos. Current Int. Rate Int. Rate <4% ~1% of Total Loans Office Other $0.4 $3.7 <4% billion >4% billion Multifamily Maturing CRE NOO Loans • Manageable volume of loans subject to refinance risk • Predominantly multifamil
Slide 20: CRE Non Owner Occupied - Office
CRE Non Owner Occupied - Office Our Lending Looks More Like This ...Less Like This • Total office portfolio of $1.6 billion; average loans size is $2.8 million • Largest exposure of ~$50 million • 95% located in bank’s footprint, diversified by submarket • 42% of portfolio is medical office (“MOB”)
Slide 21: CRE Non Owner Occupied - Multifamily
CRE Non Owner Occupied - Multifamily Our Lending Looks More Like This ...Less Like This • Total multifamily portfolio of $5.6 billion; average loans size is $5.1 million • Largest exposure of ~$60 million • 85% located in bank’s footprint • Continued strong demand and rental rates in core markets (I
Slide 22: Granular, Long-Tenured Deposit Base
Granular, Long-Tenured Deposit Base Average Core Account Balance 3 Deposit Highlights • Insured deposits2,3 >70% of total deposits • Granular low-cost deposit franchise $1.5mm • Top 20 deposit clients represents ~7% of $1.1mm total deposits; weighted average tenure > 28 years; ~70% collateralized or
Slide 23: Projected Acquisition Accounting Impact
Projected Acquisition Accounting Impact 1,2 Contractual Accretion Accretion on acquired loans and borrowings • $16 million recognized in 3Q24 $42 • $13 million contractual for remainder of 2024 $34 $13 4Q 2024 2025 2026 1 Projected Remaining Loan Discount Discount on acquired loan portfolio $163 • $
Slide 24: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q24 2Q24 3Q23 Net interest income $391.8 $388.4 $375.1 FTE Adjustment 6.1 6.3 5.8 Net interest income (FTE) $397.9 $394.8 $380.9 Add: Fee income 94.1 87.3 81.0 Total revenue (FTE) $492.0 $482.1 $461.9 Less: Provision for credit losses (28.5) (36.2) (19.1) Less: Noninterest e
Slide 25: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q24 2Q24 3Q23 Noninterest income $94.1 $87.3 $81.0 Less: Debt securities losses 0.1 0.0 0.2 Adjusted noninterest income $94.2 $87.3 $81.2 Noninterest expense $272.3 $283.0 $244.8 Less: Merger-related charges (6.8) (19.4) (6.3) Less: Separation expense (2.6) 0.0 0.0 Adjusted
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q24 2Q24 3Q23 Noninterest Expense $272.3 $283.0 $244.8 Less: Intangible amortization (7.4) (7.4) (6.0) Noninterest expense, excluding intangible amortization 264.9 275.6 238.8 Adjustments: Less: Merger-related charges (6.8) (19.4) (6.3) Less: Separation expense (2.6) 0.0 0.0
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q24 2Q24 3Q23 Net income applicable to common shares $139.8 $117.2 $143.8 Add: Intangibles amortization, net of tax 5.5 5.6 4.6 Tangible net income applicable to common shares $145.3 $122.8 $148.4 Total adjustments, net of tax $7.4 $26.8 $5.4 Adjusted net income applicable t
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q24 2Q24 3Q23 Shareholders' equity $6,367.3 $6,075.0 $5,239.5 Less: Preferred equity (243.7) (243.7) (243.7) Shareholders' common equity 6,123.6 5,831.3 4,995.8 Less: Goodwill and other intangible assets (2,305.1) (2,306.2) (2,106.8) Tangible shareholders' common equity $3,8
Slide 29: 2024 Peer Group
2024 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 Columbia Banking System, Inc. COLB Comerica Incorporated CMA F