Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (November 2021)
44 slides from Old National Bancorp's investor presentation, Nov 3, 2021
Slide 1: Investment Thesis
Investment Thesis FINANCIAL DATA AS OF September 30, 2021 DATED: November 3, 2021 Exhibit 99.1
Slide 2: Executive Summary
Executive Summary Slides 5-17
Slide 3: Forward-Looking Statements
3 Forward-Looking Statements This communication includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to
Slide 4: Non-GAAP Financial Measures
4 Non-GAAP Financial Measures These slides contain non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of the registrant's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to a
Slide 5: Snapshot of Old National
5 Snapshot of Old National Summary Company Description • Largest bank holding company headquartered in Indiana with financial centers located in Indiana, Kentucky, Michigan, Minnesota and Wisconsin • 162 financial centers and 192 ATMs Our strategic vision--The ONB Way • We are a leading commercially
Slide 6: Footprint map
6 IndianaIllinois Missouri Minnesota Michigan Kentucky Fort Waynet r yFo t a net t rr yyFo t a net Fo t a ne Champaigniha paigniiiha paigniha paign Grand Rapids ir sand apid i irr ssand apid iand apid IndianapolisI i liIndianapolisI i liI i liIn ia a lisI i liIn ia a lis Louisvillei illsvLoui illei
Slide 7: Attractive Midwest Markets
7 Attractive Midwest Markets Source: S&P Global Market Intelligence, based on MSAs Loans & Deposits in millions Excludes PPP $86.4 $69.2 $66.2 $66.6 $64.5 $68.8 $78.2 $63.9 $60.9 $78.8 $66.7 Median Household Income 2021 (000s) 10.0% 9.6% 8.8% 9.4% 9.8% 10.2% 11.3% 9.6% 9.5% 12.6% 9.4% Projected Hous
Slide 8: Why ONB? Our Investment Thesis
8 Why ONB? Our Investment Thesis The Old National Proposition Granular & Diversified Loan Portfolio Average Commercial & Industrial loan size ~$295,000 and average Commercial Real Estate loan size ~$931,000; diversified by product type with no significant industry concentrations; primarily to client
Slide 9: Franchise Evolution Built a Better Bank
9 Franchise Evolution Built a Better Bank Source: S&P Global Market Intelligence $ in millions unless noted otherwise $5,447 $7,279 $18,196 $47 $40 $112 2007 2012 3Q21 Core Deposits Core Deposits/Branch $7,846 $9,544 $24,019 $3.15 $3.56 $9.97 2007 2012 3Q21 Total Assets Assets/FTE 193 215 725 2007 2
Slide 10: Quality Low-Cost Deposit Franchise
10 $2.4 $2.5 $3.0 $3.7 $4.0 $4.1 $5.6 $6.1 $6.2 $6.4 $6.1 $5.8 $7.6 $8.7 $10.2 $10.4 $11.3 $11.7 $11.7 $11.8 $8.5 $8.3 $10.6 $12.4 $14.2 $14.5 $16.9 $17.8 $17.9 $18.2 2014Y 2015Y 2016Y 2017Y 2018Y 2019Y 2020Y 1Q21 2Q21 3Q21 Noninterest-bearing Interest-bearing Noninterest- bearing Demand 35.4% NOW 2
Slide 11: Granular & Diversified Loan Portfolio
11 CRE Non-Owner Occupied 35% CRE Owner Occupied 12% C&I 24% Residential Real Estate 17% Other Consumer 8% HELOC 4% Multifamily 36% Office 16% Retail 12% Warehouse/ Industrial 10% Single Family 6% Mixed Use 5% Senior Housing 5% Self Storage 3% Other 7% Granular & Diversified Loan Portfolio1,2 $ in b
Slide 12: Strong Credit Culture
12 Strong Credit Culture Peer Group data per S&P Global Market Intelligence as of 6/30/2021 - See Appendix for definition of Peer Group 1 Excludes loans held for sale ; 2 Full Years 2006-2020, includes banks with 15-years of NCO’s 3 and 15-Year Cumulative NCOs/ Avg. Loans1 0.04% 3.14% 0.62% 5.86% 0.
Slide 13: Conservative Lending Limit/Risk Grades
13 Conservative Lending Limit/Risk Grades In-house lending limits conservative relative to ONB’s legal lending limit of $312mm per borrower $ in millions 1 Includes entire relationship with borrower Borrower Asset Quality Rating (Risk Grades) In-House Lending Limit1 0 – Investment Grade $75.0 1 – Mi
Slide 14: Capital Trends
14 Capital Trends Board authorization of up to $100mm in stock to be repurchased, as conditions warrant, through January 31, 2022 1 Non-GAAP financial measure which Management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliation 8.58% 8.47%
Slide 15: Commitment to Corporate Social Responsibility
15 Commitment to Corporate Social Responsibility Old National’s inaugural Environment, 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 • St
Slide 16: ONB's ESG At A Glance — 2020
u ONB’s ESG At A Glance — 2020 ae Strengthening and Supporting Our Communities in Community Reinvestment Act (CRA)-eligible community development loans that supported affordable housing, economic development and community revitalization/stabilization $306I $1.4 million in Affordable Housing Program
Slide 17: Commitment to Excellence
u Commitment to Excellence Corporate Engagement ETHISPHERE AWARD OF ETHICS INSIDE 6 ' Points of Light Institute —_ ; CONMIMUNITY @i|[COMPANIES- Quie “4 COMMIMENT WWW.ETHISPHERE.COM & tara 10-TIME HONOREE = EST PLACE TO WORK FOR x NATIONAL ORGANIZATION ON LEADING H = | BEES DISABILITY Joss EMPLOYER M
Slide 18: Financial Details
Financial Details FINANCIAL DATA AS OF September 30, 2021 DATED: November 3, 2021
Slide 19: 3rd Quarter Highlights
19 3rd Quarter Highlights Performance Drivers • End of period commercial loans (excluding PPP) increase +7.4% annualized; $1.0bn production • End of period core deposits increase $327.2mm • Allowance for credit losses recapture of $4.6mm; net recoveries of $3.0mm • Net interest income (excluding PPP
Slide 20: Partnership Update
20 Partnership Update Q3 Momentum Accomplishments and Next Steps Established joint Integration Office with experienced integration leaders across both companies Strong team member commitment and excitement about opportunities in the larger, combined company SEC and bank regulatory filings completed;
Slide 21: Third-Quarter 2021 Results
21 Change vs. 3Q21 2Q21 3Q20 End of period total loans 13,636$ (199)$ (342)$ annualized growth -5.7% End of period core deposits 18,196 327 1,689 annualized growth 7.3% Net interest income (FTE) 155.1 1.7 6.1 Provision for credit losses (4.6) 0.3 (4.6) Noninterest income 54.5 3.0 (10.2) Noninterest
Slide 22: Commercial Loans and Earning Assets
22 Commercial Loans1 and Earning Assets1 Total commercial loans • Increase of $1.0bn YoY +11% • Increase of $172mm from 2Q21 +7% annualized 3Q21 new production avg yields1 • Commercial and industrial: 3.26% • Commercial real estate: 2.91% • 72% of commercial production is floating rate $ in millions
Slide 23: Deposits/Funding
23 Deposits/Funding Core deposit balances increased $327mm from 2Q21 Deposit costs continue to decline • 3Q21 total deposit costs of 6 bps • Total interest-bearing liabilities costs were 29 bps, down 1 bp from 2Q21 Low loan to deposit ratio of 75% $ in millions $9,742 $9,971 $10,347 $10,678 $10,664
Slide 24: Net Interest Income & Net Interest Margin
24 3.29% 3.09% 3.08% 3.03% 2.91% 2.92% 0.42% 0.30% 0.29% 3Q20 4Q20 1Q21 2Q21 3Q21 Net Interest Income & Net Interest Margin1 Key Performance Drivers • Net interest income (excluding PPP) increased $1.3mm • PPP 1% coupon + fees • $0.3mm decrease to NII • 7 bps increase to NIM • NIM increased 1 bp vs.
Slide 25: Noninterest Income
25 Noninterest Income Key Performance Drivers • 3Q21 adjusted noninterest income • $3.0mm increase in mortgage income • $5.4mm increase due to stabilizing pipeline valuation • $2.1mm decrease in gain on sales • Gain on sale margins declined to 2.40% in 3Q21 vs. 2.78% in 2Q21 • 3Q21 Mortgage activity
Slide 26: Noninterest Expense
26 Noninterest Expense Key Performance Drivers • 3Q21 adjusted noninterest expense • Reductions in salaries & benefits and occupancy expense • 3Q21 adjusted efficiency ratio of 55.4% $ in millions 1Non-GAAP financial measure which management believes is useful in evaluating the financial results of
Slide 27: Paycheck Protection Program (PPP)
27 Paycheck Protection Program (PPP) $ in millions 1 Net of unearned fees Remaining unamortized fees at 9/30/21 • $0.3mm from Round 1 • $13.7mm from Round 2 95% of Round 1 loans have been forgiven by the SBA 51% of Round 2 loans have been forgiven by the SBA $721 ($366) $355 2Q21 Forgiveness/Paydown
Slide 28: Credit
28 -1.05% 2.32% 1.71% 1.08% 3.86% 1.80% -0.01% -0.94% -9.49% 13.67% 16.94% 16.43% 24.74% 28.41% 21.03% 20.86% 20.23% 2015Y 2016Y 2017Y 2018Y 2019Y 2020Y 1Q21 2Q21 3Q21 Net Charge-offs / NPL's ONB Peer Avg -0.02% 0.04% 0.03% 0.02% 0.05% 0.02% 0.00% -0.01% -0.09% 0.16% 0.20% 0.17% 0.21% 0.22% 0.21% 0.
Slide 29: Allowance for Credit Losses
29 Allowance for Credit Losses 1 Excludes loans held for sale $ in millions $109.4 ($3.6) $1.6 $0.5 $107.9 Allowance 6/30/2021 Economic Forecast Portfolio Changes Qualitative Factors Allowance 9/30/2021 Allowance for Credit Losses Key Economic Assumptions Other Key Model Inputs • Commercial Asset Qu
Slide 30: Outlook
30 Outlook Category Outlook Commercial Loans Healthy pipeline heading into 4Q bodes well for future growth; Expect half of the remaining PPP balances to run off in the 4th quarter Net Interest Income / Net Interest Margin Net interest income, excluding PPP, should remain relatively stable given expe
Slide 31: Appendix
Appendix = OLD NATIONAL BANCORP’
Slide 32: Projected Purchase Accounting Impact
32 Projected Purchase Accounting Impact $ in millions 1 Projections are updated quarterly, assumes no prepayments and are subject to change 2 Non-GAAP financial measure which management believes is useful in evaluating the financial results of the Company – see Appendix for Non- GAAP reconciliation
Slide 33: Scrutinized Industries
33 Scrutinized Industries 6.9% Other Loans 93.1% Credit Quality Scrutinized Industries $ in millions Data as of 9/30/2021 Excludes PPP Loans % of Industry Balance Total Loans Exposure CRE - Senior Housing $293 2.2% $302 Restaurants $211 1.6% $235 Arts/Entertainment $145 1.1% $187 C&I - Retail $109 0
Slide 34: Net Interest Income Sensitivity
34 Fixed 52% Variable 42% Floating 6% Noninterest- bearing 35% CDs (Maturing/ Repricing ≤ 1-Year) 4% Other Interest- bearing 61% Year 1&2 NII Impact vs Rates Unchanged $31.4 2.9% $(30.6) -2.9% +50 bps Parallel Shock -50 bps Parallel Shock • 48% of loans are variable/floating-rate1 • $450mm of downra
Slide 35: Commitment to Strong Corporate Governance
35 Commitment to Strong Corporate Governance • Stock ownership guidelines have been established for named executive officers as follows: • As part of Old National’s Proxy filed March 8, 2021, each named executive officer has met their stock ownership requirement Position or Salary Target Ownership G
Slide 36: 2021 Executive Compensation
36 2021 Executive Compensation • Tied to long term shareholder value Performance Measure Weight Corporate EPS 60% ROATCE 20% Efficiency Ratio 20% Short Term Incentive Plan Proxy 5 Performance Measure Weight Performance-based (50% TSR & 50% ROATCE) 75% Service-based 25% Long Term Incentive Plan Proxy
Slide 37: Board of Directors
37 Board of Directors Director Market Background Andrew E. Goebel Evansville, IN 34-year career in the energy industry, most recently serving as President and Chief Operating Officer of Vectren Corporation Jerome F. Henry Jr. Ft. Wayne, IN Owner and President of Midwest Pipe & Steel, Inc., a company
Slide 38: Non-GAAP Reconciliations
38 Non-GAAP Reconciliations $ in millions, except per share data 3Q21 Net Income $71.7 Risk-Weighted Assets $16,227.1 Return on Risk-Weighted Assets 1.77% 3Q20 2Q21 3Q21 As Reported: Net Interest Income (FTE) $149.0 $153.4 $155.1 Add: Fee Income 64.7 51.5 54.5 Total Revenue (FTE) $213.7 $204.9 $209.
Slide 39: Non-GAAP Reconciliations
39 Non-GAAP Reconciliations $ in millions 3Q20 4Q20 1Q21 2Q21 3Q21 As Reported: Net Interest Income (FTE) $149.0 $164.6 $151.6 $153.4 $155.1 Add: Fee Income 64.7 58.5 56.7 51.5 54.5 Total Revenue (FTE) $213.7 $223.1 $208.3 $204.9 $209.6 Less: Noninterest Expense 120.2 142.3 117.7 129.6 121.3 Pre-Pro
Slide 40: Non-GAAP Reconciliations
40 Non-GAAP Reconciliations $ in millions 3Q20 2Q21 3Q21 Noninterest Expense As Reported $120.2 $129.6 $121.3 Less: ONB Way Charges (2.9) (0.4) - Less: Diligence, Acquisition and Integration Charges - (6.5) (1.4) Noninterest Expense Less Charges $117.3 $122.7 $119.9 Less: Amortization of Tax Credit
Slide 41: Non-GAAP Reconciliations
41 Non-GAAP Reconciliations $ in millions , except per share data 3Q20 2Q21 3Q21 Net Interest Income As Reported $145.6 $149.9 $151.6 FTE Adjustment 3.4 3.5 3.5 Net Interest Income (FTE) $149.0 $153.4 $155.1 Average Earning Assets $19,654.3 $21,095.3 $21,228.6 Net Interest Margin 2.96% 2.84% 2.86% N
Slide 42: Non-GAAP Reconciliations
42 Non-GAAP Reconciliations $ in millions 3Q21 Net Income As Reported $71.7 Add: Intangible Amortization (net of tax) 2.1 Tangible Net Income $73.8 Less: Debt Securities Gains/Losses (net of tax) (0.9) Add: Diligence, Acquisition and Integration Charges (net of tax) 1.1 Adjusted Tangible Net Income
Slide 43: Peer Group
43 Peer Group Like-size, publicly-traded financial services companies, generally in the Midwest, serving comparable demographics with comparable services as ONB Associated Banc-Corp ASB BancorpSouth Bank BXS Bank OZK OZK Cadence Bancorporation CADE Commerce Bancshares, Inc. CBSH F.N.B. Corporation F
Slide 44: Old National Investor Relations Contact
44 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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