Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Q1 2022 Earnings Presentation
29 slides from Old National Bancorp's earnings presentation, Apr 26, 2022
Slide 1: 1st Quarter 2022 Financial Review
1st Quarter 2022 Financial Review April 26, 2022
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. These statements include, but are not limited to, descriptions of Old National’s financial condition, results of operations, asset and c
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: Commitment to Corporate Social Responsibility
Commitment to Corporate Social Responsibility Old National’s 2021 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 • Strength
Slide 5: Premier Midwest Banking Franchise
Premier Midwest Banking Franchise Merged February 15, 2022 - Next Steps Transitioned to execution phase of our integration plan Branding and systems conversion in July 2022 On track to achieve ~$109 million in cost savings as outlined at announcement Strong talent and client retention; continuing to
Slide 6: First-Quarter 2022 Highlights
First-Quarter 2022 Highlights EPS / Net Loss Adj. EPS1/Net Income1 Adj. PPNR1 $(0.13) / $0.40 / $119 million $(30) million $92 million Adj. ROATCE1 Comm. Loan Growth1,2 Adj. Eff. Ratio1 15.0% 8.3% 57.7% Performance Drivers ▪ Completed transformative merger with First Midwest Bancorp, Inc. on Februar
Slide 7: First-Quarter 2022 Results
First-Quarter 2022 Results 1Q22 4Q21 1Q21 Performance Drivers - Impacted by Merger • Strong full quarter combined commercial loan growth1,2 End of period total loans1 $28,262 $13,432 $12,801 of 8.3%, annualized and production of $1.5 billion End of period deposits 35,607 18,569 17,850 • Modest decli
Slide 8: Total Loans and Earning Assets
Total Loans and Earning Assets Total Loans1 Up 5% YoY Historical Combined 2 Total loans1 $28,262 $28,258 $26,828 $27,354 $27,596 $27,830 • Combined growth2 of $432 million, +6% annualized $12,387 $12,440 $12,429 • Commercial growth of $405 million, $12,139 +8% annualized $26,486 • Consumer growth of
Slide 9: Commercial Loans
Commercial Loans Total Commercial Loans1 oY Up 6% Y Historical Combined 2 $19,348 $19,422 $19,827 $18,732 $19,079 Total commercial loans1 • Combined growth2 of $405 million, +8% annualized • Well distributed across markets and products $9,019 $9,269 $9,441 $9,603 • +14% commercial and industrial • +
Slide 10: Commercial Loan Production
Commercial Loan Production Strong $1.5 billion of production throughout the entire commercial loan portfolio and across the combined expanded market footprint Production by Product Type Production by RM Location 2% 10% 7% 28% 42% 7% 46% 7% 8% 28% 15% CRE Business Banking Illinois Indiana Corporate S
Slide 11: Deposits / Funding
Deposits / Funding Total Deposits Historical Historical Combined 1 Combined 1 $33,898 $34,838 $35,142 $35,551 $35,760 $35,607 Deposit balances stable compared $2,674 $2,544 to 4Q21 • Seasonal decline in commercial and $26,905 $12,495 $12,463 municipal deposits • Retail growth in interest-bearing • T
Slide 12: Net Interest Income & Net Interest Margin
1 Net Interest Income & Net Interest Margin 1 Key Performance Drivers Net Interest Income • Net interest income increased $77 million $227 • PPP 1% coupon + fees $4 $16 • $4 million decrease to NII • 8 bps decrease to NIM $152 $153 $155 $150 • NIM increased 11 bps vs. 4Q21 $12 $12 $8 $13 $5 $3 $4 •
Slide 13: Asset Liability Management
Asset Liability Management Disciplined balance sheet management & well-positioned for rising interest rates Deposit Betas Interest Rate Risk Profile 4Q’16 - 4Q’18 44% • 50% of loans are variable/floating-rate • 84% of variable/floating-rate loans 23% reprice in 3 months or less • Low-cost deposit ba
Slide 14: Noninterest Income
Noninterest Income 1 Adjusted Noninterest Income Key Performance Drivers • Mortgage fees impacted by rate environment, normalizing gain on sale $65 margins, and higher mix of portfolio production $10 $55 $51 $53 $51 • Fewer days in the quarter $5 $4 $5 $4 $6 $8 $7 $6 $6 $6 $17 $11 $8 $7 $22 • 1Q22 M
Slide 15: Noninterest Expense
Noninterest Expense 1 Adjusted Noninterest Expense Key Performance Drivers • 1Q22 adjusted noninterest expense well $173 controlled $32 • 1Q22 adjusted efficiency ratio1 of 57.7% $121 $118 $123 $19 $115 $20 $22 $23 $27 $21 Merger Related Charges of $12 $12 $14 $11 $11 $13 $52.3 million in 1Q22 $15 $
Slide 16: Path to Cost Saves
1 Path to Cost Saves $235 $223 Key Performance Drivers • ~85% of cost saves target (~$109 million $7 $4 annualized) realized by 4Q22 • Full run rate expected by early 2023 $23 million (~$92 million annualized) $212 2 2Q21 4Q22 Expected Combined Expense Incremental Intangibles Merit & Strategic Inves
Slide 17: Credit
Credit 30+ Day Delinquency Net Charge-offs 0.80% 0.27% 0.41% 1 0.05% 0.34% 0.24% (0.03)% 0.11% 2017Y 2018Y 2019Y 2020Y 2021Y 1Q22 2017Y 2018Y 2019Y 2020Y 2021Y 1Q22 ONB FMBI Peer Average ONB FMBI Peer Average Non-Performing Loans Net Charge-offs/NPL’s 1.19% 39.80% 0.92% 25.19% 0.88% 4.46% 0.70% (3.8
Slide 18: Allowance for Credit Losses
Allowance for Credit Losses Allowance for Credit Losses $96 $3 $3 $281 $(4) Merger Impact $(3) • $79 million of allowance established on $79 $1.5 billion of PCD loans • $96 million of Day 1 allowance established $107 through provision for credit losses on non- PCD loans of $13 billion • $162 million
Slide 19: Capital
Capital 1 1Q21 2Q21 3Q21 4Q21 1Q22 Regulatory Capital Ratios: Key Performance Drivers • As expected, 1Q22 ratios CET1 capital to RWA 12.01 % 11.95 % 12.08 % 12.04 % 10.04 % decreased primarily due to Tier 1 capital to RWA 12.01 % 11.95 % 12.08 % 12.04 % 10.79 % FMBI merger Total capital to RWA 12.84
Slide 20: Outlook
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 income and NIM, excluding PPP and accretion, should expand meaningfully a
Slide 21: Meaningful Earnings Momentum
Meaningful Earnings Momentum Price / TBV Key Performance Catalysts • Record commercial pipeline of $5.4 billion As of 12/31/2021 1.9x • Asset sensitivity better than peers 1.5x • Deposit betas better than peers (23% last cycle) ONB ^KRX • $1.5 billion of excess cash/liquidity • ~$109 million of merg
Slide 22: Appendix
Appendix oS OLD NATIONAL BANCORP?’
Slide 23: Projected Acquisition Accounting Impact
Projected Acquisition Accounting Impact Contractual Accretion Accretion on acquired loans and borrowings $49 • $16 million recognized in 1Q22 • $49 million contractual for remainder of 2022 $29 $20 2Q-4Q 2022 2023 2024 1,2 Contractual Accretion Remaining Loan Discount Discount on acquired loan portf
Slide 24: Non-GAAP Reconciliation
Non-GAAP Reconciliation 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 $201.7 $291.8 Less: Provision for Credit Losses 17.4 1.9 97.6 Less: Noninterest Expense (117.7) (131.9) (226.7) Pre-Tax Income $108.0 $71.7 $(3
Slide 25: Non-GAAP Reconciliation
Non-GAAP Reconciliation 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-Provision Net Revenue
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation 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 $174.4 Less: Amorti
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation 1Q21 2Q21 3Q21 4Q21 1Q22 Net interest Income As Reported $148.1 $149.9 $151.6 $146.8 $222.8 FTE Adjustment 3.5 3.5 3.5 3.4 3.8 Net Interest Income (FTE) $151.6 $153.4 $155.1 $150.2 $226.6 Average Earnings Assets $20,601.7 $21,095.3 $21,228.6 $21,670.7 $31,483.6 Net Interest M
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation 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 Commercial Loans1 10,822 10,516 10,291 10,050 0 Less: Legacy First Midwest PPP Loans (1,109) (706) (38
Slide 29: Peer Group
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 BOK Financial Corporation BOKF Cadence Bancorporation CADE Comerica Incorporate CMA F.N.B. Corporation FNB First Hori