Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Q3 2022 Earnings Presentation
25 slides from Old National Bancorp's earnings presentation, Oct 25, 2022
Slide 1: 3rd Quarter 2022 Financial Review
3rd Quarter 2022 Financial Review October 25, 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: Third-Quarter 2022 Highlights
Third-Quarter 2022 Highlights EPS / Net Income Adj. EPS1 / Net Income Adj. ROA1 $0.47 / $0.51 / $136 million $150 million 1.35% 24% Increase QoQ 11% Increase QoQ Adj. ROATCE1 Total Loan Growth1,2 Adj. Eff. Ratio1 22.6% 14% 50.7% ▪ Significant net interest margin (FTE)1 expansion of 38 bps, reflectiv
Slide 5: Third-Quarter 2022 Results
Third-Quarter 2022 Results Performance Drivers - Impacted by Merger 3Q22 2Q22 3Q21 Completed Mid 1Q22 • Strong total loan growth1 of 14%, annualized; commercial End of period total loans1 $30,485 $29,472 $13,230 up 17% and consumer up 7% • Higher balance in municipals; commercial and retail End of p
Slide 6: Total Loans and Earning Assets
Total Loans and Earning Assets Total Loans1 Up 10% YoY Historical Combined 2 Total loans1 $29,472 $30,485 $27,634 $27,792 $28,131 • Growth of $1.0 billion, +14% annualized • Commercial growth of $856 million, 4.54% +17% annualized • Total consumer3 growth of $157 million, 4.01% +7% annualized; drive
Slide 7: Commercial Loans
Commercial Loans Total Commercial Loans1 Up 11% YoY Historical Combined 2 $20,639 $21,495 Total commercial loans1 $19,348 $19,422 $19,757 • Growth of $856 million, +17% annualized • Well distributed across markets and products • +17% commercial and industrial • +15% commercial real estate 3Q21 4Q21
Slide 8: Commercial Loan Production
Commercial Loan Production Strong $2.4 billion of production throughout the entire commercial loan portfolio and across the combined expanded market footprint Production by Product Line Production by RM Location $25 $238 $501 $254 $25 $954 $1,159 $161 $462 $223 $261 $251 $303 CRE - Non-OO CRE - OO I
Slide 9: Deposits
Deposits Total Deposits Historical Combined 1 $35,813 $35,843 $36,054 $35,142 $35,551 $35,538 $2,393 Deposit balances stable compared $2,479 to 2Q22 • Increase in municipal deposits; $26,905 $12,388 $12,400 commercial and retail deposits stable Deposit costs continue to be low • 3Q22 total deposit c
Slide 10: Net Interest Income & Net Interest Margin
1 Net Interest Income & Net Interest Margin 1 Net Interest Income Key Performance Drivers $382 $2 • Net interest income increased $40 million $342 $25 • NIM increased 38 bps vs. 2Q22 $2 $35 • Robust loan growth2 of +14% annualized $227 • Commercial of +17% annualized $4 $16 • Total consumer3 of +7%
Slide 11: Asset Liability Management
Asset Liability Management 1 Net Interest Margin Sensitivity Well-positioned for Rising Rates Projection Actual Range • 57% of loans are variable/floating-rate 3.71%-3.81% 3.71% 0.13% • 89% reprice in 3 months or less 0.25% 3.33% • Peer leading deposit franchise 0.34% • Noninterest bearing deposits
Slide 12: Noninterest Income
Noninterest Income Adjusted Noninterest Income 1 Key Performance Drivers $89 • Lower wealth management fees resulting $81 from current market conditions $16 • Mortgage banking continues to be $11 $65 $7 impacted by higher rate environment; $9 $10 $6 lower production and gain on sale $54 $5 $5 $51 $4
Slide 13: Noninterest Expense
Noninterest Expense 1 Adjusted Noninterest Expense Key Performance Drivers $239 $241 • 3Q22 adjusted noninterest expense well $225 controlled $38 $45 $15 • Salaries impacted by ~$4 million of lower $173 $28 $24 deferred loan origination costs and $24 $33 $33 $123 $22 ~$3 million of year-to-date ince
Slide 14: Credit
Credit 30+ Day Delinquency Net Charge-offs 0.46% 0.10% 0.08% 0.02% 0.22% 0.00% 0.02% 0.17% 2017Y 2018Y 2019Y 2020Y 2021Y 1Q22 2Q22 3Q22 2017Y 2018Y 2019Y 2020Y 2021Y 1Q22 2Q22 3Q22 ONB ONB, excluding PCD Peer Average ONB Peer Average Non-Performing Loans Key Performance Drivers • Stable net charge-o
Slide 15: Allowance for Credit Losses
Allowance for Credit Losses Allowance for Credit Losses $9 $302 $288 $3 $2 Key Model Inputs • Economic assumptions (upper bound) • GDP (-6.0%) • Unemployment (7.2%) • BBB Spread / 10Y Treasury (2.9x) • Commercial Asset Quality Ratings • Consumer Credit Bureau Score • Loan To Value Allowance Portfoli
Slide 16: Capital
Capital Key Performance Drivers 3Q21 4Q21 1Q22 2Q22 3Q221 • 3Q22 ratios stable as robust loan growth and merger related charges substantially offset Capital Ratios: strong retained earnings • Total capital impacted by the CET1 capital to RWA 12.08 % 12.04 % 10.04 % 9.90 % 9.88 % phase-out of ~$30 mi
Slide 17: Outlook
Outlook Category Outlook Loans / Deposits • Commercial pipeline heading into 4Q bodes well for future growth, albeit at a potentially slower pace than 3Q • ~$400 million of deposits expected to exit mid-November with sale of health savings account (“HSA”) business Net Interest Income / • Net interes
Slide 18: Appendix
Appendix oS OLD NATIONAL BANCORP?’
Slide 19: Projected Acquisition Accounting Impact
Projected Acquisition Accounting Impact 1,2 Contractual Accretion Accretion on acquired loans and borrowings $24 • $25 million recognized in 3Q22 $19 • $10 million contractual for 4Q22 $10 4Q22 2023 2024 1 Projected Remaining Loan Discount Discount on acquired loan portfolio • $112 million remaining
Slide 20: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q21 2Q22 3Q22 Net interest income (FTE) $155.1 $341.8 $381.5 Add: Fee income 54.5 89.1 80.4 Total revenue (FTE) $209.6 $430.9 $461.9 Less: Provision for credit losses 4.6 (9.2) (11.3) Less: Noninterest expense (121.3) (277.4) (266.7) Income before income taxes $92.9 $144.3 $
Slide 21: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q21 4Q21 1Q22 2Q22 3Q22 Net interest income (FTE) $155.1 $150.2 $226.6 $341.8 $381.5 Add: Fee income 54.5 51.5 65.2 89.1 80.4 Total revenue (FTE) $209.6 $201.7 $291.8 $430.9 $461.9 Less: Noninterest expense (121.3) (131.9) (226.7) (277.4) (266.7) Pre-Provision Net Revenue (P
Slide 22: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q21 4Q21 1Q22 2Q22 3Q22 Noninterest Expense $121.3 $131.9 $226.7 $277.4 $266.7 Less: Intangible amortization (2.8) (2.6) (4.8) (7.2) (7.1) Noninterest expense, excluding intangible amortization 118.5 129.3 221.9 270.2 259.6 Adjustments: Less: Merger related charges (1.4) (6.
Slide 23: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q21 4Q21 1Q22 2Q22 3Q22 Net interest income $151.6 $146.8 $222.8 $337.5 $376.5 FTE adjustment 3.5 3.4 3.8 4.3 5.0 Net interest income (FTE) $155.1 $150.2 $226.6 $341.8 $381.5 Average earnings assets $21,228.6 $21,670.7 $31,483.6 $41,003.3 $41,180.0 Net interest margin 2.86 %
Slide 24: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q21 4Q21 1Q22 2Q22 3Q22 Old National commercial loans $9,796 $9,772 $19,962 $20,721 $21,539 Less: Old National PPP loans (355) (169) (205) (82) (44) Legacy First Midwest commercial loans1 10,291 10,050 0 0 0 Less: Legacy First Midwest PPP loans (384) (231) 0 0 0 Historical c
Slide 25: Peer Group
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 Corp