Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Q2 2024 Earnings Presentation
30 slides from Old National Bancorp's earnings presentation, Jul 23, 2024
Slide 1: 2nd Quarter 2024 Financial Review
2nd Quarter 2024 Financial Review July 23, 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: Key Second-Quarter 2024 Takeaways
Key Second-Quarter 2024 Takeaways Successfully executed organic growth strategy by leveraging position of strength and investing in new markets and talent. Strategy supported by strong deposit franchise and ample capital. Expansion of net interest income dollars driven by accelerating loan growth, i
Slide 5: Strong Second-Quarter 2024 Highlights
Strong Second-Quarter 2024 Highlights Key Performance Drivers Reported Adjusted1 EPS $0.37 $0.46 ▪ Completed CapStar acquisition April 1, 2024, strengthening our presence in Nashville and Net Income $117 $144 other high-growth markets Return on Average Assets 0.92% 1.12% ▪ Granular, peer-leading dep
Slide 6: Liquid, Well-Capitalized Balance Sheet
Liquid, Well-Capitalized Balance Sheet % Change End of Period Balances 2Q24 1Q24 2Q23 2Q24 vs. 1Q24 2Q24 vs. 2Q23 Available-for-sale securities, at fair value $7,105 $6,792 $6,501 5% 9% Held-to-maturity securities, at amortized cost $2,986 $3,001 $3,055 —% (2)% Total loans1 $36,217 $33,643 $32,547 8
Slide 7: Total Loans and Earning Assets
Total Loans and Earning Assets Total Loans1 Total loans1 Up 11% YoY • Disciplined growth of $2.6 billion, $2.1 billion $36,217 $32,547 $33,643 EOP loans acquired in the CapStar transaction • Excluding CapStar, total loan growth of +5.9% annualized 6.24% • Commercial growth of $458 million, +7.5% 6.0
Slide 8: Peer-Leading Deposit Franchise
Peer-Leading Deposit Franchise Period End Total Deposits Key Performance Drivers • Period end deposits up $2.3 billion, $2.1 billion $40.0 $36.2 $37.7 EOP acquired in the CapStar transaction $3.4 $1.8 $3.3 $1.0 $3.5 $1.2 • Excluding CapStar, up 2.4% annualized $13.5 $13.8 $15.8 • Seasonal outflows i
Slide 9: Second-Quarter 2024 Results
Second-Quarter 2024 Results % Change 2Q24 1Q24 2Q23 2Q24 vs. 1Q24 2Q24 vs. 2Q23 Net Interest Income (FTE)1,2 $395 $363 $388 9% 2% Provision for credit losses - Current Expected Credit Losses (“CECL”) Day 1 non-PCD provision expense3 15 — — N/M N/M Provision for credit losses - excluding CECL Day 1 n
Slide 10: 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 the $388 $395 CapStar transaction, loan growth and higher $363 asset yields • NIM1 increased 5 bps vs. 1Q24 3.60% • Strong low-cost deposit franchise; total deposit
Slide 11: Noninterest Income
Noninterest Income 2Q24 1Q24 2Q23 Key Performance Drivers Bank Fees $30 $28 $29 • Increases in all line items; reflective of CapStar, growth in wealth, mortgage, and Wealth Fees 29 28 27 capital markets • Includes $7 million of CapStar Mortgage Fees 7 5 4 • 2Q24 mortgage activity • Production was $4
Slide 12: Noninterest Expense
Noninterest Expense 2Q24 1Q24 2Q23 Key Performance Drivers • Higher primarily due to CapStar operating Salary & Employee Benefits $145 $135 $131 costs as well as technology and professional fees Occupancy & Equipment 35 36 34 • Includes CapStar of $18 million • Additional $2 million of intangibles a
Slide 13: Credit Quality
Credit Quality Asset Quality Net Charge-Offs 0.98% 0.91% 0.94% 0.13% 0.14% 0.16% 0.11% 0.12% 0.16% 0.06% 0.07% 0.16% 2Q23 1Q24 2Q24 2Q23 1Q24 2Q24 30+ Day Delinquency Non-Performing Loans ONB ONB, excluding PCD Allowance for Credit Losses 1 $3 $15 $6 $392 Key Performance Drivers $24 $(2) • Net charg
Slide 14: 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)% 2015Y2016Y2017Y2018Y2019Y2020Y2021Y2022Y2023Y 1Q24 2Q24 2015Y2016Y2017Y2018Y2019Y2020Y2021Y2022Y2023Y1Q24 2Q24 1 2 1 ONB Peer Average ONB Peer Average Non-Performing Loans N
Slide 15: Diversified Loan Portfolio
Diversified Loan Portfolio CRE Non-Owner Occupied $11.7 billion Office Total Loans 4% $36.2 billion Warehouse Multifamily Industrial 5% 15% Total Loans By State Other 7% IL $8.6 23% Consumer Retail 8% IN 5.5 15% 4% MN 4.0 11% CRE Non- Residential Owner Real Estate WI 3.7 10% Occupied 19% 32% MI 2.9
Slide 16: 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 $3.4 <4% billion >4% billion Multifamily Maturing CRE NOO Loans • Manageable volume of loans subject to refinance risk • Predominantly multifamil
Slide 17: CRE Non Owner Occupied - Office
CRE Non Owner Occupied - Office Our Lending Looks More Like This ...Less Like This • Total office portfolio of $1.5 billion; average loans size is $2.9 million • Largest exposure of ~$50 million • 95% located in bank’s footprint, diversified by submarket • 41% of portfolio is medical office (“MOB”)
Slide 18: CRE Non Owner Occupied - Multifamily
CRE Non Owner Occupied - Multifamily Our Lending Looks More Like This ...Less Like This • Total multifamily portfolio of $5.5 billion; average loans size is $5.1 million • Largest exposure of ~$60 million • 86% located in bank’s footprint • Continued strong demand and rental rates in core markets (I
Slide 19: Strong Capital Position
Strong Capital Position 2Q241 1Q24 2Q23 Key Performance Drivers • Strong retained earnings more than offset by CET1 capital to RWA 10.73% 10.76% 10.14% the impact of the CapStar transaction and loan growth Tier 1 capital to RWA 11.33% 11.40% 10.79% • HTM securities pre-tax unrealized losses of $474
Slide 20: Net Interest Income Outlook
Net Interest Income Outlook Quarterly NII Outlook Managing to Neutral Rate Risk Position • 53% of loans are variable/floating-rate ~ $404 • ~$4.9 billion fixed-rate loans and securities ~ $398 $395 expected to reprice over NTM • 31% of total deposits are exception priced at an average rate of 4.27%
Slide 21: Outlook
Outlook 3Q24 Outlook Full-Year 2024 Outlook EOP loans up 5% - 7%, annualized up 5% - 7%, excl. CapStar (Including HFS) Net interest income (FTE basis)1 ~$398 million ~$1,560 million Noninterest income1 ~$85 million ~$335 million Noninterest expense1 ~$260 million ~$1,025 million Net charge-off ratio
Slide 22: Appendix
Appendix Lo OLD NATIONAL BANCORP’
Slide 23: Granular, Long-Tenured Deposit Base
Granular, Long-Tenured Deposit Base Average Core Account Balance 3 Deposit Highlights • Insured deposits2,3 >70% of total deposits $1.5mm • Granular low-cost deposit franchise • Top 20 deposit clients represents ~6% of $973k total deposits; weighted average tenure > 30 years; ~70% collateralized or
Slide 24: Projected Acquisition Accounting Impact
Projected Acquisition Accounting Impact 1,2 Contractual Accretion Accretion on acquired loans and borrowings • $12 million recognized in 2Q24 $42 • $26 million contractual for remainder of 2024 $34 $26 3Q-4Q 2024 2025 2026 1 Projected Remaining Loan Discount Discount on acquired loan portfolio $168
Slide 25: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2Q24 1Q24 2Q23 Net interest income $388.4 $356.5 $382.2 FTE Adjustment 6.3 6.3 5.8 Net interest income (FTE) $394.8 $362.8 $388.0 Add: Fee income 87.3 77.5 81.6 Total revenue (FTE) $482.1 $440.3 $469.6 Less: Provision for credit losses (36.2) (18.9) (14.8) Less: Noninterest e
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2Q24 1Q24 2Q23 Noninterest income $87.3 $77.5 $81.6 Less: Debt securities losses 0.0 0.0 0.0 Adjusted noninterest income $87.3 $77.5 $81.6 Noninterest expense $283.0 $262.3 $246.6 Less: Merger-related charges (19.4) (2.9) (2.4) Less: Distribution of excess pension assets 0.0
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2Q24 1Q24 2Q23 Noninterest Expense $283.0 $262.3 $246.6 Less: Intangible amortization (7.4) (5.5) (6.1) Noninterest expense, excluding intangible amortization 275.6 256.8 240.5 Adjustments: Less: Merger-related charges (19.4) (2.9) (2.4) Less: Distribution of excess pension a
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2Q24 1Q24 2Q23 Net income applicable to common shares $117.2 $116.4 $151.0 Add: Intangibles amortization, net of tax 5.6 4.1 4.5 Tangible net income applicable to common shares $122.8 $120.5 $155.5 Total adjustments, net of tax $26.8 $14.5 $5.3 Adjusted net income applicable
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2Q24 1Q24 2Q23 Shareholders' equity $6,075.0 $5,595.4 $5,292.1 Less: Preferred equity (243.7) (243.7) (243.7) Shareholders' common equity 5,831.3 5,351.7 5,048.4 Less: Goodwill and other intangible assets (2,306.2) (2,095.5) (2,112.9) Tangible shareholders' common equity 3,52
Slide 30: 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