Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Q3 2023 Earnings Presentation
27 slides from Old National Bancorp's earnings presentation, Oct 24, 2023
Slide 1: 3rd Quarter 2023 Financial Review
3rd Quarter 2023 Financial Review October 24, 2023
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 2023 Highlights
Strong Third-Quarter 2023 Highlights Reported Adjusted1 Key Performance Drivers EPS $0.49 $0.51 ▪ Granular, peer-leading deposit franchise with Net Income $144 $149 growth in total and core deposits of 3% and low total deposit beta of 30% Return on Average Assets 1.22% 1.26% ▪ Net interest income pe
Slide 5: Liquid, Well-Capitalized Balance Sheet
Liquid, Well-Capitalized Balance Sheet % Change End of Period Balances 3Q23 2Q23 3Q22 3Q23 vs. 2Q23 3Q23 vs. 3Q22 Available-for-sale securities, at fair value $6,415 $6,501 $6,863 (1)% (7)% Held-to-maturity securities, at amortized cost $3,028 $3,055 $3,097 (1)% (2)% Total loans1 $32,700 $32,547 $30
Slide 6: Total Loans and Earning Assets
Total Loans and Earning Assets Total Loans1 Up 7% YoY $30,549 $32,547 $32,700 Total loans1 • Disciplined growth of $153 million,+0.5% from 2Q23 5.98% • Commercial growth of $115 million, +0.5% 5.75% • Sold ~$389 million of C&I loans, at par, in 4.54% 3Q23 • Total consumer2 growth of $38 million, 3Q2
Slide 7: Peer-Leading Deposit Franchise
Peer-Leading Deposit Franchise Period End Total Deposits $36.1 $36.2 $37.3 $3.6 $3.6 $3.9 $13.7 $14.5 $14.7 Key Performance Drivers • End of period deposits up $1.0 billion, or 3%; $18.8 $18.1 $18.7 core deposits up 3% • Reflect continuing effective competition for 3Q22 2Q23 3Q23 new client relation
Slide 8: Third-Quarter 2023 Results
Third-Quarter 2023 Results % Change 3Q23 2Q23 3Q22 3Q23 vs. 2Q23 3Q23 vs. 3Q22 Net Interest Income (FTE)1,2 $381 $388 $381 (2%) —% 3 Provision for credit losses 19 15 16 27% 19% 1 Adjusted noninterest income 81 82 80 (1%) 1% 1 Adjusted noninterest expense 239 241 239 (1%) —% Merger-related and other
Slide 9: Net Interest Income & Net Interest Margin
1 Net Interest Income & Net Interest Margin 1 Net Interest Income Key Performance Drivers • Modest net interest income1 decrease reflective $381 $388 $381 of the rate environment • NIM1 decreased 11 bps vs. 2Q23 • Strong low-cost deposit franchise; total deposit costs of 161 bps 3.71% • Low cycle to
Slide 10: Noninterest Income
Noninterest Income 3Q23 2Q23 3Q22 Key Performance Drivers Bank Fees $29 $29 $31 • Increase in all fee income categories more than offset by lower other income as a Wealth Fees 27 27 25 result of higher 2Q23 levels of company- owned life insurance income, recovery of an asset and derivative valuation
Slide 11: Noninterest Expense
Noninterest Expense 3Q23 2Q23 3Q22 Key Performance Drivers • 3Q23 adjusted noninterest expense1 well- Salary & Employee Benefits $127 $131 $140 controlled • Salaries & employee benefits higher in Occupancy & Equipment 34 34 15 2Q23 resulting from year-to-date performance-driven incentive accrual tru
Slide 12: Credit Quality
Credit Quality Asset Quality Net Charge-Offs 0.91% 0.25% 0.81% 0.80% 0.24% 0.13% 0.10% 0.22% 0.12% 0.06% 0.18% 0.02% 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 30+ Day Delinquency Non-Performing Loans ONB ONB, excluding PCD Allowance for Credit Losses 1 $338 $1 $337 Key Performance Drivers $(2) • Net charge-offs
Slide 13: Key Areas of Focus
Key Areas of Focus Lo OLD NATIONAL BANCORP’
Slide 14: Granular & Diversified Loan Portfolio
1 Granular & Diversified Loan Portfolio Total Loans Residential Real Estate SNC 24% Office 7% of Total Loans C&I Consumer 4% of Total Loans 29% 4% $32.7 billion CRE Owner Occupied Suburban C&I 11% and other Central 6% 2% Business $2.1 $1.4 District billion billion <1% CRE <1% CRE Non-Owner Medical C
Slide 15: CRE Non-Owner Occupied Maturities
CRE Non-Owner Occupied Maturities CRE Non-Owner Occupied CRE Non-Owner CRE Non-Owner Maturities Occupied Occupied Maturing <18 Mos. Maturing <18 Mos. Current Int. Rate Int. Rate <4% <1% of Total Loans Office >15 Months $10.4 <15 Months >4% $2.6 $0.3 Other 25% billion <4% billion 75% billion Multifam
Slide 16: Commercial Loan Production
Commercial Loan Production 3Q23 Total Production CRE Non-Owner Occupied 41% of Total Production Corporate $286 Multifamily 20% CRE - Non-OO $1.5 $619 $618 billion million Business Office Banking 1% $427 Retail 2% Other Warehouse/ 17% Industrial CRE - OO 1% $213 Production & Pipeline • $1.5 billion t
Slide 17: Granular, Long-Tenured Deposit Base
Granular, Long-Tenured Deposit Base Average Core Account Balance Deposit Highlights • Insured deposits2 >70% of total deposits $1.4mm • Granular low-cost deposit franchise • Top 20 deposit clients represents only $959k 6.6% of total deposits; weighted average tenure > 30 years; ~75% collateralized o
Slide 18: Strong Capital Position
Strong Capital Position 3Q231 2Q23 3Q22 Key Performance Drivers • 3Q23 ratios increased due to strong CET1 capital to RWA 10.41% 10.14% 9.88% retained earnings • HTM securities pre-tax unrealized losses Tier 1 capital to RWA 11.06% 10.79% 10.58% of $634 million (~$475 million net of tax) • No shares
Slide 19: Guidance
Guidance Lo OLD NATIONAL BANCORP’
Slide 20: Outlook
Outlook Category 3Q23 2023 Guidance • Mid to high single-digit growth for the full-year 2023; low Period End Loans1 $32.7 billion single-digit growth for Q4 • At or above industry deposit growth; subject to seasonal Period End Deposits $37.3 billion outflows • Net interest income now expected to be
Slide 21: Appendix
Appendix Lo OLD NATIONAL BANCORP’
Slide 22: Projected Acquisition Accounting Impact
Projected Acquisition Accounting Impact 1,2 Contractual Accretion Accretion on acquired loans and borrowings • $8 million recognized in 3Q23 $20 • $5 million contractual for remainder of 2023 $17 $5 4Q 2023 2024 2025 1 Projected Remaining Loan Discount Discount on acquired loan portfolio $79 • $83 m
Slide 23: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q23 2Q23 3Q22 Net interest income $375.1 $382.2 $376.4 FTE Adjustment 5.8 5.8 5.0 Net interest income (FTE) $380.9 $388.0 $381.4 Add: Fee income 81.0 81.6 80.4 Total revenue (FTE) $461.9 $469.6 $461.8 Less: Provision for credit losses (19.1) (14.8) (15.5) Less: Noninterest e
Slide 24: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q23 2Q23 3Q22 Noninterest income $81.0 $81.6 $80.4 Less: Debt securities losses 0.2 0.0 0.2 Adjusted noninterest income $81.2 $81.6 $80.6 Noninterest expense 244.8 246.6 262.4 Less: Merger-related charges (6.3) (2.4) (22.7) Less: Louisville expenses1 0.0 (3.4) 0.0 Less: Prop
Slide 25: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q23 2Q23 3Q22 Net interest income $374.9 $382.2 $376.4 FTE adjustment 5.9 5.8 5.0 Net interest income (FTE) $380.8 $388.0 $381.4 Average earnings assets $43,617.5 $43,097.2 $41,180.0 Net interest margin 3.44% 3.55% 3.66% Net interest margin (FTE) 3.49% 3.60% 3.71% Net income
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q23 2Q23 3Q22 Shareholders' equity $5,239.5 $5,292.1 $4,943.4 Less: Preferred equity (243.7) (243.7) (243.7) Shareholders' common equity 4,995.8 5,048.4 4,699.7 Less: Goodwill and other intangible assets (2,106.8) (2,112.9) (2,135.8) Tangible shareholders' common equity 2,88
Slide 27: 2023 Peer Group
2023 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