Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (February 2023)
45 slides from Old National Bancorp's investor presentation, Feb 13, 2023
Slide 1: Investment Thesis
Investment Thesis Financial Data as of December 31, 2022 Dated: February 2023 Exhibit 99.1
Slide 2: Executive Summary
2 Executive Summary Slides 6 — 14
Slide 3: Forward-Looking Statements
3 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
Slide 4: Non-GAAP Financial Measures
4 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 ar
Slide 5: The Best of Offense and Defense
5 The Best of Offense and Defense Financial data as of or for the year ended December 31, 2022, except as noted 1 Non-GAAP financial measure that management believes is useful in evaluating the financial results of the Company - see Appendix for Non-GAAP reconciliation 2 Excludes Paycheck Protection
Slide 6: Commitment to Excellence
Commitment to Excellence Bloomberg Gender-Equality Index 2022 UNITY Moopy’s VIITMENT.. === INVESTORS SERVICE twas m_ ae NATIONAL ORGANIZATION ON. LEADING | BEST PLACE TO WORK FOR [J D =| DISABILITY INCLUSION [4 DISABILITY Josssuirr awd s EMPLOYER 100% DISABILITY EQUALITY INDEX ISS QualityScore = OLD
Slide 7: Commitment to Corporate Social Responsibility
7 Commitment to Corporate Social Responsibility Old National’s 2021 Environmental, 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 • Stre
Slide 8: Snapshot of Old National
8 HELOC 3% CRE Non- Owner Occupied 29% CRE Owner Occupied 11% C&I 31% Residential Real Estate 21% Other Consumer 5% Snapshot of Old National $ in millions, except as noted 1 Market data as of 02/09/2023 2 Non-GAAP financial measures that management believes is useful in evaluating the financial resu
Slide 9: Accomplished an Exceptional Transformation
9 Accomplished an Exceptional Transformation $9 $12 $33 2016 2019 2023E $11 $15 $35 2016 2019 2023E $202 $326 $921 2016 2019 2023E $0.95 $1.45 $2.17 2016 2019 2023E 1.71% 1.88% 2.23% 2016 2019 2023E 12% 16% 21% 2016 2019 2023E Loans ($ in billions) Deposits ($ in billions) Adj. PPNR2 ($ in millions)
Slide 10: ONB - A Premier Midwest Banking Franchise
10 7th Largest wealth management platform among banks <$100 billion in assets2 6th Largest commercial bank headquartered in the Midwest by assets1 Top 35 Largest commercial bank in the country by assets3 7th Largest wealth management platform among banks <$100 billion in assets2 6th Largest commerci
Slide 11: Meaningful Upside
11 Meaningful Upside Key Performance Catalysts1 • Strong commercial pipeline of $4.6 billion • Asset sensitivity better than peers • Deposit betas better than peers (22% last cycle); cycle to date deposit beta of 12% • ~$109 million of merger cost saves • Timely branding and systems conversion • Con
Slide 12: Quality Low-Cost Deposit Franchise
12 0.19% 0.32% 0.48% 0.18% 0.06% 0.15% 0.30% 0.54% 0.80% 0.29% 0.10% ONB Peer Median 2017Y 2018Y 2019Y 2020Y 2021Y 2022Y Quality Low-Cost Deposit Franchise Cost of Deposits $12.4 $14.2 $14.5 $16.9 $18.6 $35.0 $3.7 $4.0 $4.1 $5.6 $6.3 $11.9$8.7 $10.2 $10.4 $11.3 $12.3 $23.1 Noninterest-bearing Intere
Slide 13: Granular & Diversified Loan Portfolio
13 Granular & Diversified Loan Portfolio1,2 $ in billions As of 12/31/2022 1 Includes loans held for sale 2 Excludes PPP loans 3 As of 9/30/22 $11.1 $12.3 $12.2 $12.9 $13.5 $31.0 $2.7 $3.2 $2.9 $3.0 $3.2 $9.4$4.4 $5.0 $5.2 $5.9 $6.4 $12.5 $4.0 $4.1 $4.1 $4.0 $3.9 $9.2 C&I CRE Consumer 2017Y 2018Y 20
Slide 14: Outlook
14 Outlook Category Outlook Loans • Healthy pipeline heading into 1Q23 bodes well for future growth; expect 4Q22 mid single digit growth to continue in 2023 Net Interest Income / Net Interest Margin • Net interest income and NIM, excluding accretion, should be consistent with projection on slide 24
Slide 15: Financial Details
Financial Details Financial Data as of December 31, 2022
Slide 16: Fourth-Quarter 2022 Highlights
16 Fourth-Quarter 2022 Highlights ▪ Strong net interest margin (FTE)1 expansion of 14 bps, reflective of robust loan growth and higher rate environment ▪ Robust broad-based total loan growth1,2 of 8% annualized, commercial up 8% ▪ Credit remains strong with net charge-offs of 5 bps ▪ Disciplined exp
Slide 17: 2022 Highlights
17 2022 Highlights ▪ Completed transformational merger with First Midwest Bancorp, Inc. on February 15, 2022 and systems conversion during the 3Q22 ▪ Significant net interest margin (FTE)1 expansion of 58 bps, reflective of strong loan growth and higher rate environment ▪ Robust broad-based total lo
Slide 18: Fourth-Quarter 2022 Results
18 Fourth-Quarter 2022 Results $ in millions, except per-share data 1 Excludes PPP loans 2 Non-GAAP financial measures that management believes is useful in evaluating the financial results of the Company - see Appendix for Non-GAAP reconciliation 3 Includes the provision for unfunded commitments Pe
Slide 19: Total Loans and Earning Assets
19 Total Loans and Earning Assets Historical Combined 2 $28,131 $29,472 $30,485 $31,091 $27,792 3.56% 3.64% 4.01% 4.54% 5.08% ONB FMBI Loan Yield 4Q21 1Q22 2Q22 3Q22 4Q22 Total loans1 • Growth of $606 million, +8% annualized • Commercial growth of $438 million, +8% annualized • Total consumer3 growt
Slide 20: Commercial Loans
20 Commercial Loans Historical Combined 2 $19,757 $20,639 $21,495 $21,933 $19,422 ONB FMBI 4Q21 1Q22 2Q22 3Q22 4Q22 Commercial Production & Pipeline $2,474 $5,394 $5,927 $5,419 $4,626 $1,096 $1,547 $2,207 $2,409 $2,706 ONB Pipeline Production 4Q21 1Q22 2Q22 3Q22 4Q22 Total commercial loans1 • Growth
Slide 21: Commercial Loan Production
21 Commercial Loan Production $ in millions Strong $2.7 billion of production throughout the entire commercial loan portfolio and across the combined expanded market footprint Production by Product Line $1,530 $211 $363 $539 $64 CRE - Non-OO CRE - OO Business Banking Corporate Small Business Product
Slide 22: Deposits / Funding
22 Deposits / Funding $35,551 $26,905 $35,813 $35,843 $35,391 $36,054 $35,001 $21,261 $20,294 $12,400 $11,931 $2,393 $2,776 Transaction Noninterest-Bearing Time 4Q21 1Q22 2Q22 3Q22 4Q22 3Q22 4Q22 Historical Combined 1 $ in millions 1 For illustration only; represents historical combined balances as
Slide 23: Net Interest Income & Net Interest Margin
23 Net Interest Income & Net Interest Margin1 Net Interest Income Accretion Income PPP Interest / Fees 4Q21 1Q22 2Q22 3Q22 4Q22 Key Performance Drivers • Net interest income increased $14 million • NIM increased 14 bps vs. 3Q22 • Robust loan growth2 of +8% annualized • Commercial of +8% annualized •
Slide 24: Asset Liability Management
24 Asset Liability Management 3.15%-3.20% 3.18%-3.27%5 68 Net Interest Margin Sensitivity 2.88% 3.33% 3.71% 3.85% 3.74% 2.64% 2.98% 3.46% 3.75% 0.20% 0.34% 0.25% 0.10% 0.07% Total Excluding Accretion and PPP PPP Accretion 1Q22 2Q22 3Q22 4Q22 1Q23 Well-positioned for Rising Rates • 56% of loans are v
Slide 25: Noninterest Income
25 Noninterest Income $ in millions 1 Non-GAAP financial measure that management believes is useful in evaluating the financial results of the Company - see Appendix for Non-GAAP reconciliation 2 Residential mortgage production includes quick home refinance product Adjusted Noninterest Income $51 $6
Slide 26: 2023 Noninterest Expense Projection
26 2023 Noninterest Expense Projection $900 $14 $11 $9 $(5) $10 $939 2023 Launch Point Tax Credit Amort. Merit FDIC Assessment Basis Adj. Property Optimization Strategic Investment & Other FY 2023 Expected Noninterest Expense Adjusted Noninterest Expense $123 $173 $239 $237 $230 $72 $101 $140 $139 $
Slide 27: Credit
27 0.10% 0.05% 0.02% 0.05% ONB ONB, excluding PCD Peer Average 2018Y 2019Y 2020Y 2021Y 1Q22 2Q22 3Q22 4Q22 Credit Peer Group data per S&P Global Market Intelligence as of 09/30/2022 - See Appendix for definition of Peer Group 0.81% 0.81% 0.45% ONB Peer Average 2018Y 2019Y 2020Y 2021Y 1Q22 2Q22 3Q22
Slide 28: Allowance for Credit Losses
28 Allowance for Credit Losses Allowance to Total Loans $103 $118 $303 $310 $328 $336 0.85% 0.87% 1.07% 1.05% 1.08% 1.08% ACL ACL / Total Loans 1/1/2020 4Q21 1Q22 2Q22 3Q22 4Q22 $ in millions 1 Includes reserve for unfunded commitments 2 Excludes loans held for sale 3 Includes the provision for unfu
Slide 29: Capital
29 Capital 4Q21 1Q22 2Q22 3Q22 4Q221 Capital Ratios: CET1 capital to RWA 12.04 % 10.04 % 9.90 % 9.88 % 10.03 % Tier 1 capital to RWA 12.04 % 10.79 % 10.63 % 10.58 % 10.71 % Total capital to RWA 12.77 % 12.19 % 12.03 % 11.84 % 12.02 % TCE to tangible assets 8.30 % 6.51 % 6.20 % 5.82 % 6.18 % 1 4Q22 f
Slide 30: Appendix
Appendix = OLD NATIONAL BANCORP
Slide 31: Remaining Loan Discount
31 Remaining Loan Discount $86 $71 $58 12/31/23 12/31/24 12/31/25 Accretion on acquired loans and borrowings • $10 million recognized in 4Q22 • $22 million contractual for 2023 Discount on acquired loan portfolio • $102 million remaining as of 12/31/2022 • $80 million related to First Midwest Projec
Slide 32: Commitment to Strong Corporate Governance
32 Commitment to Strong Corporate Governance Position or Salary Target Ownership Guidelines Chief Executive Officer 5X salary in stock or 200,000 shares Chief Operating Officer 4X salary in stock or 100,000 shares Salary equal to or greater than $250,000 3X salary in stock or 50,000 shares Salary be
Slide 33: 2021 Executive Compensation
33 2021 Executive Compensation Short Term Incentive Plan Performance Measure Weight Corporate EPS 60% ROATCE 20% Efficiency Ratio 20% Long Term Incentive Plan Performance Measure Weight Performance-based (50% TSR & 50% ROATCE) 75% Service-based 25% • Tied to long term shareholder value
Slide 34: Board of Directors
34 Board of Directors Director Market Background Barbara A. Boigegrain Chicago, IL Former CEO and General Secretary of Wespath Benefits and Investments Thomas L. Brown Chicago, IL Former Senior Vice President and CFO of RLI Corp. (NYSE), a specialty insurer serving diverse niche property, casualty a
Slide 35: Non-GAAP Reconciliation
35 Non-GAAP Reconciliation $ in millions, except per share data 1 Tax-effect calculations use management's estimate of the full year FTE tax rates (federal + state) 4Q21 3Q22 4Q22 Net interest income (FTE) $150.2 $381.5 $396.5 Add: Fee income 51.5 80.4 165.0 Total revenue (FTE) $201.7 $461.9 $561.5
Slide 36: Non-GAAP Reconciliation
36 Non-GAAP Reconciliation 4Q21 1Q22 2Q22 3Q22 4Q22 Net interest income (FTE) $150.2 $226.6 $341.8 $381.5 $396.5 Add: Fee income 51.5 65.2 89.1 80.4 165.0 Total revenue (FTE) $201.7 $291.8 $430.9 $461.9 $561.5 Less: Noninterest expense (131.4) (215.6) (277.5) (262.4) (282.7) Pre-Provision Net Revenu
Slide 37: Non-GAAP Reconciliation
37 Non-GAAP Reconciliation 4Q21 1Q22 2Q22 3Q22 4Q22 Noninterest expense $131.4 $215.6 $277.5 $262.4 $282.7 Less: Intangible amortization (2.6) (4.8) (7.2) (7.1) (6.8) Noninterest expense, excluding intangible amortization 128.8 210.8 270.3 255.3 275.9 Adjustments: Less: Merger related charges1 (6.7)
Slide 38: Non-GAAP Reconciliation
38 Non-GAAP Reconciliation $ in millions 1 Tax-effect calculations use management's estimate of the full year FTE tax rates (federal + state) 2 Certain reclassifications were made to conform to the current presentation 4Q21 1Q22 2Q22 3Q22 4Q22 Net interest income $146.8 $222.8 $337.5 $376.5 $391.1 F
Slide 39: Non-GAAP Reconciliation
39 Non-GAAP Reconciliation $ in millions 1 Certain reclassifications were made to conform to the current presentation 3Q21 4Q21 1Q22 2Q22 4Q22 Old National commercial loans $9,772 $19,962 $20,721 $21,539 $21,966 Less: Old National PPP loans (169) (205) (82) (44) (33) Legacy First Midwest commercial
Slide 40: Non-GAAP Reconciliation
40 Non-GAAP Reconciliation $ in millions, except per share data 1 Tax-effect calculations use management's estimate of the full year FTE tax rates (federal + state) 4Q22 GAAP shareholders’ common equity $4,884.9 Less: Goodwill and intangible assets (2,125.1) Tangible shareholder’s common equity $2,7
Slide 41: Non-GAAP Reconciliation
41 Non-GAAP Reconciliation $ in millions, except per share data 2016 2019 Net interest income (FTE) $424.0 $617.2 Add: Fee income 252.8 199.3 Total revenue (FTE) $676.8 $816.5 Less: Noninterest expense 454.1 508.5 PPRN $222.7 $308.0 Adjustments: Debt securities gains $(5.8) $(1.9) Gain on sale of in
Slide 42: Non-GAAP Reconciliation
42 Non-GAAP Reconciliation $ in millions, except per share data 2016 2019 Net interest income (FTE) $424.0 $617.2 Add: Fee income 252.8 199.3 Total revenue (FTE) $676.8 $816.5 Less: Provision for credit losses (0.9) (4.7) Less: Noninterest expense (454.1) (508.5) Income before income taxes $221.8 $3
Slide 43: Non-GAAP Reconciliation
43 Non-GAAP Reconciliation $ in millions, except per share data 2016 2019 Net income applicable to common shares $134.3 $238.2 Add: Intangible amortization (net of tax)1 8.1 12.8 Tangible net income applicable to common shares $142.4 $251.0 Less: Debt securities gains (net of tax)1 $(3.8) $(1.4) Les
Slide 44: Peer Group
44 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 Bank CADE Comerica Incorporated CMA F.N.B. Corporation FNB First Horizon Corporation
Slide 45: Old National Investor Relations Contact
45 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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