Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Q4 2022 Earnings Presentation
29 slides from Old National Bancorp's earnings presentation, Jan 24, 2023
Slide 1: 4th Quarter 2022 Financial Review
4th Quarter 2022 Financial Review January 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. 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: Fourth-Quarter 2022 Highlights
Fourth-Quarter 2022 Highlights EPS / Net Income Adj. EPS1 / Net Income Adj. ROA1 $0.67 / $0.56 / $164 million 1.46% $197 million 10% Increase QoQ Adj. ROATCE1 Total Loan Growth1,2 Adj. Eff. Ratio1 26.5% 8% 47.5% ▪ Strong net interest margin (FTE)1 expansion of 14 bps, reflective of robust loan growt
Slide 5: 2022 Highlights
2022 Highlights EPS / Net Income Adj. EPS1 / Net Income Adj. ROA1 $1.50 / $1.96 / $541 million 1.28% $414 million 13% Increase YoY Adj. ROATCE1 Total Loan Growth1,2 Adj. Eff. Ratio1 21.1% 12% 51.6% ▪ Completed transformational merger with First Midwest Bancorp, Inc. on February 15, 2022 and systems
Slide 6: Fourth-Quarter 2022 Results
Fourth-Quarter 2022 Results Performance Drivers - Impacted by Merger 4Q22 3Q22 4Q21 Completed Mid 1Q22 End of period total loans1 $31,091 $30,485 $13,432 • Strong total loan growth1 of 8%, annualized • Sale of $382 million of HSA, client deployment of excess End of period deposits 35,001 36,054 18,5
Slide 7: Total Loans and Earning Assets
Total Loans and Earning Assets Total Loans1 Up 12% YoY Historical Combined 2 Total loans1 $30,485 $31,091 $29,472 • Growth of $606 million, +8% annualized $27,792 $28,131 5.08% • Commercial growth of $438 million, +8% 4.54% annualized 4.01% • Total consumer3 growth of $168 million, 3.64% 3.56% +8% a
Slide 8: Commercial Loans
Commercial Loans Total Commercial Loans1 Up 13% YoY Historical Combined 2 $21,495 $21,933 $20,639 Total commercial loans1 $19,422 $19,757 • Growth of $438 million, +8% annualized • Well distributed across markets and products • +8% commercial and industrial • +7% commercial real estate 4Q21 1Q22 2Q2
Slide 9: Commercial Loan Production
Commercial Loan Production Strong $2.7 billion of production throughout the entire commercial loan portfolio and across the combined expanded market footprint Production by Product Line Production by RM Location $64 $116 $199 $539 $168 $92 $1,194 $1,530 $364 $363 $211 $190 $384 CRE - Non-OO CRE - OO
Slide 10: Deposits
Deposits Total Deposits Historical Combined 1 $35,813 $35,843 $36,054 $35,551 $35,391 $2,393 $35,001 Average deposit balances down $2,776 1%, excluding HSA sale • Sale of $382 million of HSAs in November $26,905 $12,400 • Seasonal public funds outflows $11,931 • Client deployment of excess liquidity
Slide 11: Net Interest Income & Net Interest Margin
1 Net Interest Income & Net Interest Margin 1 Net Interest Income Key Performance Drivers $396 $382 $10 • Net interest income increased $14 million $2 $342 $25 • NIM increased 14 bps vs. 3Q22 $2 $35 • Robust loan growth2 of +8% annualized $227 • Commercial of +8% annualized $4 $16 • Total consumer3
Slide 12: Asset Liability Management
Asset Liability Management 1 Net Interest Margin Sensitivity Projection Well-positioned for Rising Rates Actual Range 3.85% • 56% of loans are variable/floating-rate 3.71% 3.74% 3.72%-3.77% 0.10% 0.07% • 88% reprice in 3 months or less 0.25% 3.33% • Peer leading deposit franchise 0.34% • Noninterest
Slide 13: Noninterest Income
Noninterest Income Adjusted Noninterest Income 1 Key Performance Drivers $89 • Lower capital markets $81 • Bank fees impacted by service charge $16 $74 program enhancements and sale of HSAs $11 $65 $7 $10 • Mortgage banking continues to be $9 $10 $6 $5 impacted by higher rate environment; $5 $51 $4
Slide 14: Noninterest Expense
Noninterest Expense 1 Adjusted Noninterest Expense Key Performance Drivers • 4Q22 adjusted noninterest expense well $239 $237 $230 controlled $38 $41 $42 • Salaries & Employee benefits lower $173 $28 $24 $24 $33 $22 • Merger cost saves fully achieved in $123 $33 $34 $22 4Q22 (annualized) $19 $26 $14
Slide 15: Credit
Credit 30+ Day Delinquency Net Charge-offs 0.46% 0.10% 0.05% 0.22% 0.06% 0.05% 0.19% 0.02% 2018Y 2019Y 2020Y 2021Y 1Q22 2Q22 3Q22 4Q22 2018Y 2019Y 2020Y 2021Y 1Q22 2Q22 3Q22 4Q22 ONB ONB, excluding PCD Peer Average ONB Peer Average Non-Performing Loans Key Performance Drivers • Net charge-offs of 5
Slide 16: Allowance for Credit Losses
Allowance for Credit Losses 1 Allowance for Credit Losses $10 $336 $328 $4 Key Model Inputs $(6) • Economic assumptions (upper bound) • GDP (-3.6%) • Unemployment (7.2%) • BBB Spread / 10Y Treasury (2.6x) • Commercial Asset Quality Ratings • Consumer Credit Bureau Score • Loan To Value Allowance Por
Slide 17: Capital
Capital Key Performance Drivers 4Q21 1Q22 2Q22 3Q22 4Q221 • 4Q22 ratios up as retained earnings including the gain on the sale of HSAs were partly Capital Ratios: offset by strong loan growth • Total capital impacted by the CET1 capital to RWA 12.04 % 10.04 % 9.90 % 9.88 % 10.03 % phase-out of ~$2 m
Slide 18: Outlook
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 income and NIM, excluding accretion, should be consistent with projection on slide 12 Net Interest Margin • C
Slide 19: Appendix
Appendix oS OLD NATIONAL BANCORP?’
Slide 20: Projected Acquisition Accounting Impact
Projected Acquisition Accounting Impact 1,2 Contractual Accretion Accretion on acquired loans and borrowings • $10 million recognized in 4Q22 $22 $21 • $22 million contractual for 2023 $18 2023 2024 2025 1 Projected Remaining Loan Discount Discount on acquired loan portfolio $86 • $102 million remai
Slide 21: Non-GAAP Reconciliation
Non-GAAP Reconciliation 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 Less: Provision for credit losses 1.3 (15.5) (11.4) Less: Noninterest expense (131.4) (262.4) (282.7) Income before income taxes $71.6 $184.0
Slide 22: Non-GAAP Reconciliation
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 Revenue (
Slide 23: Non-GAAP Reconciliation
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) (4
Slide 24: Non-GAAP Reconciliation
Non-GAAP Reconciliation 4Q21 1Q22 2Q22 3Q22 4Q22 Net interest income $146.8 $222.8 $337.5 $376.5 $391.1 FTE adjustment 3.4 3.8 4.3 5.0 5.4 Net interest income (FTE) $150.2 $226.6 $341.8 $381.5 $396.5 Average earnings assets $21,670.7 $31,483.6 $41,003.3 $41,180.0 $41,206.7 Net interest margin 2.71 %
Slide 25: Non-GAAP Reconciliation
Non-GAAP Reconciliation 4Q21 1Q22 2Q22 3Q22 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 loans1 10,050 0 0 0 0 Less: Legacy First Midwest PPP loans (231) 0 0 0 0 Historical combined c
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2022 Net interest income (FTE) $1,346.4 Add: Fee income 399.7 Total revenue (FTE) $1,746.1 Less: Provision for credit losses (144.8) Less: Noninterest expense (1,038.2) Income before income taxes $563.1 Less: Income taxes (FTE) 134.9 Net income $428.2 Less: Preferred dividend
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2022 Noninterest Expense $1,038.2 Less: Intangible amortization (25.9) Noninterest expense, excluding intangible amortization 1,012.3 Adjustments: Less: Merger related charges1 (120.9) Less: Property optimization (26.8) Less: Amortization of tax credits investments (11.0) Adj
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2022 Net income applicable to common shares $414.2 Add: Intangible amortization, net of tax1 19.7 Adjusted tangible net income applicable to common shares $433.9 Total adjustments, net of tax $126.8 Adjusted tangible net income applicable to common shares $560.7 Average GAAP
Slide 29: 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