Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Q2 2023 Earnings Presentation
27 slides from Old National Bancorp's earnings presentation, Jul 25, 2023
Slide 1: 2nd Quarter 2023 Financial Review
2nd Quarter 2023 Financial Review July 25, 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 Second-Quarter 2023 Highlights
Strong Second-Quarter 2023 Highlights Reported Adjusted1 Key Performance Drivers EPS $0.52 $0.54 ▪ Increased net interest income vs. 1Q23 Net Income $151 $156 ▪ Granular, peer-leading deposit franchise Return on Average Assets 1.29% 1.33% ▪ Growth in total deposits of 4% and core 1 Return on Average
Slide 5: Liquid, Well-Capitalized Balance Sheet
Liquid, Well-Capitalized Balance Sheet % Change End of Period Balances 2Q23 1Q23 2Q22 2Q23 vs. 1Q23 2Q23 vs. 2Q22 Available-for-sale securities, at fair value $6,501 $6,687 $7,568 (3)% (14)% Held-to-maturity securities, at amortized cost $3,055 $3,071 $3,084 (1)% (1)% Total loans1 $32,547 $31,833 $2
Slide 6: Total Loans and Earning Assets
Total Loans and Earning Assets Total Loans1 Up 10% YoY $29,580 $31,833 $32,547 Total loans1 • Disciplined growth of $714 million,+2% from 1Q23 5.42% 5.08% 5.75% • Commercial growth of $581 million, +3% 5.42% 4.54% 4.01% • Sold ~$300 million of C&I loans, at par, in 4.01% 3.64% 2Q23 • Total consumer2
Slide 7: Peer-Leading Deposit Franchise
Peer-Leading Deposit Franchise Period End Total Deposits $35.5 $34.9 $36.2 $3.4 $2.8 $3.3 $12.5 $14.0 $14.8 Key Performance Drivers • End of period deposits up 4%; core deposits $19.6 $18.1 $18.1 up 2% • Reflect continuing effective competition for 2Q22 1Q23 2Q23 new client relationships Retail Comm
Slide 8: Second-Quarter 2023 Results
Second-Quarter 2023 Results % Change 2Q23 1Q23 2Q22 2Q23 vs. 1Q23 2Q23 vs. 2Q22 Net Interest Income (FTE)1,2 $388 $387 $342 —% 13% 3 Provision for credit losses 15 13 9 15% 67% 1 Adjusted noninterest income 82 76 89 8% (8%) Net securities losses — (5) — N/M N/M 1 Adjusted noninterest expense 241 235
Slide 9: Net Interest Income & Net Interest Margin
1 Net Interest Income & Net Interest Margin 1 Net Interest Income Up 27 bps YoY $387 $388 $342 Key Performance Drivers • Net interest income1 increased vs. 1Q23 3.69% • NIM1 decreased 9 bps vs. 1Q23 3.60% • Strong low-cost deposit franchise; total deposit costs of 115 bps • Low cycle to date total d
Slide 10: Noninterest Income
Noninterest Income 2Q23 1Q23 2Q22 Key Performance Drivers Bank Fees $29 $27 $32 • 8% higher due to: • Bank fees, increased client Wealth Fees 27 27 28 transactions • Other income driven by company- owned life insurance income, recovery Mortgage Fees 4 3 6 of an other asset and derivative valuations
Slide 11: Noninterest Expense
Noninterest Expense 2Q23 1Q23 2Q22 Key Performance Drivers • 2Q23 adjusted noninterest expense1 well- Salary & Employee Benefits $131 $126 $140 controlled • Salaries & employee benefits higher Occupancy & Equipment 34 34 33 resulting from $5 million of year-to-date performance-driven incentive accru
Slide 12: Credit Continues to be Stable
Credit Continues to be Stable Asset Quality Net Charge-Offs 0.78% 0.74% 0.91% 0.21% 0.13% 0.05% 0.02% 0.06% 0.17% 0.14% 0.12% 0.00% 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 30+ Day Delinquency Non-Performing Loans ONB ONB, excluding PCD Allowance for Credit Losses 1 $6 $338 $333 Key Performance Drivers $(1) •
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 CRE Non-Owner Consumer 4% Occupied 31% of Total Loans Office 4% of Total Loans Residential Real Estate Multifamily 24% 13% Suburban and other Central 2% Business $32.5 CRE Non- Owner $10.0 Office $1.4 District billion 4% billion Occupied Other bill
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 >18 Months $10.0 <18 Months >4% $2.2 $0.3 Other <4% billion 78% billion 22% billion Multifam
Slide 16: Commercial Loan Production
Commercial Loan Production 2Q23 Total Production Other CRE Non-Owner $5 Occupied 38% of Total Production Corporate $528 Multifamily 13% CRE - Non-OO $1.9 $773 $733 Office billion Other million 4% 8% Business Retail Warehouse/ 1% Banking Industrial $428 12% CRE - OO $251 Production & Pipeline • $1.9
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 $955k 5.1% of total deposits; weighted average tenure > 30 years; ~75% collateralized o
Slide 18: Strong Capital Position
Strong Capital Position 2Q231 1Q23 2Q22 Key Performance Drivers • 2Q23 ratios increased as strong retained CET1 capital to RWA 10.14% 9.98% 9.90% earnings more than offset loan growth and merger-related charges Tier 1 capital to RWA 10.79% 10.64% 10.63% • HTM securities pre-tax unrealized losses of
Slide 19: Guidance
Guidance Lo OLD NATIONAL BANCORP’
Slide 20: Outlook
Outlook Category 2Q23 2023 Guidance • Mid to high single-digit growth for the full-year 2023; Period End Loans1 $32.5 billion moderating second half of 2023 Period End Deposits $36.2 billion • At or above industry deposit growth • Net Interest Income expected to be 9-12% higher than FY2022; bias tow
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 • $7 million recognized in 2Q23 $20 • $10 million contractual for remainder of 2023 $18 $10 3Q-4Q 2023 2024 2025 1 Projected Remaining Loan Discount Discount on acquired loan portfolio $83 •
Slide 23: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2Q22 1Q23 2Q23 Net interest income (FTE) $341.8 $387.2 $388.0 Add: Fee income 89.1 70.7 81.6 Total revenue (FTE) $430.9 $457.9 $469.6 Less: Provision for credit losses (9.2) (13.4) (14.8) Less: Noninterest expense (277.4) (250.7) (246.6) Income before income taxes $144.3 $193
Slide 24: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2Q22 1Q23 2Q23 Noninterest income $89.1 $70.7 $81.6 Less: Debt securities losses 0.1 5.2 0.0 Adjusted noninterest income $89.2 $75.9 $81.6 Noninterest expense $277.5 $250.7 $246.6 Less: Louisville expenses1 0.0 0.0 (3.4) Less: Merger-related charges (36.6) (14.6) (2.4) Less:
Slide 25: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2Q22 1Q23 2Q23 Net interest income $337.5 $381.6 $382.2 FTE adjustment 4.3 5.6 5.8 Net interest income (FTE) $341.8 $387.2 $388.0 Average earnings assets $41,003.3 $41,941.9 $43,097.2 Net interest margin 3.29% 3.64% 3.55% Net interest margin (FTE) 3.33% 3.69% 3.60% Net income
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2Q22 1Q23 2Q23 Shareholders' equity $5,078.8 $5,277.4 $5,292.1 Less: Preferred equity (243.7) (243.7) (243.7) Shareholders' common equity 4,835.1 5,033.7 5,048.4 Less: Goodwill and other intangible assets (2,131.8) (2,118.9) (2,112.9) Tangible shareholders' common equity 2,70
Slide 27: 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