Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Q3 2024 Earnings Presentation
46 slides from Old National Bancorp's earnings presentation, Nov 6, 2024
Slide 1: 3rd Quarter 2024 Investment Thesis
Exhibit 99.1 3rd Quarter 2024 Investment Thesis November 6, 2024
Slide 2: Executive Summary
Executive Summary Slides 5 —14
Slide 3: 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 4: 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 5: Corporate Strategy
Corporate Strategy Old National’s primary strategic objective is to be a top quartile performing “basic bank” that is a primary, trusted partner to our clients in the communities we serve, and a highly respected, highly valued employer that continually empowers our team members to grow, develop and
Slide 6: Snapshot of Old National
Snapshot of Old National Summary1 Company Description Headquarters Evansville, IN • 6th largest commercial bank headquartered in Market Cap $6,111 Midwest - top 30 banking company based in the U.S. by assets P/ TBV 160 % • 280 branches and 359 ATMs Dividend Yield 2.9 % LTM Average Daily Volume (Actu
Slide 7: The Best of Offense and Defense
The Best of Offense and Defense OFFENSE DEFENSE Top quartile 3Q2024 Quality, peer-leading deposit franchise financial metrics • Growth in total deposits of 8.5% annualized 1 • 16.8% Adj. ROATCE • Low total deposit costs of 225 bps • 51.2% Adj. Efficiency. Ratio1 • 75% of core deposits have tenure >5
Slide 8: Low-Risk Balance Sheet Relative to Peers
Low-Risk Balance Sheet Relative to Peers Risk-Weighted Assets / Total Assets1 3 and 15-Year Cumulative NCOs / Avg. Loans2 93% 87% 79% 76% 6.19% 72% 1.58% 0.13% 0.32% Lower Average Upper Peer Max ONB 3-Year 15-Year Quartile Quartile 3 ONB Peer Average Financial data as of or for the quarter ended 9/3
Slide 9: ONB is Building Capital Faster than Peers
1 ONB is Building Capital Faster than Peers ROA ROATCE 2024E Payout Ratio2,3 HWC 1.3% COLB 18.9% VLY 63% SNV 1.3% SNV 18.1% COLB 57% WBS 1.2% WBS 17.2% CMA 56% COLB 1.2% CMA 16.5% ASB 42% ASB 1.1% ZION 16.2% FHN 41% CADE 1.1% ASB 15.9% CADE 39% PNFP 1.1% HWC 15.9% ZION 36% WTFC 1.1% ONB 15.7% SNV 36
Slide 10: Strong TBV Per Share Growth History
Strong TBV Per Share Growth History 13% R of ’2 4 CAG - 3Q f 7% 2022 $11.97 Ro C A G $11.43 $11.70 21 $11.00 $11.10 $11.05 6 - 20 201 $10.35 $9.42 $9.00 $8.30 $8.37 $7.62 TBV Per Share CAGR (%)1 Old National KRX 3-Year 6.5% 6.7% 5-Year 7.1% 6.5% 5 6 7 8 9 0 1 2 3 '24 '24 '24 201 201 201 201 201 202
Slide 11: ONB has Dramatically Enhanced Franchise Value
ONB has Dramatically Enhanced Franchise Value 2013 2024E Added Scale Assets ($B) $10 $54 + $44B in assets AUM ($B) $6 $311 + $34B in Deposits Core EPS 2 $1.05 $1.79 + $25B in AUM TBV Per Share $7.85 $12.33 New Markets3 Efficiency Ratio Chicago ~$16B in Deposits #9 Mkt Share 67% 55% Minneapolis ~$4B
Slide 12: Peer-Leading Deposit Franchise
Peer-Leading Deposit Franchise Period End Total Deposits Key Performance Drivers • Period end deposits up $847 million, +8.5% $37.3 $40.0 $1.8 $40.8 $1.7 annualized; core deposits up 10.1% annualized $1.2 $3.9 $4.1 $4.2 • Increases in commercial and community $13.5 $14.0 $14.9 deposits and seasonal
Slide 13: Net Interest Income Outlook
Net Interest Income Outlook Quarterly NII Outlook Managing to Neutral Rate Risk Position • 55% of loans are variable/floating-rate ~ ~ $400 • ~$4.8 billion fixed-rate loans and securities ~ $398 $395 expected to reprice over NTM • 34% of total deposits are exception priced at an average rate of 3.92
Slide 14: Outlook
Outlook 4Q24 Outlook Full-Year 2024 Outlook EOP loans up 2% - 4%, annualized up 5% - 7%, excl. CapStar (Including HFS) Net interest income (FTE basis)1 ~$400 million ~$1,555 million Noninterest income1 ~$86 million ~$345 million Noninterest expense1 ~$260 million ~$1,030 million Net charge-off ratio
Slide 15: Financial Details
Financial Details Data as of September 30, 2024
Slide 16: Strong Third-Quarter 2024 Highlights
Strong Third-Quarter 2024 Highlights Key Performance Drivers Reported Adjusted1 EPS $0.44 $0.46 ▪ Granular, peer-leading deposit franchise • Core deposits up 10.1% annualized Net Income $140 $147 • NIB deposits grew nearly $100 million • Low total deposit costs of 225 bps Return on Average Assets 1.
Slide 17: Liquid, Well-Capitalized Balance Sheet
Liquid, Well-Capitalized Balance Sheet % Change End of Period Balances 3Q24 2Q24 3Q23 3Q24 vs. 2Q24 3Q24 vs. 3Q23 Available-for-sale securities, at fair value $7,432 $7,105 $6,415 5% 16% Held-to-maturity securities, at amortized cost $2,969 $2,986 $3,028 (1)% (2)% Total loans1 $36,463 $36,217 $32,70
Slide 18: Earning Assets
Earning Assets Total Loans1 Total loans1 Up 12% YoY • Disciplined growth of $246 million, +2.7% $36,217 $36,463 $32,700 annualized from 2Q24 • Commercial growth of $248 million, +4.1% annualized 6.36% • $1.7 billion total commercial production 6.24% • 77% of commercial production is floating; 5.98%
Slide 19: Third-Quarter 2024 Results
Third-Quarter 2024 Results % Change 3Q24 2Q24 3Q23 3Q24 vs. 2Q24 3Q24 vs. 3Q23 Net Interest Income (FTE)1,2 $398 $395 $381 1% 4% Provision for credit losses - excluding CECL Day 1 non-PCD provision expense 29 21 19 38% 53% Provision for credit losses - Current Expected Credit Losses (“CECL”) Day 1 n
Slide 20: 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 loan $395 $398 growth as well as higher asset yields and $381 accretion • NIM1 decreased modestly 1 bps vs. 2Q24 3.49% • Strong low-cost deposit franchise; total de
Slide 21: Noninterest Income
Noninterest Income 3Q24 2Q24 3Q23 Key Performance Drivers Bank Fees $32 $30 $29 • Increases in majority of line items; growth in bank fees, mortgage, capital markets, Wealth Fees 29 29 27 and other income Mortgage Fees 8 7 5 • 3Q24 mortgage activity • Production2 was $439 million compared Capital Ma
Slide 22: Noninterest Expense
Noninterest Expense 3Q24 2Q24 3Q23 Key Performance Drivers • 3Q24 adjusted noninterest expense1 Salary & Employee Benefits $142 $145 $127 well-controlled • Includes $3 million of market fluctuations Occupancy & Equipment 36 35 34 related to compensation plans • Adjusted efficiency ratio1 of 51.2% Te
Slide 23: Credit Quality
Credit Quality Asset Quality Net Charge-Offs 1.22% 0.25% 0.94% 0.19% 0.80% 0.16% 0.24% 0.16% 0.11% 0.18% 0.16% 0.26% 3Q23 2Q24 3Q24 3Q23 2Q24 3Q24 30+ Day Delinquency Non-Performing Loans ONB ONB, excluding PCD Key Performance Drivers Allowance for Credit Losses 1 • NCOs of 16 bps excluding 3 bps im
Slide 24: 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)% 2017Y 2018Y 2019Y 2020Y 2021Y 2022Y 2023Y 1Q24 2Q24 3Q24 2017Y 2018Y 2019Y 2020Y 2021Y 2022Y 2023Y 1Q24 2Q24 3Q24 1 2 1 ONB Peer Average ONB Peer Average Non-Performing Loan
Slide 25: Conservative Lending Limit/Risk Grades
Conservative Lending Limit/Risk Grades Borrower Asset Quality Rating In-House Direct Lending Limit (Risk Grades) 0 - Investment Grade $100.0 1 - Minimal Grade $100.0 2 - Modest Grade $87.5 3 - Average Risk $75.0 4 - Monitor $60.0 5 - Weak Monitor $45.0 6 - Watch $25.0 Borrower Asset Quality Rating (
Slide 26: Diversified Loan Portfolio
Diversified Loan Portfolio CRE Non-Owner Occupied $11.9 billion Office Total Loans 4% $36.4 billion Warehouse Multifamily Industrial 5% 14% Total Loans By State Other 6% IL $8.6 24% Consumer Retail 8% 4% IN 5.4 15% MN 3.9 11% CRE Non- Residential Owner Real Estate WI 3.7 10% Occupied 18% 33% MI 2.9
Slide 27: 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 $3.7 <4% billion >4% billion Multifamily Maturing CRE NOO Loans • Manageable volume of loans subject to refinance risk • Predominantly multifamil
Slide 28: CRE Non-Owner Occupied - Office
CRE Non-Owner Occupied - Office Our Lending Looks More Like This ...Less Like This • Total office portfolio of $1.6 billion; average loans size is $2.8 million • Largest exposure of ~$50 million • 95% located in bank’s footprint, diversified by submarket • 42% of portfolio is medical office (“MOB”)
Slide 29: CRE Non-Owner Occupied - Multifamily
CRE Non-Owner Occupied - Multifamily Our Lending Looks More Like This ...Less Like This • Total multifamily portfolio of $5.6 billion; average loans size is $5.1 million • Largest exposure of ~$60 million • 85% located in bank’s footprint • Continued strong demand and rental rates in core markets (I
Slide 30: Strong Capital Position
Strong Capital Position 3Q24 2Q24 3Q23 Key Performance Drivers • Strong retained earnings drive capital CET1 capital to RWA 11.00% 10.73% 10.41% • HTM securities pre-tax unrealized losses of $365 million (~$274 million net of tax) Tier 1 capital to RWA 11.60% 11.33% 11.06% • No shares of common stoc
Slide 31: Appendix
Appendix Lo OLD NATIONAL BANCORP’
Slide 32: Granular, Long-Tenured Deposit Base
Granular, Long-Tenured Deposit Base Average Core Account Balance 3 Deposit Highlights • Granular low-cost deposit franchise • Top 20 deposit clients represents ~7% of $1.5mm total deposits; weighted average tenure > $1.1mm 28 years; ~70% collateralized or insured • 80% of accounts have balances <$25
Slide 33: Projected Acquisition Accounting Impact
Projected Acquisition Accounting Impact 1,2 Contractual Accretion Accretion on acquired loans and borrowings • $16 million recognized in 3Q24 $42 • $13 million contractual for remainder of 2024 $34 $13 4Q 2024 2025 2026 1 Projected Remaining Loan Discount Discount on acquired loan portfolio $163 • $
Slide 34: Commitment to Strong Corporate Governance
Commitment to Strong Corporate Governance • Stock ownership guidelines have been established for executive officers as follows: 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 Sal
Slide 35: Commitment to Excellence
Commitment to Excellence Trade names, trademarks and service marks of other companies appearing in this presentation are the property of their respective holders. 35
Slide 36: Commitment to Corporate Social Responsibility
Commitment to Corporate Social Responsibility Old National’s 2023 Environmental, Social and Governance (“ESG”) Report showcases our commitment to: • Strong risk management and corporate governance principles • Putting our clients at the center of all we do • Investing in our team members • Diversity
Slide 37: ESG At A Glance - 2023
ESG At A Glance - 2023 $564 MILLION in Community Reinvestment Act (CRA)-eligible community development loans that supported affordable housing, economic development, community services for low- and moderate-income people, and revitalization/stabilization of low- and moderate-income communities woe $
Slide 38: 2023 Executive Compensation
2023 Executive Compensation • Tied to long-term shareholder value Short-Term Incentive Compensation Performance Measure Weight Adjusted EPS 100% Pre-determined formulaic modifiers for relative deposit cost and deposit growth versus banks in the KRX Index Long-Term Equity Compensation Performance Mea
Slide 39: Board of Directors and Corporate Governance
Board of Directors and Corporate Governance 93% Independent 47% Female and minority directors Tenure1 80% Other public company Lead Independent Since 2016, Rebecca Skillman has 20% experience Director served as Lead Independent Director 0-5 years 33% 6-10 years Annual Elected each year for one- Stoc
Slide 40: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q24 2Q24 3Q23 Net interest income $391.8 $388.4 $375.1 FTE Adjustment 6.1 6.3 5.8 Net interest income (FTE) $397.9 $394.8 $380.9 Add: Fee income 94.1 87.3 81.0 Total revenue (FTE) $492.0 $482.1 $461.9 Less: Provision for credit losses (28.5) (36.2) (19.1) Less: Noninterest e
Slide 41: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q24 2Q24 3Q23 Noninterest income $94.1 $87.3 $81.0 Less: Debt securities losses 0.1 0.0 0.2 Adjusted noninterest income $94.2 $87.3 $81.2 Noninterest expense $272.3 $283.0 $244.8 Less: Merger-related charges (6.8) (19.4) (6.3) Less: Separation expense (2.6) 0.0 0.0 Adjusted
Slide 42: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q24 2Q24 3Q23 Noninterest Expense $272.3 $283.0 $244.8 Less: Intangible amortization (7.4) (7.4) (6.0) Noninterest expense, excluding intangible amortization 264.9 275.6 238.8 Adjustments: Less: Merger-related charges (6.8) (19.4) (6.3) Less: Separation expense (2.6) 0.0 0.0
Slide 43: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q24 2Q24 3Q23 Net income applicable to common shares $139.8 $117.2 $143.8 Add: Intangibles amortization, net of tax 5.5 5.6 4.6 Tangible net income applicable to common shares $145.3 $122.8 $148.4 Total adjustments, net of tax $7.4 $26.8 $5.4 Adjusted net income applicable t
Slide 44: Non-GAAP Reconciliation
Non-GAAP Reconciliation 3Q24 2Q24 3Q23 Shareholders' equity $6,367.3 $6,075.0 $5,239.5 Less: Preferred equity (243.7) (243.7) (243.7) Shareholders' common equity 6,123.6 5,831.3 4,995.8 Less: Goodwill and other intangible assets (2,305.1) (2,306.2) (2,106.8) Tangible shareholders' common equity $3,8
Slide 45: 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
Slide 46: Old National Investor Relations Contact
Old National Investor Relations Contact Additional information can be found on the Investor Relations web pages at www.oldnational.com Investor Inquiries: Lynell J. Durchholz, CPA SVP - Director of Investor Relations 812-464-1366 lynell.durchholz@oldnational.com 46