Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (August 2022)
45 slides from Old National Bancorp's investor presentation, Aug 12, 2022
Slide 1: Investment Thesis
Investment Thesis FINANCIAL DATA AS OF June 30, 2022 DATED: August 2022 Exhibit 99.1
Slide 2: Executive Summary
2 Executive Summary Slides 5 — 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, assets, c
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: Commitment to Excellence
Commitment to Excellence Corporate Engagement ETHISPHERE AWARO OF ETHICS INSIDE CERTIFICATION WWW.ETHISPHERE.COM 11-TIME HONOREE fees | BEST PLACE TO WORK FOR [Yi fey | DISABILITY INCLUSION [4 100% DISABILITY EQUALITY INDEX NATIONAL ORGANIZATION ON: LEADING | DISABILIT DISABILITY Josssuiry = OLD NAT
Slide 6: Commitment to Corporate Social Responsibility
6 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 7: Strengthening and Supporting Our Communities
ae Strengthening and Supporting Our Communities in Community Reinvestment Act (CRA)-eligible community development loans that supported affordable housing, ‘economic development and community revitalization/stabilization S189 in Affordable Housing Program (AHP) grants through the Federal Home Loan B
Slide 8: Snapshot of Old National
8 HELOC 4% CRE Non- Owner Occupied 29% CRE Owner Occupied 11% C&I 30% Residential Real Estate 20% Other Consumer 6% Snapshot of Old National $ in millions, except as noted 1 Market data as of 08/11/2022 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 $32 2016 2019 2023E $11 $15 $36 2016 2019 2023E $202 $326 $862 2016 2019 2023E $0.95 $1.45 $2.12 2016 2019 2023E 1.71% 1.88% 2.05% 2016 2019 2023E 12% 16% 20% 2016 2019 2023E Loans ($ in billions) Deposits ($ in billions) Adj. PPNR2 ($ in millions)
Slide 10: Creating 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 Creating a Premier Midwest Banking Franchise Completed February 15, 2022 - Next Steps (ONB + FMB
Slide 11: Meaningful Upside
11 Meaningful Upside Key Performance Catalysts1 • Record commercial pipeline of $5.9 billion • Asset sensitivity better than peers • Deposit betas better than peers (22% last cycle) • ~$109 million of merger cost saves • Timely branding and systems conversion • Consistent track record of delivering
Slide 12: Quality Low-Cost Deposit Franchise
12 0.19% 0.32% 0.48% 0.18% 0.06% 0.06% 0.30% 0.54% 0.80% 0.29% 0.10% 0.08% ONB Peer Median 2017Y 2018Y 2019Y 2020Y 2021Y 1Q22 2Q22 Quality Low-Cost Deposit Franchise Cost of Deposits $12.4 $14.2 $14.5 $16.9 $18.6 $35.6 $35.5 $3.7 $4.0 $4.1 $5.6 $6.3 $12.5 $12.4$8.7 $10.2 $10.4 $11.3 $12.3 $23.1 $23.
Slide 13: Granular & Diversified Loan Portfolio
13 Granular & Diversified Loan Portfolio1,2 $ in billions As of 06/30/2022 1 Includes loans held for sale 2 Excludes PPP loans $11.1 $12.3 $12.2 $12.9 $13.5 $28.2 $29.6 $2.7 $3.2 $2.9 $3.0 $3.2 $8.4 $9.0$4.4 $5.0 $5.2 $5.9 $6.4 $11.3 $11.8 $4.0 $4.1 $4.1 $4.0 $3.9 $8.5 $8.8 C&I CRE Consumer 2017Y 20
Slide 14: Outlook
14 Outlook Category Outlook Commercial Loans • Record pipeline heading into 3Q bodes well for future growth, albeit at a potentially slower pace than 2Q given client sentiment Net Interest Income / Net Interest Margin • Net interest income and NIM, excluding PPP and accretion, should continue to exp
Slide 15: Financial Details
Financial Details FINANCIAL DATA AS OF June 30, 2022 DATED: August 2022
Slide 16: Second-Quarter 2022 Highlights
16 Second-Quarter 2022 Highlights EPS / Net Income Adj. ROATCE1 Adj. EPS1/Net Income1 Total Loan Growth1,2 Adj. Eff. Ratio1 $0.38 / $111 million 20.4% $0.46 / $135 million 19% 53.9% Adj. ROA1 1.21% ▪ Completed branding and majority of systems conversion in early July 2022 ▪ Strong net interest margi
Slide 17: Second-Quarter 2022 Results
17 Second-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 Performance Drivers - Impacted by Merger Completed M
Slide 18: Total Loans and Earning Assets
18 Total Loans and Earning Assets $27,392 $27,634 $27,792 $28,131 $29,472 $13,064 $13,230 $13,432 $26,355 $27,754 $12,425 $12,477 $12,391 ONB FMBI FMBI Transactional Loans 2Q21 3Q21 4Q21 1Q22 2Q22 Total loans1 • Growth of $1.3 billion, +19% annualized • Commercial growth of $882 million, +18% annual
Slide 19: Commercial Loans
19 Commercial Loans $19,757 $20,639 $19,079 $19,348 $19,422 $9,269 $9,441 $9,603 ONB FMBI 2Q21 3Q21 4Q21 1Q22 2Q22 Commercial Production & Pipeline $1,067 $975 $1,096 $1,547 $2,207 ONB Pipeline Production 2Q21 3Q21 4Q21 1Q22 2Q22 Total commercial loans1 • Growth of $882 million, +18% annualized • We
Slide 20: Commercial Loan Production
20 Commercial Loan Production Production by Product Line $1,137 $513 $529 $28 CRE Business Banking Corporate Small Business Production by RM Location $967 $283 $315 $161 $147 $174 $73 $87 Illinois Indiana Minnesota Wisconsin Michigan Kentucky New LPO Markets Healthcare Vertical Strong $2.2 billion o
Slide 21: Deposits / Funding
21 Deposits / Funding $34,838 $35,142 $35,551 $26,905 $35,813 $35,607 $35,539 $20,600 $20,671 $12,463 $12,388 $2,544 $2,479 Transaction Noninterest-Bearing Time 2Q21 3Q21 4Q21 1Q22 2Q22 1Q22 2Q22 $ in millions 1 For illustration only; represents historical combined balances as reported by Old Nation
Slide 22: Net Interest Income & Net Interest Margin
22 Net Interest Income & Net Interest Margin1 1Net Interest Income Accretion Income PPP Interest / Fees 2Q21 3Q21 4Q21 1Q22 2Q22 Key Performance Drivers • Net interest income increased $115 million • NIM increased 45 bps vs. 1Q22 • + 33 bps rate / volume mix • + 14 bps accretion • + 2 bps interest c
Slide 23: Asset Liability Management
23 Asset Liability Management Net Interest Margin Sensitivity 2.64% 2.98% 0.20% 0.34% 0.20% 0.15% Total Excluding Accretion and PPP PPP Accretion 1Q22 2Q22 3Q22 4Q22 Well-positioned for Rising Rates • 56% of loans are variable/floating-rate • 88% reprice in 3 months or less • Peer leading deposit fr
Slide 24: Noninterest Income
24 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 $5
Slide 25: Noninterest Expense
25 Noninterest Expense Adjusted Noninterest Expense $121 $118 $123 $173 $239 $73 $71 $72 $101 $162$14 $13 $13 $21 $26 $12 $11 $11 $19 $26 $22 $23 $27 $32 $25 Salary & Employee Benefits Occupancy Data Processing/Communication Other 2Q21 3Q21 4Q21 1Q22 2Q22 Key Performance Drivers • 2Q22 adjusted noni
Slide 26: Expected Path to Cost Saves
26 $235 $227 $212 $2 $7 $6 Combined Expense Incremental Intangibles Merit & Strategic Investments Performance-driven Incentives 2Q21 4Q22 Expected Path to Cost Saves1 $23 million (~$92 million annualized) 2 Key Performance Drivers • ~85% of cost saves target (~$109 million annualized) realized by 4Q
Slide 27: Credit
27 0.05% 0.02% 0.27% 0.06% ONB FMBI Peer Average 2017Y 2018Y 2019Y 2020Y 2021Y 1Q22 2Q22 Credit Peer Group data per S&P Global Market Intelligence as of 03/31/2022 - See Appendix for definition of Peer Group Non-Performing Loans Net Charge-offs/NPL’s 30+ Day Delinquency Net Charge-offs 1 4.46% 3.05%
Slide 28: Allowance to Total Loans
28 Allowance to Total Loans $86 $109 $108 $107 $281 $288 0.79% 0.79% 0.79% 0.79% 0.99% 0.97% ACL Allowance to Total Loans 1/1/2020 2Q21 3Q21 4Q21 1Q22 2Q22 Allowance for Credit Losses $ in millions 1 Excludes loans held for sale 1 Key Model Inputs • Economic assumptions (upper bound) • GDP (-6.1%) •
Slide 29: Capital
29 Capital 2Q21 3Q21 4Q21 1Q22 2Q221 Regulatory Capital Ratios: CET1 capital to RWA 11.95 % 12.08 % 12.04 % 10.04 % 9.90 % Tier 1 capital to RWA 11.95 % 12.08 % 12.04 % 10.79 % 10.63 % Total capital to RWA 12.73 % 12.84 % 12.77 % 12.19 % 12.03 % Key Performance Drivers • 2Q22 ratios decreased as rob
Slide 30: Appendix
Appendix = OLD NATIONAL BANCORP
Slide 31: Contractual Accretion
31 Contractual Accretion $28 $26 $19 3Q-4Q 2022 2023 2024 Remaining Loan Discount $109 $91 $78 12/31/22 12/31/23 12/31/24 Accretion on acquired loans and borrowings • $35 million recognized in 2Q22 • $28 million contractual for remainder of 2022 Discount on acquired loan portfolio • $131 million rem
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., a specialty insurer serving diverse niche property, casualty and sure
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) 2Q21 1Q22 2Q22 As reported: Net interest Income (FTE) $153.4 $226.6 $341.8 Add: Fee income 51.5 65.2 89.1 Total Revenue (FTE) $204.9 $2
Slide 36: Non-GAAP Reconciliation
36 Non-GAAP Reconciliation $ in millions 2Q21 3Q21 4Q21 1Q22 2Q22 As reported: Net interest Income (FTE) $153.4 $155.1 $150.2 $226.6 $341.8 Add: Fee income 51.5 54.5 51.5 65.2 89.1 Total Revenue (FTE) $204.9 $209.6 $201.7 $291.8 $430.9 Less: Noninterest Expense 129.6 121.3 131.9 226.7 277.4 Pre-Prov
Slide 37: Non-GAAP Reconciliation
37 Non-GAAP Reconciliation $ in millions 2Q21 3Q21 4Q21 1Q22 2Q22 Noninterest Expense As Reported $129.6 $121.3 $131.9 $226.7 $277.4 Less: ONB Way Charges (0.4) 0.0 0.0 0.0 0.0 Less: Merger-Related Charges (6.5) (1.4) (6.7) (52.3) (36.6) Noninterest Expense Less Charges $122.7 $119.9 $125.2 $174.4 $
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 2Q21 3Q21 4Q21 1Q22 2Q22 Net interest Income As Reported $149.9 $151.6 $146.8 $22
Slide 39: Non-GAAP Reconciliation
39 Non-GAAP Reconciliation $ in millions 1 Certain reclassifications were made to conform to the current presentation 2Q21 3Q21 4Q21 1Q22 2Q22 Old National Commercial Loans $9,990 $9,796 $9,772 $19,962 $20,721 Less: Old National PPP Loans (721) (355) (169) (205) (82) 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) 2Q22 Shareholder’s Common Equity As Reported $4,835.1 Less: Goodwill and Intangible Assets (2,131.8) Tangible Shareholder’s Common Equi
Slide 41: Non-GAAP Reconciliation
41 Non-GAAP Reconciliation $ in millions, except per share data 2016 2019 As reported: 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 Pre-Provision Net Revenue (PPRN) $222.7 $308.0 Revenue Adjustments: Less:
Slide 42: Non-GAAP Reconciliation
42 Non-GAAP Reconciliation $ in millions, except per share data 2016 2019 As reported: 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) Pre-Tax Income $221.8 $
Slide 43: Non-GAAP Reconciliation
43 Non-GAAP Reconciliation $ in millions, except per share data 2016 2019 Net Income Applicable to Common Shares As Reported $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
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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