Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Q2 2024 Earnings Presentation
48 slides from Old National Bancorp's earnings presentation, Aug 16, 2024
Slide 1: 2nd Quarter 2024 Investment Thesis
Exhibit 99.1 2nd Quarter 2024 Investment Thesis August 16, 2024
Slide 2: Executive Summary
Slides 5 — 15 Executive Summary
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 (the “Act”), notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be conta
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: Corporate Strategy
5 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 an
Slide 6: Snapshot of Old National
6 Snapshot of Old National Key Financial Metrics Cost of Total Deposits 216 bps Cycle to Date Total Deposit Beta 41% Insured Deposits to Total Deposits3 >70% Loan-to-Deposit Ratio2 91% Price / Tangible Book Value $11.05 Efficiency Ratio As Reported/ Adjusted4 57.2% / 52.6% Net Charge-Offs / Average
Slide 7: The Best of Offense and Defense
7 Financial data as of or for the quarter ended 6/30/2024, 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 Includes the estimate of Old National Bank federally uninsured de
Slide 8: Low-Risk Balance Sheet Relative to Peers
8 0.13% 1.58% 0.32% 6.19% 3-Year 15-Year 72% 79% 87% 93% 76% Lower Quartile Average Upper Quartile Peer Max ONB 3 and 15-Year Cumulative NCOs / Avg. Loans2Risk-Weighted Assets / Total Assets1 ONB Peer Average Financial data as of or for the quarter ended 6/30/2024, except as noted 1 Peer Group data
Slide 9: ONB is Building Capital Faster than Peers
9 ONB is Building Capital Faster than Peers 1.3% 1.3% 1.2% 1.2% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1% 1.0% 1.0% 1.0% 1.0% 0.9% 0.9% 0.5% HWC SNV WBS COLB ASB CADE PNFP WTFC FNB ONB CMA UMBF BOKF FHN WAL ZION VLY 18.1% 17.2% 16.5% 16.2% 15.9% 15.9% 15.7% 14.9% 14.6% 14.5% 13.8% 13.4% 13.1% 12.8% 11.8% 10.6%
Slide 10: Strong TBV Per Share Growth Glidepath
10 $7.62 $8.30 $8.37 $9.00 $10.35 $11.43 $11.70 $9.42 $11.00 $11.10 $11.05 2015 2016 2017 2018 2019 2020 2021 2022 2023 1Q'24 2Q'24 Strong TBV Per Share Growth Glidepath TBV Per Share CAGR (%) ex. AOCI2 Old National KRX 3-Year 9.0% 8.9% (3.8)% Incl. AOCI 1.3% Incl. AOCI 5-Year 7.0% 7.0% 2.2% Incl. A
Slide 11: ONB has Dramatically Enhanced Franchise Value
11 ONB has Dramatically Enhanced Franchise Value 2013 2024E $10 $54 $6 $301 $1.05 $1.82 $7.85 $11.86 67% 55% ~2,600 ~4,3001 169 2801 $42.7 $135.4 463k 4.7M $40,663 $74,910 Assets ($B) AUM ($B) Core EPS 2 TBV Per Share Efficiency Ratio Headcount Branches Deposits / Branch ($M)3 Avg MSA Pop. Median HH
Slide 12: Partnership with CapStar Financial Holdings, Inc.
12 Partnership with CapStar Financial Holdings, Inc. Expanding Nashville Presence; Positioned for Growth in Highly Attractive Markets Leverage ONB Capabilities in Growth Markets Financially Compelling Low Risk CapStar is a dynamic $3 billion asset bank with top 10 deposit market share in Nashville M
Slide 13: Peer-Leading Deposit Franchise
13 Average Total Deposits $35.1 $37.1 $40.1 $24.4 $27.8 $30.6 $10.7 $9.3 $9.6 IB NIB 2Q23 1Q24 2Q24 % Peer-Leading Deposit Franchise Key Performance Drivers • Period end deposits up $2.3 billion, $2.1 billion EOP acquired in the CapStar transaction • Excluding CapStar, up 2.4% annualized • Seasonal
Slide 14: Quarterly NII Outlook
14 Quarterly NII Outlook $363 $395 $398 $404 1Q24 (Actual) 2Q24 (Actual) 3Q24 4Q24 Net Interest Income Outlook Managing to Neutral Rate Risk Position • 53% of loans are variable/floating-rate • ~$4.9 billion fixed-rate loans and securities expected to reprice over NTM • 31% of total deposits are exc
Slide 15: Outlook
15 Outlook 3Q24 Outlook Full-Year 2024 Outlook EOP loans (Including HFS) up 5% - 7%, annualized up 5% - 7%, excl. CapStar Net interest income (FTE basis)1 ~$398 million ~$1,560 million Noninterest income1 ~$85 million ~$335 million Noninterest expense1 ~$260 million ~$1,025 million Net charge-off ra
Slide 16: Financial Details
Financial Details Data as of June 30, 2024
Slide 17: Key Second-Quarter 2024 Takeaways
17 Key Second-Quarter 2024 Takeaways Successfully executed organic growth strategy by leveraging position of strength and investing in new markets and talent. Strategy supported by strong deposit franchise and ample capital. Expansion of net interest income dollars driven by accelerating loan growth
Slide 18: Strong Second-Quarter 2024 Highlights
18 Strong Second-Quarter 2024 Highlights $ in Millions, except per share data 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 Includes loans held-for-sale 3 Refers to the initial increase
Slide 19: Liquid, Well-Capitalized Balance Sheet
19 2Q24 1Q24 2Q23 % Change End of Period Balances 2Q24 vs. 1Q24 2Q24 vs. 2Q23 Available-for-sale securities, at fair value $7,105 $6,792 $6,501 5% 9% Held-to-maturity securities, at amortized cost $2,986 $3,001 $3,055 —% (2)% Total loans1 $36,217 $33,643 $32,547 8% 11% Total assets $53,120 $49,535 $
Slide 20: Total Loans and Earning Assets
20 $32,547 $33,643 $36,217 2Q23 1Q24 2Q24 6.24% % 6.07% Loan Yields Total Loans and Earning Assets Total loans1 • Disciplined growth of $2.6 billion, $2.1 billion EOP loans acquired in the CapStar transaction • Excluding CapStar, total loan growth of +5.9% annualized • Commercial growth of $458 mill
Slide 21: Second-Quarter 2024 Results
21 $ in millions, except per-share data 1 Non-GAAP financial measures that management believes is useful in evaluating the financial results of the Company - see Appendix for Non-GAAP reconciliation 2 Fully Taxable Equivalent Basis 3 Refers to the initial increase in allowance for credit losses requ
Slide 22: Net Interest Income & Net Interest Margin
22 Impacts on Net Interest Margin 3.28% 0.15% 0.05% (0.15)% 3.33% 1Q24 Rate / volume mix Accretion IB Deposit Costs 2Q24 $ in millions 1 Fully Taxable Equivalent Basis; Non-GAAP financial measure that management believes is useful in evaluating the financial results of the Company - see Appendix for
Slide 23: Noninterest Income
23 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 Key Performance Drivers • Increase
Slide 24: Noninterest Expense
24 Noninterest Expense $ 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 Key Performance Drivers • Higher primarily due to CapStar operating costs as well as technology and profe
Slide 25: Allowance for Credit Losses
25 Allowance for Credit Losses $346 $24 $15 $6 $3 $(2) $392 Allowance 3/31/24 PCD Non-PCD Economic Forecast & Other Assumptions Loan Growth Unfunded Commitments Allowance 6/30/2024 1.03% Credit Quality Asset Quality 0.12% 0.16% 0.16% 0.91% 0.98% 0.94% 30+ Day Delinquency Non-Performing Loans 2Q23 1Q
Slide 26: Peer Credit Data
26 Peer Credit Data 30+ Day Delinquency ONB Peer Average 2015Y2016Y2017Y2018Y2019Y2020Y2021Y2022Y2023Y 1Q24 2Q24 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% Net Charge-Offs ONB Peer Average 2015Y2016Y2017Y2018Y2019Y2020Y2021Y2022Y2023Y1Q24 2Q24 (0.10)% 0.00% 0.10% 0.20% 0.30% 0.40% Non-Performing Loans ONB
Slide 27: Conservative Lending Limit/Risk Grades
27 Conservative Lending Limit/Risk Grades $ in millions 1 Data as of 6/30/2024 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 - Wat
Slide 28: Diversified Loan Portfolio
28 CRE Non- Owner Occupied 32% CRE Owner Occupied 12% C&I 29% Residential Real Estate 19% Consumer 8% Multifamily 15% Retail 4% Other 7% Warehouse Industrial 5% Office 4% Warehouse Industrial 5% Office 2% Senior Housing 2% Retail 2% Other 2% Total Loans By State IL $8.6 23% IN 5.5 15% MN 4.0 11% WI
Slide 29: CRE Non-Owner Occupied Maturities
29 Multifamily Office Other $0.4 billion >4% <4% CRE Non-Owner Occupied Maturities As of 06/30/2024 1 Includes loans held-for-sale 2 Based on review of top 80% of CRE non-owner occupied office portfolio CBD - Central business district NOO - Non-owner occupied LTV - loan-to-value DSC - debt service c
Slide 30: CRE Non Owner Occupied - Office
30 CRE Non Owner Occupied - Office Our Lending Looks More Like This ...Less Like This • Total office portfolio of $1.5 billion; average loans size is $2.9 million • Largest exposure of ~$50 million • 95% located in bank’s footprint, diversified by submarket • 41% of portfolio is medical office (“MOB
Slide 31: CRE Non Owner Occupied - Multifamily
31 CRE Non Owner Occupied - Multifamily Our Lending Looks More Like This ...Less Like This • Total multifamily portfolio of $5.5 billion; average loans size is $5.1 million • Largest exposure of ~$60 million • 86% located in bank’s footprint • Continued strong demand and rental rates in core markets
Slide 32: Strong Capital Position
32 Key Performance Drivers • Strong retained earnings more than offset by the impact of the CapStar transaction and loan growth • HTM securities pre-tax unrealized losses of $474 million (~$355 million net of tax) • No shares of common stock repurchased during 2Q24 • Strong capital position validate
Slide 33: Appendix
Appendix = OLD NATIONAL BANCORP’
Slide 34: Granular, Long-Tenured Deposit Base
34 76% >5 years Core Deposit Tenure 24% 25% 22% 29% <5 years 5-15 years 15-25 years >25 years Brokered Deposits/ Total Deposits 9.9% 4.6% 3.2% Peers - 1Q24 Peer Avg - 1Q24 ONB - 2Q24 ONB - 1Q24 Deposit Highlights • Insured deposits2,3 >70% of total deposits • Granular low-cost deposit franchise • To
Slide 35: Projected Acquisition Accounting Impact
35 Accretion on acquired loans and borrowings • $12 million recognized in 2Q24 • $26 million contractual for remainder of 2024 Discount on acquired loan portfolio • $190 million remaining as of 6/30/2024 • $119 million related to CapStar • $55 million related to First Midwest Contractual Accretion $
Slide 36: Commitment to Strong Corporate Governance
36 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 • Stock ownership guidelines have been established
Slide 37: Commitment to Excellence
Commitment to Excellence Bloomberg Gender-Equality Index 2023 = on D | ] BEST PLACE TO WORK FOR f¥} = DISABILITY INCLUSION 4 100 DISABILITY EQUALITY INDEX Corporate Engagement AWARD OF Moobpy’s CEO FOR DIVERSITY & INCLUSION LEADING A DISABILITY EMPLOYER a OLD NATIONAL BANCORP’ | 37
Slide 38: Commitment to Corporate Social Responsibility
38 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, equity and inclusion • Strengthening our
Slide 39: ESG At A Glance - 2023
ESG At A Glance - 2023 In Community Reinvestment Act (CRA)-ellgible community development loans that supported affordable housing, economic development, community services for low- and moderate-income people, and revitaltzation/stabilization of low- and moderate-income communities $564 MILLION $3.3
Slide 40: 2023 Executive Compensation
40 • Tied to long-term shareholder value 2023 Executive Compensation TSR - total shareholder return ROATCE - return on average tangible common equity NEO - Named executive officers KRX - “KBW” Nasdaq Regional Bank Index Short-Term Incentive Compensation Performance Measure Weight Adjusted EPS 100% P
Slide 41: Board of Directors
41 Annual Elected each year for Stock Ownership Robust ownership guidelines Election one-year term 93% Independent 47% Racial minority and gender diversity 80% Other public company Lead Independent Since 2016, Rebecca Skillman has experience Director served as Lead Independent Director Barbara A. Bo
Slide 42: Non-GAAP Reconciliation
42 2Q24 1Q24 2Q23 Net interest income $388.4 $356.5 $382.2 FTE Adjustment 6.3 6.3 5.8 Net interest income (FTE) $394.8 $362.8 $388.0 Add: Fee income 87.3 77.5 81.6 Total revenue (FTE) $482.1 $440.3 $469.6 Less: Provision for credit losses (36.2) (18.9) (14.8) Less: Noninterest expense (283.0) (262.3
Slide 43: Non-GAAP Reconciliation
43 2Q24 1Q24 2Q23 Noninterest income $87.3 $77.5 $81.6 Less: Debt securities losses 0.0 0.0 0.0 Adjusted noninterest income $87.3 $77.5 $81.6 Noninterest expense $283.0 $262.3 $246.6 Less: Merger-related charges (19.4) (2.9) (2.4) Less: Distribution of excess pension assets 0.0 (13.3) 0.0 Less: FDIC
Slide 44: Non-GAAP Reconciliation
44 2Q24 1Q24 2Q23 Noninterest Expense $283.0 $262.3 $246.6 Less: Intangible amortization (7.4) (5.5) (6.1) Noninterest expense, excluding intangible amortization 275.6 256.8 240.5 Adjustments: Less: Merger-related charges (19.4) (2.9) (2.4) Less: Distribution of excess pension assets 0.0 (13.3) 0.0
Slide 45: Non-GAAP Reconciliation
45 2Q24 1Q24 2Q23 Net income applicable to common shares $117.2 $116.4 $151.0 Add: Intangibles amortization, net of tax 5.6 4.1 4.5 Tangible net income applicable to common shares $122.8 $120.5 $155.5 Total adjustments, net of tax $26.8 $14.5 $5.3 Adjusted net income applicable to common shares, exc
Slide 46: Non-GAAP Reconciliation
46 2Q24 1Q24 2Q23 Shareholders' equity $6,075.0 $5,595.4 $5,292.1 Less: Preferred equity (243.7) (243.7) (243.7) Shareholders' common equity 5,831.3 5,351.7 5,048.4 Less: Goodwill and other intangible assets (2,306.2) (2,095.5) (2,112.9) Tangible shareholders' common equity 3,525.1 3,256.2 2,935.5 L
Slide 47: 2024 Peer Group
47 2024 Peer Group Associated Banc-Corp ASB BOK Financial Corporation BOKF Cadence Bancorporation CADE Columbia Banking System, Inc. COLB Comerica Incorporated CMA F.N.B. Corporation FNB First Horizon Corporation FHN Hancock Whitney Corporation HWC Pinnacle Financial Partners, Inc. PNFP Synovus Fina
Slide 48: Old National Investor Relations Contact
48 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 Old National Investor Relations Contact