Old National's 1st Quarter Results Supported by Strong Deposit Franchise, Ample Liquidity, Stable Credit and Expense Discipline

ソース: Nasdaq GlobeNewswire / 25 4 2023 08:00:39 America/New_York

EVANSVILLE, Ind., April 25, 2023 (GLOBE NEWSWIRE) --

Old National Bancorp (NASDAQ: ONB) reports 1Q23 net income applicable to common shares of $142.6 million, diluted EPS of $0.49; $159.1 million and $0.54 on an adjusted¹ basis, respectively.

COMMENTARY BY CEO JIM RYAN:

Reflecting on April 10th
"Five of our Old National team members were lost forever while other team members and two Louisville Metro police officers suffered injuries. In the aftermath, many heroes emerged, including members of law enforcement, city and state officials, the Louisville medical community and some of our own team members who were on the scene.

Old National would like to thank the Louisville community for their unconditional love and support, as well as countless other individuals and organizations throughout the country whose outpouring of love and care has strengthened us. We also want to acknowledge and thank our resilient team members who rallied in support of those in Louisville and one another, along with our clients, many of whom reached out to us with messages of care and concern.

Finally, we ask everyone to consider giving the gift of life by donating blood. In addition to honoring those impacted in Louisville, your gift will help save lives throughout our nation."

Reflecting on First Quarter Earnings
“Our positive first quarter results underscore the stability of Old National's low-cost deposit franchise and the granularity and strength of our loan portfolio and revenue streams. When you also factor in another quarter of excellent expense discipline, stable credit and ample liquidity, you can see why Old National finds itself exceptionally well-positioned for whatever headwinds may lie ahead."

FIRST QUARTER HIGHLIGHTS²:

Net Income	Net income applicable to common shares of $142.6 million; adjusted net income applicable to common shares¹ of $159.1 million
Net Income	Earnings per diluted common share ("EPS") of $0.49; adjusted EPS¹ of $0.54

Net Interest Income/NIM	Net interest income on a fully taxable equivalent basis¹ of $387.2 million
Net Interest Income/NIM	Net interest margin on a fully taxable equivalent basis¹ ("NIM") of 3.69%, down 16 basis points ("bps")

Operating Performance	Pre-provision net revenue¹ (“PPNR”) of $207.1 million; adjusted PPNR¹ of $228.2 million
	Noninterest expense of $250.7 million; adjusted noninterest expense¹ of $234.8 million
	Efficiency ratio¹ of 52.8%; adjusted efficiency ratio¹of 48.8%

Deposits and Funding	Period-end total deposits of $34.9 billion, stable including normal seasonal patterns in public funds
	Granular low-cost deposit franchise; total deposit costs of 72 bps and a total deposit beta cycle to date of 15% (interest-bearing deposit beta of 23%)
	Deposits that were either insured or collateralized³ at March 31, 2023 were ~70% of total deposits
	Strong liquidity provided by existing funding sources plus available unencumbered, high-quality collateral totaling $15.7 billion; ~150% uninsured covered ratio⁴
	Total funding of $41.7 billion, up 2.6% compared to December 31, 2022

Note: See following page for footnotes.

Loans and Credit Quality	End-of-period total loans⁵ of $31.8 billion, up 2.2% compared to December 31, 2022
	Provision for credit losses⁶ ("provision") of $13.4 million
	Net charge-offs of $16.4 million, or 21 bps of average loans; 5 bps excluding purchased credit deteriorated ("PCD") loans that had an allowance at acquisition
	Non-performing loans of 0.74% of total loans

Return Profile & Capital	Return on average tangible common equity¹ of 21.0%; adjusted return on average tangible common equity¹ of 23.4%
Return Profile & Capital	Repurchased 1.8 million shares of common stock during the quarter

Notable Items	$14.6 million of merger-related charges
	$1.3 million of property optimization charges
	$5.2 million of losses on sales of debt securities

¹Non-GAAP financial measure that management believes is useful in evaluating the financial results of the Company – refer to the Non-GAAP reconciliations contained in this release ²Comparisons are on a linked-quarter basis, unless otherwise noted ³ Uninsured and uncollateralized deposits include the estimate of Old National Bank federally uninsured deposits for regulatory purposes, as adjusted for $1.4 billion of affiliate deposits and $3.4 billion of collateralized or otherwise insured deposits ⁴ Represents the ratio of liquidity availability (cash and cash equivalents, funding capacity at FHLB, discount window and Bank Term Funding Program ("BTFP"), and unencumbered eligible collateral) at March 31, 2023, plus recently pledged loan collateral to FHLB, to uninsured and uncollateralized deposits at March 31, 2023 ⁵Includes loans held for sale ⁶Includes the provision for unfunded commitments

RESULTS OF OPERATIONS
Old National Bancorp ("Old National") reported first quarter 2023 net income applicable to common shares of $142.6 million, or $0.49 per diluted common share.

Included in the first quarter was pre-tax charges of $1.3 million for property optimization and $14.6 million related to the February 15, 2022 merger with First Midwest. Excluding these transactions and $5.2 million of realized debt securities losses from the current quarter, adjusted net income was $159.1 million, or $0.54 per diluted common share.

DEPOSITS AND FUNDING
Stable low-cost deposits including normal seasonal patterns in public funds; ample funding and liquidity.

Period-end total core deposits were $34.9 billion at March 31, 2023, stable including normal seasonal patterns in public funds.
On average, total deposits for the first quarter were $34.9 billion, a decrease of 1.4%.
Granular low-cost deposit franchise; total deposit costs of 72 bps and a total deposit cycle to date beta of 15% (interest-bearing deposit beta of 23%).
Deposits that were either insured or collateralized at March 31, 2023 were approximately 70% of total deposits.
Strong liquidity provided by existing funding sources plus available unencumbered, high-quality collateral; ~150% uninsured covered ratio⁴.
Total funding of $41.7 billion, up 2.6% compared to December 31, 2022.
A loan to deposit ratio of 91% at March 31, 2023, combined with existing funding sources plus available unencumbered, high-quality collateral totaling approximately $15.7 billion provides strong liquidity.

LOANS
Broad-based disciplined commercial loan growth.

Period-end total loans³ were $31.8 billion at March 31, 2023, up 2.2% from December 31, 2022, driven by strong commercial loan growth.
Total commercial loan production in the first quarter was $1.8 billion; period-end commercial pipeline totaled $5.4 billion.
Average total loans in the first quarter were $31.3 billion, an increase of $532.6 million from the fourth quarter of 2022.

CREDIT QUALITY
Strong credit quality continues to be a hallmark of the Old National franchise.

Provision⁵ expense in the first quarter of 2023 was $13.4 million, compared to $11.4 million in the fourth quarter of 2022, reflecting loan and unfunded commitment growth, economic factors and portfolio mix changes.
Net charge-offs in the first quarter were $16.4 million, or 21 bps of average loans compared to net charge-offs of 5 bps of average loans in the fourth quarter of 2022.
- Excluding PCD loans that had an allowance for credit losses established at acquisition, net charge-offs to average loans were 5 bps for both the first quarter of 2023 and fourth quarter of 2022.
30+ day delinquencies were 0.14% at the end of the first quarter of 2023, compared to 0.19% at the end of the fourth quarter of 2022.
Non-performing loans as a percentage of total loans were 0.74% compared to 0.81% for the fourth quarter of 2022.
Loans acquired from previous acquisitions were recorded at fair value at the acquisition date. As of March 31, 2023, the remaining discount on these acquired loans was $96 million.
The allowance for credit losses, including the allowance for credit losses on unfunded commitments, stood at $332.9 million, or 1.05% of total loans at March 31, 2023, compared to $335.9 million, or 1.08% of total loans at December 31, 2022.

NET INTEREST INCOME AND MARGIN
Loan growth and the higher rate environment favorably impact net interest income and margin, more than offset by higher funding costs, fewer days in the quarter and lower accretion.

Net interest income on a fully taxable equivalent basis decreased to $387.2 million in the first quarter of 2023 compared to $396.5 million in the fourth quarter of 2022, driven by loan growth and the higher rate environment which were more than offset by higher funding costs, fewer days in the quarter and lower accretion income on loans.
Net interest margin on a fully taxable equivalent basis decreased 16 bps to 3.69% compared to the fourth quarter of 2022.
Accretion income on loans and borrowings was $7.9 million, or 8 bps of net interest margin, in the first quarter of 2023 compared to $10.4 million, or 10 bps of net interest margin, in the fourth quarter of 2022.
Cost of total deposits was 0.72%, increasing 38 bps and the cost of total interest-bearing deposits increased 57 bps to 1.09% in the first quarter of 2023.

NONINTEREST INCOME
Increase driven by higher capital markets income as well as wealth management and investment products fees, partly offset by lower bank fees.

Total noninterest income for the first quarter of 2023 was $70.7 million.
Excluding realized debt securities losses for both periods and a $90.7 million pre-tax gain on the sale of health savings accounts for the fourth quarter of 2022, adjusted noninterest income for the first quarter was $75.9 million, up 1.8% compared to the fourth quarter of 2022, driven by higher capital markets income as well as wealth management and investment product fees, partially offset by lower service charges on deposit accounts and debit card and ATM fees.

NONINTEREST EXPENSE
Disciplined expense management.

Noninterest expense for the first quarter of 2023 was $250.7 million and included $1.3 million for property optimization and $14.6 million of merger-related charges.
Excluding these items, adjusted noninterest expense for the first quarter was $234.8 million, consistent with $235.5 million for the fourth quarter of 2022; lower salary and employee benefits and tax credit amortization was mostly offset by higher FDIC assessment and technology expenses.
The efficiency ratio¹ was 52.8%, while the adjusted efficiency ratio¹ was 48.8% for the first quarter of 2023 compared to 49.1% and 47.5%, respectively, for the fourth quarter of 2022.

INCOME TAXES

Income tax expense in the first quarter of 2023 was $41.4 million, resulting in an effective tax rate of 22.0% compared to 23.4% in the fourth quarter of 2022. On an adjusted fully taxable equivalent ("FTE") basis, the effective tax rate was 24.1% in the first quarter compared to 24.8% in the fourth quarter.
Income tax expense included $3.1 million of tax credit benefit.

CAPITAL
Capital ratios remain strong.

Preliminary total risk-based capital was 11.95% and preliminary regulatory Tier 1 capital was 10.62%, impacted by loan growth, merger related charges, and stock repurchases, partly offset by retained earnings.
Tangible common equity to tangible assets was 6.37% at the end of the first quarter compared to 6.18% in the fourth quarter of 2022.
The Company repurchased 1.8 million shares of common stock during the quarter.

CONFERENCE CALL AND WEBCAST
Old National will host a conference call and live webcast at 9:00 a.m. Central Time on Tuesday, April 25, 2023, to review first quarter financial results. The live audio webcast link and corresponding presentation slides will be available on the Company’s Investor Relations web page at oldnational.com and will be archived there for 12 months. To listen to the live conference call, dial U.S. (844) 200-6205 or International (929) 526-1599, Access code 892610. A replay of the call will also be available from approximately noon Central Time on April 25, 2023 through May 9, 2023. To access the replay, dial U.S. (866) 813-9403 or international +44 (204) 525-0658, Access code 569807.

ABOUT OLD NATIONAL
Old National Bancorp (NASDAQ: ONB) is the holding company of Old National Bank, which is the sixth largest commercial bank headquartered in the Midwest. With approximately $48 billion of assets and $28 billion of assets under management, Old National ranks among the top 35 banking companies headquartered in the U.S. Tracing our roots to 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships with clients and in the communities it serves. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investment, and capital market services. For more information and financial data, please visit Investor Relations at oldnational.com.

USE OF 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 useful because they assist investors in assessing the Company's operating performance. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables at the end of this release.

The Company presents EPS, the efficiency ratio, return on average common equity, and return on average tangible common equity, all adjusted for certain notable items. These items include the current expected credit loss ("CECL") Day 1 non-PCD provision expense, merger related charges associated with completed acquisitions, gain on sale of health savings accounts, property optimization charges and gains/losses on sales of debt securities. Management believes excluding these items from EPS, the efficiency ratio, return on average common equity, and return on average tangible common equity may be useful in assessing the Company's underlying operational performance since these items do not pertain to its core business operations and their exclusion may facilitate better comparability between periods. Management believes that excluding merger related charges and the CECL Day 1 non-PCD provision expense from these metrics may be useful to the Company, as well as analysts and investors, since these expenses can vary significantly based on the size, type, and structure of each acquisition. Additionally, management believes excluding these items from these metrics may enhance comparability for peer comparison purposes.

Income tax expense, provision for credit losses, and the certain notable items listed above are excluded from the calculation of pre-provision net revenues, adjusted due to the fluctuation in income before income tax and the level of provision for credit losses required. Management believes pre-provision net revenues, adjusted may be useful in assessing the Company's underlying operating performance and their exclusion may facilitate better comparability between periods and for peer comparison purposes.

The Company presents adjusted noninterest expense, which excludes merger related charges and property optimization charges, as well as adjusted noninterest income, which excludes the gain on sale of health savings accounts and gains/losses on sales of debt securities. Management believes that excluding these items from noninterest expense and noninterest income may be useful in assessing the Company’s underlying operational performance as these items either do not pertain to its core business operations or their exclusion may facilitate better comparability between periods and for peer comparison purposes.

The tax-equivalent adjustment to net interest income and net interest margin recognizes the income tax savings when comparing taxable and tax-exempt assets. Interest income and yields on tax-exempt securities and loans are presented using the current federal income tax rate of 21%. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on a fully tax-equivalent basis and that it may enhance comparability for peer comparison purposes.

In management's view, tangible common equity measures are capital adequacy metrics that may be meaningful to the Company, as well as analysts and investors, in assessing the Company's use of equity and in facilitating comparisons with peers. These non-GAAP measures are valuable indicators of a financial institution's capital strength since they eliminate intangible assets from stockholders' equity and retain the effect of accumulated other comprehensive loss in stockholders' equity.

Although intended to enhance investors' understanding of the Company's business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. In addition, these non-GAAP financial measures may differ from those used by other financial institutions to assess their business and performance. See the previously provided tables and the following reconciliations in the "Non-GAAP Reconciliations" section for details on the calculation of these measures to the extent presented herein.

FORWARD-LOOKING STATEMENTS
This communication contains 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 credit quality trends, profitability and business plans or opportunities. Forward-looking statements can be identified by the use of the words "anticipate," "believe," "contemplate," "could," "estimate," "expect," "intend," "may," "outlook," "plan," "should," and "will," and other words of similar meaning. These forward-looking statements express management’s current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those in such statements. Factors that might cause such a difference include, but are not limited to: the continued impact of the COVID-19 pandemic on our business as well as the business of our customers; competition; government legislation, regulations and policies; the ability of Old National to execute its business plan, including the completion of the integration related to the merger between Old National and First Midwest and the achievement of the synergies and other benefits from the merger; unanticipated changes in our liquidity position, including but not limited to changes in access to sources of liquidity and capital to address our liquidity needs; changes in economic conditions and economic and business uncertainty which could materially impact credit quality trends and the ability to generate loans and gather deposits; inflation and governmental responses to inflation, including increasing interest rates; failure or circumvention of our internal controls; significant changes in accounting, tax or regulatory practices or requirements; new legal obligations; disruptive technologies in payment systems and other services traditionally provided by banks; failure or disruption of our information systems; computer hacking and other cybersecurity threats; other matters discussed in this communication; and other factors identified in our Annual Report on Form 10-K for the year ended December 31, 2022 and other filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date of this communication and are not guarantees of future results or performance, and Old National does not undertake an obligation to update these forward-looking statements to reflect events or conditions after the date of this communication.

CONTACTS:
Media: Kathy Schoettlin		Investors: Lynell Walton
(812) 465-7269		(812) 464-1366
Kathy.Schoettlin@oldnational.com		Lynell.Walton@oldnational.com


Financial Highlights (unaudited)
($ and shares in thousands, except per share data)

	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
		2023			2022			2022			2022			2022
Income Statement
Net interest income	$	381,488		$	391,090		$	376,589		$	337,472		$	222,785
FTE adjustment^1,4		5,666			5,378			4,950			4,314			3,772
Net interest income - tax equivalent basis⁴		387,154			396,468			381,539			341,786			226,557
Provision for credit losses²		13,437			11,408			15,490			9,165			108,736
Noninterest income		70,681			165,037			80,385			89,117			65,240
Noninterest expense²		250,711			282,675			262,444			277,475			215,589
Net income (loss) available to common shareholders	$	142,566		$	196,701		$	136,119		$	110,952		$	(29,603	)
Per Common Share Data
Weighted average diluted shares		292,756			293,131			292,483			291,881			227,002
EPS, diluted	$	0.49		$	0.67		$	0.47		$	0.38		$	(0.13	)
Cash dividends		0.14			0.14			0.14			0.14			0.14
Dividend payout ratio³		29	%		21	%		30	%		37	%	(108) %
Book value	$	17.24		$	16.68		$	16.05		$	16.51		$	17.03
Stock price		14.42			17.98			16.47			14.79			16.38
Tangible book value⁴		9.98			9.42			8.75			9.23			9.71
Performance Ratios
ROAA		1.25	%		1.74	%		1.22	%		1.01	%	(0.31) %
ROAE		11.6	%		16.8	%		11.1	%		9.1	%	(2.9) %
ROATCE⁴		21.0	%		31.5	%		20.5	%		16.9	%	(4.0) %
NIM (FTE)		3.69	%		3.85	%		3.71	%		3.33	%		2.88	%
Efficiency ratio⁴		52.8	%		49.1	%		55.3	%		62.7	%		72.3	%
Efficiency ratio (prior presentation)⁵	N/A			N/A				56.2	%		62.7	%		76.2	%
NCOs (recoveries) to average loans		0.21	%		0.05	%		0.10	%		0.02	%		0.05	%
ACL on loans to EOP loans		0.94	%		0.98	%		0.99	%		0.97	%		0.99	%
ACL⁶ to EOP loans		1.05	%		1.08	%		1.08	%		1.05	%		1.07	%
NPLs to EOP loans		0.74	%		0.81	%		0.81	%		0.78	%		0.88	%
Balance Sheet (EOP)
Total loans	$	31,822,374		$	31,123,641		$	30,528,933		$	29,553,648		$	28,336,244
Total assets		47,842,644			46,763,372			46,215,526			45,748,355			45,834,648
Total deposits		34,917,792			35,000,830			36,053,663			35,538,975			35,607,390
Total borrowed funds		6,740,454			5,586,314			4,264,750			4,384,411			4,347,560
Total shareholders' equity		5,277,426			5,128,595			4,943,383			5,078,783			5,232,114
Capital Ratios⁴
Risk-based capital ratios (EOP):
Tier 1 common equity		9.96	%		10.03	%		9.88	%		9.90	%		10.04	%
Tier 1 capital		10.62	%		10.71	%		10.58	%		10.63	%		10.79	%
Total capital		11.95	%		12.02	%		11.84	%		12.03	%		12.19	%
Leverage ratio (average assets)		8.53	%		8.52	%		8.26	%		8.19	%		10.58	%
Equity to assets (averages)		11.00	%		10.70	%		11.18	%		11.22	%		12.03	%
TCE to TA		6.37	%		6.18	%		5.82	%		6.20	%		6.51	%
Nonfinancial Data
Full-time equivalent employees		4,023			3,967			4,008			4,196			4,333
Banking centers		256			263			263			266			267
¹ Calculated using the federal statutory tax rate in effect of 21% for all periods.
² Provision for unfunded commitments is included in the provision for credit losses. The reclassification of the provision for unfunded commitments out of other expense as a component of noninterest expense was made to amounts prior to December 31, 2022 to conform to the current period presentation.
³ Cash dividends per common share divided by net income per common share (basic).
⁴Represents a non-GAAP financial measure. Refer the "Non-GAAP Measures" table for reconciliations to GAAP financial measures. March 31, 2023 capital ratios are preliminary.
⁵Presented as calculated prior to December 31, 2022, which included the provision for unfunded commitments in noninterest expense. Management believes that removing the provision for unfunded commitments from this metric enhances comparability for peer comparison purposes.
⁶ Includes the allowance for credit losses on loans and unfunded commitments.

FTE - Fully taxable equivalent basis ROAA - Return on average assets ROAE - Return on average equity
ROATCE - Return on average tangible common equity NCOs - Net Charge-offs ALL - Allowance for loan losses ACL - Allowance for Credit Losses EOP - End of period actual balances NPLs - Non-performing Loans TCE - Tangible common equity TA - Tangible assets


Income Statement (unaudited)
($ and shares in thousands, except per share data)
	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
		2023			2022			2022			2022			2022
Interest income	$	495,649		$	457,821		$	406,518		$	354,358		$	235,505
Less: interest expense		114,161			66,731			29,929			16,886			12,720
Net interest income		381,488			391,090			376,589			337,472			222,785
Provision for credit losses¹		13,437			11,408			15,490			9,165			108,736
Net interest income after provision for credit losses		368,051			379,682			361,099			328,307			114,049
Wealth management fees		18,760			17,851			17,317			19,304			14,630
Service charges on deposit accounts		17,003			18,109			20,042			20,324			14,026
Debit card and ATM fees		9,982			10,798			10,608			11,222			7,599
Mortgage banking revenue		3,400			3,888			5,360			6,522			7,245
Investment product fees		8,160			7,817			8,042			8,568			7,322
Capital markets income		6,939			5,377			8,906			7,261			4,442
Company-owned life insurance		3,186			3,108			3,361			4,571			3,524
Gain on sale of health savings accounts		—			90,673			—			—			—
Other income		8,467			7,589			6,921			11,430			6,110
Gains (losses) on sales of debt securities		(5,216	)		(173	)		(172	)		(85	)		342
Total noninterest income		70,681			165,037			80,385			89,117			65,240
Salaries and employee benefits		137,364			142,459			147,203			161,817			124,147
Occupancy		28,282			26,488			26,418			26,496			21,019
Equipment		7,389			7,591			7,328			7,550			5,168
Marketing		9,417			8,508			10,361			9,119			4,276
Technology		19,202			19,951			20,269			25,883			18,762
Communication		4,461			4,159			5,392			5,878			3,417
Professional fees		6,732			6,360			6,559			6,336			19,791
FDIC assessment		10,404			5,809			6,249			4,699			2,575
Amortization of intangibles		6,186			6,787			7,089			7,170			4,811
Amortization of tax credit investments		2,761			5,258			2,662			1,525			1,516
Property optimization		1,317			26,818			—			—			—
Other expense¹		17,196			22,487			22,914			21,002			10,107
Total noninterest expense		250,711			282,675			262,444			277,475			215,589
Income (loss) before income taxes		188,021			262,044			179,040			139,949			(36,300	)
Income tax expense (benefit)		41,421			61,309			38,887			24,964			(8,714	)
Net income (loss)	$	146,600		$	200,735		$	140,153		$	114,985		$	(27,586	)
Preferred dividends		(4,034	)		(4,034	)		(4,034	)		(4,033	)		(2,017	)
Net income (loss) applicable to common shares	$	142,566		$	196,701		$	136,119		$	110,952		$	(29,603	)

EPS	$	0.49		$	0.67		$	0.47		$	0.38		$	(0.13	)
Weighted Average Common Shares Outstanding
Basic		291,088			291,012			290,961			290,862			227,002
Diluted		292,756			293,131			292,483			291,881			227,002
Common shares outstanding (EOP)		291,922			292,903			292,880			292,893			292,959

¹ Provision for unfunded commitments is included in the provision for credit losses. The reclassification of the provision for unfunded commitments out of other expense as a component of noninterest expense was made to amounts prior to December 31, 2022 to conform to the current period presentation.


End of Period Balance Sheet (unaudited)
($ in thousands)
	March 31,			December 31,			September 30,			June 30,			March 31,
		2023			2022			2022			2022			2022
Earning Assets
Federal Reserve Bank account	$	712,388		$	269,374		$	328,391		$	334,570		$	1,545,389
Money market investments		14,668			5,606			6,374			7,774			12,419
Investments:
Treasury and government-sponsored agencies		2,236,413			2,195,175			2,186,551			2,461,173			2,527,568
Mortgage-backed securities		5,395,680			5,476,718			5,584,241			5,976,921			6,086,853
States and political subdivisions		1,785,072			1,827,164			1,829,561			1,839,333			1,840,823
Other securities		826,575			730,476			693,303			719,223			735,550
Total investments		10,243,740			10,229,533			10,293,656			10,996,650			11,190,794
Loans held for sale, at fair value		10,584			11,926			19,748			26,217			39,376
Loans:
Commercial		9,751,875			9,508,904			9,311,148			8,923,983			8,624,253
Commercial and agriculture real estate		12,908,380			12,457,070			12,227,888			11,796,503			11,337,735
Consumer:
Home equity		1,009,440			1,033,783			1,043,594			1,097,852			1,080,885
Other consumer loans		1,584,013			1,663,443			1,678,997			1,656,253			1,587,216
Subtotal of commercial and consumer loans		25,253,708			24,663,200			24,261,627			23,474,591			22,630,089
Residential real estate		6,568,666			6,460,441			6,267,306			6,079,057			5,706,155
Total loans		31,822,374			31,123,641			30,528,933			29,553,648			28,336,244
Total earning assets		42,803,754			41,640,080			41,177,102			40,918,859			41,124,222

Allowance for credit losses on loans		(298,711	)		(303,671	)		(302,254	)		(288,003	)		(280,507	)
Non-earning Assets:
Cash and due from banks		386,879			453,432			466,846			455,620			418,744
Premises and equipment, net		566,758			557,307			588,021			586,031			584,113
Operating lease right-of-use assets		183,687			189,714			187,626			192,196			201,802
Goodwill and other intangible assets		2,118,935			2,125,121			2,135,792			2,131,815			2,144,609
Company-owned life insurance		770,471			768,552			767,089			769,595			766,291
Other assets		1,310,871			1,332,837			1,195,304			982,242			875,374
Total non-earning assets		5,337,601			5,426,963			5,340,678			5,117,499			4,990,933
Total assets	$	47,842,644		$	46,763,372		$	46,215,526		$	45,748,355		$	45,834,648

Liabilities and Equity
Noninterest-bearing demand deposits	$	10,995,083		$	11,930,798		$	12,400,077		$	12,388,379		$	12,463,136
Interest-bearing:
Checking and NOW accounts		7,903,520			8,340,955			8,963,014			8,473,510			8,296,337
Savings accounts		6,030,255			6,326,158			6,616,512			6,796,152			6,871,767
Money market accounts		5,867,239			5,389,139			5,602,729			5,373,318			5,432,139
Other time deposits		3,361,979			2,775,991			2,393,083			2,479,304			2,544,011
Total core deposits		34,158,076			34,763,041			35,975,415			35,510,663			35,607,390
Brokered deposits		759,716			237,789			78,248			28,312			—
Total deposits		34,917,792			35,000,830			36,053,663			35,538,975			35,607,390

Federal funds purchased and interbank borrowings		618,955			581,489			301,031			1,561			1,721
Securities sold under agreements to repurchase		393,018			432,804			438,053			476,173			509,275
Federal Home Loan Bank advances		4,981,612			3,829,018			2,804,617			3,283,963			3,239,357
Other borrowings		746,869			743,003			721,049			622,714			597,207
Total borrowed funds		6,740,454			5,586,314			4,264,750			4,384,411			4,347,560
Operating lease liabilities		205,249			211,964			207,725			215,188			234,049
Accrued expenses and other liabilities		701,723			835,669			746,005			530,998			413,535
Total liabilities		42,565,218			41,634,777			41,272,143			40,669,572			40,602,534
Preferred stock, common stock, surplus, and retained earnings		5,985,784			5,915,017			5,751,833			5,647,916			5,570,313
Accumulated other comprehensive income (loss), net of tax		(708,358	)		(786,422	)		(808,450	)		(569,133	)		(338,199	)
Total shareholders' equity		5,277,426			5,128,595			4,943,383			5,078,783			5,232,114
Total liabilities and shareholders' equity	$	47,842,644		$	46,763,372		$	46,215,526		$	45,748,355		$	45,834,648


Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)


	Three Months Ended							Three Months Ended								Three Months Ended
	March 31, 2023							December 31, 2022								March 31, 2022
	Average			Income¹/		Yield/		Average			Income¹/			Yield/		Average			Income¹/		Yield/
Earning Assets:	Balance			Expense		Rate		Balance			Expense			Rate		Balance			Expense		Rate
Money market and other interest-earning investments	$	497,953		$	3,098	2.52	%	$	324,801		$	(259	)	(0.32) %		$	1,336,404		$	308	0.09	%
Investments:
Treasury and government-sponsored agencies		2,197,426			16,531	3.01	%		2,151,746			14,683		2.73	%		2,195,470			8,219	1.50	%
Mortgage-backed securities		5,429,200			35,090	2.59	%		5,470,753			35,344		2.58	%		4,869,038			24,377	2.00	%
States and political subdivisions		1,808,316			14,690	3.25	%		1,818,431			14,849		3.27	%		1,738,652			13,637	3.14	%
Other securities		738,139			8,604	4.66	%		702,730			7,741		4.41	%		605,552			4,144	2.74	%
Total investments		10,173,081			74,915	2.95	%		10,143,660			72,617		2.86	%		9,408,712			50,377	2.14	%
Loans:²
Commercial		9,457,089			147,620	6.24	%		9,330,906			132,711		5.69	%		5,893,907			55,283	3.75	%
Commercial and agriculture real estate		12,654,366			179,475	5.67	%		12,317,057			161,766		5.25	%		8,749,162			77,408	3.54	%
Consumer:
Home equity		929,477			19,070	8.32	%		949,925			16,926		7.07	%		783,729			7,355	3.81	%
Other consumer loans		1,706,873			19,038	4.52	%		1,766,527			19,906		4.47	%		1,320,923			14,560	4.47	%
Subtotal commercial and consumer loans		24,747,805			365,203	5.91	%		24,364,415			331,309		5.43	%		16,747,721			154,606	3.74	%
Residential real estate loans		6,523,074			58,099	3.56	%		6,373,819			59,532		3.74	%		3,990,716			33,986	3.41	%

Total loans		31,270,879			423,302	5.42	%		30,738,234			390,841		5.08	%		20,738,437			188,592	3.64	%

Total earning assets	$	41,941,913		$	501,315	4.79	%	$	41,206,695		$	463,199		4.49	%	$	31,483,553		$	239,277	3.04	%

Less: Allowance for credit losses on loans		(304,393	)						(303,009	)							(168,175	)

Non-earning Assets:
Cash and due from banks	$	437,872						$	368,874							$	268,836
Other assets		4,907,115							4,861,247								3,480,640

Total assets	$	46,982,507						$	46,133,807							$	35,064,854

Interest-Bearing Liabilities:
Checking and NOW accounts	$	7,988,579		$	19,359	0.98	%	$	8,482,651		$	13,189		0.62	%	$	6,784,653		$	596	0.04	%
Savings accounts		6,183,409			2,230	0.15	%		6,482,369			1,558		0.10	%		5,302,015			589	0.05	%
Money market accounts		5,641,288			20,010	1.44	%		5,382,254			8,091		0.60	%		3,778,682			691	0.07	%
Other time deposits		3,057,870			15,289	2.03	%		2,540,619			5,688		0.89	%		1,745,153			1,318	0.31	%
Total interest-bearing core deposits		22,871,146			56,888	1.01	%		22,887,893			28,526		0.49	%		17,610,503			3,194	0.07	%
Brokered deposits		500,530			5,705	4.62	%		129,745			1,366		4.18	%		—			—	0.00	%
Total interest-bearing deposits		23,371,676			62,593	1.09	%		23,017,638			29,892		0.52	%		17,610,503			3,194	0.07	%

Federal funds purchased and interbank borrowings		419,291			4,839	4.68	%		475,431			4,299		3.59	%		1,113			—	0.01	%
Securities sold under agreements to repurchase		412,819			779	0.77	%		409,916			556		0.54	%		449,939			96	0.09	%
Federal Home Loan Bank advances		4,273,343			37,996	3.61	%		3,266,896			25,609		3.11	%		2,589,984			5,963	0.93	%
Other borrowings		781,221			7,954	4.13	%		753,401			6,375		3.36	%		432,434			3,467	3.21	%
Total borrowed funds		5,886,674			51,568	3.55	%		4,905,644			36,839		2.98	%		3,473,470			9,526	1.11	%

Total interest-bearing liabilities	$	29,258,350		$	114,161	1.58	%	$	27,923,282		$	66,731		0.95	%	$	21,083,973		$	12,720	0.24	%

Noninterest-Bearing Liabilities and Shareholders' Equity
Demand deposits	$	11,526,267						$	12,373,495							$	9,294,876
Other liabilities		1,031,702							900,448								467,589
Shareholders' equity		5,166,188							4,936,582								4,218,416

Total liabilities and shareholders' equity	$	46,982,507						$	46,133,807							$	35,064,854

Net interest rate spread						3.21	%							3.54	%						2.80	%

Net interest margin (GAAP)						3.64	%							3.80	%						2.83	%

Net interest margin (FTE)³						3.69	%							3.85	%						2.88	%

FTE adjustment				$	5,666						$	5,378							$	3,772

¹ Interest income is reflected on a FTE.
² Includes loans held for sale.
³Represents a non-GAAP financial measure. Refer the "Non-GAAP Measures" table for reconciliations to GAAP financial measures.


Asset Quality (EOP) (unaudited)
($ in thousands)

	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
		2023			2022			2022			2022			2022
Allowance for credit losses:
Beginning allowance for credit losses on loans	$	303,671		$	302,254		$	288,003		$	280,507		$	107,341
Allowance established for acquired PCD loans		—			—			10,558			—			78,531
Provision for credit losses on loans		11,469			5,389			11,288			9,254			97,409
Gross charge-offs		(18,180	)		(7,081	)		(11,440	)		(4,096	)		(4,664	)
Gross recoveries		1,751			3,109			3,845			2,338			1,890
NCOs		(16,429	)		(3,972	)		(7,595	)		(1,758	)		(2,774	)
Ending allowance for credit losses on loans	$	298,711		$	303,671		$	302,254		$	288,003		$	280,507
Beginning allowance for credit losses on unfunded commitments	$	32,188		$	26,169		$	21,966		$	22,046		$	10,879
Provision (release) for credit losses on unfunded commitments		1,968			6,019			4,203			(80	)		11,167
Ending allowance for credit losses on unfunded commitments	$	34,156		$	32,188		$	26,169		$	21,966		$	22,046
Allowance for credit losses	$	332,867		$	335,859		$	328,423		$	309,969		$	302,553
Provision for credit losses on loans	$	11,469		$	5,389		$	11,288		$	9,254		$	97,409
Provision (release) for credit losses on unfunded commitments¹		1,968			6,019			4,203			(80	)		11,167
Provision for credit losses¹	$	13,437		$	11,408		$	15,491		$	9,174		$	108,576
NCOs / average loans²		0.21	%		0.05	%		0.10	%		0.02	%		0.05	%
Average loans²	$	31,270,299		$	30,737,698		$	29,890,008		$	28,847,003		$	20,725,313
EOP loans²		31,822,374			31,123,641			30,528,933			29,553,648			28,336,244
ACL on loans / EOP loans²		0.94	%		0.98	%		0.99	%		0.97	%		0.99	%
ACL / EOP loans²		1.05	%		1.08	%		1.08	%		1.05	%		1.07	%
Underperforming Assets:
Loans 90 days and over (still accruing)	$	1,231		$	2,650		$	767		$	882		$	1,646
NPLs:
Nonaccrual loans^3,4		234,337			238,178			233,659			214,924			227,925
TDRs still accruing⁴	N/A				15,313			13,674			15,665			20,999
Total NPLs		234,337			253,491			247,333			230,589			248,924
Foreclosed assets		10,817			10,845			11,967			12,618			19,713
Total underperforming assets	$	246,385		$	266,986		$	260,067		$	244,089		$	270,283
Classified and Criticized Assets:
Nonaccrual loans³	$	234,337		$	238,178		$	233,659		$	214,924		$	227,925
Substandard loans (still accruing)		570,229			504,657			476,724			490,566			518,341
Loans 90 days and over (still accruing)		1,231			2,650			767			882			1,646
Total classified loans - "problem loans"		805,797			745,485			711,150			706,372			747,912
Other classified assets		26,441			24,735			24,773			25,004			24,676
Criticized loans - "special mention loans"		593,307			636,069			549,994			452,835			507,689
Total classified and criticized assets	$	1,425,545		$	1,406,289		$	1,285,917		$	1,184,211		$	1,280,277
Loans 30-89 days past due	$	42,071		$	55,522		$	65,632		$	48,889		$	94,114
NPLs / EOP loans²		0.74	%		0.81	%		0.81	%		0.78	%		0.88	%
ACL to NPLs		142	%		132	%		133	%		134	%		122	%
Under-performing assets/EOP loans²		0.77	%		0.86	%		0.85	%		0.83	%		0.95	%
Under-performing assets/EOP assets		0.51	%		0.57	%		0.56	%		0.53	%		0.59	%
30+ day delinquencies²		0.14	%		0.19	%		0.22	%		0.17	%		0.34	%
¹ Excludes $0.2 million of expense to establish an allowance on held-to-maturity securities during the first quarter of 2022. Provision for unfunded commitments is included in the provision for credit losses. The reclassification of the provision for unfunded commitments out of other expense as a component of noninterest expense was made to amounts prior to December 31, 2022 to conform to the current period presentation.
² Excludes loans held for sale.
³ Includes non-accruing TDRs totaling $24.0 million at December 31, 2022, $23.8 million at September 30, 2022, $24.3 million at June 30, 2022 and $23.8 million at March 31, 2022.
⁴ As a result of accounting guidance adopted in 2023, the TDR classification is no longer applicable subsequent to December 31, 2022.
PCD - Purchased credit deteriorated TDR - Troubled debt restructuring


Non-GAAP Measures (unaudited)
($ and shares in thousands, except per share data)

	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
		2023			2022			2022			2022			2022
Earnings Per Share:
Net income applicable to common shares	$	142,566		$	196,701		$	136,119		$	110,952		$	(29,603	)
Adjustments:
Merger related charges²		14,558			20,314			22,743			36,585			52,299
Tax effect¹		(3,172	)		(5,160	)		(8,529	)		(13,057	)		(9,534	)
Merger related charges, net		11,386			15,154			14,214			23,528			42,765
Debt Securities (gains) losses		5,216			173			172			85			(342	)
Tax effect¹		(1,137	)		(44	)		(65	)		(30	)		62
Debt securities (gains) losses, net		4,079			129			107			55			(280	)
Property optimization		1,317			26,818			—			—			—
Tax effect¹		(287	)		(6,812	)		—			—			—
Property optimization, net		1,030			20,006			—			—			—
Gain on sale of health savings accounts		—			(90,673	)		—			—			—
Tax effect¹		—			23,031			—			—			—
Gain on sale of health savings accounts, net		—			(67,642	)		—			—			—
Day 1 non-PCD		—			—			—			—			96,270
Tax effect¹		—			—			—			—			(17,550	)
Day 1 non-PCD, net		—			—			—			—			78,720
Total adjustments, net		16,495			(32,353	)		14,321			23,583			121,205
Net income applicable to common shares, adjusted	$	159,061		$	164,348		$	150,440		$	134,535		$	91,602
Weighted average diluted common shares outstanding		292,756			293,131			292,483			291,881			227,002
EPS, diluted	$	0.49		$	0.67		$	0.47		$	0.38		$	(0.13	)
Adjusted EPS, diluted	$	0.54		$	0.56		$	0.51		$	0.46		$	0.40
NIM:
Net interest income	$	381,488		$	391,090		$	376,589		$	337,472		$	222,785
Add: FTE adjustment¹		5,666			5,378			4,950			4,314			3,772
Net interest income (FTE)	$	387,154		$	396,468		$	381,539		$	341,786		$	226,557
Average earning assets	$	41,941,913		$	41,206,695		$	41,180,026		$	41,003,338		$	31,483,553
NIM (GAAP)		3.64	%		3.80	%		3.66	%		3.29	%		2.83	%
NIM (FTE)		3.69	%		3.85	%		3.71	%		3.33	%		2.88	%


Non-GAAP Measures (unaudited)
($ in thousands)

	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
		2023			2022			2022			2022			2022
PPNR:
Net interest income (FTE)¹	$	387,154		$	396,468		$	381,539		$	341,786		$	226,557
Add: Noninterest income		70,681			165,037			80,385			89,117			65,240
Total revenue (FTE)		457,835			561,505			461,924			430,903			291,797
Less: Noninterest expense		(250,711	)		(282,675	)		(262,444	)		(277,475	)		(215,589	)
PPNR	$	207,124		$	278,830		$	199,480		$	153,428		$	76,208
Adjustments:
Gain on sale of health savings accounts	$	—		$	(90,673	)	$	—		$	—		$	—
Debt securities (gains) losses		5,216			173			172			85			(342	)
Noninterest income adjustments		5,216			(90,500	)		172			85			(342	)
Adjusted noninterest income		75,897			74,537			80,557			89,202			64,898
Adjusted revenue	$	463,051		$	471,005		$	462,096		$	430,988		$	291,455
Adjustments:
Merger related charges³	$	14,558		$	20,314		$	22,743		$	36,585		$	41,286
Property optimization		1,317			26,818			—			—			—
Noninterest expense adjustments		15,875			47,132			22,743			36,585			41,286
Adjusted total noninterest expense		(234,836	)		(235,543	)		(239,701	)		(240,890	)		(174,303	)
Adjusted PPNR	$	228,215		$	235,462		$	222,395		$	190,098		$	117,152
Efficiency Ratio:
Noninterest expense	$	250,711		$	282,675		$	262,444		$	277,475		$	215,589
Less: Amortization of intangibles		(6,186	)		(6,787	)		(7,089	)		(7,170	)		(4,811	)
Noninterest expense, excl. amortization of intangibles		244,525			275,888			255,355			270,305			210,778
Less: Amortization of tax credit investments		(2,761	)		(5,258	)		(2,662	)		(1,525	)		(1,516	)
Less: Noninterest expense adjustments		(15,875	)		(47,132	)		(22,743	)		(36,585	)		(41,286	)
Adjusted noninterest expense	$	225,889		$	223,498		$	229,950		$	232,195		$	167,976
Total revenue (FTE)¹	$	457,835		$	561,505		$	461,924		$	430,903		$	291,797
Less: Debt securities (gains) losses		5,216			173			172			85			(342	)
Total revenue excl. debt securities (gains) losses		463,051			561,678			462,096			430,988			291,455
Less: Gain on sale of health savings accounts		—			(90,673	)		—			—			—
Total adjusted revenue	$	463,051		$	471,005		$	462,096		$	430,988		$	291,455
Efficiency Ratio		52.8	%		49.1	%		55.3	%		62.7	%		72.3	%
Efficiency Ratio (prior presentation)⁴	N/A			N/A				56.2	%		62.7	%		76.2	%
Adjusted Efficiency Ratio		48.8	%		47.5	%		49.8	%		53.9	%		57.6	%
Adjusted Efficiency Ratio (prior presentation)⁴	N/A			N/A				50.7	%		53.9	%		57.7	%


Non-GAAP Measures (unaudited)
($ in thousands)

	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
		2023			2022			2022			2022			2022
ROAE and ROATCE:
Net income (loss) applicable to common shares	$	142,566		$	196,701		$	136,119		$	110,952		$	(29,603	)
Amortization of intangibles		6,186			6,787			7,089			7,170			4,811
Tax effect¹		(1,547	)		(1,697	)		(1,772	)		(1,793	)		(877	)
Amortization of intangibles, net		4,639			5,090			5,317			5,377			3,934
Net income (loss) applicable to common shares, excluding intangible amortization		147,205			201,791			141,436			116,329			(25,669	)
Total adjustments, net (see pg.11)		16,495			(32,353	)		14,321			23,583			121,205
Adjusted tangible net income applicable to common shares	$	163,700		$	169,438		$	155,757		$	139,912		$	95,536
Average shareholders' equity	$	5,166,188		$	4,936,582		$	5,134,153		$	5,129,900		$	4,218,416
Less: Average preferred equity		(243,719	)		(243,719	)		(243,719	)		(243,719	)		(117,210	)
Average shareholders' common equity	$	4,922,469		$	4,692,863		$	4,890,434		$	4,886,181		$	4,101,206
Average goodwill and other intangible assets		(2,122,157	)		(2,132,480	)		(2,129,858	)		(2,136,964	)		(1,550,624	)
Average tangible shareholder's common equity	$	2,800,312		$	2,560,383		$	2,760,576		$	2,749,217		$	2,550,582
ROAE		11.6	%		16.8	%		11.1	%		9.1	%		(2.9	)%
ROAE, adjusted		12.9	%		14.0	%		12.3	%		11.0	%		8.9	%
ROATCE		21.0	%		31.5	%		20.5	%		16.9	%		(4.0	)%
ROATCE, adjusted		23.4	%		26.5	%		22.6	%		20.4	%		15.0	%


Non-GAAP Measures (unaudited)
($ in thousands)

	As of
	March 31,			December 31,			September 30,			June 30,			March 31,
		2023			2022			2022			2022			2022
Tangible Common Equity:
Shareholders' equity	$	5,277,426		$	5,128,595		$	4,943,383		$	5,078,783		$	5,232,114
Less: Preferred equity		(243,719	)		(243,719	)		(243,719	)		(243,719	)		(243,719	)
Shareholders' common equity	$	5,033,707		$	4,884,876		$	4,699,664		$	4,835,064		$	4,988,395
Less: Goodwill and other intangible assets		(2,118,935	)		(2,125,121	)		(2,135,792	)		(2,131,815	)		(2,144,609	)
Tangible shareholders' common equity	$	2,914,772		$	2,759,755		$	2,563,872		$	2,703,249		$	2,843,786

Total assets	$	47,842,644		$	46,763,372		$	46,215,526		$	45,748,355		$	45,834,648
Less: Goodwill and other intangible assets		(2,118,935	)		(2,125,121	)		(2,135,792	)		(2,131,815	)		(2,144,609	)
Tangible assets	$	45,723,709		$	44,638,251		$	44,079,734		$	43,616,540		$	43,690,039

Risk-weighted assets⁵	$	36,856,873		$	35,950,900		$	34,741,765		$	33,662,205		$	32,341,335

Tangible common equity to tangible assets		6.37	%		6.18	%		5.82	%		6.20	%		6.51	%
Tangible common equity to risk-weighted assets⁵		7.91	%		7.68	%		7.38	%		8.03	%		8.79	%
Tangible Common Equity:
Common shares outstanding		291,922			292,903			292,880			292,893			292,959
Tangible common book value	$	9.98		$	9.42		$	8.75		$	9.23		$	9.71


¹Tax-effect calculations use management's estimate of the full year FTE tax rates (federal + state). ²Includes $11.0 million of provision for unfunded commitments for the three months ended March 31, 2022. ³Excludes $11.0 million of provision for unfunded commitments that is included in provision for credit losses for the three months ended March 31, 2022. ⁴ Presented as calculated prior to December 31, 2022, which included the provision for unfunded commitments in noninterest expense. Management believes that removing the provision for unfunded commitments from this metric enhances comparability for peer comparison purposes. ⁵March 31, 2023 figures are preliminary.

Old National's 1st Quarter Results Supported by Strong Deposit Franchise, Ample Liquidity, Stable Credit and Expense Discipline

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