Old National's strong 3rd quarter driven by commercial loan growth of 7% annualized

Rhea-AI Summary

Old National Bancorp (NASDAQ: ONB) reported a strong 3Q21 with a net income of $71.7 million and a diluted EPS of $0.43. Adjusted net income remained at $71.8 million, indicating no change in earnings per share. The quarter saw significant commercial loan growth, up $171.7 million, while total loans decreased by $198.7 million primarily due to a drop in PPP loans. Deposits rose 7.3% to $18.2 billion, driven by an increase in noninterest-bearing deposits. The company continues its merger with First Midwest Bank, pending Federal Reserve approval.

Positive

• Net income increased to $71.7 million, or $0.43 per diluted share.
• Strong commercial loan growth of $171.7 million, excluding PPP loans.
• Total deposits grew by 7.3% to $18.2 billion.
• Efficient cost management resulted in a reduced efficiency ratio of 56.86%.
• Strong credit quality with non-performing loans down to 0.94%.

Negative

• Total loans decreased by $198.7 million, or 5.7% annualized.
• Significant drop in PPP loans, declining by $366.1 million during the quarter.

EVANSVILLE, Ind., Oct. 19, 2021 (GLOBE NEWSWIRE) --  

Old National Bancorp (NASDAQ: ONB) reports 3Q21 net income of $71.7 million, diluted EPS of $0.43.

Adjusted1 net income of $71.8 million, or $0.43 per diluted share.

CEO COMMENTARY:

"Old National's excellent 3rd quarter results were driven by multiple success factors, including strong commercial loan growth, good deposit growth, increased fee income, reduced expenses and strong credit metrics," said Chairman and CEO Jim Ryan. "In addition, we continued to make smooth, steady progress throughout the quarter on activities related to our merger of equals with First Midwest Bank, which we expect to be completed as soon as we receive Federal Reserve approval. As previously disclosed, we have already received approval from the OCC."

THIRD QUARTER HIGHLIGHTS²:

Net income	Net income of $71.7 million
	Earnings per diluted share of $0.43
Net interest income/NIM	Net interest income on a fully taxable equivalent basis of $155.1 million compared to $153.4 million
	Net interest margin on a fully taxable equivalent basis of 2.92% compared to 2.91%
Operating Performance	Pre-provision net revenue1 (“PPNR”) of $88.3 million
	Adjusted PPNR1 of $90.2 million
	Noninterest expense of $121.3 million
	Adjusted noninterest expense1 of $118.2 million
	Efficiency ratio1 of 56.86%
	Adjusted efficiency ratio1 of 55.38%
Loans and Credit Quality	End-of-period total loans3 of $13,636.1 million compared to $13,834.8 million Total commercial loans increased $171.7 million, excluding the $366.1 million decrease in PPP loans
	Third-quarter total commercial production of $1.0 billion
	Provision for credit losses was a recapture of $4.6 million
	September 30 pipeline of $2.7 billion
	Net recoveries of $3.0 million compared to net recoveries of $336 thousand
	Non-performing loans of 0.94% of total loans compared to 1.03%
Return Profile & Capital	Return on average common equity of 9.48%
	Return on average tangible common equity1 of 15.13%
	Adjusted return on average tangible common equity1 of 15.16%
	No shares of common stock were repurchased during the current quarter
Notable Items	$1.7 million in tax credit amortization
	$1.4 million in merger charges

¹ Non-GAAP financial measure that Management believes is useful in evaluating the financial results of the Company – please refer to the Non GAAP reconciliations contained in this release ² Comparisons are on a linked-quarter basis, unless otherwise noted ³ Includes loans held for sale

RESULTS OF OPERATIONS
Old National Bancorp ("Old National") reported third quarter 2021 net income of $71.7 million, or $0.43 per diluted share.

Included in the third quarter were pre-tax charges of $1.4 million for the pending merger with First Midwest Bancorp, Inc. Excluding these charges from the current quarter and netting out debt securities gains, adjusted net income was $71.8 million, or $0.43 per diluted share.

LOANS
Strong commercial production results in over 7% annualized commercial loan growth.

• Period-end total loans were $13,636.1 million at September 30, 2021, a decrease of $198.7 million, or 5.7% annualized, when compared to the $13,834.8 million at June 30, 2021.
• Paycheck Protection Program (PPP) loans declined $366.1 million to $354.9 million at September 30, 2021, compared to $721.1 million at June 30, 2021.
• Excluding the $366.1 million decrease in PPP loans during the quarter, total loans increased $167.5 million, or 5.1% annualized.
• Excluding PPP loans, total commercial loans increased $171.7 million, or 7.4% annualized.
• Total commercial loan production in the third quarter was $1.0 billion; period-end pipeline totaled $2.7 billion.
• Consumer loans decreased $15.1 million to $1,564.2 million and residential mortgage loans increased $9.7 million to $2,224.8 million.
• Average total loans in the third quarter were $13,687.3 million, a decrease of $308.0 million from the second quarter of 2021.
• Excluding PPP loans, average total loans in the third quarter increased $185.8 million from the second quarter of 2021.

DEPOSITS
Total deposit growth bolstered by strong increase in noninterest-bearing demand deposits.

• Period-end total deposits were $18,196.1 million at September 30, 2021, an increase of $327.2 million, or 7.3% annualized, when compared to the $17,868.9 million at June 30, 2021.
• Noninterest-bearing deposits increased $297.8 million to $6,440.5 million at September 30, 2021 from $6,142.7 million at June 30, 2021.
• On average, total deposits in the third quarter increased $122.9 million to $17,976.0 million, compared to $17,853.1 million in the second quarter of 2021.
  

NET INTEREST INCOME AND MARGIN
Net interest income and margin both increase as funding costs stabilize.

• Net interest income increased to $151.6 million in the third quarter of 2021 compared to $149.9 million in the second quarter of 2021.
• The net interest margin on a fully taxable equivalent basis increased 1 basis point to 2.92% compared to 2.91% in the second quarter of 2021.
• PPP interest and net fees combined were $12.2 million, or 16 basis points of net interest margin, in the third quarter of 2021 compared to $11.9 million, or 9 basis points of net interest margin, in the second quarter of 2021.
• Accretion income was $3.0 million, or 6 basis points of net interest margin, in the third quarter of 2021 compared to $5.1 million, or 10 basis points of net interest margin, in the second quarter of 2021.
• Interest collected on nonaccrual loans was $2.3 million, or 4 basis points of net interest margin, in the third quarter of 2021 compared to $1.2 million, or 2 basis points of net interest margin, in the second quarter of 2021.
• The cost of total deposits remained unchanged at 0.06% in the third quarter of 2021 and the cost of total interest-bearing deposits also remained unchanged at 0.09%.

CREDIT QUALITY
Strong credit quality remains a hallmark of the Old National franchise.

• Old National recorded a provision recapture in the third quarter of 2021 of $4.6 million, compared to $4.9 million in provision recapture recorded in the second quarter of 2021.
• Net recoveries in the third quarter were $3.0 million, compared to net recoveries of $336 thousand in the second quarter of 2021.
• 30-89 day delinquencies were 0.10% at the end of the third quarter.
• Non-performing loans decreased as a percentage of total loans to 0.94%.
• Loans acquired from previous acquisitions were recorded at fair value at the acquisition date. As of September 30, 2021, the remaining discount on these acquired loans was $37.7 million.
• The allowance for credit losses stood at $107.9 million, or 0.79% of total loans at September 30, 2021.

NONINTEREST INCOME
Noninterest income increased primarily due to higher mortgage banking revenue.

• Total noninterest income for the third quarter of 2021 was $54.5 million, an increase of $3.0 million from the second quarter of 2021.
• Mortgage banking revenue increased $3.0 million when compared to the second quarter of 2021, due primarily to a stabilizing pipeline valuation.
• Gains on sales of debt securities increased $0.5 million when compared to the second quarter of 2021.
  

NONINTEREST EXPENSE
Decline in third quarter expenses due to reductions in personnel and occupancy expenses.

• Noninterest expense for the third quarter of 2021 was $121.3 million and included $1.4 million in diligence, integration and merger charges and $1.7 million in tax credit amortization.
• Excluding these items, adjusted noninterest expense for the third quarter was $118.2 million, compared to the $120.9 million in adjusted noninterest expense in the second quarter of 2021.
• The third quarter efficiency ratio was 56.86%, while the adjusted efficiency ratio was 55.38%.
  

INCOME TAXES

• On a fully taxable-equivalent basis, income tax expense in the third quarter was $21.2 million, resulting in a 22.8% FTE tax rate, compared to 21.7% in the second quarter of 2021.
• Income tax expense included $1.5 million in tax credit benefit.

CAPITAL AND LIQUIDITY
Capital ratios remain strong.

• At the end of the third quarter, preliminary total risk-based capital was 12.84% and preliminary regulatory tier 1 capital was 12.08%.
• Tangible common equity to tangible assets was 8.55% at the end of the third quarter compared to 8.47% in the second quarter of 2021.
• The Company did not repurchase any shares of common stock during the third quarter.
• A low loan to deposit ratio of 74.9%, combined with existing funding sources plus available unencumbered, high-quality collateral, provides strong liquidity.

NON-GAAP RECONCILIATIONS

($ in millions, except EPS, shares in 000s)	3Q21				Adjustments4				Adjusted 3Q21
Total Revenues (FTE)	$	209.6			$	(1.2	)		$	208.4
Less: Provision for Credit Losses	4.6				—				4.6
Less: Noninterest Expenses	(121.3		)		1.4				(119.9		)
Income before Income Taxes (FTE)	$	92.9			$	0.2			$	93.1
Income Taxes (FTE)	(21.2		)		(0.1		)		(21.3		)
Net Income	$	71.7			$	0.1			$	71.8
Average Shares Outstanding	165,939				—				165,939
Earnings Per Share - Diluted	$	0.43			$	—			$	0.43

⁴ Tax-effect calculations use the current statutory FTE tax rates (federal + state)

($ in millions)	3Q21				2Q21
Net Interest Income	$	151.6			$	149.9
Add: FTE Adjustment	3.5				3.5
Net Interest Income (FTE)	$	155.1			$	153.4
Average Earning Assets	$	21,228.6			$	21,095.3
Net Interest Margin (FTE)	2.92		%		2.91		%

($ in millions)	3Q21				3Q20
Net Interest Income	$	151.6			$	145.6
Add: FTE Adjustment	3.5				3.4
Net Interest Income (FTE)	$	155.1			$	149.0
Add: Total Noninterest Income	54.5				64.7
Less: Noninterest Expense	121.3				120.2
Pre-Provision Net Revenue	$	88.3			$	93.5
Less: Debt Securities Gains/Losses	(1.2		)		(4.9		)
Add: Diligence, Acquisition and Integration Charges	1.4				—
Add: ONB Way Charges	—				2.9
Add: Amortization of Tax Credit Investments	1.7				3.1
Adjusted Pre-Provision Net Revenue	$	90.2			$	94.6

($ in millions)	3Q21				2Q21				3Q20
Noninterest Expense	$	121.3			$	129.6			$	120.2
Less: ONB Way Charges	—				(0.4		)		(2.9		)
Less: Diligence, Acquisition and Integration Charges	(1.4		)		(6.5		)		—
Noninterest Expense less Charges	$	119.9			$	122.7			$	117.3
Less: Amortization of Tax Credit Investments	(1.7		)		(1.8		)		(3.1		)
Adjusted Noninterest Expense	$	118.2			$	120.9			$	114.2
Less: Intangible Amortization	(2.8		)		(2.9		)		(3.4		)
Adjusted Noninterest Expense Less Intangible Amortization	$	115.4			$	118.0			$	110.8
Net Interest Income	$	151.6			$	149.9			$	145.6
FTE Adjustment	3.5				3.5				3.4
Net Interest Income (FTE)	$	155.1			$	153.4			$	149.0
Total Noninterest Income	54.5				51.5				64.7
Total Revenue (FTE)	$	209.6			$	204.9			$	213.7
Less: Debt Securities Gains/Losses	(1.2		)		(0.7		)		(4.9		)
Adjusted Total Revenue (FTE)	$	208.4			$	204.2			$	208.8
Efficiency Ratio	56.86			%	62.05			%	55.93			%
Adjusted Efficiency Ratio	55.38			%	57.74			%	53.06			%

                

($ in millions)	3Q21				2Q21
Net Income	$	71.7			$	62.8
Add: Intangible Amortization (net of tax5)	2.1				2.2
Tangible Net Income	$	73.8			$	65.0
Less: Securities Gains/Losses (net of tax5)	(0.9		)		(0.5		)
Add: Diligence, Acquisition and Integration Charges (net of tax5)	1.1				4.9
Add: ONB Way Charges (net of tax5)	—				0.3
Adjusted Tangible Net Income	$	74.0			$	69.7
Average Total Shareholders’ Equity	3,027.9				2,992.7
Less: Average Goodwill	(1,037.0		)		(1,037.0		)
Less: Average Intangibles	(38.6		)		(41.4		)
Average Tangible Shareholders’ Equity	$	1,952.3			$	1,914.3
Return on Average Tangible Common Equity	15.13			%	13.58			%
Adjusted Return on Average Tangible Common Equity	15.16			%	14.56			%

⁵ Tax-effect calculations use the current statutory FTE tax rates (federal + state)

CONFERENCE CALL AND WEBCAST
Old National will host a conference call and live webcast at 9:00 a.m. Central Time on Tuesday, October 19, 2021, to review third-quarter 2021 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. (877) 660-9071 or International (929) 517-9523, Conference I.D. 4242648. A replay of the call will also be available from Noon Central Time on October 19 through November 2. To access the replay, dial (855) 859-2056, Conference ID Code 4242648.

ABOUT OLD NATIONAL
Old National Bancorp (NASDAQ: ONB), the holding company of Old National Bank, is the largest bank holding company headquartered in Indiana. With $24.0 billion in assets, it ranks among the top 100 banking companies in the U.S. and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for ten consecutive years.  Since its founding in Evansville in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships and keeping our clients at the center of all we do. This is an approach to business that we call The ONB Way. Today, Old National’s footprint includes Indiana, Kentucky, Michigan, Minnesota and Wisconsin. 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
This earnings release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Old National’s results of operations or financial position. 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 of this release.

FORWARD-LOOKING STATEMENTS
This communication includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to Old National’s future plans, objectives, performance, revenues, growth, profits, operating expenses or Old National’s underlying assumptions; First Midwest’s and Old National’s beliefs, goals, intentions, and expectations regarding the proposed transaction, revenues, earnings, loan production, asset quality, and capital levels, among other matters; our estimates of future costs and benefits of the actions we may take; our assessments of expected losses on loans; our assessments of interest rate and other market risks; our ability to achieve our financial and other strategic goals; the expected timing of completion of the proposed transaction; the expected cost savings, synergies and other anticipated benefits from the proposed transaction; and other statements that are not historical facts.

Forward‐looking statements are typically identified by such words as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “should,” “will,” and other similar words and expressions, and are subject to numerous assumptions, risks, and uncertainties, which change over time. These forward-looking statements include, without limitation, those relating to the terms, timing and closing of the proposed transaction.

Additionally, forward‐looking statements speak only as of the date they are made; Old National does not assume any duty, and does not undertake, to update such forward‐looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise. Furthermore, because forward‐looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those indicated in such forward-looking statements as a result of a variety of factors, many of which are beyond the control of Old National. Such statements are based upon the current beliefs and expectations of the management of Old National and are subject to significant risks and uncertainties outside of the control of the parties. Caution should be exercised against placing undue reliance on forward-looking statements. The factors that could cause actual results to differ materially include the following: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between First Midwest and Old National; the outcome of any legal proceedings that may be instituted against First Midwest or Old National; the possibility that the proposed transaction will not close when expected or at all because required regulatory or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated (and the risk that required regulatory approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction); the ability of First Midwest and Old National to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of either or both parties to the proposed transaction; the possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where First Midwest and Old National do business; certain restrictions during the pendency of the proposed transaction that may impact the parties’ ability to pursue certain business opportunities or strategic transactions; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management’s attention from ongoing business operations and opportunities; the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes or at all and to successfully integrate First Midwest’s operations and those of Old National; such integration may be more difficult, time consuming or costly than expected; revenues following the proposed transaction may be lower than expected; First Midwest’s and Old National’s success in executing their respective business plans and strategies and managing the risks involved in the foregoing; the dilution caused by Old National’s issuance of additional shares of its capital stock in connection with the proposed transaction; effects of the announcement, pendency or completion of the proposed transaction on the ability of First Midwest and Old National to retain customers and retain and hire key personnel and maintain relationships with their suppliers, and on their operating results and businesses generally; risks related to the potential impact of general economic, political and market factors on the companies or the proposed transaction and other factors that may affect future results of First Midwest and Old National; uncertainty as to the extent of the duration, scope, and impacts of the COVID-19 pandemic on First Midwest, Old National and the proposed transaction; and the other factors discussed in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of each of First Midwest’s and Old National’s Annual Report on Form 10‐K for the year ended December 31, 2020, in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of each of First Midwest’s and Old National’s Quarterly Report on Form 10‐Q for the quarter ended June 30, 2021, and in other reports First Midwest and Old National file with the U.S. Securities and Exchange Commission (the “SEC”).

Financial Highlights (unaudited)
($ and shares in thousands, except per share data)
	Three Months Ended													Nine Months Ended
	September 30,				June 30,				September 30,					September 30,				September 30,
	2021				2021				2020					2021				2020
Income Statement
Net interest income	$	151,572			$	149,927			$	145,573				$	449,619			$	435,015
Tax equivalent adjustment (1)	3,501				3,470				3,379					10,471				10,069
Net interest income - tax equivalent basis	155,073				153,397				148,952					460,090				445,084
Provision for credit losses	(4,613		)		(4,929		)		—					(26,898		)		39,495
Noninterest income	54,515				51,508				64,759					162,735				180,722
Noninterest expense	121,274				129,618				120,234					368,632				399,099
Net income	71,746				62,786				77,944					221,350				152,289
Per Common Share Data
Weighted average diluted shares	165,939				165,934				165,419					165,862				166,370
Net income (diluted)	$	0.43			$	0.38			$	0.47				$	1.33			$	0.92
Cash dividends	0.14				0.14				0.14					0.42				0.42
Common dividend payout ratio (2)	33			%	37			%	30			%		31			%	46		%
Book value	$	18.31			$	18.05			$	17.67				$	18.31			$	17.67
Stock price	16.95				17.61				12.56					16.95				12.56
Tangible common book value (3)	11.83				11.55				11.10					11.83				11.10
Performance Ratios
Return on average assets	1.20			%	1.06			%	1.40			%		1.25			%	0.95		%
Return on average common equity	9.48			%	8.39			%	10.79			%		9.85			%	7.11		%
Return on tangible common equity (3)	15.05			%	13.58			%	17.56			%		15.49			%	11.66		%
Return on average tangible common equity (3)	15.13			%	13.58			%	17.88			%		15.84			%	12.12		%
Net interest margin (FTE)	2.92			%	2.91			%	3.03			%		2.92			%	3.15		%
Efficiency ratio (4)	56.86			%	62.05			%	55.93			%		58.14			%	63.11		%
Net charge-offs (recoveries) to average loans	(0.09		)	%	(0.01		)	%	(0.09		)	%		(0.03		)	%	0.04		%
Allowance for credit losses to ending loans	0.79			%	0.79			%	0.95			%		0.79			%	0.95		%
Non-performing loans to ending loans	0.94			%	1.03			%	1.15			%		0.94			%	1.15		%
Balance Sheet (EOP)
Total loans	$	13,584,828			$	13,784,677			$	13,892,509				$	13,584,828				$13,892,509
Total assets		24,018,733				23,675,666				22,460,476					24,018,733				22,460,476
Total deposits		18,196,149				17,868,911				16,506,494					18,196,149				16,506,494
Total borrowed funds		2,536,303				2,559,113				2,725,731					2,536,303				2,725,731
Total shareholders' equity		3,035,892				2,991,118				2,921,149					3,035,892				2,921,149
Capital Ratios (3)
Risk-based capital ratios (EOP):
Tier 1 common equity	12.08			%	11.95			%	11.84			%		12.08			%	11.84		%
Tier 1	12.08			%	11.95			%	11.84			%		12.08			%	11.84		%
Total	12.84			%	12.73			%	12.81			%		12.84			%	12.81		%
Leverage ratio (to average assets)	8.54			%	8.38			%	8.15			%		8.54			%	8.15		%
Total equity to assets (averages)	12.69			%	12.61			%	12.97			%		12.69			%	13.33		%
Tangible common equity to tangible assets	8.55			%	8.47			%	8.58			%		8.55			%	8.58		%
Nonfinancial Data
Full-time equivalent employees		2,410				2,465				2,484					2,410				2,484
Banking centers		162				162				162					162				162
(1) Calculated using the federal statutory tax rate in effect of 21% for all periods.
(2) Cash dividends per share divided by net income per share (basic).
(3) Represents a non-GAAP financial measure. Refer the "Non-GAAP Measures" table for reconciliations to GAAP financial measures.
September 30, 2021 capital ratios are preliminary.
(4) Efficiency ratio is defined as noninterest expense before amortization of intangibles as a percent of FTE net interest income and
noninterest revenues, excluding net gains from debt securities transactions. This presentation excludes amortization of intangibles
and net debt securities gains, as is common in other company releases, and better aligns with true operating performance.
FTE - Fully taxable equivalent basis      EOP - End of period actual balances

Income Statement (unaudited)
($ and shares in thousands, except per share data)
	Three Months Ended												Nine Months Ended
	September 30,				June 30,				September 30,				September 30,				September 30,
	2021				2021				2020				2021				2020
Interest income	$	162,026			$	160,458			$	160,086			$	481,721			$	490,059
Less: interest expense	10,454				10,531				14,513				32,102				55,044
Net interest income	151,572				149,927				145,573				449,619				435,015
Provision for credit losses	(4,613		)		(4,929		)		—				(26,898		)		39,495
Net interest income after provision for credit losses	156,185				154,856				145,573				476,517				395,520
Wealth management fees	10,134				10,734				9,239				30,576				27,547
Service charges on deposit accounts	8,926				8,514				8,698				25,564				26,357
Debit card and ATM fees	4,942				5,583				5,276				15,668				15,106
Mortgage banking revenue	10,870				7,827				18,110				35,222				46,542
Investment product fees	6,475				6,042				5,351				18,381				16,070
Capital markets income	6,017				5,871				5,428				15,603				15,935
Company-owned life insurance	2,355				2,783				2,830				7,852				8,878
Other income	3,589				3,462				4,906				9,977				13,681
Gains (losses) on sales of debt securities	1,207				692				4,921				3,892				10,606
Total noninterest income	54,515				51,508				64,759				162,735				180,722
Salaries and employee benefits	71,005				72,640				69,860				211,762				215,589
Occupancy	12,757				14,054				13,930				41,683				42,308
Equipment	3,756				4,506				3,754				12,231				12,912
Marketing	3,267				2,632				2,140				7,961				7,632
Data processing	11,508				11,697				9,628				35,558				28,724
Communication	2,372				2,411				2,241				7,661				7,335
Professional fees	3,416				8,528				3,083				14,668				10,921
FDIC assessment	1,628				1,226				1,319				4,461				4,942
Amortization of intangibles	2,779				2,909				3,459				8,763				10,847
Amortization of tax credit investments	1,736				1,813				3,115				4,751				8,917
Other expense	7,050				7,202				7,705				19,133				48,972
Total noninterest expense	121,274				129,618				120,234				368,632				399,099
Income before income taxes	89,426				76,746				90,098				270,620				177,143
Income tax expense	17,680				13,960				12,154				49,270				24,854
Net income	$	71,746			$	62,786			$	77,944			$	221,350			$	152,289
Diluted Earnings Per Share
Net income	$	0.43			$	0.38			$	0.47			$	1.33			$	0.92
Average Common Shares Outstanding
Basic		165,258				165,175				164,773				165,144				165,748
Diluted		165,939				165,934				165,419				165,862				166,370
Common shares outstanding at end of period		165,814				165,732				165,333				165,814				165,333

Balance Sheet (unaudited)
($ in thousands)
	September 30,				June 30,				September 30,
	2021				2021				2020
Assets
Federal Reserve Bank account	$	600,581			$	287,446			$	87,682
Money market investments	16,294				15,294				13,437
Investments:
Treasury and government-sponsored agencies	1,803,273				1,657,079				501,771
Mortgage-backed securities	3,354,701				3,280,983				3,382,280
States and political subdivisions	1,609,283				1,567,931				1,426,495
Other securities	442,503				441,037				462,958
Total investments	7,209,760				6,947,030				5,773,504
Loans held for sale, at fair value	51,306				50,121				85,091
Loans:
Commercial	3,505,183				3,802,943				4,264,568
Commercial and agriculture real estate	6,290,632				6,187,318				5,701,493
Consumer:
Home equity	554,322				549,951				549,115
Other consumer loans	1,009,909				1,029,409				1,112,034
Subtotal of commercial and consumer loans	11,360,046				11,569,621				11,627,210
Residential real estate	2,224,782				2,215,056				2,265,299
Total loans	13,584,828				13,784,677				13,892,509
Total earning assets	21,462,769				21,084,568				19,852,223
Allowance for credit losses	(107,868		)		(109,444		)		(131,388		)
Non-earning Assets:
Cash and due from banks	180,583				188,391				229,631
Premises and equipment, net	476,036				484,879				463,253
Operating lease right-of-use assets	69,912				72,207				77,482
Goodwill and other intangible assets	1,074,245				1,077,024				1,086,252
Company-owned life insurance	461,310				459,565				455,975
Other assets	401,746				418,476				427,048
Total non-earning assets	2,663,832				2,700,542				2,739,641
Total assets	$	24,018,733			$	23,675,666			$	22,460,476
Liabilities and Equity
Noninterest-bearing demand deposits	$	6,440,526			$	6,142,724			$	5,463,007
Interest-bearing:
Checking and NOW accounts	4,956,012				4,921,430				4,588,432
Savings accounts	3,708,807				3,675,701				3,287,302
Money market accounts	2,097,967				2,126,537				1,904,404
Other time deposits	992,837				1,002,519				1,206,658
Total core deposits	18,196,149				17,868,911				16,449,803
Brokered deposits	—				—				56,691
Total deposits	18,196,149				17,868,911				16,506,494
Federal funds purchased and interbank borrowings	34				1,523				1,259
Securities sold under agreements to repurchase	375,247				396,129				399,141
Federal Home Loan Bank advances	1,890,054				1,891,143				2,087,648
Other borrowings	270,968				270,318				237,683
Total borrowed funds	2,536,303				2,559,113				2,725,731
Operating lease liabilities	76,771				81,333				88,552
Accrued expenses and other liabilities	173,618				175,191				218,550
Total liabilities	20,982,841				20,684,548				19,539,327
Common stock, surplus, and retained earnings	2,979,082				2,928,856				2,771,865
Accumulated other comprehensive income (loss), net of tax	56,810				62,262				149,284
Total shareholders' equity	3,035,892				2,991,118				2,921,149
Total liabilities and shareholders' equity	$	24,018,733			$	23,675,666			$	22,460,476

Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
		Three Months Ended										Three Months Ended										Three Months Ended
		September 30, 2021										June 30, 2021										September 30, 2020
		Average				Income (1)/			Yield/			Average				Income (1)/			Yield/			Average				Income (1)/			Yield/
Earning Assets:		Balance				Expense			Rate			Balance				Expense			Rate			Balance				Expense			Rate
Money market and other interest-earning
investments		$	467,572			$	177		0.15	%		$	232,723			$	48		0.08	%		$	137,880			$	59		0.17	%
Investments:
Treasury and government-sponsored agencies		1,730,553				6,968			1.61	%		1,637,396				5,967			1.46	%		454,005				2,457			2.17	%
Mortgage-backed securities		3,313,027				14,509			1.75	%		3,287,254				15,067			1.83	%		3,342,284				17,478			2.09	%
States and political subdivisions		1,586,743				12,609			3.18	%		1,503,447				12,364			3.29	%		1,383,765				11,860			3.43	%
Other securities		443,393				2,638			2.38	%		439,197				2,690			2.45	%		487,405				2,922			2.40	%
Total investments		7,073,716				36,724			2.08	%		6,867,294				36,088			2.10	%		5,667,459				34,717			2.45	%
Loans: (2)
Commercial		3,645,197				36,139			3.88	%		4,019,553				34,715			3.42	%		4,274,894				33,223			3.04	%
Commercial and agriculture real estate		6,200,144				57,820			3.65	%		6,146,057				57,655			3.71	%		5,546,486				55,891			3.94	%
Consumer:
Home equity		549,229				4,448			3.21	%		538,999				4,201			3.13	%		551,380				4,336			3.13	%
Other consumer loans		1,018,385				9,690			3.77	%		1,034,439				9,747			3.78	%		1,120,681				11,635			4.13	%
Subtotal commercial and consumer loans		11,412,955				108,097			3.76	%		11,739,048				106,318			3.63	%		11,493,441				105,085			3.64	%
Residential real estate loans		2,274,347				20,529			3.61	%		2,256,215				21,474			3.81	%		2,355,512				23,604			4.01	%
Total loans		13,687,302				128,626			3.70	%		13,995,263				127,792			3.62	%		13,848,953				128,689			3.66	%
Total earning assets		$	21,228,590			$	165,527		3.08	%		$	21,095,280			$	163,928		3.09	%		$	19,654,292			$	163,465		3.29	%
Less: Allowance for credit losses		(111,216		)								(117,020		)								(132,447		)
Non-earning Assets:
Cash and due from banks		$	272,855									$	238,326									$	346,343
Other assets		2,479,079										2,520,937										2,405,517
Total assets		$	23,869,308									$	23,737,523									$	22,273,705
Interest-Bearing Liabilities:
Checking and NOW accounts		$	4,873,914			$	484		0.04	%		$	4,948,773			$	513		0.04	%		$	4,607,427			$	886		0.08	%
Savings accounts		3,678,944				500			0.05	%		3,647,952				492			0.05	%		3,232,375				634			0.08	%
Money market accounts		2,110,981				438			0.08	%		2,081,286				433			0.08	%		1,902,407				724			0.15	%
Other time deposits		998,060				1,156			0.46	%		1,024,777				1,293			0.51	%		1,253,058				2,852			0.91	%
Total interest-bearing core deposits		11,661,899				2,578			0.09	%		11,702,788				2,731			0.09	%		10,995,267				5,096			0.18	%
Brokered deposits		—				—			0.00	%		9,890				1			0.05	%		150,545				201			0.53	%
Total interest-bearing deposits		11,661,899				2,578			0.09	%		11,712,678				2,732			0.09	%		11,145,812				5,297			0.19	%
Federal funds purchased and interbank borrowings		689				—			0.00	%		1,460				—			0.02	%		18,347				12			0.25	%
Securities sold under agreements to repurchase		384,724				90			0.09	%		406,251				95			0.09	%		385,149				160			0.16	%
Federal Home Loan Bank advances		1,890,916				5,326			1.12	%		1,906,078				5,218			1.10	%		2,021,468				6,709			1.32	%
Other borrowings		270,597				2,460			3.64	%		269,259				2,486			3.69	%		237,811				2,335			3.93	%
Total borrowed funds		2,546,926				7,876			1.23	%		2,583,048				7,799			1.21	%		2,662,775				9,216			1.38	%
Total interest-bearing liabilities		$	14,208,825			$	10,454		0.29	%		$	14,295,726			$	10,531		0.30	%		$	13,808,587			$	14,513		0.42	%
Noninterest-Bearing Liabilities and Shareholders' Equity
Demand deposits		$	6,314,100									$	6,140,424									$	5,291,037
Other liabilities		318,448										308,680										284,536
Shareholders' equity		3,027,935										2,992,693										2,889,545
Total liabilities and shareholders' equity		$	23,869,308									$	23,737,523									$	22,273,705
Net interest rate spread									2.79	%									2.79	%									2.87	%
Net interest margin (FTE)									2.92	%									2.91	%									3.03	%
FTE adjustment						$	3,501									$	3,470									$	3,379
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.

Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
		Nine Months Ended										Nine Months Ended
		September 30, 2021										September 30, 2020
		Average				Income (1)/			Yield/			Average				Income (1)/			Yield/
Earning Assets:		Balance				Expense			Rate			Balance				Expense			Rate
Money market and other interest-earning
investments		$	357,151			$	313		0.12	%		$	94,149			$	442		0.63	%
Investments:
Treasury and government-sponsored agencies		1,509,931				17,820			1.57	%		513,055				9,187			2.39	%
Mortgage-backed securities		3,304,200				45,408			1.83	%		3,231,439				54,474			2.25	%
States and political subdivisions		1,523,175				37,174			3.25	%		1,317,136				35,026			3.55	%
Other securities		445,298				8,071			2.42	%		493,016				9,361			2.53	%
Total investments		$	6,782,604			$	108,473		2.13	%		$	5,554,646			$	108,048		2.59	%
Loans: (2)
Commercial		3,878,630				106,421			3.62	%		3,745,803				94,005			3.30	%
Commercial and agriculture real estate		6,109,795				171,221			3.70	%		5,359,254				176,337			4.32	%
Consumer:
Home equity		544,111				12,801			3.15	%		554,800				14,180			3.41	%
Other consumer loans		1,037,038				29,613			3.82	%		1,141,399				35,384			4.14	%
Subtotal commercial and consumer loans		11,569,574				320,056			3.70	%		10,801,256				319,906			3.96	%
Residential real estate loans		2,268,142				63,350			3.72	%		2,365,037				71,732			4.04	%
Total loans		13,837,716				383,406			3.67	%		13,166,293				391,638			3.93	%
Total earning assets		$	20,977,471			$	492,192		3.11	%		$	18,815,088			$	500,128		3.52	%
Less: Allowance for credit losses		(120,619		)								(107,860		)
Non-earning Assets:
Cash and due from banks		$	266,543									$	322,318
Other assets		2,495,512										2,392,893
Total assets		$	23,618,907									$	21,422,439
Interest-Bearing Liabilities:
Checking and NOW accounts		$	4,895,539			$	1,608		0.04	%		$	4,381,919			$	4,820		0.15	%
Savings accounts		3,608,078				1,479			0.05	%		3,040,889				2,669			0.12	%
Money market accounts		2,060,325				1,293			0.08	%		1,843,902				4,141			0.30	%
Other time deposits		1,034,389				4,058			0.52	%		1,397,222				11,823			1.13	%
Total interest-bearing core deposits		11,598,331				8,438			0.10	%		10,663,932				23,453			0.29	%
Brokered deposits		55,312				31			0.08	%		101,112				940			1.24	%
Total interest-bearing deposits		11,653,643				8,469			0.10	%		10,765,044				24,393			0.30	%
Federal funds purchased and interbank borrowings		1,096				—			0.00	%		184,397				1,296			0.94	%
Securities sold under agreements to repurchase		396,495				305			0.10	%		355,039				729			0.27	%
Federal Home Loan Bank advances		1,907,322				15,953			1.12	%		2,043,617				21,321			1.39	%
Other borrowings		267,650				7,375			3.67	%		243,255				7,305			4.00	%
Total borrowed funds		2,572,563				23,633			1.23	%		2,826,308				30,651			1.45	%
Total interest-bearing liabilities		14,226,206				32,102			0.30	%		13,591,352				55,044			0.54	%
Noninterest-Bearing Liabilities and Shareholders' Equity
Demand deposits		$	6,072,310									$	4,710,969
Other liabilities		323,310										263,841
Shareholders' equity		2,997,081										2,856,277
Total liabilities and shareholders' equity		$	23,618,907									$	21,422,439
Net interest rate spread									2.81	%									2.98	%
Net interest margin (FTE)									2.92	%									3.15	%
FTE adjustment						$	10,471									$	10,069
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.

Asset Quality (EOP) (unaudited)
($ in thousands)
	Three Months Ended													Nine Months Ended
	September 30,				June 30,				September 30,					September 30,				September 30,
	2021				2021				2020					2021				2020
Beginning allowance for credit losses	$	109,444			$	114,037			$	128,394				$	131,388			$	54,619
Impact of adopting ASC 326 on 01/01/2020	—				—				—					—				41,347
Provision for credit losses	(4,613		)		(4,929		)		—					(26,898		)		39,495
Gross charge-offs	(1,215		)		(980		)		(4,169		)			(3,765		)		(14,846		)
Gross recoveries	4,252				1,316				7,163					7,143				10,773
Net (charge-offs) recoveries	3,037				336				2,994					3,378				(4,073		)
Ending allowance for credit losses	$	107,868			$	109,444			$	131,388				$	107,868			$	131,388
Net charge-offs (recoveries) / average loans (1)	(0.09		)	%	(0.01		)	%	(0.09		)	%		(0.03		)	%	0.04			%
Average loans outstanding (1)	$	13,675,436			$	13,984,295			$	13,827,019				$	13,824,569			$	13,150,805
EOP loans outstanding (1)	13,584,828				13,784,677				13,892,509					13,584,828				13,892,509
Allowance for credit losses / EOP loans (1)	0.79			%	0.79			%	0.95			%		0.79			%	0.95			%
Underperforming Assets:
Loans 90 Days and over (still accruing)	$	113			$	9			$	90				$	113			$	90
Non-performing loans:
Nonaccrual loans (2)	111,586				128,268				137,611					111,586				137,611
TDRs still accruing	16,420				14,222				22,037					16,420				22,037
Total non-performing loans	128,006				142,490				159,648					128,006				159,648
Foreclosed properties	1,943				520				1,248					1,943				1,248
Total underperforming assets	$	130,062			$	143,019			$	160,986				$	130,062			$	160,986
Classified and Criticized Assets:
Nonaccrual loans (2)	111,586				128,268				137,611					111,586				137,611
Substandard accruing loans	164,192				160,995				189,524					164,192				189,524
Loans 90 days and over (still accruing)	113				9				90					113				90
Total classified loans - "problem loans"	$	275,891			$	289,272			$	327,225				$	275,891			$	327,225
Other classified assets	4,300				4,305				3,860					4,300				3,860
Criticized loans - "special mention loans"	240,215				228,264				272,859					240,215				272,859
Total classified and criticized assets	$	520,406			$	521,841			$	603,944				$	520,406			$	603,944
Non-performing loans / EOP loans (1)	0.94			%	1.03			%	1.15			%		0.94			%	1.15			%
Allowance to non-performing loans	84			%	77			%	82			%		84			%	82			%
Under-performing assets / EOP loans (1)	0.96			%	1.04			%	1.16			%		0.96			%	1.16			%
EOP total assets	$	24,018,733			$	23,675,666			$	22,460,476				$	24,018,733			$	22,460,476
Under-performing assets / EOP assets	0.54			%	0.60			%	0.72			%		0.54			%	0.72			%
EOP - End of period actual balances
(1) Excludes loans held for sale.
(2) Includes non-accruing TDRs totaling $12.8 million at September 30, 2021, $13.6 million at June 30, 2021, and $7.7 million at September 30, 2020.

Non-GAAP Measures (unaudited)
($ in thousands)
	Three Months Ended										Nine Months Ended
	September 30,			June 30,			September 30,				September 30,			September 30,
	2021			2021			2020				2021			2020
Actual End of Period Balances
GAAP shareholders' equity	$	3,035,892		$	2,991,118		$	2,921,149			$	3,035,892		$	2,921,149
Deduct:
Goodwill	1,036,994			1,036,994			1,036,994				1,036,994			1,036,994
Intangibles	37,251			40,030			49,258				37,251			49,258
	1,074,245			1,077,024			1,086,252				1,074,245			1,086,252
Tangible shareholders' equity	$	1,961,647		$	1,914,094		$	1,834,897			$	1,961,647		$	1,834,897
Average Balances
GAAP shareholders' equity	$	3,027,935		$	2,992,693		$	2,889,545			$	2,997,081		$	2,856,277
Deduct:
Goodwill	1,036,994			1,036,994			1,036,994				1,036,994			1,036,994
Intangibles	38,585			41,410			50,926				41,447			54,488
	1,075,579			1,078,404			1,087,920				1,078,441			1,091,482
Average tangible shareholders' equity	$	1,952,356		$	1,914,289		$	1,801,625			$	1,918,640		$	1,764,795
Actual End of Period Balances
GAAP assets	$	24,018,733		$	23,675,666		$	22,460,476			$	24,018,733		$	22,460,476
Add:
Trust overdrafts	116			24			17				116			17
Deduct:
Goodwill	1,036,994			1,036,994			1,036,994				1,036,994			1,036,994
Intangibles	37,251			40,030			49,258				37,251			49,258
	1,074,245			1,077,024			1,086,252				1,074,245			1,086,252
Tangible assets	$	22,944,604		$	22,598,666		$	21,374,241			$	22,944,604		$	21,374,241
Risk-weighted assets (2)	$	16,227,070		$	15,971,711		$	14,770,750			$	16,227,070		$	14,770,750
GAAP net income	$	71,746		$	62,786		$	77,944			$	221,350		$	152,289
Add:
Amortization of intangibles (net of tax)	2,084			2,182			2,595				6,572			8,152
Tangible net income	$	73,830		$	64,968		$	80,539			$	227,922		$	160,441
Tangible Ratios
Return on tangible common equity	15.05		%	13.58		%	17.56		%		15.49		%	11.66		%
Return on average tangible common equity	15.13		%	13.58		%	17.88		%		15.84		%	12.12		%
Return on tangible assets	1.29		%	1.15		%	1.51		%		1.32		%	1.00		%
Tangible common equity to tangible assets	8.55		%	8.47		%	8.58		%		8.55		%	8.58		%
Tangible common equity to risk-weighted assets (2)	12.09		%	11.98		%	12.42		%		12.09		%	12.42		%
Tangible common book value (1)	11.83			11.55			11.10				11.83			11.10
Tangible common equity presentation includes other comprehensive income as is common in other company releases.
(1) Tangible common shareholders' equity divided by common shares issued and outstanding at period-end.
Tier 1 common equity (2)	$	1,960,340		$	1,908,053		$	1,748,150			$	1,960,340		$	1,748,150
Risk-weighted assets (2)	16,227,070			15,971,711			14,770,750				16,227,070			14,770,750
Tier 1 common equity to risk-weighted assets (2)	12.08		%	11.95		%	11.84		%		12.08		%	11.84		%
(2) September 30, 2021 figures are preliminary.

Media: Kathy A. Schoettlin (812) 465-7269
Investors: Lynell J. Walton (812) 464-1366

FAQ

What were Old National Bancorp's 3Q21 earnings?

Old National Bancorp reported a net income of $71.7 million for 3Q21, translating to a diluted EPS of $0.43.

What drove the growth in deposits for Old National Bancorp in 3Q21?

Deposits increased by 7.3% to $18.2 billion, primarily due to a rise in noninterest-bearing demand deposits.

How did Old National Bancorp's loan portfolio perform in 3Q21?

Total loans decreased by $198.7 million, largely due to a reduction in PPP loans, despite a $171.7 million increase in commercial loans.

What impact does the merger with First Midwest Bank have on Old National Bancorp?

The merger is expected to enhance Old National's market position, pending Federal Reserve approval, while current results show strong operational performance.

What is the current efficiency ratio for Old National Bancorp?

The efficiency ratio for 3Q21 is reported at 56.86%, reflecting improvements in cost management.