OLD NATIONAL BANCORP /IN/ [ONB] Filings

10-Q 1 onb-20220331.htm 10-Q onb-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 001-15817

Old National Bancorp

(Exact name of registrant as specified in its charter)


Indiana		35-1539838
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Main Street		47708
Evansville,	Indiana	(Zip Code)
(Address of principal executive offices)

(800) 731-2265

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common stock, no par value

ONB

The

NASDAQ

Stock Market LLC

Depositary Shares, each representing a 1/40th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series A

ONBPP

The

NASDAQ

Stock Market LLC

Depositary Shares, each representing a 1/40th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series C

ONBPO

The

NASDAQ

Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

The registrant has one class of common stock (no par value) with 292,959,000 shares outstanding at March 31, 2022.

OLD NATIONAL BANCORP

FORM 10-Q

TABLE OF CONTENTS


			Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets (unaudited)		4
	Consolidated Statements of Income (Loss) (unaudited)		5
	Consolidated Statements of Comprehensive Income (Loss) (unaudited)		6
	Consolidated Statements of Changes in Shareholders’ Equity (unaudited)		7
	Consolidated Statements of Cash Flows (unaudited)		8
	Notes to Consolidated Financial Statements (unaudited)		10
	Note 1.	Basis of Presentation	10
	Note 2.	Recent Accounting Pronouncements	10
	Note 3.	Acquisition Activity	12
	Note 4.	Net Income Per Common Share	14
	Note 5.	Investment Securities	15
	Note 6.	Loans and Allowance for Credit Losses	18
	Note 7.	Premises and Equipment	30
	Note 8.	Leases	31
	Note 9.	Goodwill and Other Intangible Assets	33
	Note 10.	Loan Servicing Rights	34
	Note 11.	Qualified Affordable Housing Projects and Other Tax Credit Investments	34
	Note 12.	Securities Sold Under Agreements to Repurchase	35
	Note 13.	Federal Home Loan Bank Advances	36
	Note 14.	Other Borrowings	36
	Note 15.	Accumulated Other Comprehensive Income (Loss)	38
	Note 16.	Share-Based Compensation	39
	Note 17.	Income Taxes	40
	Note 18.	Derivative Financial Instruments	41
	Note 19.	Commitments and Contingencies	45
	Note 20.	Financial Guarantees	45
	Note 21.	Fair Value	46
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		53
	Forward-Looking Statements		53
	Financial Highlights		54
	Non-GAAP Financial Measures		55
	Executive Summary		57
	Results of Operations		58
	Financial Condition		62
	Risk Management		67
	Critical Accounting Estimates		77
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		77
Item 4.	Controls and Procedures		78
PART II.	OTHER INFORMATION		79
Item 1A.	Risk Factors		79
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		79
Item 5.	Other Information		79
Item 6.	Exhibits		80
SIGNATURE			83

GLOSSARY OF ABBREVIATIONS AND ACRONYMS

As used in this report, references to “Old National,” “we,” “our,” “us,” and similar terms refer to the consolidated entity consisting of Old National Bancorp and its wholly-owned affiliates. Old National Bancorp refers solely to the parent holding company, and Old National Bank refers to Old National Bancorp’s bank subsidiary.

The acronyms and abbreviations identified below are used in the Notes to Consolidated Financial Statements (Unaudited) as well as in the Management’s Discussion and Analysis of Financial Condition and Results of Operations. You may find it helpful to refer to this page as you read this report.

Anchor (MN): Anchor Bancorp, Inc.

Anchor (WI): Anchor BanCorp Wisconsin Inc.

AOCI: accumulated other comprehensive income (loss)

AQR: asset quality rating

ASC: Accounting Standards Codification

ASU: Accounting Standards Update

ATM: automated teller machine

BBCC: business banking credit center (small business)

CECL: current expected credit loss

Common Stock: Old National Bancorp common stock, no par value

COVID-19: coronavirus disease 2019

DTI: debt-to-income

FASB: Financial Accounting Standards Board

FDIC: Federal Deposit Insurance Corporation

FHLB: Federal Home Loan Bank

FHTC: Federal Historic Tax Credit

FICO: Fair Isaac Corporation

First Midwest: First Midwest Bancorp, Inc.

GAAP: U.S. generally accepted accounting principles

LGD: loss given default

LIBOR: London Interbank Offered Rate

LIHTC: Low Income Housing Tax Credit

LTV: loan-to-value

N/A: not applicable

NASDAQ: The NASDAQ Stock Market LLC

N/M: not meaningful

NMTC: New Markets Tax Credit

NOW: negotiable order of withdrawal

OCC: Office of the Comptroller of the Currency

PCD: purchased credit deteriorated

PD: probability of default

PPP: Paycheck Protection Program

Renewable Energy: investment tax credits for solar projects

SBA: Small Business Administration

SEC: Securities and Exchange Commission

TBA: to be announced

TDR: troubled debt restructuring

OLD NATIONAL BANCORP

CONSOLIDATED BALANCE SHEETS


(dollars and shares in thousands, except per share data)	March 31, 2022		December 31, 2021
	(unaudited)
Assets
Cash and due from banks	$	418,744	$	172,663
Money market and other interest-earning investments	1,557,808		649,356
Total cash and cash equivalents	1,976,552		822,019
Equity securities, at fair value	67,555		13,211
Investment securities - available-for-sale, at fair value:
U.S. Treasury	419,024		235,584
U.S. government-sponsored entities and agencies	1,580,020		1,542,773
Mortgage-backed securities	5,623,742		3,698,831
States and political subdivisions	750,056		1,654,986
Other securities	377,762		249,892
Total investment securities - available-for-sale	8,750,604		7,382,066
Investment securities - held-to-maturity, at amortized cost (fair value $1,955,596 and $0, respectively)	2,082,242		—
Federal Home Loan Bank/Federal Reserve Bank stock, at cost	290,393		169,375
Loans held for sale, at fair value	39,376		35,458
Loans:
Commercial	8,624,253		3,391,769
Commercial real estate	11,337,735		6,380,674
Residential real estate	5,706,155		2,255,289
Consumer credit, net of unearned income	2,668,101		1,574,114
Total loans	28,336,244		13,601,846
Allowance for credit losses	(280,507)		(107,341)
Net loans	28,055,737		13,494,505
Premises and equipment, net	584,113		476,186
Operating lease right-of-use assets	201,802		69,560
Accrued interest receivable	136,975		84,109
Goodwill	1,997,157		1,036,994
Other intangible assets	147,452		34,678
Company-owned life insurance	766,291		463,324
Other assets	738,399		372,079
Total assets	$	45,834,648	$	24,453,564
Liabilities
Deposits:
Noninterest-bearing demand	$	12,463,136	$	6,303,106
Interest-bearing:
Checking and NOW	8,296,337		5,338,022
Savings	6,871,767		3,798,494
Money market	5,432,139		2,169,160
Time deposits	2,544,011		960,413
Total deposits	35,607,390		18,569,195
Federal funds purchased and interbank borrowings	1,721		276
Securities sold under agreements to repurchase	509,275		392,275
Federal Home Loan Bank advances	3,239,357		1,886,019
Other borrowings	597,207		296,670
Operating lease liabilities	234,049		76,236
Accrued expenses and other liabilities	413,535		220,875
Total liabilities	40,602,534		21,441,546
Shareholders' Equity
Preferred stock, 2,000 shares authorized, 231 and 0 shares issued and outstanding, respectively	230,500		—
Common stock, $1.00 per share stated value, 600,000 shares authorized, 292,959 and 165,838 shares issued and outstanding, respectively	292,959		165,838
Capital surplus	4,149,594		1,880,545
Retained earnings	897,260		968,010
Accumulated other comprehensive income (loss), net of tax	(338,199)		(2,375)
Total shareholders' equity	5,232,114		3,012,018
Total liabilities and shareholders' equity	$	45,834,648	$	24,453,564

The accompanying notes to consolidated financial statements are an integral part of these statements.

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (unaudited)


	Three Months Ended March 31,
(dollars and shares in thousands, except per share data)	2022		2021
Interest Income
Loans including fees:
Taxable	$	184,015	$	122,529
Nontaxable	3,507		3,357
Investment securities:
Taxable	37,409		24,131
Nontaxable	10,266		9,132
Money market and other interest-earning investments	308		88
Total interest income	235,505		159,237
Interest Expense
Deposits	3,194		3,159

Securities sold under agreements to repurchase	96		120
Federal Home Loan Bank advances	5,963		5,409
Other borrowings	3,467		2,429
Total interest expense	12,720		11,117
Net interest income	222,785		148,120
Provision for credit losses	97,569		(17,356)
Net interest income after provision for credit losses	125,216		165,476
Noninterest Income
Wealth management fees	14,630		9,708
Service charges on deposit accounts	14,726		8,124
Debit card and ATM fees	6,899		5,143
Mortgage banking revenue	7,245		16,525
Investment product fees	7,322		5,864
Capital markets income	4,442		3,715
Company-owned life insurance	3,524		2,714
Debt securities gains (losses), net	342		1,993
Other income	6,110		2,926
Total noninterest income	65,240		56,712
Noninterest Expense
Salaries and employee benefits	124,147		68,117
Occupancy	21,019		14,872
Equipment	5,168		3,969
Marketing	4,276		2,062
Data processing	18,762		12,353
Communication	3,417		2,878
Professional fees	19,791		2,724
FDIC assessment	2,575		1,607
Amortization of intangibles	4,811		3,075
Amortization of tax credit investments	1,516		1,202
Other expense	21,274		4,881
Total noninterest expense	226,756		117,740
Income (loss) before income taxes	(36,300)		104,448
Income tax expense (benefit)	(8,714)		17,630
Net income (loss)	(27,586)		86,818
Preferred dividends	(2,017)		—

Net income (loss) applicable to common shareholders	$	(29,603)	$	86,818
Net income (loss) per common share - basic	$	(0.13)	$	0.53
Net income (loss) per common share - diluted	(0.13)		0.52
Weighted average number of common shares outstanding - basic	227,002		164,997
Weighted average number of common shares outstanding - diluted	227,002		165,707
Dividends per common share	$	0.14	$	0.14

The accompanying notes to consolidated financial statements are an integral part of these statements.

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)


	Three Months Ended March 31,
(dollars in thousands)	2022		2021
Net income (loss)	$	(27,586)	$	86,818

Other comprehensive income (loss):

Change in debt securities available-for-sale:
Unrealized holding gains (losses) for the period	(429,470)		(73,514)
Reclassification for securities transferred to held-to-maturity	22,163		—
Reclassification adjustment for securities (gains) losses realized in income	(342)		(1,993)
Income tax effect	96,235		16,667
Unrealized gains (losses) on available-for-sale securities	(311,414)		(58,840)

Change in securities held-to-maturity:
Adjustment for securities transferred from available-for-sale	(22,163)		—
Amortization of unrealized losses on securities transferred from available-for-sale	310		—
Income tax effect	5,126		—
Changes from securities held-to-maturity	(16,727)		—

Change in cash flow hedges:
Net unrealized derivative gains (losses) on cash flow hedges	(9,506)		4,048
Reclassification adjustment for (gains) losses realized in net income	(669)		(149)
Income tax effect	2,500		(958)
Changes from cash flow hedges	(7,675)		2,941

Change in defined benefit pension plans:
Amortization of net (gains) losses recognized in income	(11)		49
Income tax effect	3		(12)
Changes from defined benefit pension plans	(8)		37
Other comprehensive income (loss), net of tax	(335,824)		(55,862)
Comprehensive income (loss)	$	(363,410)	$	30,956

The accompanying notes to consolidated financial statements are an integral part of these statements.

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)


(dollars in thousands, except per share data)	Preferred Stock		Common Stock		Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Shareholders' Equity
Balance, December 31, 2020	$	—	$	165,367	$	1,875,626	$	783,892	$	147,771	$	2,972,656


Net income	—		—		—		86,818		—		86,818
Other comprehensive income (loss)	—		—		—		—		(55,862)		(55,862)
Dividends - common stock ($0.14 per share)	—		—		—		(23,195)		—		(23,195)
Common stock issued	—		9		130		—		—		139
Common stock repurchased	—		(160)		(2,696)		—		—		(2,856)
Share-based compensation expense	—		—		1,747		—		—		1,747
Stock activity under incentive compensation plans	—		460		(235)		(225)		—		—
Balance, March 31, 2021	$	—	$	165,676	$	1,874,572	$	847,290	$	91,909	$	2,979,447

















Balance, December 31, 2021	$	—	$	165,838	$	1,880,545	$	968,010	$	(2,375)	$	3,012,018


Net income (loss)	—		—		—		(27,586)		—		(27,586)
Other comprehensive income (loss)	—		—		—		—		(335,824)		(335,824)
First Midwest Bancorp, Inc. merger:
Issuance of common stock	—		129,365		2,316,947		—		—		2,446,312
Issuance of preferred stock, net of issuance costs	230,500		—		13,219		—		—		243,719
Cash dividends:
Common ($0.14 per share)	—		—		—		(40,782)		—		(40,782)
Preferred dividends	—		—		—		(2,017)		—		(2,017)
Common stock issued	—		10		155		—		—		165
Common stock repurchased	—		(3,890)		(66,188)		—		—		(70,078)
Share-based compensation expense	—		—		6,284		—		—		6,284
Stock activity under incentive compensation plans	—		1,636		(1,368)		(365)		—		(97)
Balance, March 31, 2022	$	230,500	$	292,959	$	4,149,594	$	897,260	$	(338,199)	$	5,232,114

OLD NATIONAL BANCORP /IN/ [ONB] Filings
OLD NATIONAL BANCORP /IN/ [ONBPO] Filings
OLD NATIONAL BANCORP /IN/ [ONBPP] Filings
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10-Q	[2020-10-28]
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10-K	[2020-02-12]
10-Q	[2019-10-30]
10-Q	[2019-07-31]
10-Q	[2019-05-02]
10-K	[2019-02-12]
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10-Q	[2018-08-01]
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10-K	[2017-02-16]
10-Q	[2016-11-04]
10-Q	[2016-08-05]
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10-K	[2016-02-26]
10-Q	[2015-10-30]
10-Q	[2015-07-31]
10-Q	[2015-05-01]
10-K	[2015-02-25]
10-Q	[2014-10-31]
10-Q	[2014-08-01]
10-Q	[2014-05-02]
10-K	[2014-02-25]
10-Q	[2013-11-01]
10-Q	[2013-08-02]
10-Q	[2013-05-03]
10-K	[2013-02-26]
10-Q	[2012-11-02]
10-Q	[2012-08-03]
10-Q	[2012-05-08]
10-K	[2012-02-27]

OLD NATIONAL BANCORP /IN/ [ONB] Filings

OLD NATIONAL BANCORP /IN/ [ONBPO] Filings

OLD NATIONAL BANCORP /IN/ [ONBPP] Filings