OLD NATIONAL BANCORP /IN/ [ONB] Filings

10-Q 1 onb-20220930.htm 10-Q onb-20220930

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 September 30, 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 such filing requirements for 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 such 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 Exchange Act). Yes ☐ No ☑

The registrant has one class of common stock (no par value) with 292,890,000 shares outstanding at October 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 (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)		9
	Notes to Consolidated Financial Statements (unaudited)		11
	Note 1.	Basis of Presentation	11
	Note 2.	Recent Accounting Pronouncements	11
	Note 3.	Acquisition and Divestiture Activity	13
	Note 4.	Net Income Per Common Share	15
	Note 5.	Investment Securities	16
	Note 6.	Loans and Allowance for Credit Losses	19
	Note 7.	Premises and Equipment	32
	Note 8.	Leases	33
	Note 9.	Goodwill and Other Intangible Assets	35
	Note 10.	Loan Servicing Rights	36
	Note 11.	Qualified Affordable Housing Projects and Other Tax Credit Investments	36
	Note 12.	Securities Sold Under Agreements to Repurchase	38
	Note 13.	Federal Home Loan Bank Advances	38
	Note 14.	Other Borrowings	39
	Note 15.	Accumulated Other Comprehensive Income (Loss)	41
	Note 16.	Share-Based Compensation	43
	Note 17.	Income Taxes	44
	Note 18.	Derivative Financial Instruments	45
	Note 19.	Commitments , Contingencies , and Financial Guarant ees	48
	Note 20.	Fair Value	50
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		58
	Forward-Looking Statements		58
	Financial Highlights		59
	Non-GAAP Financial Measures		60
	Executive Summary		62
	Results of Operations		63
	Financial Condition		69
	Risk Management		73
	Critical Accounting Estimates		82
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		83
Item 4.	Controls and Procedures		83
PART II.	OTHER INFORMATION		84
Item 1A.	Risk Factors		84
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		84
Item 5.	Other Information		84
Item 6.	Exhibits		85
SIGNATURE			86

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)	September 30, 2022		December 31, 2021
	(unaudited)
Assets
Cash and due from banks	$	466,846	$	172,663
Money market and other interest-earning investments	334,765		649,356
Total cash and cash equivalents	801,611		822,019
Equity securities, at fair value	51,846		13,211
Investment securities - available-for-sale, at fair value:
U.S. Treasury	193,605		235,584
U.S. government-sponsored entities and agencies	1,175,457		1,542,773
Mortgage-backed securities	4,459,527		3,698,831
States and political subdivisions	675,047		1,654,986
Other securities	359,344		249,892
Total investment securities - available-for-sale	6,862,980		7,382,066
Investment securities - held-to-maturity, at amortized cost (fair value $2,600,440 and $0, respectively)	3,096,567		—
Federal Home Loan Bank/Federal Reserve Bank stock, at cost	282,263		169,375
Loans held for sale, at fair value	19,748		35,458
Loans:
Commercial	9,311,148		3,391,769
Commercial real estate	12,227,888		6,380,674
Residential real estate	6,267,306		2,255,289
Consumer credit, net of unearned income	2,722,591		1,574,114
Total loans	30,528,933		13,601,846
Allowance for credit losses	(302,254)		(107,341)
Net loans	30,226,679		13,494,505
Premises and equipment, net	588,021		476,186
Operating lease right-of-use assets	187,626		69,560
Accrued interest receivable	166,699		84,109
Goodwill	2,002,599		1,036,994
Other intangible assets	133,193		34,678
Company-owned life insurance	767,089		463,324
Other assets	1,028,605		372,079
Total assets	$	46,215,526	$	24,453,564
Liabilities
Deposits:
Noninterest-bearing demand	$	12,400,077	$	6,303,106
Interest-bearing:
Checking and NOW	8,963,014		5,338,022
Savings	6,616,512		3,798,494
Money market	5,602,729		2,169,160
Time deposits	2,471,331		960,413
Total deposits	36,053,663		18,569,195
Federal funds purchased and interbank borrowings	301,031		276
Securities sold under agreements to repurchase	438,053		392,275
Federal Home Loan Bank advances	2,804,617		1,886,019
Other borrowings	721,049		296,670
Operating lease liabilities	207,725		76,236
Accrued expenses and other liabilities	746,005		220,875
Total liabilities	41,272,143		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, 292,880 and 165,838 shares issued and outstanding, respectively	292,880		165,838
Capital surplus	4,166,583		1,880,545
Retained earnings	1,061,870		968,010
Accumulated other comprehensive income (loss), net of tax	(808,450)		(2,375)
Total shareholders' equity	4,943,383		3,012,018
Total liabilities and shareholders' equity	$	46,215,526	$	24,453,564

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

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF INCOME (unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars and shares in thousands, except per share data)	2022		2021		2022		2021
Interest Income
Loans including fees:
Taxable	$	331,271	$	124,488	$	800,535	$	370,594
Nontaxable	6,461		3,119		14,770		9,647
Investment securities:
Taxable	56,765		24,773		145,633		73,305
Nontaxable	11,086		9,469		32,370		27,862
Money market and other interest-earning investments	935		177		3,073		313
Total interest income	406,518		162,026		996,381		481,721
Interest Expense
Deposits	10,820		2,578		19,201		8,469
Federal funds purchased and interbank borrowings	720		—		722		—
Securities sold under agreements to repurchase	106		90		287		305
Federal Home Loan Bank advances	13,027		5,326		25,915		15,953
Other borrowings	5,256		2,460		13,410		7,375
Total interest expense	29,929		10,454		59,535		32,102
Net interest income	376,589		151,572		936,846		449,619
Provision for credit losses	11,287		(4,613)		118,101		(26,898)
Net interest income after provision for credit losses	365,302		156,185		818,745		476,517
Noninterest Income
Wealth management fees	17,317		10,134		51,251		30,576
Service charges on deposit accounts	20,042		8,123		54,392		23,270
Debit card and ATM fees	10,608		5,745		29,429		17,962
Mortgage banking revenue	5,360		10,870		19,127		35,222
Investment product fees	8,042		6,475		23,932		18,381
Capital markets income	8,906		6,017		20,609		15,603
Company-owned life insurance	3,361		2,355		11,456		7,852
Debt securities gains (losses), net	(172)		1,207		85		3,892
Other income	6,921		3,589		24,461		9,977
Total noninterest income	80,385		54,515		234,742		162,735
Noninterest Expense
Salaries and employee benefits	147,203		71,005		433,167		211,762
Occupancy	26,418		12,757		73,933		41,683
Equipment	7,328		3,756		20,046		12,231
Marketing	10,361		3,267		23,756		7,961
Data processing	20,269		11,508		64,914		35,558
Communication	5,392		2,372		14,687		7,661
Professional fees	6,559		3,416		32,686		14,668
FDIC assessment	6,249		1,628		13,523		4,461
Amortization of intangibles	7,089		2,779		19,070		8,763
Amortization of tax credit investments	2,662		1,736		5,703		4,751
Other expense	27,117		7,050		69,313		19,133
Total noninterest expense	266,647		121,274		770,798		368,632
Income before income taxes	179,040		89,426		282,689		270,620
Income tax expense	38,887		17,680		55,137		49,270
Net income	140,153		71,746		227,552		221,350
Preferred dividends	(4,034)		—		(10,084)		—

Net income applicable to common shareholders	$	136,119	$	71,746	$	217,468	$	221,350
Net income per common share - basic	$	0.47	$	0.43	$	0.81	$	1.34
Net income per common share - diluted	0.47		0.43		0.80		1.33
Weighted average number of common shares outstanding - basic	290,961		165,258		269,843		165,144
Weighted average number of common shares outstanding - diluted	292,483		165,939		271,123		165,862
Dividends per common share	$	0.14	$	0.14	$	0.42	$	0.42

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 September 30,				Nine Months Ended September 30,
(dollars in thousands)	2022		2021		2022		2021
Net income	$	140,153	$	71,746	$	227,552	$	221,350

Other comprehensive income (loss):

Change in debt securities available-for-sale:
Unrealized holding gains (losses) for the period	(285,798)		(3,595)		(1,019,782)		(112,927)
Reclassification for securities transferred to held-to-maturity	—		—		165,473		—
Reclassification adjustment for securities (gains) losses realized in income	172		(1,207)		(85)		(3,892)
Income tax effect	68,356		627		202,999		26,404
Unrealized gains (losses) on available-for-sale securities	(217,270)		(4,175)		(651,395)		(90,415)

OLD NATIONAL BANCORP /IN/ [ONB] Filings
OLD NATIONAL BANCORP /IN/ [ONBPO] Filings
OLD NATIONAL BANCORP /IN/ [ONBPP] Filings
10-Q	[2022-11-02]
10-Q	[2022-08-03]
10-Q	[2022-05-04]
10-K	[2022-02-10]
10-Q	[2021-10-27]
10-Q	[2021-08-04]
10-Q	[2021-04-28]
10-K	[2021-02-10]
10-Q	[2020-10-28]
10-Q	[2020-07-29]
10-Q	[2020-04-29]
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]
10-Q	[2018-10-31]
10-Q	[2018-08-01]
10-Q	[2018-05-02]
10-K	[2018-02-15]
10-Q	[2017-11-01]
10-Q	[2017-08-01]
10-Q	[2017-05-05]
10-K	[2017-02-16]
10-Q	[2016-11-04]
10-Q	[2016-08-05]
10-Q	[2016-05-06]
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