OLD NATIONAL BANCORP /IN/ [ONB] Filings

10-Q 1 onb-20230930.htm 10-Q onb-20230930

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, 2023


☐			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 292,621,000 shares outstanding at October 31, 2023.

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	14
	Note 5.	Investment Securities	15
	Note 6.	Loans and Allowance for Credit Losses	18
	Note 7.	Leases	29
	Note 8.	Goodwill and Other Intangible Assets	30
	Note 9.	Qualified Affordable Housing Projects and Other Tax Credit Investments	31
	Note 10.	Securities Sold Under Agreements to Repurchase	33
	Note 11.	Federal Home Loan Bank Advances	33
	Note 12.	Other Borrowings	34
	Note 13.	Accumulated Other Comprehensive Income (Loss)	36
	Note 14.	Income Taxes	38
	Note 15.	Derivative Financial Instruments	39
	Note 16.	Commitments, Contingencies, and Financial Guarantees	42
	Note 17.	Fair Value	43
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		50
	Forward-Looking Statements		50
	Financial Highlights		51
	Non-GAAP Financial Measures		53
	Executive Summary		56
	Results of Operations		57
	Financial Condition		64
	Risk Management		68
	Critical Accounting Estimates		74
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		74
Item 4.	Controls and Procedures		75
PART II.	OTHER INFORMATION		76
Item 1A.	Risk Factors		76
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		76
Item 5.	Other Information		76
Item 6.	Exhibits		77
SIGNATURE			78

GLOSSARY OF ABBREVIATIONS AND ACRONYMS

As used in this report, references to “Old National,” “the Company,” “we,” “our,” “us,” and similar terms refer to the consolidated entity consisting of Old National Bancorp and its wholly-owned subsidiaries. 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 throughout this report, including the Notes to Consolidated Financial Statements (Unaudited). You may find it helpful to refer to this page as you read this report.

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

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

N/M: not meaningful

NASDAQ: The NASDAQ Stock Market LLC

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

Renewable Energy: investment tax credits for solar projects

SEC: U.S. Securities and Exchange Commission

SOFR: Secured Overnight Financing Rate

TDR: troubled debt restructuring

UMB: UMB Bank, n.a.

OLD NATIONAL BANCORP

CONSOLIDATED BALANCE SHEETS


(dollars and shares in thousands, except per share data)	September 30, 2023		December 31, 2022
	(unaudited)
Assets
Cash and due from banks	$	381,343	$	453,432
Money market and other interest-earning investments	1,282,087		274,980
Total cash and cash equivalents	1,663,430		728,412
Equity securities, at fair value	69,880		52,507






Investment securities - available-for-sale, at fair value (amortized cost $7,719,944 and $7,772,603, respectively)	6,414,761		6,773,712
Investment securities - held-to-maturity, at amortized cost (fair value $2,393,621 and $2,643,682, respectively)	3,027,914		3,089,147
Federal Home Loan Bank/Federal Reserve Bank stock, at cost	365,588		314,168
Loans held-for-sale, at fair value	122,033		11,926
Loans:
Commercial	9,333,448		9,508,904
Commercial real estate	13,916,221		12,457,070
Residential real estate	6,696,288		6,460,441
Consumer credit, net of unearned income	2,631,877		2,697,226
Total loans	32,577,834		31,123,641
Allowance for credit losses on loans	(303,982)		(303,671)
Net loans	32,273,852		30,819,970
Premises and equipment, net	565,607		557,307
Operating lease right-of-use assets	179,284		189,714
Accrued interest receivable	209,503		190,521
Goodwill	1,998,716		1,998,716
Other intangible assets	108,119		126,405
Company-owned life insurance	774,517		768,552
Other assets	1,286,244		1,142,315
Total assets	$	49,059,448	$	46,763,372
Liabilities
Deposits:
Noninterest-bearing demand	$	10,091,352	$	11,930,798
Interest-bearing:
Checking and NOW	7,495,417		8,340,955
Savings	5,296,985		6,326,158
Money market	8,793,218		5,389,139
Time deposits	5,575,704		3,013,780
Total deposits	37,252,676		35,000,830
Federal funds purchased and interbank borrowings	918		581,489
Securities sold under agreements to repurchase	279,061		432,804
Federal Home Loan Bank advances	4,412,576		3,829,018
Other borrowings	863,455		743,003
Operating lease liabilities	199,937		211,964
Accrued expenses and other liabilities	811,288		835,669
Total liabilities	43,819,911		41,634,777
Shareholders’ Equity
Preferred stock, 2,000 shares authorized, 231 shares issued and outstanding	230,500		230,500
Common stock, no par value, $1.00 per share stated value, 600,000 shares authorized, 292,586 and 292,903 shares issued and outstanding, respectively	292,586		292,903
Capital surplus	4,153,977		4,174,265
Retained earnings	1,531,289		1,217,349
Accumulated other comprehensive income (loss), net of tax	(968,815)		(786,422)
Total shareholders’ equity	5,239,537		5,128,595
Total liabilities and shareholders’ equity	$	49,059,448	$	46,763,372

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)	2023		2022		2023		2022
Interest Income
Loans including fees:
Taxable	$	474,387	$	331,271	$	1,334,658	$	800,535
Nontaxable	11,181		6,461		32,318		14,770
Investment securities:
Taxable	66,924		56,765		191,797		145,633
Nontaxable	10,833		11,086		33,039		32,370
Money market and other interest-earning investments	13,194		935		25,258		3,073
Total interest income	576,519		406,518		1,617,070		996,381
Interest Expense
Deposits	147,428		10,820		310,995		19,201
Federal funds purchased and interbank borrowings	910		720		11,404		722
Securities sold under agreements to repurchase	710		106		2,389		287
Federal Home Loan Bank advances	40,382		13,027		123,466		25,915
Other borrowings	12,003		5,256		30,071		13,410
Total interest expense	201,433		29,929		478,325		59,535
Net interest income	375,086		376,589		1,138,745		936,846
Provision for credit losses	19,068		15,490		47,292		133,391
Net interest income after provision for credit losses	356,018		361,099		1,091,453		803,455
Noninterest Income
Wealth and investment services fees	26,687		25,359		80,128		75,183
Service charges on deposit accounts	18,524		20,042		53,278		54,392
Debit card and ATM fees	10,818		10,608		31,453		29,429
Mortgage banking revenue	5,063		5,360		12,628		19,127

Capital markets income	5,891		8,906		19,003		20,609
Company-owned life insurance	3,740		3,361		11,624		11,456
Debt securities gains (losses), net	(241)		(172)		(5,440)		85
Other income	10,456		6,921		30,574		24,461
Total noninterest income	80,938		80,385		233,248		234,742
Noninterest Expense
Salaries and employee benefits	131,541		147,203		404,715		433,167
Occupancy	25,795		26,418		80,162		73,933
Equipment	8,284		7,328		23,394		20,046
Marketing	9,448		10,361		28,698		23,756
Technology	20,592		20,269		59,850		64,914
Communication	4,075		5,392		12,768		14,687
Professional fees	5,956		6,559		19,085		32,686
FDIC assessment	9,000		6,249		29,028		13,523
Amortization of intangibles	6,040		7,089		18,286		19,070
Amortization of tax credit investments	2,644		2,662		8,167		5,703
Property optimization	—		—		1,559		—
Other expense	21,401		22,914		56,359		54,023
Total noninterest expense	244,776		262,444		742,071		755,508
Income before income taxes	192,180		179,040		582,630		282,689
Income tax expense	44,304		38,887		133,118		55,137
Net income	147,876		140,153		449,512		227,552
Preferred dividends	(4,034)		(4,034)		(12,101)		(10,084)
Net income applicable to common shareholders	$	143,842	$	136,119	$	437,411	$	217,468
Net income per common share - basic	$	0.49	$	0.47	$	1.50	$	0.81
Net income per common share - diluted	0.49		0.47		1.50		0.80
Weighted average number of common shares outstanding - basic	290,648		290,961		290,763		269,843
Weighted average number of common shares outstanding - diluted	291,717		292,483		291,809		271,123
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)	2023		2022		2023		2022
Net income	$	147,876	$	140,153	$	449,512	$	227,552

Other comprehensive income (loss):

Change in debt securities available-for-sale:
Unrealized holding gains (losses) for the period	(208,626)		(285,798)		(304,061)		(1,019,782)
Reclassification for securities transferred to held-to-maturity	—		—		—		165,473
Reclassification adjustment for securities (gains) losses realized in income	241		172		5,440		(85)
Income tax effect	51,903		68,356		83,092		202,999
Unrealized gains (losses) on available-for-sale securities	(156,482)		(217,270)		(215,529)		(651,395)

Change in securities held-to-maturity:
Adjustment for securities transferred from available-for-sale	—		—		—		(165,473)
Amortization of unrealized losses on securities transferred from available-for-sale	5,623		6,772		16,574		10,774
Income tax effect	(1,430)		(1,651)		(2,861)		37,621
Changes from securities held-to-maturity	4,193		5,121		13,713		(117,078)

Change in hedges:
Net unrealized derivative gains (losses) on hedges	(15,574)		(36,755)		45,547		(49,679)
Reclassification adjustment for (gains) losses realized in net income	4,927		749		(19,893)		(139)
Income tax effect	2,754		8,846		(6,094)		12,240
Changes from hedges	(7,893)		(27,160)		19,560		(37,578)

Change in defined benefit pension plans:
Amortization of net (gains) losses recognized in income	—		(11)		(182)		(32)
Income tax effect	—		3		45		8
Changes from defined benefit pension plans	—		(8)		(137)		(24)
Other comprehensive income (loss), net of tax	(160,182)		(239,317)		(182,393)		(806,075)
Comprehensive income (loss)	$	(12,306)	$	(99,164)	$	267,119	$	(578,523)

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, 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
Net income	—		—		—		114,985		—		114,985
Other comprehensive income (loss)	—		—		—		—		(230,934)		(230,934)
Cash dividends:
Common ($0.14 per share)	—		—		—		(40,901)		—		(40,901)
Preferred dividends	—		—		—		(4,033)		—		(4,033)
Common stock issued	—		10		152		—		—		162
Common stock repurchased	—		(21)		(301)		—		—		(322)
Share-based compensation expense	—		—		7,813		—		—		7,813
Stock activity under incentive compensation plans	—		(55)		285		(331)		—		(101)
Balance, June 30, 2022	230,500		292,893		4,157,543		966,980		(569,133)		5,078,783
Net income	—		—		—		140,153		—		140,153
Other comprehensive income (loss)	—		—		—		—		(239,317)		(239,317)
Cash dividends:
Common ($0.14 per share)	—		—		—		(40,907)		—		(40,907)
Preferred dividends	—		—		—		(4,034)		—		(4,034)
Common stock issued	—		17		213		—		—		230
Common stock repurchased	—		(34)		(497)		—		—		(531)
Share-based compensation expense	—		—		7,485		—		—		7,485
Stock activity under incentive compensation plans	—		4		1,839		(322)		—		1,521
Balance, September 30, 2022	$	230,500	$	292,880	$	4,166,583	$	1,061,870	$	(808,450)	$	4,943,383


OLD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited) – (Continued)
(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, 2022	$	230,500	$	292,903	$	4,174,265	$	1,217,349	$	(786,422)	$	5,128,595


Net income	—		—		—		146,600		—		146,600
Other comprehensive income (loss)	—		—		—		—		78,064		78,064
Cash dividends:
Common ($0.14 per share)	—		—		—		(41,088)		—		(41,088)
Preferred dividends	—		—		—		(4,034)		—		(4,034)
Common stock issued	—		15

OLD NATIONAL BANCORP /IN/ [ONB] Filings
OLD NATIONAL BANCORP /IN/ [ONBPO] Filings
OLD NATIONAL BANCORP /IN/ [ONBPP] Filings
10-Q	[2023-11-01]
10-Q	[2023-08-02]
10-Q	[2023-05-03]
10-K	[2023-02-22]
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