OLD NATIONAL BANCORP /IN/ [ONB] Filings

10-Q 1 onb-20220630.htm 10-Q onb-20220630

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 June 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 292,893,000 shares outstanding at June 30, 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)		8
	Notes to Consolidated Financial Statements (unaudited)		10
	Note 1.	Basis of Presentation	10
	Note 2.	Recent Accounting Pronouncements	10
	Note 3.	Acquisition and Divestiture Activity	11
	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	31
	Note 8.	Leases	32
	Note 9.	Goodwill and Other Intangible Assets	34
	Note 10.	Loan Servicing Rights	35
	Note 11.	Qualified Affordable Housing Projects and Other Tax Credit Investments	35
	Note 12.	Securities Sold Under Agreements to Repurchase	37
	Note 13.	Federal Home Loan Bank Advances	37
	Note 14.	Other Borrowings	38
	Note 15.	Accumulated Other Comprehensive Income (Loss)	40
	Note 16.	Share-Based Compensation	42
	Note 17.	Income Taxes	43
	Note 18.	Derivative Financial Instruments	44
	Note 19.	Commitments and Contingencies	47
	Note 20.	Financial Guarantees	48
	Note 21.	Fair Value	49
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		57
	Forward-Looking Statements		57
	Financial Highlights		58
	Non-GAAP Financial Measures		59
	Executive Summary		61
	Results of Operations		62
	Financial Condition		68
	Risk Management		72
	Critical Accounting Estimates		81
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		81
Item 4.	Controls and Procedures		82
PART II.	OTHER INFORMATION		83
Item 1A.	Risk Factors		83
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		83
Item 5.	Other Information		83
Item 6.	Exhibits		84
SIGNATURE			85

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)	June 30, 2022		December 31, 2021
	(unaudited)
Assets
Cash and due from banks	$	455,620	$	172,663
Money market and other interest-earning investments	342,344		649,356
Total cash and cash equivalents	797,964		822,019
Equity securities, at fair value	55,879		13,211
Investment securities - available-for-sale, at fair value:
U.S. Treasury	402,783		235,584
U.S. government-sponsored entities and agencies	1,242,557		1,542,773
Mortgage-backed securities	4,827,708		3,698,831
States and political subdivisions	720,041		1,654,986
Other securities	374,612		249,892
Total investment securities - available-for-sale	7,567,701		7,382,066
Investment securities - held-to-maturity, at amortized cost (fair value $2,779,290 and $0, respectively)	3,084,186		—
Federal Home Loan Bank/Federal Reserve Bank stock, at cost	288,884		169,375
Loans held for sale, at fair value	26,217		35,458
Loans:
Commercial	8,923,983		3,391,769
Commercial real estate	11,796,503		6,380,674
Residential real estate	6,079,057		2,255,289
Consumer credit, net of unearned income	2,754,105		1,574,114
Total loans	29,553,648		13,601,846
Allowance for credit losses	(288,003)		(107,341)
Net loans	29,265,645		13,494,505
Premises and equipment, net	586,031		476,186
Operating lease right-of-use assets	192,196		69,560
Accrued interest receivable	157,079		84,109
Goodwill	1,991,534		1,036,994
Other intangible assets	140,281		34,678
Company-owned life insurance	769,595		463,324
Other assets	825,163		372,079
Total assets	$	45,748,355	$	24,453,564
Liabilities
Deposits:
Noninterest-bearing demand	$	12,388,379	$	6,303,106
Interest-bearing:
Checking and NOW	8,473,510		5,338,022
Savings	6,796,152		3,798,494
Money market	5,373,318		2,169,160
Time deposits	2,507,616		960,413
Total deposits	35,538,975		18,569,195
Federal funds purchased and interbank borrowings	1,561		276
Securities sold under agreements to repurchase	476,173		392,275
Federal Home Loan Bank advances	3,283,963		1,886,019
Other borrowings	622,714		296,670
Operating lease liabilities	215,188		76,236
Accrued expenses and other liabilities	530,998		220,875
Total liabilities	40,669,572		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, 292,893 and 165,838 shares issued and outstanding, respectively	292,893		165,838
Capital surplus	4,157,543		1,880,545
Retained earnings	966,980		968,010
Accumulated other comprehensive income (loss), net of tax	(569,133)		(2,375)
Total shareholders' equity	5,078,783		3,012,018
Total liabilities and shareholders' equity	$	45,748,355	$	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 June 30,				Six Months Ended June 30,
(dollars and shares in thousands, except per share data)	2022		2021		2022		2021
Interest Income
Loans including fees:
Taxable	$	285,249	$	123,577	$	469,264	$	246,106
Nontaxable	4,802		3,171		8,309		6,528
Investment securities:
Taxable	51,459		24,401		88,868		48,532
Nontaxable	11,018		9,261		21,284		18,393
Money market and other interest-earning investments	1,830		48		2,138		136
Total interest income	354,358		160,458		589,863		319,695
Interest Expense
Deposits	5,187		2,732		8,381		5,891
Federal funds purchased and interbank borrowings	2		—		2		—
Securities sold under agreements to repurchase	85		95		181		215
Federal Home Loan Bank advances	6,925		5,218		12,888		10,627
Other borrowings	4,687		2,486		8,154		4,915
Total interest expense	16,886		10,531		29,606		21,648
Net interest income	337,472		149,927		560,257		298,047
Provision for credit losses	9,245		(4,929)		106,814		(22,285)
Net interest income after provision for credit losses	328,227		154,856		453,443		320,332
Noninterest Income
Wealth management fees	19,304		10,734		33,934		20,442
Service charges on deposit accounts	21,144		8,514		35,870		16,638
Debit card and ATM fees	10,402		5,583		17,301		10,726
Mortgage banking revenue	6,522		7,827		13,767		24,352
Investment product fees	8,568		6,042		15,890		11,906
Capital markets income	7,261		5,871		11,703		9,586
Company-owned life insurance	4,571		2,783		8,095		5,497
Debt securities gains (losses), net	(85)		692		257		2,685
Other income	11,430		3,462		17,540		6,388
Total noninterest income	89,117		51,508		154,357		108,220
Noninterest Expense
Salaries and employee benefits	161,817		72,640		285,964		140,757
Occupancy	26,496		14,054		47,515		28,926
Equipment	7,550		4,506		12,718		8,475
Marketing	9,119		2,632		13,395		4,694
Data processing	25,883		11,697		44,645		24,050
Communication	5,878		2,411		9,295		5,289
Professional fees	6,336		8,528		26,127		11,252
FDIC assessment	4,699		1,226		7,274		2,833
Amortization of intangibles	7,170		2,909		11,981		5,984
Amortization of tax credit investments	1,525		1,813		3,041		3,015
Other expense	20,922		7,202		42,196		12,083
Total noninterest expense	277,395		129,618		504,151		247,358
Income before income taxes	139,949		76,746		103,649		181,194
Income tax expense	24,964		13,960		16,250		31,590
Net income	114,985		62,786		87,399		149,604
Preferred dividends	(4,033)		—		(6,050)		—

Net income applicable to common shareholders	$	110,952	$	62,786	$	81,349	$	149,604
Net income per common share - basic	$	0.38	$	0.38	$	0.31	$	0.91
Net income per common share - diluted	0.38		0.38		0.31		0.90
Weighted average number of common shares outstanding - basic	290,862		165,175		259,108		165,086
Weighted average number of common shares outstanding - diluted	291,881		165,934		260,253		165,821
Dividends per common share	$	0.14	$	0.14	$	0.28	$	0.28

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 June 30,				Six Months Ended June 30,
(dollars in thousands)	2022		2021		2022		2021
Net income	$	114,985	$	62,786	$	87,399	$	149,604

Other comprehensive income (loss):

Change in debt securities available-for-sale:
Unrealized holding gains (losses) for the period	(304,514)		(35,818)		(733,984)		(109,332)
Reclassification for securities transferred to held-to-maturity	143,310		—		165,473		—
Reclassification adjustment for securities (gains) losses realized in income	85		(692)		(257)		(2,685)
Income tax effect	38,408		9,110		134,643		25,777
Unrealized gains (losses) on available-for-sale securities	(122,711)		(27,400)		(434,125)		(86,240)

Change in securities held-to-maturity:
Adjustment for securities transferred from available-for-sale	(143,310)		—		(165,473)		—

OLD NATIONAL BANCORP /IN/ [ONB] Filings
OLD NATIONAL BANCORP /IN/ [ONBPO] Filings
OLD NATIONAL BANCORP /IN/ [ONBPP] Filings
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