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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, 2024
or
☐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)
 
Indiana35-1539838
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
 
One Main Street47708
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 NASDAQ Global Select Market
Depositary Shares, each representing a 1/40th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series AONBPPNASDAQ Global Select Market
Depositary Shares, each representing a 1/40th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series CONBPONASDAQ Global Select Market
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 318,971,000 shares outstanding at April 30, 2024.


OLD NATIONAL BANCORP
FORM 10-Q
TABLE OF CONTENTS
  Page
PART I. 
Item 1. 
 
 
 
 
 
 
 Note 1.
 Note 2.
Note 3.
 Note 4.
 Note 5.
 Note 6.
 Note 7.
 Note 8.
 Note 9.
 Note 10.
 Note 11.
 Note 12.
 Note 13.
 Note 14.
 Note 15.
 Note 16.
 Note 17.
Item 2.
 
 
 
 
 
 
 
 
Item 3.
Item 4.
PART II.
Item 1A.
Item 2.
Item 5.
Item 6.
2

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 wholly-owned 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)
CapStar:  CapStar Financial Holdings, Inc.
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
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: NASDAQ Global Select Market
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


3

OLD NATIONAL BANCORP
CONSOLIDATED BALANCE SHEETS
(dollars and shares in thousands, except per share data)
March 31,
2024		December 31,
2023
 (unaudited) 
Assets  
Cash and due from banks$350,990 $430,866 
Money market and other interest-earning investments588,509 744,192 
Total cash and cash equivalents939,499 1,175,058 
Equity securities, at fair value84,954 80,372 
Investment securities - available-for-sale, at fair value (amortized cost
   $7,834,082 and $7,684,889, respectively)
6,791,652 6,713,055 
Investment securities - held-to-maturity, at amortized cost (fair value
   $2,547,576 and $2,601,188, respectively)
3,001,349 3,013,493 
Federal Home Loan Bank/Federal Reserve Bank stock, at cost365,588 365,588 
Loans held-for-sale, at fair value19,418 32,006 
Loans:
Commercial9,648,269 9,512,230 
Commercial real estate14,653,958 14,140,629 
Residential real estate6,661,379 6,699,443 
Consumer2,659,713 2,639,625 
Total loans, net of unearned income33,623,319 32,991,927 
Allowance for credit losses on loans(319,713)(307,610)
Net loans33,303,606 32,684,317 
Premises and equipment, net564,007 565,396 
Goodwill1,998,716 1,998,716 
Other intangible assets96,795 102,250 
Company-owned life insurance767,423 767,902 
Accrued interest receivable and other assets1,601,911 1,591,683 
Total assets$49,534,918 $49,089,836 
Liabilities
Deposits:
Noninterest-bearing demand$9,257,709 $9,664,247 
Interest-bearing:
Checking and NOW7,236,667 7,331,487 
Savings5,020,095 5,099,186 
Money market10,234,113 9,561,116 
Time deposits5,950,834 5,579,144 
Total deposits37,699,418 37,235,180 
Federal funds purchased and interbank borrowings50,416 390 
Securities sold under agreements to repurchase274,493 285,206 
Federal Home Loan Bank advances4,193,039 4,280,681 
Other borrowings813,213 764,870 
Accrued expenses and other liabilities908,931 960,609 
Total liabilities43,939,510 43,526,936 
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,
   293,330 and 292,655 shares issued and outstanding, respectively
293,330 292,655 
Capital surplus4,157,542 4,159,924 
Retained earnings1,693,664 1,618,630 
Accumulated other comprehensive income (loss), net of tax(779,628)(738,809)
Total shareholders’ equity5,595,408 5,562,900 
Total liabilities and shareholders’ equity$49,534,918 $49,089,836 
The accompanying notes to consolidated financial statements are an integral part of these statements.
4

OLD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Three Months Ended
March 31,
(dollars and shares in thousands, except per share data)
20242023
Interest Income  
Loans including fees:  
Taxable$487,361 $410,375 
Nontaxable13,102 10,212 
Investment securities:
Taxable75,027 60,801 
Nontaxable10,506 11,163 
Money market and other interest-earning investments9,985 3,098 
Total interest income595,981 495,649 
Interest Expense
Deposits185,439 62,593 
Federal funds purchased and interbank borrowings961 4,839 
Securities sold under agreements to repurchase917 779 
Federal Home Loan Bank advances41,167 37,996 
Other borrowings11,039 7,954 
Total interest expense239,523 114,161 
Net interest income356,458 381,488 
Provision for credit losses18,891 13,437 
Net interest income after provision for credit losses337,567 368,051 
Noninterest Income
Wealth and investment services fees28,304 26,920 
Service charges on deposit accounts17,898 17,003 
Debit card and ATM fees10,054 9,982 
Mortgage banking revenue4,478 3,400 
Capital markets income2,900 6,939 
Company-owned life insurance3,434 3,186 
Debt securities gains (losses), net(16)(5,216)
Other income10,470 8,467 
Total noninterest income77,522 70,681 
Noninterest Expense
Salaries and employee benefits149,803 137,364 
Occupancy27,019 28,282 
Equipment8,671 7,389 
Marketing10,634 9,417 
Technology20,023 19,202 
Communication4,000 4,461 
Professional fees6,406 6,732 
FDIC assessment11,313 10,404 
Amortization of intangibles5,455 6,186 
Amortization of tax credit investments2,749 2,761 
Other expense16,244 18,513 
Total noninterest expense262,317 250,711 
Income before income taxes152,772 188,021 
Income tax expense32,488 41,421 
Net income 120,284 146,600 
Preferred dividends(4,034)(4,034)
Net income applicable to common shareholders$116,250 $142,566 
Net income per common share - basic$0.40 $0.49 
Net income per common share - diluted0.40 0.49 
Weighted average number of common shares outstanding - basic290,980 291,088 
Weighted average number of common shares outstanding - diluted292,207 292,756 
Dividends per common share$0.14 $0.14 
The accompanying notes to consolidated financial statements are an integral part of these statements.
5

OLD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)
Three Months Ended
March 31,
(dollars in thousands)20242023
Net income$120,284 $146,600 
Other comprehensive income (loss):
Change in debt securities available-for-sale:
Unrealized holding gains (losses) for the period(44,709)24,724 
Reclassification adjustment for securities (gains) losses
   realized in income		16 5,216 
Income tax effect11,242 1,146 
Unrealized gains (losses) on available-for-sale securities(33,451)31,086 
Change in securities held-to-maturity:
Amortization of unrealized losses on securities transferred
    from available-for-sale		4,318 5,829 
Income tax effect(1,097)(131)
Changes from securities held-to-maturity3,221 5,698 
Change in hedges:
Net unrealized derivative gains (losses) on hedges(19,159)47,849 
Reclassification adjustment for (gains) losses realized in net
   income		4,877 7,292 
Income tax effect3,693 (13,720)
Changes from hedges(10,589)41,421 
Change in defined benefit pension plans:
Amortization of net (gains) losses recognized in income— (188)
Income tax effect— 47 
Changes from defined benefit pension plans— (141)
Other comprehensive income (loss), net of tax(40,819)78,064 
Comprehensive income (loss)$79,465 $224,664 
The accompanying notes to consolidated financial statements are an integral part of these statements.
6

OLD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)
(dollars in thousands, except per
   share data)		Preferred StockCommon StockCapital SurplusRetained EarningsAccumulated
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 ($17.50 per share)
— — — (4,034)— (4,034)
Common stock issued— 15 247 — — 262 
Common stock repurchased— (2,598)(41,112)— — (43,710)
Share-based compensation expense— — 12,742 — — 12,742 
Stock activity under incentive
   compensation plans		— 1,602 (1,412)(195)— (5)
Balance, March 31, 2023$230,500 $291,922 $4,144,730 $1,318,632 $(708,358)$5,277,426 
December 31, 2023$230,500 $292,655 $4,159,924 $1,618,630 $(738,809)$5,562,900 
Net income— — — 120,284 — 120,284 
Other comprehensive income (loss)— — — — (40,819)(40,819)
Cash dividends:
Common ($0.14 per share)
— — — (41,060)— (41,060)
Preferred ($17.50 per share)
— — — (4,034)— (4,034)
Common stock issued— 17 248 — — 265 
Common stock repurchased— (434)(6,748)— — (7,182)
Share-based compensation expense— — 5,491 — — 5,491 
Stock activity under incentive
   compensation plans		— 1,092 (1,373)(156)— (437)
Balance, March 31, 2024$230,500 $293,330 $4,157,542 $1,693,664 $(779,628)$5,595,408 
The accompanying notes to consolidated financial statements are an integral part of these statements.
7

OLD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three Months Ended
March 31,
(dollars in thousands)20242023
Cash Flows From Operating Activities  
Net income$120,284 $146,600 
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation9,678 9,121 
Amortization of other intangible assets5,455 6,186 
Amortization of tax credit investments2,749 2,761 
Net premium amortization on investment securities1,133 3,603 
Accretion income related to acquired loans(3,612)(6,410)
Share-based compensation expense5,491 12,742 
Provision for credit losses18,891 13,437 
Debt securities (gains) losses, net16 5,216 
Net (gains) losses on sales of loans and other assets(1,245)829 
Increase in cash surrender value of company-owned life insurance(3,434)(3,186)
Residential real estate loans originated for sale(112,818)(65,148)
Proceeds from sales of residential real estate loans112,552 67,468 
(Increase) decrease in interest receivable5,349 1,533 
(Increase) decrease in other assets14,135 (3,833)
Increase (decrease) in accrued expenses and other liabilities(70,391)(137,230)
Net cash flows provided by (used in) operating activities104,233 53,689 
Cash Flows From Investing Activities
Purchases of investment securities available-for-sale(483,506)(44,413)
Purchases of investment securities held-to-maturity— (1,941)
Purchases of Federal Home Loan Bank/Federal Reserve Bank stock— (99,158)
Purchases of equity securities(3,791)(20,807)
Proceeds from maturities, prepayments, and calls of investment securities available-for-sale318,810 164,893 
Proceeds from sales of investment securities available-for-sale15,195 51,522 
Proceeds from maturities, prepayments, and calls of investment securities held-to-maturity15,619 24,744 
Proceeds from sales of equity securities1,834 615 
Loan originations and payments, net(639,530)(708,752)
Proceeds from sales of commercial loans13,819 — 
Proceeds from company-owned life insurance death benefits3,891 2,257 
Proceeds from sales of premises and equipment and other assets— 1,410 
Purchases of premises and equipment and other assets(8,482)(10,456)
Net cash flows provided by (used in) investing activities(766,141)(640,086)
Cash Flows From Financing Activities
Net increase (decrease) in:
Deposits464,238 (83,038)
Federal funds purchased and interbank borrowings50,026 37,466 
Securities sold under agreements to repurchase(10,713)(39,786)
Other borrowings49,809 (4,002)
Payments for maturities of Federal Home Loan Bank advances(825,000)(750,150)
Proceeds from Federal Home Loan Bank advances750,000 1,900,000 
Cash dividends paid(45,094)(45,122)
Common stock repurchased(7,182)(43,710)
Common stock issued265 262 
Net cash flows provided by (used in) financing activities426,349 971,920 
Net increase (decrease) in cash and cash equivalents(235,559)385,523 
Cash and cash equivalents at beginning of period1,175,058 728,412 
Cash and cash equivalents at end of period$939,499 $1,113,935 

8

OLD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) – (Continued)
Three Months Ended
March 31,
(dollars in thousands)20242023
Supplemental cash flow information:
Total interest paid$241,927 $104,917 
Total income taxes paid (net of refunds)2,429 1,182 
Operating lease right-of-use assets obtained in exchange for lease obligations(193)222 
Finance lease right-of-use assets obtained in exchange for lease obligations10,400 9,141 
The accompanying notes to consolidated financial statements are an integral part of these statements.
9

OLD NATIONAL BANCORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 1 – BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the accounts of Old National Bancorp and its wholly-owned subsidiaries (hereinafter collectively referred to as “Old National”) and have been prepared in conformity with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry. Such principles require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosures of contingent assets and liabilities at the date of the financial statements and amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, the consolidated financial statements contain all the normal and recurring adjustments necessary for a fair statement of the financial position of Old National as of March 31, 2024 and December 31, 2023, and the results of its operations for the three months ended March 31, 2024 and 2023. Interim results do not necessarily represent annual results. Certain information and disclosures normally included in notes to consolidated annual financial statements prepared in accordance with GAAP have been condensed or omitted in this Quarterly Report on Form 10-Q pursuant to SEC rules and regulations. These financial statements should be read in conjunction with Old National’s Annual Report on Form 10-K for the year ended December 31, 2023.
All intercompany transactions and balances have been eliminated. Certain prior year amounts have been reclassified to conform to the current presentation. Such reclassifications had no effect on prior period net income or shareholders’ equity and were insignificant amounts.
NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS
Accounting Guidance Adopted in 2024
FASB ASC 820 – In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, to clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The adoption of this guidance on January 1, 2024 did not have a material impact on the consolidated financial statements.
FASB ASC 323 – In March 2023, the FASB issued ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, which allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. This ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The adoption of this guidance on a modified retrospective basis on January 1, 2024 did not have a material impact on the consolidated financial statements.
FASB ASC 848 – In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary, optional guidance to ease the potential burden in accounting for, or recognizing the effects of, the transition away from LIBOR or other interbank offered rate on financial reporting. The guidance is applicable only to contracts or hedge accounting relationships that reference LIBOR or another reference rate expected to be discontinued.
In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which defers the sunset date of relief provisions within Topic 848 from December 31, 2022 to December 31, 2024. The objective of the guidance in Topic 848 is to provide relief during the transition period.
The amendments in this ASU are effective March 12, 2020 through December 31, 2024. As of March 31, 2024, substantially all of the Company’s LIBOR exposure was addressed and remaining LIBOR-based contracts are expected to transition to alternate reference rates at their next index reset dates. Old National believes the adoption of this guidance on activities subsequent to March 31, 2024 will not have a material impact on the consolidated financial statements.
10

Accounting Guidance Pending Adoption 
FASB ASC 280 – In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments are intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The purpose of the amendments is to enable investors to better understand an entity’s overall performance and assess potential future cash flows. A public entity should apply the amendments retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements.
FASB ASC 740 – In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Among other things, these amendments require that public business entities on an annual basis disclose additional information in specified categories with respect to the reconciliation of the effective tax rate to the statutory rate for federal, state, and foreign income taxes. It also requires greater detail about individual reconciling items in the rate reconciliation to the extent the impact of those items exceeds a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (loss) by the applicable statutory income tax rate). In addition, the ASU requires information pertaining to taxes paid (net of refunds received) to be disaggregated for federal, state, and foreign taxes and further disaggregated for specific jurisdictions to the extent the related amounts are equal to or greater than 5 percent of total income taxes paid (net of refunds received). The amendments in this ASU are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements.
NOTE 3 – ACQUISITION AND DIVESTITURE ACTIVITY
Pending Acquisition
CapStar Financial Holdings, Inc.
On October 26, 2023, Old National announced that it had entered into a definitive merger agreement to acquire CapStar Financial Holdings, Inc. (“CapStar”) and its wholly-owned subsidiary, CapStar Bank, in an all-stock transaction. On April 1, 2024, Old National completed its acquisition of CapStar. This partnership strengthens Old National’s Nashville, Tennessee presence and adds several new high-growth markets. At closing, CapStar had approximately $3.0 billion of total assets, $2.3 billion of total loans, and $2.6 billion of deposits. Under the terms of the merger agreement, each outstanding share of CapStar common stock was converted into the right to receive 1.155 shares of Old National common stock plus cash in lieu of fractional shares, resulting in consideration paid of $418 million based on Old National’s stock price of $17.41 per share at close. Old National expects systems conversions related to the transaction to be completed in the third quarter of 2024.
11

NOTE 4 – NET INCOME PER COMMON SHARE
Basic and diluted net income per common share are calculated using the two-class method. Net income applicable to common shares is divided by the weighted-average number of common shares outstanding during the period. Adjustments to the weighted-average number of common shares outstanding are made only when such adjustments will dilute net income per common share. Net income applicable to common shares is then divided by the weighted-average number of common shares and common share equivalents during the period.
The following table presents the calculation of basic and diluted net income per common share:
Three Months Ended
March 31,
(dollars and shares in thousands, except per share data)20242023
Net income$120,284 $146,600 
Preferred dividends(4,034)(4,034)
Net income applicable to common shares$116,250 $142,566 
Weighted average common shares outstanding:
Weighted average common shares outstanding (basic)290,980 291,088 
Effect of dilutive securities:
Restricted stock1,227 1,666 
Stock appreciation rights— 2 
Weighted average diluted shares outstanding292,207 292,756 
Basic Net Income Per Common Share$0.40 $0.49 
Diluted Net Income Per Common Share$0.40 $0.49 

12

NOTE 5 – INVESTMENT SECURITIES
The following table summarizes the amortized cost and fair value of the available-for-sale and held-to-maturity investment securities portfolios and the corresponding amounts of gross unrealized gains, unrealized losses, and basis adjustments in AOCI and gross unrecognized gains and losses.
(dollars in thousands)Amortized
Cost		Unrealized
Gains		Unrealized
Losses
Basis
Adjustments (1)
Fair
Value
March 31, 2024    
Available-for-Sale    
U.S. Treasury$291,538 $19 $(9,956)$(48,550)$233,051 
U.S. government-sponsored entities and agencies1,448,561 — (184,941)(80,601)1,183,019 
Mortgage-backed securities - Agency5,223,119 1,996 (675,092)— 4,550,023 
States and political subdivisions537,930 404 (24,180)950 515,104 
Pooled trust preferred securities13,800 — (2,526)— 11,274 
Other securities319,134 391 (20,344)— 299,181 
Total available-for-sale securities$7,834,082 $2,810 $(917,039)$(128,201)$6,791,652 
Held-to-Maturity
U.S. government-sponsored entities and agencies$827,684 $— $(164,949)$— $662,735 
Mortgage-backed securities - Agency1,016,858 — (159,201)— 857,657 
States and political subdivisions1,156,957 864 (130,487)— 1,027,334 
Allowance for securities held-to-maturity(150)— — — (150)
Total held-to-maturity securities$3,001,349 $864 $(454,637)$— $2,547,576 
December 31, 2023
Available-for-Sale
U.S. Treasury$449,817 $154 $(11,941)$(41,297)$396,733 
U.S. government-sponsored entities and agencies1,487,879 33 (192,717)(63,931)1,231,264 
Mortgage-backed securities - Agency4,835,319 3,093 (621,852)— 4,216,560 
States and political subdivisions554,509 878 (23,057)2,930 535,260 
Pooled trust preferred securities13,797 — (2,460)— 11,337 
Other securities343,568 449 (22,116)— 321,901 
Total available-for-sale securities$7,684,889 $4,607 $(874,143)$(102,298)$6,713,055 
Held-to-Maturity
U.S. government-sponsored entities and agencies$825,953 $— $(154,827)$— $671,126 
Mortgage-backed securities - Agency1,029,131 — (147,137)— 881,994 
States and political subdivisions1,158,559 1,800 (112,141)— 1,048,218 
Allowance for securities held-to-maturity(150)— — — (150)
Total held-to-maturity securities$3,013,493 $1,800 $(414,105)$— $2,601,188 
(1)    Basis adjustments represent the amount of fair value hedging adjustments included in the carrying amounts of fixed-rate investment securities assets designated in fair value hedging arrangements. See Note 15 to the consolidated financial statements for additional information regarding these derivative financial instruments.
Substantially all of the mortgage-backed securities in the investment portfolio are residential mortgage-backed securities.
Proceeds from sales or calls of available-for-sale investment securities and the resulting realized gains and realized losses were as follows:
Three Months Ended
March 31,
(dollars in thousands)20242023
Proceeds$61,250 $57,955 
Realized gains3 909 
Realized losses(19)(6,125)
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The table below shows the amortized cost and fair value of the investment securities portfolio by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Weighted average yield is based on amortized cost.
 March 31, 2024
(dollars in thousands)Amortized
Cost		Fair
Value		Weighted
Average
Yield
Maturity
Available-for-Sale   
Within one year$177,458 $174,950 3.39 %
One to five years1,991,571 1,848,581 3.44 
Five to ten years4,193,417 3,608,726 2.57 
Beyond ten years1,471,636 1,159,395 2.58 
Total$7,834,082 $6,791,652 2.81 %
Held-to-Maturity
Within one year$157 $147 2.23 %
One to five years160,838 132,056 2.63 
Five to ten years1,161,402 1,006,755 2.62 
Beyond ten years1,678,952 1,408,618 2.73 
Total$3,001,349 $2,547,576 2.68 %
The following table summarizes the available-for-sale investment securities with unrealized losses for which an allowance for credit losses has not been recorded by aggregated major security type and length of time in a continuous unrealized loss position:
 Less than 12 months12 months or longerTotal
(dollars in thousands)Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized Losses
March 31, 2024
Available-for-Sale
U.S. Treasury$13,882 $(77)$183,031 $(9,879)$196,913 $(9,956)
U.S. government-sponsored entities
   and agencies		3,983 (74)1,179,036 (184,867)1,183,019 (184,941)
Mortgage-backed securities - Agency498,441 (4,781)3,710,045 (670,311)4,208,486 (675,092)
States and political subdivisions132,681 (691)282,382 (23,489)415,063 (24,180)
Pooled trust preferred securities— — 11,274 (2,526)11,274 (2,526)
Other securities36,511 (133)215,927 (20,211)252,438 (20,344)
Total available-for-sale$685,498 $(5,756)$5,581,695 $(911,283)$6,267,193 $(917,039)
December 31, 2023
Available-for-Sale
U.S. Treasury$8,937 $(42)$191,027 $(11,899)$199,964 $(11,941)
U.S. government-sponsored entities
   and agencies		— — 1,189,314 (192,717)1,189,314 (192,717)
Mortgage-backed securities - Agency90,145 (710)3,835,552 (621,142)3,925,697 (621,852)
States and political subdivisions86,865 (495)259,767 (22,562)346,632 (23,057)
Pooled trust preferred securities— — 11,337 (2,460)11,337 (2,460)
Other securities39,032 (229)255,888 (21,887)294,920 (22,116)
Total available-for-sale$224,979 $(1,476)$5,742,885 $(872,667)$5,967,864 $(874,143)
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The following table summarizes the held-to-maturity investment securities with unrecognized losses aggregated by major security type and length of time in a continuous loss position:
 Less than 12 months12 months or longerTotal
(dollars in thousands)Fair
Value		Unrecognized
Losses		Fair
Value		Unrecognized
Losses		Fair
Value		Unrecognized
Losses
March 31, 2024
Held-to-Maturity
U.S. government-sponsored entities
   and agencies		$— $— $662,735 $(164,949)$662,735 $(164,949)
Mortgage-backed securities - Agency— — 857,657 (159,201)857,657 (159,201)
States and political subdivisions19,953 (100)957,362 (130,387)977,315 (130,487)
Total held-to-maturity$19,953 $(100)$2,477,754 $(454,537)$2,497,707 $(454,637)
December 31, 2023
Held-to-Maturity
U.S. government-sponsored entities
   and agencies		$— $— $671,126 $(154,827)$671,126 $(154,827)
Mortgage-backed securities - Agency— — 881,994 (147,137)881,994 (147,137)
States and political subdivisions— — 977,154 (112,141)977,154 (112,141)
Total held-to-maturity$— $— $2,530,274 $(414,105)$2,530,274 $(414,105)
The unrecognized losses on held-to-maturity investment securities presented in the table above do not include unrecognized losses on securities that were transferred from available-for-sale to held-to-maturity totaling $123.3 million at March 31, 2024 and $127.6 million at December 31, 2023. These unrecognized losses are included as a separate component of shareholders’ equity and are being amortized over the remaining term of the securities.
No allowance for credit losses on available-for-sale debt securities was needed at March 31, 2024 or December 31, 2023.
An allowance on held-to-maturity debt securities is maintained for certain municipal bonds to account for expected lifetime credit losses. Substantially all of the U.S. government-sponsored entities and agencies and agency mortgage-backed securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major credit rating agencies, and have a long history of no credit losses. Therefore, for those securities, we do not record expected credit losses. The allowance for credit losses on held-to-maturity debt securities was $0.2 million at March 31, 2024 and December 31, 2023. Accrued interest receivable on the securities portfolio is excluded from the estimate of credit losses and totaled $40.3 million at March 31, 2024 and $50.3 million at December 31, 2023.
At March 31, 2024, Old National’s securities portfolio consisted of 2,941 securities, 2,702 of which were in an unrealized loss position. The unrealized losses attributable to our U.S. Treasury, U.S. government-sponsored entities and agencies, agency mortgage-backed securities, states and political subdivisions, and other securities are the result of fluctuations in interest rates and market movements. Old National’s pooled trust preferred securities are evaluated using collateral-specific assumptions to estimate the expected future interest and principal cash flows. At March 31, 2024, we had no intent to sell any securities that were in an unrealized loss position nor is it expected that we would be required to sell the securities prior to their anticipated recovery.
Old National’s pooled trust preferred securities have experienced credit defaults. However, we believe that the value of the instruments lies in the full and timely interest payments that will be received through maturity, the steady amortization that will be experienced until maturity, and the full return of principal by the final maturity of the collateralized debt obligations. Old National did not recognize any losses on these securities for the three months ended March 31, 2024 or 2023.
Equity Securities
Equity securities consist of mutual funds for Community Reinvestment Act qualified investments and diversified investment securities held in a grantor trust for participants in the Company’s nonqualified deferred compensation plan. Old National’s equity securities with readily determinable fair values totaled $85.0 million at March 31, 2024 and $80.4 million at December 31, 2023. There were gains on equity securities of $0.3 million during the three months ended March 31, 2024, compared to losses of $0.8 million during the three months ended March 31, 2023.
15

Alternative Investments
Old National has alternative investments without readily determinable fair values that are included in other assets totaling $474.7 million at March 31, 2024, consisting of $270.6 million of illiquid investments in partnerships, limited liability companies, and other ownership interests that support affordable housing and $204.1 million of economic development and community revitalization initiatives in low-to-moderate income neighborhoods. These alternative investments totaled $449.3 million at December 31, 2023. There have been no impairments or adjustments on equity securities without readily determinable fair values, except for amortization of tax credit investments in the three months ended March 31, 2024 and 2023. See Note 9 to the consolidated financial statements for detail regarding these investments.
NOTE 6 – LOANS AND ALLOWANCE FOR CREDIT LOSSES
Loans
Old National’s loans consist primarily of loans made to consumers and commercial clients in many diverse industries, including real estate rental and leasing, manufacturing, healthcare, wholesale trade, construction, and agriculture, among others. Most of Old National’s lending activity occurs within our principal geographic markets in the Midwest region of the United States. Old National manages concentrations of credit exposure by industry, product, geography, client relationship, and loan size.
Old National has loan participations, which qualify as participating interests, with other financial institutions. At March 31, 2024, these loans totaled $3.0 billion, of which $1.3 billion had been sold to other financial institutions and $1.7 billion was retained by Old National. The loan participations convey proportionate ownership rights with equal priority to each participating interest holder; involve no recourse (other than ordinary representations and warranties) to, or subordination by, any participating interest holder; all cash flows are divided among the participating interest holders in proportion to each holder’s share of ownership; and no holder has the right to pledge the entire financial asset unless all participating interest holders agree.
16

The loan categories used to monitor and analyze interest income and yields are different than the portfolio segments used to determine the allowance for credit losses on loans. The allowance for credit losses was calculated by pooling loans of similar credit risk characteristics and credit monitoring procedures. The four loan portfolios used to monitor and analyze interest income and yields – commercial, commercial real estate, residential real estate, and consumer – are reclassified into seven segments of loans – commercial, commercial real estate, BBCC, residential real estate, indirect, direct, and home equity for purposes of determining the allowance for credit losses on loans. The commercial and commercial real estate loan categories shown on the balance sheet include the same pool of loans as the commercial, commercial real estate, and BBCC portfolio segments. The consumer loan category shown on the balance sheet is comprised of the same loans in the indirect, direct, and home equity portfolio segments. The portfolio segment reclassifications follow:
Balance Sheet
Line Item		Portfolio
Segment
Reclassifications		Portfolio
Segment After
Reclassifications
(dollars in thousands)
March 31, 2024
Commercial (1)
$9,648,269 $(232,045)$9,416,224 
Commercial real estate14,653,958 (172,659)14,481,299 
BBCCN/A404,704 404,704 
Residential real estate6,661,379 — 6,661,379 
Consumer2,659,713 (2,659,713)N/A
IndirectN/A1,091,998 1,091,998 
DirectN/A506,305 506,305 
Home equityN/A1,061,410 1,061,410 
Total loans (2)
$33,623,319 $— $33,623,319 
Allowance for credit losses on loans(319,713)— (319,713)
Net loans$33,303,606 $— $33,303,606 
December 31, 2023
Commercial (1)
$9,512,230 $(232,764)$9,279,466 
Commercial real estate14,140,629 (169,058)13,971,571 
BBCCN/A401,822 401,822 
Residential real estate6,699,443 — 6,699,443 
Consumer2,639,625 (2,639,625)N/A
IndirectN/A1,050,982 1,050,982 
DirectN/A523,172 523,172 
Home equityN/A1,065,471 1,065,471 
Total loans (2)
$32,991,927 $— $32,991,927 
Allowance for credit losses on loans(307,610)— (307,610)
Net loans$32,684,317 $— $32,684,317 
(1)Includes direct finance leases of $161.7 million at March 31, 2024 and $169.7 million at December 31, 2023.
(2)    Includes unearned income of $88.9 million at March 31, 2024 and $93.7 million at December 31, 2023.
The risk characteristics of each loan portfolio segment are as follows:
Commercial
Commercial loans are classified primarily on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its clients.
Commercial Real Estate
Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted
17

on the property securing the loan. Commercial real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The properties securing Old National’s commercial real estate portfolio are diverse in terms of type and geographic location. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner-occupied loans.
Included with commercial real estate are construction loans, which are underwritten utilizing independent appraisal reviews, sensitivity analysis of absorption and lease rates, financial analysis of the developers and property owners, and feasibility studies, if available. Construction loans are generally based on estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders (including Old National), sales of developed property, or an interim loan commitment from Old National until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions, and the availability of long-term financing.
At 242%, Old National Bank’s applicable investor commercial real estate loans as a percentage of its Tier 1 capital plus the allowance for credit losses attributable to loans and leases remained below the regulatory guideline limit of 300% at March 31, 2024.
BBCC
BBCC loans are typically granted to small businesses with gross revenues of less than $5 million and aggregate debt of less than $1 million. Old National has established minimum debt service coverage ratios, minimum FICO scores for owners and guarantors, and the ability to show relatively stable earnings as criteria to help mitigate risk. Repayment of these loans depends on the personal income of the borrowers and the cash flows of the business. These factors can be affected by factors such as changes in economic conditions and unemployment levels.
Residential
With respect to residential loans that are secured by 1 - 4 family residences and are generally owner occupied, Old National typically establishes a maximum loan-to-value ratio and generally requires private mortgage insurance if that ratio is exceeded. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in residential property values. Portfolio risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.
Indirect
Indirect loans are secured by automobile collateral, generally new and used cars and trucks from auto dealers that operate within our footprint. Old National typically mitigates the risk of indirect loans by establishing minimum FICO scores, maximum loan-to-value ratios, and maximum debt-to-income ratios. Repayment of these loans depends largely on the personal income of the borrowers, which can be affected by changes in economic conditions such as unemployment levels. Portfolio risk is mitigated by the fact that the loans are of smaller amounts spread over many borrowers and ongoing reviews of dealer relationships.
Direct
Direct loans are typically secured by collateral such as auto or real estate or are unsecured. Old National has established underwriting standards such as minimum FICO scores, maximum loan-to-value ratios, and maximum debt-to-income ratios. Repayment of these loans depends largely on the personal income of the borrowers, which can be affected by changes in economic conditions such as unemployment levels. Portfolio risk is mitigated by the fact that the loans are of smaller amounts spread over many borrowers.
Home Equity
Home equity loans are generally secured by 1-4 family residences that are owner-occupied. Old National has established underwriting standards such as minimum FICO scores, maximum loan-to-value ratios, and maximum debt-to-income ratios. Repayment of these loans depends largely on the personal income of the borrowers, which can be affected by changes in economic conditions such as unemployment levels. Portfolio risk is mitigated by the
18

fact that the loans are of smaller amounts spread over many borrowers, along with monitoring of updated borrower credit scores.
Allowance for Credit Losses
Loans
Credit loss assumptions used when computing the level of expected credit losses are estimated using a model that categorizes loan pools based on loss history, delinquency status, and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. The base forecast scenario considers unemployment, gross domestic product, and the BBB ratio (BBB spread to the 10-year U.S. Treasury rate). In addition to the quantitative inputs, several qualitative factors are considered. These factors include the risk that unemployment, gross domestic product, housing product index, and the BBB ratio prove to be more severe and/or prolonged than our baseline forecast due to a variety of factors including monetary actions to control inflation, recent instability in the banking sector, global military conflicts, and global supply chain issues. Old National’s activity in the allowance for credit losses on loans by portfolio segment was as follows:
(dollars in thousands)Balance at
Beginning of
Period		Charge-offsRecoveriesProvision
for Loan
Losses		Balance at
End of
Period
Three Months Ended March 31, 2024
Commercial$118,333 $(3,659)$334 $8,429 $123,437 
Commercial real estate155,099 (6,641)1,035 11,147 160,640 
BBCC2,887 (76)18 334 3,163 
Residential real estate20,837 — 19 1,043 21,899 
Indirect1,236 (1,138)332 788 1,218 
Direct3,169 (2,428)487 1,724 2,952 
Home equity6,049 (78)45 388 6,404 
Total$307,610 $(14,020)$2,270 $23,853 $319,713 
Three Months Ended March 31, 2023
Commercial$120,612 $(12,423)$283 $17,296 $125,768 
Commercial real estate138,244 (1,189)263 (1,970)135,348 
BBCC2,431 (28)73 (160)2,316 
Residential real estate21,916 (23)72 (1,758)20,207 
Indirect1,532 (1,197)412 687 1,434 
Direct12,116 (3,238)581 (2,693)6,766 
Home equity6,820 (82)67 67 6,872 
Total$303,671 $(18,180)$1,751 $11,469 $298,711 
Accrued interest receivable on loans is excluded from the estimate of credit losses and totaled $171.6 million at March 31, 2024, compared to $169.8 million at December 31, 2023.
19

Unfunded Loan Commitments
Old National maintains an allowance for credit losses on unfunded loan commitments to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the allowance for credit losses on loans, modified to take into account the probability of a drawdown on the commitment. The allowance for credit losses on unfunded loan commitments is classified as a liability account on the balance sheet within accrued expenses and other liabilities, while the corresponding provision for unfunded loan commitments is included in the provision for credit losses. Old National’s activity in the allowance for credit losses on unfunded loan commitments was as follows:
Three Months Ended
March 31,
(dollars in thousands)20242023
Allowance for credit losses on unfunded loan commitments:
Balance at beginning of period$31,226 $32,188 
Provision (release) for credit losses on unfunded loan
   commitments		(4,962)1,968 
Balance at end of period$26,264 $34,156 
Credit Quality
Old National’s management monitors the credit quality of its loans on an ongoing basis with the AQR for commercial loans reviewed annually or at renewal and the performance of its residential and consumer loans based upon the accrual status refreshed at least quarterly. Internally, management assigns an AQR to each non-homogeneous commercial, commercial real estate, and BBCC loan in the portfolio. The primary determinants of the AQR are the reliability of the primary source of repayment and the past, present, and projected financial condition of the borrower. The AQR will also consider current industry conditions. Major factors used in determining the AQR can vary based on the nature of the loan, but commonly include factors such as debt service coverage, internal cash flow, liquidity, leverage, operating performance, debt burden, FICO scores, occupancy, interest rate sensitivity, and expense burden. Old National uses the following definitions for risk ratings:
Criticized. Special mention loans that have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.
Classified – Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
Classified – Nonaccrual. Loans classified as nonaccrual have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection in full, on the basis of currently existing facts, conditions, and values, in doubt.
Classified – Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as nonaccrual, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
Pass rated loans are those loans that are other than criticized, classified – substandard, classified – nonaccrual, or classified – doubtful.
20

The following table summarizes the amortized cost of term loans by risk category of commercial, commercial real estate, and BBCC loans by loan portfolio segment, class of loan, and origination year:
(dollars in thousands)Origination YearRevolving to Term
20242023202220212020PriorRevolvingTotal
March 31, 2024
Commercial:
Pass$410,201 $1,750,748 $1,366,887 $874,692 $478,725 $799,327 $2,162,262 $891,572 $8,734,414 
Criticized1,087 23,697 66,438 16,667 36,943 50,076 123,117 15,698 333,723 
Classified:
Substandard6,680 8,148 37,790 32,816 33,303 27,990 60,662 67,681 275,070 
Nonaccrual— 8,206 — — — 1,623 603 2,285 12,717 
Doubtful— 12,237 35,110 6,343 4,523 2,087 — — 60,300 
Total$417,968 $1,803,036 $1,506,225 $930,518 $553,494 $881,103 $2,346,644 $977,236 $9,416,224 
Commercial real estate:
Pass$461,150 $2,274,374 $3,680,370 $2,438,872 $1,479,830 $2,057,232 $98,657 $988,203 $13,478,688 
Criticized7,746 51,975 48,071 132,220 38,258 112,902 7,869 80,231 479,272 
Classified:
Substandard280 10,079 66,381 37,954 33,966 142,537 — 57,157 348,354 
Nonaccrual— 206 19,344 11,850 2,599 19,159 — 2,465 55,623 
Doubtful— 5,217 21,775 24,349 2,224 65,797 — — 119,362 
Total$469,176 $2,341,851 $3,835,941 $2,645,245 $1,556,877 $2,397,627 $106,526 $1,128,056 $14,481,299 
BBCC:
Pass$20,205 $82,522 $63,561 $41,025 $35,964 $41,883 $65,020 $31,595 $381,775 
Criticized122 — 571 872 528 324 2,004 10,003 14,424 
Classified:
Substandard73 444 191 248 126 82 575 994 2,733 
Nonaccrual— — — 470 — 1,169 — 1,962 3,601 
Doubtful— 904 564 229 252 222 — — 2,171 
Total$20,400 $83,870 $64,887 $42,844 $36,870 $43,680 $67,599 $44,554 $404,704 
(dollars in thousands)Origination YearRevolving to Term
20232022202120202019PriorRevolvingTotal
December 31, 2023
Commercial:
Pass$1,826,289 $1,573,669 $985,964 $520,883 $450,911 $495,979 $2,051,985 $651,953 $8,557,633 
Criticized20,038 90,031 19,953 36,906 25,756 47,357 89,765 44,348 374,154 
Classified:
Substandard27,271 41,164 27,990 37,618 10,461 29,981 72,703 56,716 303,904 
Nonaccrual32 7,034 — — 823 3,411 — 5,461 16,761 
Doubtful— 7,261 5,925 4,875 1,742 7,211 — — 27,014 
Total$1,873,630 $1,719,159 $1,039,832 $600,282 $489,693 $583,939 $2,214,453 $758,478 $9,279,466 
Commercial real estate:
Pass$2,177,841 $3,515,702 $2,563,638 $1,576,044 $1,010,351 $1,161,119 $103,332 $960,386 $13,068,413 
Criticized69,648 69,946 68,708 27,059 52,107 95,896 3,893 64,730 451,987 
Classified:
Substandard26,638 56,423 21,401 28,983 61,186 49,558 — 48,760 292,949 
Nonaccrual— 21,919 10,706 1,975 1,634 8,632 — 1,400 46,266 
Doubtful5,360 429 30,897 2,306 37,777 35,187 — — 111,956 
Total$2,279,487 $3,664,419 $2,695,350 $1,636,367 $1,163,055 $1,350,392 $107,225 $1,075,276 $13,971,571 
BBCC:
Pass$81,102 $64,583 $44,307 $38,086 $27,557 $19,028 $68,807 $33,361 $376,831 
Criticized— — 857 700 1,001 349 2,144 12,728 17,779 
Classified:
Substandard436 193 252 — — 604 15 1,006 2,506 
Nonaccrual— — 482 — 4 1,105 — 1,402 2,993 
Doubtful302 727 254 286 60 84 — — 1,713 
Total$81,840 $65,503 $46,152 $39,072 $28,622 $21,170 $70,966 $48,497 $401,822 
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For residential real estate and consumer loan classes, Old National evaluates credit quality based on the aging status of the loan and by payment activity. The performing or nonperforming status is updated on an on-going basis dependent upon improvement and deterioration in credit quality. The following table presents the amortized cost of term residential real estate and consumer loans based on payment activity and origination year:
Origination YearRevolving to Term
(dollars in thousands)20242023202220212020PriorRevolvingTotal
March 31, 2024
Residential real estate:
Risk Rating:
Performing$52,693 $475,237 $1,494,593 $1,857,010 $1,615,143 $1,119,364 $74 $243 $6,614,357 
Nonperforming— 1,366 6,461 6,151 3,771 29,273 — — 47,022 
Total$52,693 $476,603 $1,501,054 $1,863,161 $1,618,914 $1,148,637 $74 $243 $6,661,379 
Indirect:
Risk Rating:
Performing$139,067 $373,733 $321,837 $143,848 $69,757 $39,133 $— $215 $1,087,590 
Nonperforming— 695 1,668 1,110 450 485 — — 4,408 
Total$139,067 $374,428 $323,505 $144,958 $70,207 $39,618 $— $215 $1,091,998 
Direct:
Risk Rating:
Performing$19,941 $92,696 $123,339 $82,175 $29,248 $73,369 $79,443 $611 $500,822 
Nonperforming— 18 522 386 658 3,886 3 10 5,483 
Total$19,941 $92,714 $123,861 $82,561 $29,906 $77,255 $79,446 $621 $506,305 
Home equity:
Risk Rating:
Performing$— $2 $396 $299 $— $4,911 $1,012,484 $25,360 $1,043,452 
Nonperforming— 1 7 131 242 4,688 3,618 9,271 17,958 
Total$— $3 $403 $430 $242 $9,599 $1,016,102 $34,631 $1,061,410 
Origination YearRevolving to Term
20232022202120202019PriorRevolvingTotal
December 31, 2023
Residential real estate:
Risk Rating:
Performing$453,743 $1,508,671 $1,836,078 $1,705,131 $430,783 $722,987 $— $279 $6,657,672 
Nonperforming116 4,563 4,004 3,375 4,078 25,635 — — 41,771 
Total$453,859 $1,513,234 $1,840,082 $1,708,506 $434,861 $748,622 $— $279 $6,699,443 
Indirect:
Risk Rating:
Performing$393,369 $355,822 $162,735 $82,871 $37,967 $13,815 $— $196 $1,046,775 
Nonperforming372 1,472 1,207 547 318 291 — — 4,207 
Total$393,741 $357,294 $163,942 $83,418 $38,285 $14,106 $— $196 $1,050,982 
Direct:
Risk Rating:
Performing$109,372 $90,310 $92,491 $48,387 $29,659 $67,129 $75,080 $4,852 $517,280 
Nonperforming67 531 517 560 210 3,872 124 11 5,892 
Total$109,439 $90,841 $93,008 $48,947 $29,869 $71,001 $75,204 $4,863 $523,172 
Home equity:
Risk Rating:
Performing$290 $164 $160 $140 $679 $4,483 $1,019,389 $23,918 $1,049,223 
Nonperforming— 310 328 404 741 4,327 2,844 7,294 16,248 
Total$290 $474 $488 $544 $1,420 $8,810 $1,022,233 $31,212 $1,065,471 
22

The following table summarizes the gross charge-offs of loans by loan portfolio segment and origination year:
Origination Year
(dollars in thousands)20242023202220212020PriorRevolvingTotal
Three Months Ended March 31, 2024
Commercial$— $— $3,481 $33 $8 $4 $133 $3,659 
Commercial real estate— — — 2,176 — 4,465 — 6,641 
BBCC— — 76 — — — — 76 
Residential real estate— — — — — — — — 
Indirect— 370 472 225 33 38 — 1,138 
Direct— 116 576 529 113 223 871 2,428 
Home equity— — — 34 — 44 — 78 
Total gross charge-offs$— $486 $4,605 $2,997 $154 $4,774 $1,004 $14,020 
Origination Year
20232022202120202019PriorRevolvingTotal
Three Months Ended March 31, 2023
Commercial$— $— $5,230 $— $6,789 $239 $165 $12,423 
Commercial real estate— 54 735 400 — — — 1,189 
BBCC— — 28 — — — — 28 
Residential real estate— — — — — 23 — 23 
Indirect— 514 430 93 111 49 — 1,197 
Direct— 471 794 286 327 195 1,165 3,238 
Home equity— — — — — 82 — 82 
Total gross charge-offs$— $1,039 $7,217 $779 $7,227 $588 $1,330 $18,180 
Nonaccrual and Past Due Loans
Old National does not record interest on nonaccrual loans until principal is recovered. For all loan classes, a loan is generally placed on nonaccrual status when principal or interest becomes 90 days past due unless it is well secured and in the process of collection, or earlier when concern exists as to the ultimate collectability of principal or interest. Interest accrued but not received is reversed against earnings. Cash interest received on these loans is applied to the principal balance until the principal is recovered or until the loan returns to accrual status. Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current, remain current for a prescribed period, and future payments are reasonably assured.
23

The following table presents the aging of the amortized cost basis in past due loans by class of loans:
(dollars in thousands)30-59 Days
Past Due		60-89 Days
Past Due		Past Due
90 Days or
More		Total
Past Due		CurrentTotal
Loans
March 31, 2024
Commercial$10,099 $1,620 $10,023 $21,742 $9,394,482 $9,416,224 
Commercial real estate8,838 27,844 32,539 69,221 14,412,078 14,481,299 
BBCC1,268 1,111 1,240 3,619 401,085 404,704 
Residential31,319 5,030 14,216 50,565 6,610,814 6,661,379 
Indirect5,488 1,351 1,205 8,044 1,083,954 1,091,998 
Direct4,751 1,115 3,454 9,320 496,985 506,305 
Home equity4,948 1,045 7,921 13,914 1,047,496 1,061,410 
Total$66,711 $39,116 $70,598 $176,425 $33,446,894 $33,623,319 
December 31, 2023
Commercial$16,128 $1,332 $4,861 $22,321 $9,257,145 $9,279,466 
Commercial real estate9,081 5,254 30,660 44,995 13,926,576 13,971,571 
BBCC1,368 134 977 2,479 399,343 401,822 
Residential12,358 367 15,249 27,974 6,671,469 6,699,443 
Indirect7,025 1,854 1,342 10,221 1,040,761 1,050,982 
Direct5,436 1,455 1,787 8,678 514,494 523,172 
Home equity7,791 2,347 6,659 16,797 1,048,674 1,065,471 
Total$59,187 $12,743 $61,535 $133,465 $32,858,462 $32,991,927 
The following table presents the amortized cost basis of loans on nonaccrual status and loans past due 90 days or more and still accruing by class of loan:
March 31, 2024December 31, 2023
(dollars in thousands)Nonaccrual
Amortized
Cost		Nonaccrual
With No
Related
Allowance		Past Due
90 Days or
More and
Accruing		Nonaccrual
Amortized
Cost		Nonaccrual
With No
Related
Allowance		Past Due
90 Days or
More and
Accruing
Commercial$73,017 $16,707 $1,167 $43,775 $13,143 $242 
Commercial real estate174,985 56,216 742 158,222 24,507 585 
BBCC5,772 — 98 4,706 — 95 
Residential47,022 — 10 41,771 — — 
Indirect4,408 — 108 4,207 — 8 
Direct5,483 — 42 5,892 — 31 
Home equity17,958 — 5 16,248 — — 
Total$328,645 $72,923 $2,172 $274,821 $37,650 $961 
Interest income recognized on nonaccrual loans was insignificant during the three months ended March 31, 2024 and 2023.
24

When management determines that foreclosure is probable, expected credit losses for collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. A loan is considered collateral dependent when the borrower is experiencing financial difficulty, and the loan is expected to be repaid substantially through the operation or sale of the collateral. The class of loan represents the primary collateral type associated with the loan. Significant quarter-over-quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value. The following table presents the amortized cost basis of collateral dependent loans by class of loan:
Type of Collateral
(dollars in thousands)Real
Estate		Blanket
Lien		Investment
Securities/Cash		AutoOther
March 31, 2024
Commercial$11,284 $39,258 $5,728 $11,582 $319 
Commercial real estate163,753 — 1,133 — 6,031 
BBCC3,793 1,701 — 278 — 
Residential47,022 — — — — 
Indirect— — — 4,408 — 
Direct4,559 — 7 386 48 
Home equity17,958 — — — — 
Total loans$248,369 $40,959 $6,868 $16,654 $6,398 
December 31, 2023
Commercial$14,303 $24,729 $2,577 $280 $328 
Commercial real estate146,425 — 1,167 — 6,107 
BBCC3,522 794 — 390 — 
Residential41,771 — — — — 
Indirect— — — 4,207 — 
Direct4,727 1 3 366 29 
Home equity16,248 — — — — 
Total loans$226,996 $25,524 $3,747 $5,243 $6,464 
Financial Difficulty Modifications
Occasionally, Old National modifies loans to borrowers experiencing financial difficulty in the form of principal forgiveness, term extension, an other-than-insignificant payment delay, or interest rate reduction (or a combination thereof). When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses on loans.
The following table presents the amortized cost basis of financial difficulty modifications that were modified for borrowers experiencing financial difficulty, by class of loans and type of modification:
(dollars in thousands)Term
Extension		Total
Class of
Loans
Three Months Ended March 31, 2024
Commercial$29,426 0.3 %
Commercial real estate120,891 0.8 %
Total$150,317 0.4 %
Three Months Ended March 31, 2023
Commercial$17,342 0.2 %
Commercial real estate9,926 0.1 %
Total$27,268 0.1 %
25

Old National closely monitors the performance of financial difficulty modifications to understand the effectiveness of its efforts. The following table presents the performance of loans identified as financial difficulty modifications:
(dollars in thousands)30-59 Days
Past Due		60-89 Days
Past Due		Past Due
90 Days or
More		Total
Past Due		CurrentTotal
Loans
March 31, 2024
Commercial$— $— $— $— $29,426 $29,426 
Commercial real estate4,059 31,222 — 35,281 85,610 120,891 
Total$4,059 $31,222 $— $35,281 $115,036 $150,317 
December 31, 2023
Commercial$— $— $— $— $21,631 $21,631 
Commercial real estate5,287 — — 5,287 116,242 121,529 
Total$5,287 $— $— $5,287 $137,873 $143,160 
The following table summarizes the nature of the financial difficulty modifications by class of loans:
(dollars in thousands)Weighted-
Average
Term
Extension
(in months)
Three Months Ended March 31, 2024
Commercial9.1
Commercial real estate8.1
Total8.6
Three Months Ended March 31, 2023
Commercial6.8
Commercial real estate4.1
Total5.6
There were no payment defaults on these loans subsequent to their modifications during the three months ended March 31, 2024 or 2023. Old National had not committed to lend any material additional funds to the borrowers whose loans were modified due to financial difficulties at March 31, 2024 or December 31, 2023.
NOTE 7 – LEASES
Old National has operating and finance leases for land, office space, banking centers, and equipment. These leases are generally for periods of 5 to 20 years with various renewal options. We include certain renewal options in the measurement of our right-of-use assets and lease liabilities if they are reasonably certain to be exercised. Variable lease payments that are dependent on an index or a rate are initially measured using the index or rate at the commencement date and are included in the measurement of the lease liability. Variable lease payments that are not dependent on an index or a rate are excluded from the measurement of the lease liability and are recognized in profit and loss when incurred. Variable lease payments are defined as payments made for the right to use an asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time.
Old National has lease agreements with lease and non-lease components, which are generally accounted for separately. For real estate leases, non-lease components and other non-components, such as common area maintenance charges, real estate taxes, and insurance are not included in the measurement of the lease liability since they are generally able to be segregated. For certain equipment leases, Old National accounts for the lease and non-lease components as a single lease component using the practical expedient available for that class of assets. Old National does not have any material sub-lease agreements.
26

The components of lease expense were as follows:
Affected Line
Item in the
Statement of Income		Three Months Ended
March 31,
(dollars in thousands)20242023
Operating lease costOccupancy/Equipment expense$7,826 $8,638 
Finance lease cost: 
Amortization of right-of-use assetsOccupancy expense751 691 
Interest on lease liabilitiesInterest expense181 169 
Sub-lease incomeOccupancy expense(125)(60)
Total $8,633 $9,438 
Supplemental balance sheet information related to leases was as follows:
(dollars in thousands)March 31,
2024		December 31,
2023
Operating Leases 
Operating lease right-of-use assets$189,593 $185,506 
Operating lease liabilities208,868 204,960 
Finance Leases
Premises and equipment, net18,877 19,820 
Other borrowings20,108 20,955 
Weighted-Average Remaining Lease Term (in Years)
Operating leases8.48.5
Finance leases10.310.5
Weighted-Average Discount Rate
Operating leases3.05 %3.04 %
Finance leases3.91 %3.90 %
Supplemental cash flow information related to leases was as follows:
Three Months Ended
March 31,
(dollars in thousands)20242023
Cash paid for amounts included in the measurement of lease liabilities: 
Operating cash flows from operating leases$8,005 $7,932 
Operating cash flows from finance leases181 169 
Financing cash flows from finance leases655 628 
The following table presents a maturity analysis of the Company’s lease liability by lease classification at March 31, 2024:
(dollars in thousands)Operating
Leases		Finance
Leases
2024$23,964 $2,520 
202532,022 3,377 
202631,257 2,151 
202730,266 2,152 
202826,608 2,050 
Thereafter94,333 12,451 
Total undiscounted lease payments238,450 24,701 
Amounts representing interest(29,582)(4,593)
Lease liability$208,868 $20,108 

27

NOTE 8 – GOODWILL AND OTHER INTANGIBLE ASSETS
The following table presents the changes in the carrying amount of goodwill:
Three Months Ended
March 31,
(dollars in thousands)20242023
Balance at beginning of period$1,998,716 $1,998,716 
Acquisitions and adjustments— — 
Balance at end of period$1,998,716 $1,998,716 
Old National performed the required annual goodwill impairment test as of August 31, 2023 and there was no impairment. No events or circumstances since the August 31, 2023 annual impairment test were noted that would indicate it was more likely than not a goodwill impairment exists.
The gross carrying amounts and accumulated amortization of other intangible assets were as follows: 
(dollars in thousands)Gross
Carrying
Amount		Accumulated
Amortization
and Impairment		Net
Carrying
Amount
March 31, 2024   
Core deposit$143,511 $(77,249)$66,262 
Customer trust relationships52,621 (22,088)30,533 
Total other intangible assets$196,132 $(99,337)$96,795 
December 31, 2023
Core deposit$143,511 $(72,940)$70,571 
Customer trust relationships52,621 (20,942)31,679 
Total other intangible assets$196,132 $(93,882)$102,250 
Other intangible assets consist of core deposit intangibles and customer relationship intangibles and are being amortized primarily on an accelerated basis over their estimated useful lives, generally over a period of 5 to 15 years.
Old National reviews other intangible assets for possible impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. No impairment charges were recorded during the three months ended March 31, 2024 or 2023. Total amortization expense associated with intangible assets was $5.5 million for the three months ended March 31, 2024, compared to $6.2 million for the three months ended March 31, 2023.
Estimated amortization expense for future years is as follows:
(dollars in thousands) 
2024 remaining$15,784 
202518,358 
202615,555 
202712,867 
202810,356 
Thereafter23,875 
Total$96,795 
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NOTE 9 – QUALIFIED AFFORDABLE HOUSING PROJECTS AND OTHER TAX CREDIT INVESTMENTS
Old National is a limited partner in several tax-advantaged limited partnerships whose purpose is to invest in approved qualified affordable housing, renewable energy, or other renovation or community revitalization projects. These investments are included in other assets on the balance sheet, with any unfunded commitments included with other liabilities. As of March 31, 2024, Old National expects to recover its remaining investments through the use of the tax credits that are generated by the investments.
The following table summarizes Old National’s investments in qualified affordable housing projects and other tax credit investments:
(dollars in thousands) March 31, 2024December 31, 2023
InvestmentAccounting MethodInvestment
Unfunded
Commitment (1)
InvestmentUnfunded
Commitment
LIHTCProportional amortization$119,914 $67,310 $114,991 $75,981 
FHTC
Proportional amortization (2)
32,757 27,148 34,220 27,421 
NMTCConsolidation51,421 — 47,727 — 
Renewable EnergyEquity15 — 201 — 
Total $204,107 $94,458 $197,139 $103,402 
(1)All commitments will be paid by Old National by December 31, 2027.
(2)Old National’s FHTC investments were previously accounted for under the Equity method of accounting prior to the adoption of ASU 2023-02 on January 1, 2024.
The following table summarizes the amortization expense and tax benefit recognized for Old National’s qualified affordable housing projects and other tax credit investments:
(dollars in thousands)
Amortization
Expense (1)
Tax Expense
(Benefit)
Recognized (2)
Three Months Ended March 31, 2024
LIHTC$2,486 $(3,331)
FHTC534 (663)
NMTC2,546 (3,175)
Renewable Energy186 — 
Total$5,752 $(7,169)
Three Months Ended March 31, 2023
LIHTC$1,463 $(1,908)
FHTC424 (512)
NMTC2,091 (2,611)
Renewable Energy246 — 
Total$4,224 $(5,031)
(1)The amortization expense for the LIHTC and FHTC investments is included in our income tax expense. Prior to the adoption of ASU 2023-02, FHTC amortization expense was included in noninterest expense. NMTC amortization is recognized in noninterest expense in correlation to the recognition of tax credits on our tax return. Amortization expense for the Renewable Energy tax credits is included in noninterest expense.
(2)All of the tax benefits recognized are included in our income tax expense. The tax benefit recognized for the NMTC and Renewable Energy investments primarily reflects the tax credits generated from the investments and excludes the net tax expense (benefit) and deferred tax liability of the investments’ income (loss).
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NOTE 10 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities sold under agreements to repurchase are secured borrowings. Old National pledges investment securities to secure these borrowings. The following table presents securities sold under agreements to repurchase and related weighted-average interest rates:
At or for the Three Months
Ended March 31,
(dollars in thousands)20242023
Outstanding at period end$274,493 $393,018 
Average amount outstanding during the period296,236 412,819 
Maximum amount outstanding at any month-end during the period319,423 430,537 
Weighted-average interest rate:
During the period1.25 %0.77 %
At period end3.61 %0.88 %
At December 31, 2023, securities sold under agreements to repurchase totaled $285.2 million with a weighted-average interest rate of 3.64%.
The following table presents the contractual maturity of our secured borrowings and class of collateral pledged:
 At March 31, 2024
 Remaining Contractual Maturity of the Agreements
(dollars in thousands)Overnight and ContinuousUp to
30 Days		 30-90 DaysGreater Than 90 daysTotal
Repurchase Agreements:     
U.S. Treasury and agency securities$274,493 $— $— $— $274,493 
Total$274,493 $— $— $— $274,493 
NOTE 11 – FEDERAL HOME LOAN BANK ADVANCES
The following table summarizes Old National Bank’s FHLB advances:
(dollars in thousands)March 31,
2024		December 31,
2023
FHLB advances (fixed rates 2.19% to 5.53%
   and variable rates 5.33% to 5.36%) maturing
   June 2024 to March 2044
$4,225,528 $4,300,528 
Fair value hedge basis adjustments and unamortized
   prepayment fees		(32,489)(19,847)
Total$4,193,039 $4,280,681 
FHLB advances had weighted-average rates of 3.58% at March 31, 2024 and 3.45% at December 31, 2023. FHLB advances are collateralized by designated assets that may include qualifying commercial real estate loans, residential and multifamily mortgages, home equity loans, and certain investment securities.
At March 31, 2024, total unamortized prepayment fees related to all FHLB advance debt modifications completed in prior years totaled $12.7 million, compared to $14.2 million at December 31, 2023.
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Contractual maturities of FHLB advances at March 31, 2024 were as follows:
(dollars in thousands) 
Due in 2024$100,243 
Due in 2025550,285 
Due in 2026100,000 
Due in 2028850,000 
Thereafter2,625,000 
Fair value hedge basis adjustments and unamortized prepayment fees(32,489)
Total$4,193,039 
NOTE 12 – OTHER BORROWINGS
The following table summarizes Old National’s other borrowings:
(dollars in thousands)March 31,
2024		December 31,
2023
Old National Bancorp:  
Senior unsecured notes (fixed rate 4.125%) maturing August 2024
$175,000 $175,000 
Unamortized debt issuance costs related to senior unsecured notes(52)(91)
Subordinated debentures (fixed rate 5.875%) maturing September 2026
150,000 150,000 
Junior subordinated debentures (rates of 6.95% to 9.15%) maturing
   July 2031 to September 2037
136,643 136,643 
Other basis adjustments16,916 18,207 
Old National Bank:
Finance lease liabilities20,108 20,955 
Subordinated debentures (3-month SOFR plus 4.618%; variable rate 9.94%)
   maturing October 2025
12,000 12,000 
Leveraged loans for NMTC (fixed rates of 1.00% to 1.43%)
   maturing December 2046 to June 2060
168,228 154,284 
Other (1)
134,370 97,872 
Total other borrowings$813,213 $764,870 
(1)Includes overnight borrowings to collateralize certain derivative positions totaling $134.2 million at March 31, 2024 and $97.6 million at December 31, 2023.
Contractual maturities of other borrowings at March 31, 2024 were as follows:
(dollars in thousands) 
Due in 2024$311,233 
Due in 202514,747 
Due in 2026151,582 
Due in 20271,641 
Due in 20281,598 
Thereafter315,407 
Unamortized debt issuance costs and other basis adjustments17,005 
Total$813,213 
Junior Subordinated Debentures
Junior subordinated debentures related to trust preferred securities are classified in “other borrowings.” Junior subordinated debentures qualify as Tier 2 capital for regulatory purposes, subject to certain limitations.
Through various mergers and acquisitions, Old National assumed junior subordinated debenture obligations related to various trusts that issued trust preferred securities. Old National guarantees the payment of distributions on the trust preferred securities issued by the trusts. Proceeds from the issuance of each of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by the trusts.
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Old National, at any time, may redeem the junior subordinated debentures at par and, thereby cause a redemption of the trust preferred securities in whole or in part.
The following table summarizes the terms of our outstanding junior subordinated debentures at March 31, 2024:
(dollars in thousands)   
Rate at
March 31,
2024
 
Name of TrustIssuance DateIssuance
Amount		RateMaturity Date
Bridgeview Statutory Trust IJuly 2001$15,464 
3-month SOFR plus 3.58%
9.15%July 31, 2031
Bridgeview Capital Trust IIDecember 200215,464 
3-month SOFR plus 3.35%
8.93%January 7, 2033
First Midwest Capital Trust INovember 200337,825 
6.95% fixed
6.95%December 1, 2033
St. Joseph Capital Trust IIMarch 20055,155 
3-month SOFR plus 1.75%
7.34%March 17, 2035
Northern States Statutory Trust ISeptember 200510,310 
3-month SOFR plus 1.80%
7.39%September 15, 2035
Anchor Capital Trust IIIAugust 20055,000 
3-month SOFR plus 1.55%
7.11%September 30, 2035
Great Lakes Statutory Trust IIDecember 20056,186 
3-month SOFR plus 1.40%
6.99%December 15, 2035
Home Federal Statutory
   Trust I		September 200615,464 
3-month SOFR plus 1.65%
7.24%September 15, 2036
Monroe Bancorp Capital
   Trust I		July 20063,093 
3-month SOFR plus 1.60%
7.18%October 7, 2036
Tower Capital Trust 3December 20069,279 
3-month SOFR plus 1.69%
7.29%March 1, 2037
Monroe Bancorp Statutory
   Trust II		March 20075,155 
3-month SOFR plus 1.60%
7.19%June 15, 2037
Great Lakes Statutory Trust IIIJune 20078,248 
3-month SOFR plus 1.70%
7.29%September 15, 2037
Total$136,643 
Leveraged Loans
The leveraged loans are directly related to the NMTC structure. As part of the transaction structure, Old National has the right to sell its interest in the entity that received the leveraged loans at an agreed upon price to the leveraged lender at the end of the NMTC seven-year compliance period. See Note 9 to the consolidated financial statements for additional information on the Company’s NMTC investments.
Finance Lease Liabilities
Old National has long-term finance lease liabilities for certain banking centers and equipment totaling $20.1 million at March 31, 2024. See Note 7 to the consolidated financial statements for a maturity analysis of the Company’s finance lease liabilities.
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NOTE 13 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table summarizes the changes within each classification of AOCI, net of tax:
(dollars in thousands)Unrealized
Gains and
Losses on
Available-
for-Sale
Debt
Securities		Unrealized
Gains and
Losses on
Held-to-
Maturity
Securities		Gains and
Losses on
Hedges		Defined
Benefit
Pension
Plans		Total
Three Months Ended March 31, 2024
Balance at beginning of period$(652,518)$(95,472)$9,181 $— $(738,809)
Other comprehensive income (loss) before
   reclassifications		(33,463)— (14,205)— (47,668)
Amounts reclassified from AOCI to income (1)
12 3,221 3,616 — 6,849 
Balance at end of period$(685,969)$(92,251)$(1,408)$— $(779,628)
Three Months Ended March 31, 2023
Balance at beginning of period$(642,346)$(112,664)$(31,549)$137 $(786,422)
Other comprehensive income (loss) before
   reclassifications		27,219 1,325 35,985 — 64,529 
Amounts reclassified from AOCI to income (1)
3,867 4,373 5,436 (141)13,535 
Balance at end of period$(611,260)$(106,966)$9,872 $(4)$(708,358)
(1)See table below for details about reclassifications to income.
The following table summarizes the amounts reclassified out of each component of AOCI for the three months ended March 31, 2024 and 2023:
 Three Months Ended
March 31,		 
(dollars in thousands)20242023 
Details about AOCI ComponentsAmount Reclassified
from AOCI		Affected Line Item in the
Statement of Income
Unrealized gains and losses on
   available-for-sale securities		$(16)$(5,216)Debt securities gains (losses), net
 4 1,349 Income tax (expense) benefit
 $(12)$(3,867)Net income
Amortization of unrealized losses on
   held-to-maturity securities transferred
   from available-for-sale		$(4,318)$(5,829)Interest income (expense)
 1,097 1,456 Income tax (expense) benefit
 $(3,221)$(4,373)Net income
Gains and losses on hedges
   Interest rate contracts		$(4,877)$(7,292)Interest income (expense)
 1,261 1,856 Income tax (expense) benefit
 $(3,616)$(5,436)Net income
Amortization of defined benefit
   pension items		 
Actuarial gains (losses)$— $188 Salaries and employee benefits
 — (47)Income tax (expense) benefit
 $— $141 Net income
Total reclassifications for the period$(6,849)$(13,535)Net income
33

NOTE 14 – INCOME TAXES
The following is a summary of the major items comprising the differences in taxes from continuing operations computed at the federal statutory rate and as recorded in the consolidated statements of income:
Three Months Ended
March 31,
(dollars in thousands)20242023
Provision at statutory rate of 21%
$32,082 $39,484 
Tax-exempt income:
Tax-exempt interest(4,958)(4,486)
Section 291/265 interest disallowance885 386 
Company-owned life insurance income(694)(627)
Tax-exempt income(4,767)(4,727)
State income taxes5,147 8,142 
Interim period effective rate adjustment944 (1,717)
Tax credit investments - federal(3,055)(2,526)
Officer compensation limitation765 1,040 
Non-deductible FDIC premiums1,747 2,110 
Other, net(375)(385)
Income tax expense$32,488 $41,421 
Effective tax rate21.3 %22.0 %
Net Deferred Tax Assets
Net deferred tax assets are included in other assets on the balance sheet. At March 31, 2024, net deferred tax assets totaled $418.3 million, compared to $423.3 million at December 31, 2023. No valuation allowance was required on the Company’s deferred tax assets at March 31, 2024 or December 31, 2023.
The Company’s retained earnings at March 31, 2024 included an appropriation for acquired thrifts’ tax bad debt allowances totaling $58.6 million for which no provision for federal or state income taxes has been made. If in the future, this portion of retained earnings were distributed as a result of the liquidation of the Company or its subsidiaries, federal and state income taxes would be imposed at the then applicable rates.
Old National has federal net operating loss carryforwards totaling $60.1 million at March 31, 2024 and $63.6 million at December 31, 2023. This federal net operating loss was acquired from the acquisition of Anchor BanCorp Wisconsin Inc. in 2016 and First Midwest Bancorp, Inc. in 2022. If not used, the federal net operating loss carryforwards will begin expiring in 2030 and later. Old National has recorded state net operating loss carryforwards totaling $114.2 million at March 31, 2024 and $116.9 million at December 31, 2023. If not used, the state net operating loss carryforwards will expire from 2027 to 2036.
The federal and recorded state net operating loss carryforwards are subject to an annual limitation under Internal Revenue Code section 382. Old National believes that all of the federal and recorded state net operating loss carryforwards will be used prior to expiration.
NOTE 15 – DERIVATIVE FINANCIAL INSTRUMENTS
As part of our overall interest rate risk management, Old National uses derivative instruments, including interest rate swaps, collars, caps, and floors. The notional amount does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual agreements. Derivative instruments are recognized on the balance sheet at their fair value and are not reported on a net basis.
Credit risk arises from the possible inability of counterparties to meet the terms of their contracts. Old National’s exposure is limited to the termination value of the contracts rather than the notional, principal, or contract amounts. There are provisions in our agreements with the counterparties that allow for certain unsecured credit exposure up to an agreed threshold. Exposures in excess of the agreed thresholds are collateralized. In addition, we minimize credit risk through credit approvals, limits, and monitoring procedures.
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Derivatives Designated as Hedges
Subsequent changes in fair value for a hedging instrument that has been designated and qualifies as part of a hedging relationship are accounted for in the following manner:
Cash flow hedges: changes in fair value are recognized as a component in other comprehensive income (loss).
Fair value hedges: changes in fair value are recognized concurrently in earnings.
As long as a hedging instrument is designated and the results of the effectiveness testing support that the instrument qualifies for hedge accounting treatment, 100% of the periodic changes in fair value of the hedging instrument are accounted for as outlined above. This is the case whether or not economic mismatches exist in the hedging relationship. As a result, there is no periodic measurement or recognition of ineffectiveness. Rather, the full impact of hedge gains and losses is recognized in the period in which the hedged transactions impact earnings.
The change in fair value of the hedging instrument that is included in the assessment of hedge effectiveness is presented in the same income statement line item that is used to present the earnings effect of the hedged item.
Cash Flow Hedges
Interest rate swaps of certain borrowings were designated as cash flow hedges totaling $150.0 million notional amount at both March 31, 2024 and December 31, 2023. Interest rate swaps, collars, and floors related to variable-rate commercial loan pools were designated as cash flow hedges totaling $1.8 billion notional amount at March 31, 2024 and $1.6 billion notional amount at December 31, 2023. The hedges were determined to be effective during all periods presented and we expect them to remain effective during the remaining terms.
Old National has designated its interest rate collars as cash flow hedges. The structure of these instruments is such that Old National pays the counterparty an incremental amount if the collar index exceeds the cap rate. Conversely, Old National receives an incremental amount if the index falls below the floor rate. No payments are required if the collar index falls between the cap and floor rates. 
Old National has designated its interest rate floor transactions as cash flow hedges. The structure of these instruments is such that Old National receives an incremental amount if the index falls below the floor strike rate. No payments are required if the index remains above the floor strike rate.
Fair Value Hedges
Interest rate swaps of certain borrowings were designated as fair value hedges totaling $900.0 million notional amount at both March 31, 2024 and December 31, 2023. Interest rate swaps of certain available-for-sale investment securities were designated as fair value hedges totaling $998.1 million notional amount at both March 31, 2024 and December 31, 2023. The hedges were determined to be effective during all periods presented and we expect them to remain effective during the remaining terms.
The following table summarizes Old National’s derivatives designated as hedges:
March 31, 2024December 31, 2023
Fair ValueFair Value
(dollars in thousands)Notional
Assets (1)
Liabilities (2)
Notional
Assets (1)
Liabilities (2)
Cash flow hedges
Interest rate swaps, collars, and floors on loan
   pools		$1,800,000 $2,670 $15,063 $1,600,000 $10,472 $6,014 
Interest rate swaps on borrowings (3)
150,000 — — 150,000 — — 
Fair value hedges
Interest rate swaps on investment securities (3)
998,107 — — 998,107 — — 
Interest rate swaps on borrowings (3)
900,000 — — 900,000 — — 
Total$2,670 $15,063 $10,472 $6,014 
(1)Derivative assets are included in other assets on the balance sheet.
(2)Derivative liabilities are included in other liabilities on the balance sheet.
(3)The fair values of certain counterparty interest rate swaps are zero due to the settlement of centrally cleared variation margin rules.
35

The effect of derivative instruments in fair value hedging relationships on the consolidated statements of income were as follows:
(dollars in thousands)Gain (Loss)
Recognized
in Income on
Related
Hedged
Items
Derivatives in
Fair Value Hedging
Relationships		Location of Gain or
(Loss) Recognized in
Income on Derivative		Gain (Loss)
Recognized
in Income on
Derivative		Hedged Items
in Fair Value
Hedging
Relationships		Location of Gain or
(Loss) Recognized in
in Income on Related
Hedged Item
Three Months Ended
March 31, 2024
Interest rate contractsInterest income/(expense)$(13,970)Fixed-rate debtInterest income/(expense)$14,127 
Interest rate contractsInterest income/(expense)25,848 Fixed-rate
investment
securities		Interest income/(expense)(25,903)
Total$11,878 $(11,776)
Three Months Ended
March 31, 2023
Interest rate contractsInterest income/(expense)$2,153 Fixed-rate debtInterest income/(expense)$(2,218)
Interest rate contractsInterest income/(expense)(63,115)Fixed-rate
investment
securities		Interest income/(expense)63,251 
Total$(60,962)$61,033 
The effect of derivative instruments in cash flow hedging relationships on the consolidated statements of income were as follows:
Three Months Ended
March 31,		Three Months Ended
March 31,
(dollars in thousands) 2024202320242023
Derivatives in
Cash Flow Hedging
Relationships		Location of Gain or
(Loss) Reclassified
from AOCI into Income		Gain (Loss)
Recognized in Other
Comprehensive
Income on Derivative		Gain (Loss)
Reclassified from
AOCI into
Income
Interest rate contractsInterest income/(expense)$(19,159)$6,603 $(5,910)$(7,637)
Amounts reported in AOCI related to cash flow hedges will be reclassified to interest income or interest expense as interest payments are received or paid on Old National’s derivative instruments. During the next 12 months, we estimate that $23.3 million will be reclassified to interest income and $4.5 million will be reclassified to interest expense.
Derivatives Not Designated as Hedges
Commitments to fund certain mortgage loans (interest rate lock commitments) and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. These derivative contracts do not qualify for hedge accounting. At March 31, 2024, the notional amounts of the interest rate lock commitments were $68.0 million and forward commitments were $77.6 million. At December 31, 2023, the notional amounts of the interest rate lock commitments were $25.2 million and forward commitments were $39.5 million. It is our practice to enter into forward commitments for the future delivery of residential mortgage loans to third party investors when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from our commitment to fund the loans.
Old National also enters into derivative instruments for the benefit of its clients. The notional amounts of these customer derivative instruments and the offsetting counterparty derivative instruments were $5.9 billion at March 31, 2024 and $6.0 billion at December 31, 2023. These derivative contracts do not qualify for hedge accounting. These instruments include interest rate swaps, caps, and collars. Commonly, Old National will economically hedge significant exposures related to these derivative contracts entered into for the benefit of clients by entering into offsetting contracts with approved, reputable, independent counterparties with substantially matching terms.
Old National enters into derivative financial instruments as part of its foreign currency risk management strategies. These derivative instruments consist of foreign currency forward contracts to accommodate the business
36

needs of its clients. Old National does not designate these foreign currency forward contracts for hedge accounting treatment.
The following table summarizes Old National’s derivatives not designated as hedges:
March 31, 2024December 31, 2023
Fair ValueFair Value
(dollars in thousands)Notional
Assets (1)
Liabilities (2)
Notional
Assets (1)
Liabilities (2)
Interest rate lock commitments$67,995 $317 $— $25,151 $291 $— 
Forward mortgage loan contracts77,584 144 — 39,529 — 566 
Customer interest rate swaps5,886,639 11,328 270,910 5,954,216 33,182 228,750 
Counterparty interest rate swaps (3)
5,886,639 152,855 11,380 5,954,216 121,969 33,346 
Customer foreign currency contracts10,317 57 43 12,455 320 59 
Counterparty foreign currency contracts10,484 108 7 12,308 68 181 
Total$164,809 $282,340 $155,830 $262,902 
(1)Derivative assets are included in other assets on the balance sheet.
(2)Derivative liabilities are included in other liabilities on the balance sheet.
(3)The fair values of certain counterparty interest rate swaps are zero due to the settlement of centrally cleared variation margin rules.
The effect of derivatives not designated as hedging instruments on the consolidated statements of income were as follows:
Three Months Ended
March 31,
(dollars in thousands) 20242023
Interest rate contracts (1)
Other income/(expense)$568 $(138)
Mortgage contractsMortgage banking revenue737 107 
Foreign currency contractsOther income/(expense)(34)(1)
Total $1,271 $(32)
(1)Includes the valuation differences between the customer and offsetting swaps.
Fair Value of Offsetting Derivatives
Certain derivative instruments are subject to master netting agreements with counterparties that provide rights of setoff. The Company records these transactions at their gross fair values and does not offset derivative assets and liabilities in the Consolidated Balance Sheet. The following table presents the fair value of the Company’s derivatives and offsetting positions:
March 31, 2024December 31, 2023
(dollars in thousands)AssetsLiabilitiesAssetsLiabilities
Gross amounts recognized$167,479 $297,403 $166,302 $268,916 
Less: amounts offset in the Consolidated Balance Sheet— — — — 
Net amount presented in the Consolidated Balance Sheet167,479 297,403 166,302 268,916 
Gross amounts not offset in the Consolidated Balance Sheet
Offsetting derivative positions(26,443)(26,443)(39,360)(39,360)
Cash collateral pledged— (134,459)— (97,840)
Net credit exposure$141,036 $136,501 $126,942 $131,716 
37

NOTE 16 – COMMITMENTS, CONTINGENCIES, AND FINANCIAL GUARANTEES
Litigation
At March 31, 2024, there were certain legal proceedings pending against the Company and its subsidiaries in the ordinary course of business. While the outcome of any legal proceeding is inherently uncertain, based on information currently available, the Company’s management does not expect that any potential liabilities arising from pending litigation will have a material adverse effect on the Company’s business, financial position, or results of operations.
Credit-Related Financial Instruments
Old National holds instruments, in the normal course of business with clients, that are considered financial guarantees and are recorded at fair value. Standby letters of credit guarantees are issued in connection with agreements made by clients to counterparties. Standby letters of credit are contingent upon failure of the client to perform the terms of the underlying contract. Credit risk associated with standby letters of credit is essentially the same as that associated with extending loans to clients and is subject to normal credit policies. The term of these standby letters of credit is typically one year or less. These commitments are not recorded in the consolidated financial statements.
The following table summarizes Old National Bank’s unfunded loan commitments and standby letters of credit:
(dollars in thousands)March 31,
2024		December 31,
2023
Unfunded loan commitments$8,716,398 $8,912,587 
Standby letters of credit (1)
172,444 192,237 
(1)Notional amount, which represents the maximum amount of future funding requirements. The carrying value was $1.4 million at March 31, 2024 and $1.3 million at December 31, 2023.
At March 31, 2024, approximately 4% of the unfunded loan commitments had fixed rates, with the remainder having floating rates ranging from 2.10% to 22.49%. The allowance for unfunded loan commitments totaled $26.3 million at March 31, 2024 and $31.2 million at December 31, 2023.
Old National is a party in risk participation transactions of interest rate swaps, which had total notional amounts of $589.2 million at March 31, 2024 and $557.8 million at December 31, 2023.
NOTE 17 – FAIR VALUE
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
•Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
•Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
•Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
38

Old National used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:
Investment securities and equity securities: The fair values for investment securities and equity securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Discounted cash flows are calculated using swap and SOFR curves plus spreads that adjust for loss severities, volatility, credit risk, and optionality. During times when trading is more liquid, broker quotes are used (if available) to validate the model. Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.
Loans held-for-sale: The fair value of loans held-for-sale is determined using quoted prices for a similar asset, adjusted for specific attributes of that loan (Level 2).
Derivative financial instruments: The fair values of derivative financial instruments are based on market quotes developed using observable inputs as of the valuation date (Level 2).
39

Recurring Basis
Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which we have elected the fair value option, are summarized below: 
Fair Value Measurements at March 31, 2024 Using
(dollars in thousands)Carrying ValueQuoted Prices in
Active Markets for
Identical Assets (Level 1)		Significant
Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs
(Level 3)
Financial Assets    
Equity securities$84,954 $84,954 $— $— 
Investment securities available-for-sale:
U.S. Treasury233,051 233,051 — — 
U.S. government-sponsored entities and agencies1,183,019 — 1,183,019 — 
Mortgage-backed securities - Agency4,550,023 — 4,550,023 — 
States and political subdivisions515,104 — 515,104 — 
Pooled trust preferred securities11,274 — 11,274 — 
Other securities299,181 — 299,181 — 
Loans held-for-sale19,418 — 19,418 — 
Derivative assets167,479 — 167,479 — 
Financial Liabilities
Derivative liabilities297,403 — 297,403 — 
  Fair Value Measurements at December 31, 2023 Using
(dollars in thousands)Carrying ValueQuoted Prices in
Active Markets for
Identical Assets (Level 1)		Significant
Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs
(Level 3)
Financial Assets    
Equity securities$80,372 $80,372 $— $— 
Investment securities available-for-sale:
U.S. Treasury396,733 396,733 — — 
U.S. government-sponsored entities and agencies1,231,264 — 1,231,264 — 
Mortgage-backed securities - Agency4,216,560 — 4,216,560 — 
States and political subdivisions535,260 — 535,260 — 
Pooled trust preferred securities11,337 — 11,337 — 
Other securities321,901 — 321,901 — 
Loans held-for-sale32,006 — 32,006 — 
Derivative assets166,302 — 166,302 — 
Financial Liabilities
Derivative liabilities268,916 — 268,916 — 
Non-Recurring Basis
Assets measured at fair value at March 31, 2024 on a non-recurring basis are summarized below:
  Fair Value Measurements at March 31, 2024 Using
(dollars in thousands)Carrying
Value		Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs
(Level 3)
Collateral Dependent Loans:    
Commercial loans$26,057 $— $— $26,057 
Commercial real estate loans83,492 — — 83,492 
Foreclosed Assets:
Commercial1,669 — — 1,669 
40

Commercial and commercial real estate loans that are deemed collateral dependent are valued using the discounted cash flows. The liquidation amounts are based on the fair value of the underlying collateral using the most recently available appraisals with certain adjustments made based on the type of property, age of appraisal, current status of the property, and other related factors to estimate the current value of the collateral. These commercial and commercial real estate loans had a principal amount of $142.2 million, with a valuation allowance of $32.7 million at March 31, 2024. Old National recorded provision expense associated with these loans totaling $9.6 million for the three months ended March 31, 2024, compared to $11.9 million for the three months ended March 31, 2023.
Other real estate owned and other repossessed property is measured at fair value less costs to sell on a non-recurring basis. Old National did not have any other real estate owned or other repossessed property measured at fair value on a non-recurring basis at March 31, 2024. There were no write-downs on other real estate owned for the three months ended March 31, 2024, compared to $27 thousand for the three months ended March 31, 2023.
Assets measured at fair value at December 31, 2023 on a non-recurring basis are summarized below:
  Fair Value Measurements at December 31, 2023 Using
(dollars in thousands)Carrying ValueQuoted Prices in
Active Markets for
Identical Assets (Level 1)		Significant
Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs (Level 3)
Collateral Dependent Loans:    
Commercial loans$11,017 $— $— $11,017 
Commercial real estate loans95,457 — — 95,457 
Foreclosed Assets:
Commercial real estate1,669 — — 1,669 
At December 31, 2023, commercial and commercial real estate loans that are deemed collateral dependent had a principal amount of $134.3 million, with a valuation allowance of $27.9 million.
The table below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy:
(dollars in thousands)Fair ValueValuation TechniquesUnobservable Input
Range (Weighted Average) (1)
March 31, 2024    
Collateral Dependent Loans    
Commercial loans$26,057 DiscountedDiscount for type of property,
2% - 38% (29%)
 cash flowage of appraisal, and current status
Commercial real estate loans83,492 DiscountedDiscount for type of property,
1% - 34% (13%)
cash flowage of appraisal, and current status
Foreclosed Assets
Commercial real estate1,669 Fair value ofDiscount for type of property,
4% - 8% (4%)
collateralage of appraisal, and current status
December 31, 2023  
Collateral Dependent Loans  
Commercial loans$11,017 DiscountedDiscount for type of property,
5% - 37% (27%)
 cash flowage of appraisal, and current status
Commercial real estate loans95,457 DiscountedDiscount for type of property,
2% - 38% (16%)
 cash flowage of appraisal, and current status
Foreclosed Assets  
Commercial real estate1,669 Fair value ofDiscount for type of property,
4% - 8% (4%)
collateralage of appraisal, and current status
(1)Unobservable inputs were weighted by the relative fair value of the instruments.
Fair Value Option
Old National may elect to report most financial instruments and certain other items at fair value on an instrument-by-instrument basis with changes in fair value reported in net income. After the initial adoption, the election is made at the acquisition of an eligible financial asset, financial liability, or firm commitment or when certain specified reconsideration events occur. The fair value election may not be revoked once an election is made.
41

Loans Held-For-Sale
Old National has elected the fair value option for loans held-for-sale. For these loans, interest income is recorded in the consolidated statements of income based on the contractual amount of interest income earned on the financial assets (except any that are on nonaccrual status). None of these loans are 90 days or more past due, nor are any on nonaccrual status. Interest income for loans held-for-sale is included in the income statement totaling $0.3 million for the three months ended March 31, 2024, compared to $0.2 million for the three months ended March 31, 2023.
Newly originated conforming fixed-rate and adjustable-rate first mortgage loans are intended for sale and are hedged with derivative instruments. Old National has elected the fair value option to mitigate accounting mismatches in cases where hedge accounting is complex and to achieve operational simplification. The fair value option was not elected for loans held for investment.
The difference between the aggregate fair value and the aggregate remaining principal balance for loans for which the fair value option has been elected was as follows: 
(dollars in thousands)Aggregate
Fair Value		Difference Contractual Principal
March 31, 2024   
Loans held-for-sale$19,418 $414 $19,004 
December 31, 2023
Loans held-for-sale$32,006 $621 $31,385 
Accrued interest at period end is included in the fair value of the instruments.
The following table presents the amount of gains and losses from fair value changes included in income before income taxes for financial assets carried at fair value:
(dollars in thousands)Other
Gains and (Losses)		Interest IncomeInterest (Expense)Total Changes
in Fair Values
Included in
Current Period Earnings
Three Months Ended March 31, 2024
Loans held-for-sale$(202)$— $(5)$(207)
Three Months Ended March 31, 2023
Loans held-for-sale$(53)$— $(3)$(56)
42

Financial Instruments Not Carried at Fair Value
The carrying amounts and estimated fair values of financial instruments not carried at fair value were as follows: 
  Fair Value Measurements at March 31, 2024 Using
(dollars in thousands)Carrying ValueQuoted Prices in
Active Markets
for Identical
Assets (Level 1)		Significant
Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs (Level 3)
Financial Assets    
Cash, due from banks, money market,
   and other interest-earning investments		$939,499 $939,499 $— $— 
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies827,684 — 662,735 — 
Mortgage-backed securities - Agency1,016,858 — 857,657 — 
State and political subdivisions1,156,807 — 1,027,184 — 
Loans, net:
Commercial9,522,947 — — 9,357,300 
Commercial real estate14,492,040 — — 14,005,872 
Residential real estate6,639,480 — — 5,682,754 
Consumer credit2,649,139 — — 2,607,831 
Accrued interest receivable219,809 1,133 47,057 171,619 
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits$9,257,709 $9,257,709 $— $— 
Checking, NOW, savings, and money market
   interest-bearing deposits		22,490,875 22,490,875 — — 
Time deposits5,950,834 — 5,913,854 — 
Federal funds purchased and interbank borrowings50,416 50,416 — — 
Securities sold under agreements to repurchase274,493 274,493 — — 
FHLB advances4,193,039 — 3,994,880 — 
Other borrowings813,213 — 798,748 — 
Accrued interest payable54,690 — 54,690 — 
Standby letters of credit1,379 — — 1,379 
Off-Balance Sheet Financial Instruments
Commitments to extend credit$— $— $— $3,824 
43

  Fair Value Measurements at December 31, 2023 Using
(dollars in thousands)Carrying ValueQuoted Prices in
Active Markets
for Identical
Assets (Level 1)		Significant
Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs (Level 3)
Financial Assets    
Cash, due from banks, money market,
   and other interest-earning investments		$1,175,058 $1,175,058 $— $— 
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies825,953 — 671,126 — 
Mortgage-backed securities - Agency1,029,131 — 881,994 — 
State and political subdivisions1,158,409 — 1,048,068 — 
Loans, net:
Commercial9,392,267 — — 9,258,193 
Commercial real estate13,984,273 — — 13,640,868 
Residential real estate6,678,606 — — 5,579,999 
Consumer credit2,629,171 — — 2,555,121 
Accrued interest receivable225,159 859 54,465 169,835 
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits$9,664,247 $9,664,247 $— $— 
Checking, NOW, savings, and money market
   interest-bearing deposits		21,991,789 21,991,789 — — 
Time deposits5,579,144 — 5,552,538 — 
Federal funds purchased and interbank borrowings390 390 —— 
Securities sold under agreements to repurchase285,206 285,206 —— 
FHLB advances4,280,681 — 4,090,954 — 
Other borrowings764,870 — 755,592 — 
Accrued interest payable57,094 — 57,094 — 
Standby letters of credit1,318 — — 1,318 
Off-Balance Sheet Financial Instruments
Commitments to extend credit$— $— $— $3,839 
The methods utilized to measure the fair value of financial instruments at March 31, 2024 and December 31, 2023 represent an approximation of exit price, however, an actual exit price may differ.
44

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is an analysis and discussion of our results of operations for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, and financial condition as of March 31, 2024 compared to December 31, 2023. This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes, as well as our 2023 Annual Report on Form 10-K.
FORWARD-LOOKING STATEMENTS
This report contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”), notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be contained in our future filings with the SEC, in press releases, and in oral and written statements made by us that are not statements of historical fact and constitute forward‐looking statements within the meaning of the Act. These statements include, but are not limited to, descriptions of Old National’s financial condition, results of operations, asset and credit quality trends, profitability and business plans or opportunities. Forward-looking statements can be identified by the use of words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “should,” “would,” and “will,” and other words of similar meaning. These forward-looking statements express management’s current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those in such statements, including, but not limited to: competition; government legislation, regulations and policies; the ability of Old National to execute its business plan; unanticipated changes in our liquidity position, including but not limited to changes in our access to sources of liquidity and capital to address our liquidity needs; changes in economic conditions and economic and business uncertainty which could materially impact credit quality trends and the ability to generate loans and gather deposits; inflation and governmental responses to inflation, including increasing interest rates; market, economic, operational, liquidity, credit, and interest rate risks associated with our business; our ability to successfully manage our credit risk and the sufficiency of our allowance for credit losses; the expected cost savings, synergies, and other financial benefits from the merger (the “Merger”) between Old National and CapStar not being realized within the expected time frames and costs or difficulties relating to integration matters being greater than expected; potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the Merger; the potential impact of future business combinations on our performance and financial condition, including our ability to successfully integrate the businesses and the success of revenue-generating and cost reduction initiatives; failure or circumvention of our internal controls; operational risks or risk management failures by us or critical third parties, including without limitation with respect to data processing, information systems, cybersecurity, technological changes, vendor issues, business interruption, and fraud risks; significant changes in accounting, tax or regulatory practices or requirements; new legal obligations or liabilities; disruptive technologies in payment systems and other services traditionally provided by banks; failure or disruption of our information systems; computer hacking and other cybersecurity threats; the effects of climate change on Old National and its customers, borrowers, or service providers; political and economic uncertainty and instability; the impacts of pandemics, epidemics, and other infectious disease outbreaks; other matters discussed in this report; and other factors identified in filings with the SEC. These forward-looking statements are made only as of the date of this report and are not guarantees of future results, performance, or outcomes.
Such forward-looking statements are based on assumptions and estimates, which although believed to be reasonable, may turn out to be incorrect. Therefore, undue reliance should not be placed upon these estimates and statements. We cannot assure that any of these statements, estimates, or beliefs will be realized and actual results or outcomes may differ from those contemplated in these forward-looking statements. Old National does not undertake an obligation to update these forward-looking statements to reflect events or conditions after the date of this report. You are advised to consult further disclosures we may make on related subjects in our filings with the SEC.
Investors should consider these risks, uncertainties, and other factors in addition to the factors under the heading “Risk Factors” included in our other filings with the SEC.
45

FINANCIAL HIGHLIGHTS
The following table sets forth certain financial highlights of Old National for the previous five quarters:
Three Months Ended
(dollars and shares in thousands,
except per share data)		March 31,December 31,September 30,June 30,March 31,
20242023202320232023
Income Statement:
Net interest income$356,458 $364,408 $375,086 $382,171 $381,488 
Taxable equivalent adjustment (1) (3)
6,253 6,100 5,837 5,825 5,666 
Net interest income - taxable equivalent basis (3)
362,711 370,508 380,923 387,996 387,154 
Provision for credit losses18,891 11,595 19,068 14,787 13,437 
Noninterest income77,522 100,094 80,938 81,629 70,681 
Noninterest expense262,317 284,235 244,776 246,584 250,711 
Net income available to common shareholders116,250 128,446 143,842 151,003 142,566 
Per Common Share Data:
Weighted average diluted common shares292,207 292,029 291,717 291,266 292,756 
Net income (diluted)$0.40 $0.44 $0.49 $0.52 $0.49 
Cash dividends0.14 0.14 0.14 0.14 0.14 
Common dividend payout ratio (2)
35 %32 %29 %27 %29 %
Book value$18.24 $18.18 $17.07 $17.25 $17.24 
Stock price17.41 16.89 14.54 13.94 14.42 
Tangible common book value (3)
11.10 11.00 9.87 10.03 9.98 
Performance Ratios:
Return on average assets0.98 %1.09 %1.22 %1.29 %1.25 %
Return on average common equity8.74 10.20 11.39 12.01 11.58 
Return on average tangible common equity (3)
14.93 18.11 20.18 21.35 21.03 
Net interest margin (3)
3.28 3.39 3.49 3.60 3.69 
Efficiency ratio (3)
58.34 59.05 51.66 51.22 52.81 
Net charge-offs (recoveries) to average loans0.14 0.12 0.24 0.13 0.21 
Allowance for credit losses on loans to ending loans0.95 0.93 0.93 0.93 0.94 
Allowance for credit losses (4) to ending loans
1.03 1.03 1.03 1.04 1.05 
Non-performing loans to ending loans0.98 0.83 0.80 0.91 0.74 
Balance Sheet:
Total loans$33,623,319 $32,991,927 $32,577,834 $32,432,473 $31,822,374 
Total assets49,534,918 49,089,836 49,059,448 48,496,755 47,842,644 
Total deposits37,699,418 37,235,180 37,252,676 36,231,315 34,917,792 
Total borrowed funds5,331,161 5,331,147 5,556,010 6,034,008 6,740,454 
Total shareholders’ equity5,595,408 5,562,900 5,239,537 5,292,095 5,277,426 
Capital Ratios:
Risk-based capital ratios:
Tier 1 common equity10.76 %10.70 %10.41 %10.14 %9.98 %
Tier 111.40 11.35 11.06 10.79 10.64 
Total12.74 12.64 12.32 12.14 11.96 
Leverage ratio (to average assets)8.96 8.83 8.70 8.59 8.53 
Total equity to assets (averages)11.32 10.81 10.88 10.96 11.00 
Tangible common equity to tangible assets (3)
6.86 6.85 6.15 6.33 6.37 
Nonfinancial Data:
Full-time equivalent employees3,955 3,940 3,981 4,021 4,023 
Banking centers258 258 257 256 256 
(1)Calculated using the federal statutory tax rate in effect of 21% for all periods.
(2)Cash dividends per common share divided by net income per common share (basic).
(3)Represents a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for reconciliations to GAAP financial measures.
(4)Includes the allowance for credit losses on loans and unfunded loan commitments.
46

NON-GAAP FINANCIAL MEASURES
The Company’s accounting and reporting policies conform to GAAP and general practices within the banking industry. As a supplement to GAAP, the Company provides non-GAAP performance results, which the Company believes are useful because they assist users of the financial information in assessing the Company’s operating performance. 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 following table.
The Company presents net income per common share and net income applicable to common shares, adjusted for certain notable items. These items include gain on sale of Visa Class B restricted shares, the expense associated with the distribution of excess pension assets, FDIC special assessment expense, contract termination charges, merger-related charges associated with completed and pending acquisitions, debt securities gains/losses, expenses related to the tragic April 10, 2023 event at our downtown Louisville location (“Louisville expenses”), and property optimization charges. Management believes excluding these items from net income per common share and net income applicable to common shares may be useful in assessing the Company's underlying operational performance since these items do not pertain to its core business operations and their exclusion may facilitate better comparability between periods. Management believes that excluding merger-related charges from these metrics may be useful to the Company, as well as analysts and investors, since these expenses can vary significantly based on the size, type, and structure of each acquisition. Additionally, management believes excluding these items from these metrics may enhance comparability for peer comparison purposes.
The taxable equivalent adjustment to net interest income and net interest margin recognizes the income tax savings when comparing taxable and tax-exempt assets. Interest income and yields on tax-exempt securities and loans are presented using the current federal income tax rate of 21%. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on a fully tax-equivalent basis and that it may enhance comparability for peer comparison purposes.
In management’s view, tangible common equity measures are capital adequacy metrics that may be meaningful to the Company, as well as users of the financial information, in assessing the Company’s use of equity and in facilitating comparisons with peers. These non-GAAP measures are valuable indicators of a financial institution’s capital strength since they eliminate intangible assets from shareholders’ equity and retain the effect of AOCI in shareholders’ equity.
Although intended to enhance understanding of the Company’s business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. In addition, these non-GAAP financial measures may differ from those used by other financial institutions to assess their business and performance. See the previously provided tables and the following reconciliations in the “Non-GAAP Reconciliations” section for details on the calculation of these measures to the extent presented herein.
47

The following table presents GAAP to non-GAAP reconciliations for the previous five quarters:
Three Months Ended
(dollars and shares in thousands,
except per share data)		March 31,December 31,September 30,June 30,March 31,
20242023202320232023
Net income per common share:
Net income applicable to common shares$116,250 $128,446 $143,842 $151,003 $142,566 
Adjustments:
Distribution of excess pension assets expense13,318 — — — — 
FDIC special assessment2,994 19,052 — — — 
Merger-related charges2,908 5,529 6,257 2,372 14,558 
Debt securities (gains) losses16 825 241 (17)5,216 
Gain on sale of Visa Class B restricted shares— (21,635)— — — 
Contract termination charge— 4,413 — — — 
Louisville expenses— — — 3,361 — 
Property optimization charges— — — 242 1,317 
Less: tax effect on net total adjustments (2)
(4,695)(1,988)(1,082)(695)(4,596)
Net income applicable to common shares, adjusted (1)
$130,791 $134,642 $149,258 $156,266 $159,061 
Weighted average diluted common shares outstanding292,207 292,029 291,717 291,266 292,756 
Net income per common share, diluted$0.40 $0.44 $0.49 $0.52 $0.49 
Adjusted net income per common share, diluted (1)
$0.45 $0.46 $0.51 $0.54 $0.54 
Tangible common book value:
Shareholders’ common equity$5,351,689 $5,319,181 $4,995,818 $5,048,376 $5,033,707 
Deduct: Goodwill and intangible assets2,095,511 2,100,966 2,106,835 2,112,875 2,118,935 
Tangible shareholders’ common equity (1)
$3,256,178 $3,218,215 $2,888,983 $2,935,501 $2,914,772 
Period end common shares293,330 292,655 292,586 292,597 291,922 
Tangible common book value (1)
11.10 11.00 9.87 10.03 9.98 
Return on average tangible common equity:
Net income applicable to common shares$116,250 $128,446 $143,842 $151,003 $142,566 
Add:  Intangible amortization (net of tax) (2)
4,091 4,402 4,530 4,545 4,639 
Tangible net income (1)
$120,341 $132,848 $148,372 $155,548 $147,205 
Average shareholders’ common equity$5,321,823 $5,037,768 $5,050,353 $5,030,083 $4,922,469 
Deduct: Average goodwill and intangible assets2,098,338 2,103,935 2,109,944 2,115,894 2,122,157 
Average tangible shareholders’ common equity (1)
$3,223,485 $2,933,833 $2,940,409 $2,914,189 $2,800,312 
Return on average tangible common equity (1)
14.93 %18.11 %20.18 %21.35 %21.03 %
Net interest margin:
Net interest income$356,458 $364,408 $375,086 $382,171 $381,488 
Taxable equivalent adjustment6,253 6,100 5,837 5,825 5,666 
Net interest income - taxable equivalent basis (1)
$362,711 $370,508 $380,923 $387,996 $387,154 
Average earning assets$44,175,079 $43,701,283 $43,617,456 $43,097,198 $41,941,913 
Net interest margin (1)
3.28 %3.39 %3.49 %3.60 %3.69 %
Efficiency ratio:
Noninterest expense$262,317 $284,235 $244,776 $246,584 $250,711 
Deduct:  Intangible amortization expense5,455 5,869 6,040 6,060 6,186 
Adjusted noninterest expense (1)
$256,862 $278,366 $238,736 $240,524 $244,525 
Net interest income - taxable equivalent basis (1)
   (see above)
$362,711 $370,508 $380,923 $387,996 $387,154 
Noninterest income77,522 100,094 80,938 81,629 70,681 
Deduct:  Debt securities gains (losses), net(16)(825)(241)17 (5,216)
Adjusted total revenue (1)
$440,249 $471,427 $462,102 $469,608 $463,051 
Efficiency ratio (1)
58.34 %59.05 %51.66 %51.22 %52.81 %
Tangible common equity to tangible assets:
Tangible shareholders’ equity (1) (see above)
$3,256,178 $3,218,215 $2,888,983 $2,935,501 $2,914,772 
Assets$49,534,918 $49,089,836 $49,059,448 $48,496,755 $47,842,644 
Deduct: Goodwill and intangible assets2,095,511 2,100,966 2,106,835 2,112,875 2,118,935 
Tangible assets (1)
$47,439,407 $46,988,870 $46,952,613 $46,383,880 $45,723,709 
Tangible common equity to tangible assets (1)
6.86 %6.85 %6.15 %6.33 %6.37 %
(1)Represents a non-GAAP financial measure.
(2)Calculated using management’s estimate of the annual fully taxable equivalent income tax rates (federal and state).
48

EXECUTIVE SUMMARY
Old National is the sixth largest commercial bank headquartered in the Midwest by asset size and ranks among the top 30 banking companies headquartered in the United States with consolidated assets of approximately $50 billion at March 31, 2024. The Company’s corporate headquarters and principal executive office is located in Evansville, Indiana with commercial and consumer banking operations headquartered in Chicago, Illinois. Through our wholly-owned banking subsidiary and non-bank affiliates, we provide a wide range of services primarily throughout the Midwest region of the United States and elsewhere, including commercial and consumer loan and depository services, as well as private banking, capital markets, brokerage, wealth management, trust, investment advisory, and other traditional banking services.
Net income applicable to common shares for the first quarter of 2024 was $116.3 million, or $0.40 per diluted common share, compared to $128.4 million, or $0.44 per diluted common share, for the fourth quarter of 2023.
Results for the first quarter of 2024 were impacted by a $13.3 million non-cash, pre-tax expense associated with the distribution of excess pension plan assets with the resolution of the legacy First Midwest defined benefit pension plan, as well as pre-tax charges of $3.0 million for an FDIC special assessment and $2.9 million of merger-related charges. Results for the fourth quarter of 2023 were impacted by the $21.6 million pre-tax gain on sale of Visa Class B restricted shares, $19.1 million for an FDIC special assessment, and $9.9 million of merger-related and other expenses. Excluding these items, net income applicable to common shares for the first quarter of 2024 was $130.8 million, or $0.45 per diluted common share on an adjusted basis1, compared to $134.6 million, or $0.46 per diluted common share on an adjusted basis1, for the fourth quarter of 2023.
We achieved strong results during the first quarter of 2024, including growth in total loans and deposits, modest compression of net interest income reflective of the rate environment, strong credit quality, and disciplined expense management.
Deposits:  Period-end total deposits increased $464.2 million to $37.7 billion, reflecting continued efforts to compete for new client relationships as well as normal seasonally lower patterns in business checking and public funds compared to December 31, 2023.
Loans:  Our loan balances, excluding loans held-for-sale, increased $631.4 million to $33.6 billion at March 31, 2024 compared to December 31, 2023. This was primarily driven by broad-based, disciplined commercial and commercial real estate loan growth.
Net Interest Income: Net interest income decreased $8.0 million to $356.5 million compared to the fourth quarter of 2023 driven by higher funding costs and fewer days in the quarter, partly offset by loan growth.
Provision for Credit Losses:  Provision for credit losses increased $7.3 million to $18.9 million compared to the fourth quarter of 2023 reflecting net charge-offs and loan growth, as well as economic factors.
Noninterest Income:  Noninterest income decreased $22.6 million to $77.5 million compared to the fourth quarter of 2023 reflecting the $21.6 million pre-tax gain on sale of Visa Class B restricted shares in the fourth quarter of 2023. Excluding this gain, noninterest income decreased slightly driven by lower capital markets income, partially offset by increases in mortgage fees, wealth fees, and other income.
Noninterest Expense:  Noninterest expense decreased $21.9 million compared to the fourth quarter of 2023.  For the first quarter of 2024, noninterest expense included a $13.3 million non-cash, pre-tax expense associated with the distribution of excess pension assets with the resolution of the legacy First Midwest plan, as well as pre-tax charges of $3.0 million for the FDIC special assessment, and $2.9 million of merger-related expenses compared to pre-tax charges of $19.1 million for the FDIC special assessment and $9.9 million of merger-related and other expenses in the fourth quarter of 2023. Excluding these expenses, noninterest expense decreased $12.1 million compared to the fourth quarter of 2023 primarily due to elevated performance-driven incentive accruals and higher amortization of tax credit investments for the fourth quarter of 2023, as well as lower professional fees and other expense for the first quarter of 2024, partially offset by higher payroll taxes due to timing.

(1)Represents a non-GAAP financial measure. Refer to “Non-GAAP Financial Measures” section for reconciliations to GAAP financial measures.
49

RESULTS OF OPERATIONS
The following table sets forth certain income statement information of Old National:
(dollars in thousands, except
   per share data)		Three Months Ended
March 31,		%
Change
20242023
Income Statement Summary:
Net interest income$356,458 $381,488 (6.6)%
Provision for credit losses18,891 13,437 40.6 
Noninterest income77,522 70,681 9.7 
Noninterest expense262,317 250,711 4.6 
Net income applicable to common shareholders116,250 142,566 (18.5)
Net income per common share - diluted0.40 0.49 (18.4)
Other Data:
Return on average common equity8.74 %11.58 %
Return on average tangible common equity (1)
14.93 21.03 
Efficiency ratio (1)
58.34 52.81 
Tier 1 leverage ratio8.96 8.53 
Net charge-offs (recoveries) to average loans0.14 0.21 
(1)Represents a non-GAAP financial measure. Refer to “Non-GAAP Financial Measures” section for reconciliations to GAAP financial measures.
Net Interest Income
Net interest income is the most significant component of our earnings, comprising 82% of revenues for the three months ended March 31, 2024. Net interest income and net interest margin are influenced by many factors, primarily the volume and mix of earning assets, funding sources, and interest rate fluctuations. Other factors include the level of accretion income on purchased loans, prepayment risk on mortgage and investment-related assets, and the composition and maturity of interest-earning assets and interest-bearing liabilities.
The Federal Reserve held its interest rates steady during the first quarter of 2024 and increased interest rates compared to March 31, 2023. The Federal Reserve’s Federal Funds Rate is currently in a target range of 5.25% to 5.50%, with the Effective Federal Funds Rate of 5.33% at March 31, 2024. Management actively takes balance sheet restructuring, derivative, and deposit pricing actions to help mitigate interest rate risk. See the section of this Item 7 titled “Market Risk” for additional information regarding this risk.
Loans typically generate more interest income than investment securities with similar maturities. Funding from client deposits generally costs less than wholesale funding sources. Factors such as general economic activity, Federal Reserve monetary policy, and price volatility of competing alternative investments can also exert significant influence on our ability to optimize our mix of assets and funding, net interest income, and net interest margin.
Net interest income is the excess of interest received from interest-earning assets over interest paid on interest-bearing liabilities. For analytical purposes, net interest income is presented in the table that follows, adjusted to a taxable equivalent basis to reflect what our tax-exempt assets would need to yield in order to achieve the same after-tax yield as a taxable asset. We used the current federal statutory tax rate in effect of 21% for all periods. This analysis portrays the income tax benefits related to tax-exempt assets and helps to facilitate a comparison between taxable and tax-exempt assets. Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully taxable equivalent basis and that it may enhance comparability for peer comparison purposes for both management and investors.
50

The following table presents the average balance sheet for each major asset and liability category, its related interest income and yield, or its expense and rate.
(Tax equivalent basis,
dollars in thousands)		Three Months Ended
March 31, 2024		Three Months Ended
March 31, 2023
Earning AssetsAverage
Balance
Income (1)/
Expense
Yield/
Rate		Average
Balance
Income (1)/
Expense
Yield/
Rate
Money market and other interest-earning
   investments		$757,244 $9,985 5.30 %$497,953 $3,098 2.52 %
Investment securities:
Treasury and government sponsored agencies2,362,477 23,266 3.94 %2,197,426 16,531 3.01 %
Mortgage-backed securities5,357,085 38,888 2.90 %5,429,200 35,090 2.59 %
States and political subdivisions1,680,175 13,976 3.33 %1,808,316 14,690 3.25 %
Other securities770,438 12,173 6.32 %738,139 8,604 4.66 %
Total investment securities10,170,175 88,303 3.47 %10,173,081 74,915 2.95 %
Loans: (2)
Commercial9,540,385 167,263 7.01 %9,457,089 147,620 6.24 %
Commercial real estate14,368,370 230,086 6.41 %12,654,366 179,475 5.67 %
Residential real estate loans6,693,814 63,003 3.76 %6,523,074 58,099 3.56 %
Consumer2,645,091 43,594 6.63 %2,636,350 38,108 5.86 %
Total loans33,247,660 503,946 6.07 %31,270,879 423,302 5.42 %
Total earning assets44,175,079 $602,234 5.46 %41,941,913 $501,315 4.79 %
Deduct: Allowance for credit losses on loans(313,470)(304,393)
Non-Earning Assets
Cash and due from banks362,676 437,872 
Other assets4,961,595 4,907,115 
Total assets$49,185,880 $46,982,507 
Interest-Bearing Liabilities
Checking and NOW$7,141,201 $25,252 1.42 %$7,988,579 $19,359 0.98 %
Savings5,025,400 5,017 0.40 %6,183,409 2,230 0.15 %
Money market9,917,572 94,213 3.82 %5,641,288 20,010 1.44 %
Time deposits, excluding brokered deposits4,689,136 47,432 4.07 %3,057,870 15,289 2.03 %
Brokered deposits1,047,140 13,525 5.19 %500,530 5,705 4.62 %
Total interest-bearing deposits27,820,449 185,439 2.68 %23,371,676 62,593 1.09 %
Federal funds purchased and interbank
   borrowings		69,090 961 5.59 %419,291 4,839 4.68 %
Securities sold under agreements to repurchase296,236 917 1.25 %412,819 779 0.77 %
FHLB advances4,386,492 41,167 3.77 %4,273,343 37,996 3.61 %
Other borrowings825,846 11,039 5.38 %781,221 7,954 4.13 %
Total borrowed funds5,577,664 54,084 3.90 %5,886,674 51,568 3.55 %
Total interest-bearing liabilities$33,398,113 $239,523 2.88 %$29,258,350 $114,161 1.58 %
Noninterest-Bearing Liabilities and
   Shareholders’ Equity
Demand deposits$9,258,136 $11,526,267 
Other liabilities964,089 1,031,702 
Shareholders’ equity5,565,542 5,166,188 
Total liabilities and shareholders’ equity$49,185,880 $46,982,507 
Net interest income - taxable equivalent basis$362,711 3.28 %$387,154 3.69 %
Taxable equivalent adjustment(6,253)(5,666)
Net interest income (GAAP)$356,458 3.23 %$381,488 3.64 %
(1)Interest income is reflected on a fully taxable equivalent basis.
(2)Includes loans held-for-sale.
51

The following table presents the dollar amount of changes in taxable equivalent net interest income attributable to changes in the average balances of assets and liabilities and the yields earned or rates paid.
From Three Months Ended
March 31, 2023 to Three
Months Ended March 31, 2024
 
Total
Change (1)
Attributed to
(dollars in thousands)VolumeRate
Interest Income
Money market and other interest-earning investments$6,887 $2,531 $4,356 
Investment securities (2)
13,388 (23)13,411 
Loans (3)
80,644 28,471 52,173 
Total interest income100,919 30,979 69,940 
Interest Expense
Checking and NOW deposits5,893 (2,482)8,375 
Savings deposits2,787 (791)3,578 
Money market deposits74,203 27,993 46,210 
Time deposits, excluding brokered deposits32,143 12,406 19,737 
Brokered deposits7,820 6,711 1,109 
Federal funds purchased and interbank borrowings(3,878)(4,466)588 
Securities sold under agreements to repurchase138 (290)428 
FHLB advances3,171 1,195 1,976 
Other borrowings3,085 556 2,529 
Total interest expense125,362 40,832 84,530 
Net interest income$(24,443)$(9,853)$(14,590)
(1)The variance not solely due to rate or volume is allocated equally between the rate and volume variances.
(2)Interest income on investment securities includes taxable equivalent adjustments of $2.8 million during the three months ended March 31, 2024 using the federal statutory rate in effect of 21%.
(3)Interest income on loans includes taxable equivalent adjustments of $3.5 million during the three months ended March 31, 2024 using the federal statutory rate in effect of 21%.
The decrease in net interest income for the three months ended March 31, 2024 when compared to the same period in 2023 was primarily due to higher costs and balances of average interest-bearing liabilities, partially offset by higher rates on loans as well as loan growth. Accretion income associated with acquired loans and borrowings totaled $5.1 million in the three months ended March 31, 2024 compared to $7.9 million in the three months ended March 31, 2023.
The decrease in the net interest margin on a fully taxable equivalent basis for the three months ended March 31, 2024 compared to the same period in 2023 was primarily due to higher costs of interest-bearing liabilities, partially offset by higher yields on interest earning assets. The yield on interest earning assets increased 67 basis points and the cost of interest-bearing liabilities increased 130 basis points in the three months ended March 31, 2024 compared to the same quarter a year ago. Accretion income represented 5 basis points of the net interest margin in three months ended March 31, 2024, compared to 8 basis points in the three months ended March 31, 2023.
Average earning assets were $44.2 billion and $41.9 billion for the three months ended March 31, 2024 and 2023, respectively, an increase of $2.2 billion, or 5%, primarily due to strong loan growth.
Average loans, including loans held-for-sale, increased $2.0 billion for the three months ended March 31, 2024 when compared to the same period in 2023 primarily due to strong commercial real estate loan growth.
Average noninterest-bearing deposits decreased $2.3 billion while average interest-bearing deposits increased $4.4 billion for the three months ended March 31, 2024 when compared to the same period in 2023 reflecting a mix shift as a result of the current rate environment and organic growth.
52

Provision for Credit Losses
The following table details the components of the provision for credit losses:
Three Months Ended
March 31,		%
(dollars in thousands)20242023Change
Provision for credit losses on loans$23,853 $11,469 108.0 %
Provision (release) for credit losses on
   unfunded loan commitments		(4,962)1,968 (352.1)
Total provision for credit losses$18,891 $13,437 40.6 %
Net (charge-offs) recoveries on non-PCD
   loans		$(6,061)$(4,038)50.1 %
Net (charge-offs) recoveries on PCD
   loans		(5,689)(12,391)(54.1)
Total net (charge-offs) recoveries on
   loans		$(11,750)$(16,429)(28.5)%
Net charge-offs (recoveries) to average loans0.14 %0.21 %(32.7)%
Total provision for credit losses on loans increased in the three months ended March 31, 2024 reflecting loan growth and macroeconomic factors. Continued loan growth in future periods, a decline in our current level of recoveries, or an increase in charge-offs could result in an increase in provision expense. Additionally, provision expense may be volatile due to changes in CECL model assumptions of credit quality, macroeconomic factors and conditions, and loan composition, which drive the allowance for credit losses balance.
Noninterest Income
We generate revenues in the form of noninterest income through client fees, sales commissions, and gains and losses from our core banking franchise and other related businesses, such as wealth management, investment consulting, and investment products. The following table details the components in noninterest income:
Three Months Ended
March 31,		%
(dollars in thousands)20242023Change
Wealth and investment services fees$28,304 $26,920 5.1 %
Service charges on deposit accounts17,898 17,003 5.3 
Debit card and ATM fees10,054 9,982 0.7 
Mortgage banking revenue4,478 3,400 31.7 
Capital markets income2,900 6,939 (58.2)
Company-owned life insurance3,434 3,186 7.8 
Debt securities gains (losses), net(16)(5,216)(99.7)
Other income10,470 8,467 23.7 
Total noninterest income$77,522 $70,681 9.7 %
Noninterest income increased $6.8 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily due to $5.2 million of net losses on sales of debt securities in the three months ended March 31, 2023.
Mortgage banking revenue increased $1.1 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily due to higher mortgage originations and increased loan sales.
Capital markets income decreased $4.0 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily due to lower levels of commercial real estate client interest rate swap fees.
Other income increased $2.0 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily due to higher commercial loan fees.
53

Noninterest Expense
The following table details the components in noninterest expense:
Three Months Ended
March 31,		%
(dollars in thousands)20242023Change
Salaries and employee benefits$149,803 $137,364 9.1 %
Occupancy 27,019 28,282 (4.5)
Equipment 8,671 7,389 17.4 
Marketing 10,634 9,417 12.9 
Technology20,023 19,202 4.3 
Communication 4,000 4,461 (10.3)
Professional fees6,406 6,732 (4.8)
FDIC assessment11,313 10,404 8.7 
Amortization of intangibles5,455 6,186 (11.8)
Amortization of tax credit investments2,749 2,761 (0.4)
Other expense16,244 18,513 (12.3)
Total noninterest expense$262,317 $250,711 4.6 %
Noninterest expense increased $11.6 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily due to a $13.3 million non-cash, pre-tax expense associated with the distribution of excess pension assets with the resolution of the legacy First Midwest plan in the three months ended March 31, 2024. Merger-related expenses totaled $2.9 million in the three months ended March 31, 2024, compared to $14.6 million in the three months ended March 31, 2023. In addition, the three months ended March 31, 2024 were impacted by $3.0 million for the FDIC special assessment and the three months ended March 31, 2023 were impacted by $1.3 million of property optimization charges. Excluding these items, total noninterest expense was $243.1 million and $234.8 million for the three months ended March 31, 2024 and 2023, respectively. The resulting $8.3 million increase in noninterest expense was driven by higher salary and employee benefits reflecting merit and performance-driven incentive accruals.
Provision for Income Taxes
We record a provision for income taxes currently payable and for income taxes payable or benefits to be received in the future, which arise due to timing differences in the recognition of certain items for financial statement and income tax purposes. The major difference between the effective tax rate applied to our financial statement income and the federal statutory tax rate is caused by a tax benefit from our tax credit investments and interest on tax-exempt securities and loans. The effective tax rate was 21.3% for the three months ended March 31, 2024, compared to 22.0% for the same period in 2023 reflecting decreases in pre-tax book income and state income taxes combined with an increase in tax credits. See Note 14 to the consolidated financial statements for additional information.. In accordance with ASC 740-270, Accounting for Interim Reporting, the provision for income taxes was recorded at March 31, 2024 based on the current estimate of the effective annual rate.
FINANCIAL CONDITION
Overview
At March 31, 2024, our assets were $49.5 billion, a $445.1 million increase compared to assets of $49.1 billion at December 31, 2023. The increase was driven by disciplined loan growth, partially offset by lower cash balances.
Earning Assets
Our earning assets are comprised of investment securities, portfolio loans, loans held-for-sale, money market investments, interest-earning accounts with the Federal Reserve, and equity securities. Earning assets were $44.5 billion at March 31, 2024, a $534.2 million increase compared to earning assets of $43.9 billion at December 31, 2023 driven primarily by loan growth.
54

Investment Securities
We classify the majority of our investment securities as available-for-sale to give management the flexibility to sell the securities prior to maturity based on fluctuating interest rates or changes in our funding requirements.
The investment securities portfolio, including equity securities, was $10.2 billion and represented 23% of earning assets at both March 31, 2024 and December 31, 2023. At March 31, 2024, we had no intent to sell any securities that were in an unrealized loss position nor is it expected that we would be required to sell the securities prior to their anticipated recovery.
The investment securities available-for-sale portfolio had net unrealized losses of $914.2 million and $869.5 million at March 31, 2024 and December 31, 2023, respectively. The investment securities held-to-maturity portfolio had net unrealized losses of $453.8 million and $412.3 million at March 31, 2024 and December 31, 2023, respectively.
The investment securities available-for-sale portfolio including securities hedges had an effective duration of 4.35 at March 31, 2024, compared to 4.24 at December 31, 2023. The total investment securities portfolio had an effective duration of 5.42 at March 31, 2024, compared to 5.35 at December 31, 2023. Effective duration represents the percentage change in the fair value of the portfolio in response to a change in interest rates and is used to evaluate the portfolio’s price volatility at a single point in time. Generally, there is more uncertainty in interest rates over a longer average maturity, resulting in a higher duration percentage. The annualized average yields on investment securities, on a taxable equivalent basis, were 3.47% for the three months ended March 31, 2024, compared to 2.95% for the three months ended March 31, 2023.
Loan Portfolio
We lend to commercial and commercial real estate clients in many diverse industries including real estate rental and leasing, manufacturing, healthcare, wholesale trade, construction, and agriculture, among others. Old National manages concentrations of credit exposure by industry, product, geography, client relationship, and loan size. The following table presents the composition of the loan portfolio:
(dollars in thousands)March 31,
2024		December 31,
2023		$ Change% Change
Commercial$9,648,269 $9,512,230 $136,039 1.4 %
Commercial real estate14,653,958 14,140,629 513,329 3.6 
Residential real estate6,661,379 6,699,443 (38,064)(0.6)
Consumer2,659,713 2,639,625 20,088 0.8 
Total loans$33,623,319 $32,991,927 $631,392 1.9 %
Commercial and Commercial Real Estate Loans
Commercial and commercial real estate loans are the largest classifications within earning assets, representing 55% of earning assets at both March 31, 2024, compared to 54% at December 31, 2023. The increase in commercial and commercial real estate loans at March 31, 2024 from December 31, 2023 was driven by disciplined loan production that was well balanced across our market footprint and product lines.
55

The following table provides detail on commercial loans by industry classification (as defined by the North American Industry Classification System) and by loan size.
March 31, 2024December 31, 2023
(dollars in thousands)Outstanding
Exposure(1)
NonaccrualOutstanding
Exposure(1)
Nonaccrual
By Industry:
Manufacturing$1,686,178 $2,704,095 $22,875 $1,589,727 $2,734,935 $7,408 
Health care and social assistance1,582,963 1,935,359 1,399 1,567,286 1,949,250 7,390 
Wholesale trade831,579 1,606,395 2,631 748,058 1,541,951 3,789 
Real estate rental and leasing703,259 1,079,752 12,158 686,008 1,035,073 700 
Finance and insurance622,012 947,319 1 637,630 966,842 1 
Construction617,536 1,460,350 3,186 554,312 1,437,025 2,040 
Professional, scientific, and
  technical services		527,070 911,381 5,913 458,133 821,738 3,825 
Transportation and warehousing508,817 675,547 8,430 453,630 703,976 1,746 
Accommodation and food services397,555 462,738 649 389,591 503,990 705 
Retail trade347,604 607,787 5,128 345,944 620,308 5,273 
Administrative and support and
  waste management and
  remediation services		341,772 512,538 1,837 321,018 487,359 347 
Educational services259,003 404,835 6 263,539 406,867 7 
Agriculture, forestry, fishing,
  and hunting		246,224 395,107 344 255,811 392,098 415 
Other services222,294 393,164 10,128 208,012 400,195 9,328 
Public administration199,888 269,746 — 216,939 285,963 — 
Other554,515 811,045 1,338 816,592 1,111,030 1,537 
Total$9,648,269 $15,177,158 $76,023 $9,512,230 $15,398,600 $44,511 
By Loan Size:
Less than $200,0003 %3 %3 %3 %3 %5 %
$200,000 to $1,000,00012 11 17 11 10 20 
$1,000,000 to $5,000,00024 25 38 24 25 48 
$5,000,000 to $10,000,00015 15 — 16 16 7 
$10,000,000 to $25,000,00030 28 42 31 28 20 
Greater than $25,000,00016 18 — 15 18 — 
Total100 %100 %100 %100 %100 %100 %
(1)    Includes unfunded loan commitments.
The following table provides detail on commercial real estate loans classified by property type.
March 31, 2024December 31, 2023
(dollars in thousands)Outstanding
Exposure(1)
NonaccrualOutstanding
Exposure(1)
Nonaccrual
By Property Type:
Multifamily$5,020,755 $6,487,938 $25,915 $4,794,605 $6,422,311 $6,050 
Warehouse / Industrial2,817,785 3,308,618 7,662 2,704,656 3,308,273 6,459 
Retail1,940,200 2,013,691 27,314 1,886,233 1,958,254 29,823 
Office1,898,240 2,054,203 51,554 1,948,430 2,112,157 58,111 
Senior housing1,016,129 1,102,460 40,742 848,903 947,168 41,632 
Single family449,803 474,628 2,659 450,560 476,946 3,187 
Other (2)
1,511,046 1,756,731 21,830 1,507,242 1,824,177 15,530 
Total$14,653,958 $17,198,269 $177,676 $14,140,629 $17,049,286 $160,792 
(1)    Includes unfunded loan commitments.
(2)    Other includes commercial development, agriculture real estate, hotels, self-storage, land development, religion, and mixed-use properties.
The mix of properties securing the loans in our commercial real estate portfolio is balanced between owner-occupied and non-owner-occupied categories and is diverse in terms of type and geographic location, generally within the
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Company’s primary market area. Approximately 28% of the commercial real estate portfolio is owner-occupied as of March 31, 2024, compared to 25% at December 31, 2023.
The Company actively reviews its broader loan portfolio in the normal course of business and has performed a targeted review of contractual maturities in its non-owner-occupied commercial real estate portfolio as part of its response to current market conditions to identify exposure to credit risk associated with renewals. At March 31, 2024, the Company held $430.2 million of non-owner-occupied commercial real estate loans, or 1.3% of total loans, that mature within 18 months with an interest rate below 4%.
Residential Real Estate Loans
At March 31, 2024, residential real estate loans held in our loan portfolio were $6.7 billion, a decrease of $38.1 million compared to December 31, 2023. Changes in interest rates may impact the number of refinancings and new originations of residential real estate loans. If interest rates decrease in the future, there may be an increase in refinancings and new originations of residential real estate loans. Conversely, future increases in interest rates may result in a decline in the level of refinancings and new originations of residential real estate loans.
Consumer Loans
Consumer loans, including automobile loans, personal, and home equity loans and lines of credit, increased $20.1 million to $2.7 billion at March 31, 2024 compared to December 31, 2023 reflecting higher indirect loans.
Funding
The following table summarizes Old National’s total funding, comprised of deposits and wholesale borrowings:
(dollars in thousands)March 31,
2024		December 31,
2023		$ Change% Change
Deposits:
Noninterest-bearing demand$9,257,709 $9,664,247 $(406,538)(4.2)%
Interest-bearing:
Checking and NOW7,236,667 7,331,487 (94,820)(1.3)%
Savings5,020,095 5,099,186 (79,091)(1.6)%
Money market10,234,113 9,561,116 672,997 7.0 %
Time deposits5,950,834 5,579,144 371,690 6.7 %
Total deposits37,699,418 37,235,180 464,238 1.2 %
Wholesale borrowings:
Federal funds purchased and interbank borrowings50,416 390 50,026 N/M  
Securities sold under agreements to repurchase274,493 285,206 (10,713)(3.8)%
Federal Home Loan Bank advances4,193,039 4,280,681 (87,642)(2.0)%
Other borrowings813,213 764,870 48,343 6.3 %
Total wholesale borrowings5,331,161 5,331,147 14 — %
Total funding$43,030,579 $42,566,327 $464,252 1.1 %
We use wholesale funding to augment deposit funding and to help maintain our desired interest rate risk position. Wholesale funding as a percentage of total funding was 12% at March 31, 2024, compared to 13% at December 31, 2023.
Capital 
Shareholders’ equity totaled $5.6 billion at both March 31, 2024 and December 31, 2023. Retained earnings were offset by dividends and changes in unrealized gains (losses) on available-for-sale investment securities and derivatives during the three months ended March 31, 2024.
Capital Adequacy
Old National and the banking industry are subject to various regulatory capital requirements administered by the federal banking agencies. At March 31, 2024, Old National and its bank subsidiary exceeded the regulatory minimums and Old National Bank met the regulatory definition of “well-capitalized” based on the most recent regulatory definition.
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Old National’s consolidated capital position remains strong as evidenced by the following key industry ratios. 
Regulatory
Guidelines
Minimum		Prompt
Corrective
Action "Well
Capitalized"
Guidelines		March 31,
2024		December 31,
2023
Tier 1 capital to total average assets (leverage
   ratio)		4.00 %N/A%8.96 %8.83 %
Common equity Tier 1 capital to risk-weighted
   total assets		7.00 N/A10.76 10.70 
Tier 1 capital to risk-weighted total assets8.50 6.00 11.40 11.35 
Total capital to risk-weighted total assets10.50 10.00 12.74 12.64 
Shareholders’ equity to assetsN/AN/A11.30 11.33 
Old National Bank, Old National’s bank subsidiary, maintained a strong capital position as evidenced by the following key industry ratios.
Regulatory
Guidelines
Minimum		Prompt
Corrective
Action "Well
Capitalized"
Guidelines		March 31,
2024		December 31,
2023
Tier 1 capital to total average assets (leverage
   ratio)		4.00 %5.00 %9.04 %8.99 %
Common equity Tier 1 capital to risk-weighted
   total assets		7.00 6.50 11.50 11.57 
Tier 1 capital to risk-weighted total assets8.50 8.00 11.50 11.57 
Total capital to risk-weighted total assets10.50 10.00 12.32 12.33 
During 2020, the OCC, the Board of Governors of the Federal Reserve System, and the FDIC issued final rules to delay the estimated impact on regulatory capital stemming from the implementation of CECL. The final rules provide banking organizations the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period (five-year transition option). Old National adopted the capital transition relief over the permissible five-year period.
Management views stress testing as an integral part of the Company’s risk management and strategic planning activities. Old National performs stress testing periodically throughout the year. The primary objective of the stress test is to ensure that Old National has a robust, forward-looking stress testing process and maintains sufficient capital to continue operations throughout times of economic and financial stress. Management also uses the stress testing framework to evaluate decisions relating to pricing, loan concentrations, capital deployment, and mergers and acquisitions to ensure that strategic decisions align with Old National’s risk appetite statement. Old National’s stress testing process incorporates key risks that include strategic, market, liquidity, credit, operational, regulatory, compliance, legal, and reputational risks. Old National’s stress testing policy outlines steps that will be taken if stress test results do not meet internal thresholds under severely adverse economic scenarios.
RISK MANAGEMENT
Overview
Old National has adopted a Risk Appetite Statement to enable our Board of Directors, Executive Leadership Team, and Senior Management to better assess, understand, monitor, and mitigate Old National’s risks. The Risk Appetite Statement addresses the following major risks: strategic, market, liquidity, credit, operational, talent management, compliance and regulatory, legal, and reputational. Our Chief Risk Officer provides quarterly reports to the Board’s Enterprise Risk Committee on various risk topics. The following discussion addresses certain of these major risks including credit, market, and liquidity. Discussion of operational, compliance and regulatory, legal, strategic, talent management, and reputational risks is provided in the section entitled “Risk Factors” in the Company’s 2023 Annual Report on Form 10-K.
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Credit Risk
Credit risk represents the risk of loss arising from an obligor’s inability or failure to meet contractual payment or performance terms. Our primary credit risks result from our investment and lending activities.
Asset Quality
We lend to commercial and commercial real estate clients in many diverse industries including, among others, real estate rental and leasing, manufacturing, healthcare, wholesale trade, construction, and agriculture. Old National manages concentrations of credit exposure by industry, product, geography, client relationship, and loan size. At March 31, 2024, our average commercial loan size was approximately $720,000 and our average commercial real estate loan size was approximately $1,530,000. In addition, while loans to lessors of residential and non-residential real estate exceed 10% of total loans, no individual sub-segment category within those broader categories reaches the 10% threshold. At March 31, 2024, we had minimal exposure to foreign borrowers and no sovereign debt. Our policy is to concentrate our lending activity in the geographic market areas we serve, primarily in the Midwest region of the United States.
The following table presents a summary of under-performing, criticized, and classified assets:
(dollars in thousands)March 31,
2024		December 31,
2023
Total nonaccrual loans$328,645 $274,821 
Total past due loans (90 days or more and still accruing)2,172 961 
Foreclosed assets9,344 9,434 
Total under-performing assets$340,161 $285,216 
Classified loans (includes nonaccrual, past due 90 days,
    and other problem loans)		$956,974 $875,140 
Other classified assets (1)
54,392 48,930 
Criticized loans827,419 843,920 
Total criticized and classified assets$1,838,785 $1,767,990 
Asset Quality Ratios:
Nonaccrual loans/total loans (2)
0.98 %0.83 %
Under-performing assets/total loans (2)
1.01 0.86 
Under-performing assets/total assets0.69 0.58 
Allowance for credit losses on loans/under-performing assets93.99 107.85 
Allowance for credit losses on loans/nonaccrual loans97.28 111.93 
(1)Includes investment securities that fell below investment grade rating.
(2)Loans exclude loans held-for-sale.
Under-performing assets increased to $340.2 million at March 31, 2024, compared to $285.2 million at December 31, 2023. Under-performing assets as a percentage of total loans at March 31, 2024 were 1.01%, a 15 basis point increase from 0.86% at December 31, 2023.
Nonaccrual loans increased $53.8 million from December 31, 2023 to March 31, 2024 reflecting the migration of certain commercial credits as they progress to resolution. As a percentage of nonaccrual loans, the allowance for credit losses on loans was 97.28% at March 31, 2024, compared to 111.93% at December 31, 2023.
Total criticized and classified assets were $1.8 billion at March 31, 2024, an increase of $70.8 million from December 31, 2023 primarily due to higher criticized and classified commercial real estate loans. Other classified assets include investment securities that fell below investment grade rating totaling $54.4 million at March 31, 2024, compared to $48.9 million at December 31, 2023.
Allowance for Credit Losses on Loans and Unfunded Commitments
Net charge-offs on loans totaled $11.8 million during the three months ended March 31, 2024, compared to $16.4 million for the same period in 2023. Annualized, net charge-offs to average loans were 0.14% for the three months ended March 31, 2024, compared to 0.21% for the same period in 2023. The three months ended March 31, 2024 included net charge-offs on PCD loans totaling $5.7 million, or 0.07% on an annualized basis of average loans,
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compared to net charge-offs on PCD loans totaling $12.4 million, or 0.16% on an annualized basis of average loans for the same period in 2023.
Credit quality within the loans held for investment portfolio is continuously monitored by management and is reflected within the allowance for credit losses on loans. The allowance for credit losses is an estimate of expected losses inherent within the Company’s loans held for investment portfolio. Credit quality is assessed and monitored by evaluating various attributes and the results of those evaluations are utilized in underwriting new loans and in our process for estimating expected credit losses. Expected credit loss inherent in non-cancelable off-balance-sheet credit exposures is accounted for as a separate liability included in other liabilities on the balance sheet. The allowance for credit losses on loans held for investment and unfunded loan commitments is adjusted by a credit loss expense, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries. Accrued interest receivable is excluded from the estimate of credit losses.
The allowance for credit loss estimation process involves procedures to consider the unique characteristics of our loan portfolio segments. These segments are further disaggregated into loan classes based on the level at which credit risk of the loan is monitored. When computing the level of expected credit losses, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status, and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense in those future periods.
The allowance level is influenced by loan volumes, loan AQR migration or delinquency status, changes in historical loss experience, and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions. The methodology for estimating the amount of expected credit losses reported in the allowance for credit losses on loans has two basic components: first, an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans; and second, a pooled component for estimated expected credit losses for pools of loans that share similar risk characteristics.
The allowance for credit losses on loans was $319.7 million at March 31, 2024, compared to $307.6 million at December 31, 2023. Continued loan growth in future periods, a decline in our current level of recoveries, or an increase in charge-offs could result in an increase in provision expense. Additionally, provision expense may be volatile due to changes in CECL model assumptions of credit quality, macroeconomic factors and conditions, and loan composition, which drive the allowance for credit losses balance.
We maintain an allowance for credit losses on unfunded loan commitments to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the allowance for credit losses on loans, modified to take into account the probability of a drawdown on the commitment. The allowance for credit losses on unfunded loan commitments is classified as a liability account on the balance sheet within accrued expenses and other liabilities, while the corresponding provision for unfunded loan commitments is included in the provision for credit losses. The allowance for credit losses on unfunded loan commitments totaled $26.3 million at March 31, 2024, compared to $31.2 million at December 31, 2023.
See the section entitled “Risk Factors” in the Company’s 2023 Annual Report on Form 10-K for further discussion of our credit risk.
Market Risk
Market risk is the risk that the estimated fair value of our assets, liabilities, and derivative financial instruments will decline as a result of changes in interest rates or financial market volatility, or that our net income will be significantly reduced by interest rate changes.
The objective of our interest rate management process is to maximize net interest income while operating within acceptable limits established for interest rate risk and maintaining adequate levels of funding and liquidity.
Potential cash flows, sales, or replacement value of many of our assets and liabilities, especially those that earn or pay interest, are sensitive to changes in the general level of interest rates. This interest rate risk arises primarily from our normal business activities of gathering deposits and extending loans. Many factors affect our exposure to
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changes in interest rates, such as general economic and financial conditions, client preferences, historical pricing relationships, and re-pricing characteristics of financial instruments. Our earnings can also be affected by the monetary and fiscal policies of the U.S. Government and its agencies, particularly the Federal Reserve.
In managing interest rate risk, we establish guidelines for asset and liability management, including measurement of short and long-term sensitivities to changes in interest rates, which are reviewed with the Enterprise Risk Committee of our Board of Directors. Based on the results of our analysis, we may use different techniques to manage changing trends in interest rates including:
•adjusting balance sheet mix or altering interest rate characteristics of assets and liabilities;
•changing product pricing strategies;
•modifying characteristics of the investment securities portfolio; or
•using derivative financial instruments, to a limited degree.
A key element in our ongoing process is to measure and monitor interest rate risk using a model to quantify the likely impact of changing interest rates on Old National’s results of operations. The model quantifies the effects of various possible interest rate scenarios on projected net interest income. The model measures the impact on net interest income relative to a base case scenario over a two-year cumulative horizon resulting from an immediate change in interest rates using multiple rate scenarios. The base case scenario assumes that the balance sheet and interest rates are held at current levels. The model shows our projected net interest income sensitivity based on interest rate changes only and does not consider other forecast assumptions. Due to the dynamics of future interest rate expectations, we also measure and monitor interest rate risk using the forward curve, which may be a more probable scenario of our interest rate exposure. The forward curve represents the relationship between the price of forward contracts and the time to maturity of the forward contracts at a point in time. Presentation of the forward curve model is included in the following table as of March 31, 2024.
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The following table illustrates our projected net interest income sensitivity over a two-year cumulative horizon based on the asset/liability model at March 31, 2024 and 2023:
Immediate Rate Decrease
March 31, 2024
Forward
Curve
Immediate Rate Increase
(dollars in thousands)-300
Basis Points		-200
Basis Points		-100
Basis Points		Base+100
Basis Points		+200
Basis Points		+300
Basis Points
March 31, 2024
Projected interest income:
Money market, other
  interest earning
  investments, and
  investment securities		$731,811 $751,001 $800,963 $817,375 $853,340 $907,670 $960,568 $1,012,590 
Loans3,135,715 3,509,083 3,884,871 3,984,683 4,252,944 4,618,125 4,983,142 5,347,889 
Total interest
   income		3,867,526 4,260,084 4,685,834 4,802,058 5,106,284 5,525,795 5,943,710 6,360,479 
Projected interest expense:
Deposits604,784 894,474 1,197,697 1,232,929 1,478,601 1,783,767 2,101,956 2,415,479 
Borrowings354,555 416,191 492,897 516,442 583,388 665,070 746,785 828,459 
Total interest
   expense		959,339 1,310,665 1,690,594 1,749,371 2,061,989 2,448,837 2,848,741 3,243,938 
Net interest
   income		$2,908,187 $2,949,419 $2,995,240 $3,052,687 $3,044,295 $3,076,958 $3,094,969 $3,116,541 
Change from base$(136,108)$(94,876)$(49,055)$8,392 $32,663 $50,674 $72,246 
% change from base(4.47)%(3.12)%(1.61)%0.28 %1.07 %1.66 %2.37 %
Immediate Rate DecreaseImmediate Rate Increase
-300
Basis Points		-200
Basis Points		-100
Basis Points		Base+100
Basis Points		+200
Basis Points		+300
Basis Points
March 31, 2023
Projected interest income:
Money market, other
  interest earning
  investments, and
  investment securities		$638,159 $668,554 $711,908 $764,597 $815,964 $866,973 $918,430 
Loans2,516,865 2,868,902 3,220,937 3,569,373 3,908,901 4,247,694 4,586,338 
Total interest
   income		3,155,024 3,537,456 3,932,845 4,333,970 4,724,865 5,114,667 5,504,768 
Projected interest expense:
Deposits347,614 520,021 699,243 879,315 1,063,942 1,248,569 1,433,196 
Borrowings333,258 441,566 539,054 636,325 736,439 836,612 936,862 
Total interest
   expense		680,872 961,587 1,238,297 1,515,640 1,800,381 2,085,181 2,370,058 
Net interest
   income		$2,474,152 $2,575,869 $2,694,548 $2,818,330 $2,924,484 $3,029,486 $3,134,710 
Change from base$(344,178)$(242,461)$(123,782)$106,154 $211,156 $316,380 
% change from base(12.21)%(8.60)%(4.39)%3.77 %7.49 %11.23 %
Our projected net interest income increased year over year due to loan growth and rising interest rates.
A key element in the measurement and modeling of interest rate risk is the re-pricing assumptions of our transaction deposit accounts, which have no contractual maturity dates. Because the models are driven by expected behavior in various interest rate scenarios and many factors besides market interest rates affect our net interest income, we recognize that model outputs are not guarantees of actual results. For this reason, we model many different combinations of interest rates and balance sheet assumptions to understand our overall sensitivity to market interest rate changes, including shocks, ramps, yield curve flattening, yield curve steepening, as well as forecasts of likely interest rate scenarios tested.
We use cash flow and fair value hedges, primarily interest rate swaps, collars, and floors, to mitigate interest rate risk. Derivatives designated as hedging instruments were in a net liability position with a fair value loss of $12.4 million at March 31, 2024, compared to a net asset position with a fair value gain of $4.5 million at
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December 31, 2023. See Note 15 to the consolidated financial statements for further discussion of derivative financial instruments.
Liquidity Risk
Liquidity risk arises from the possibility that we may not be able to satisfy current or future financial commitments or may become unduly reliant on alternative funding sources. We establish liquidity risk guidelines that we review with the Enterprise Risk Committee of our Board of Directors and monitor through our Asset/Liability Executive Management Committee. The objective of liquidity management is to ensure we have the ability to fund balance sheet growth and meet deposit and debt obligations in a timely and cost-effective manner. Management monitors liquidity through a regular review of asset and liability maturities, funding sources, and loan and deposit forecasts. We maintain strategic and contingency liquidity plans to ensure sufficient available funding to satisfy requirements for balance sheet growth, to properly manage capital markets’ funding sources, and to address unexpected liquidity requirements. On May 31, 2023, we filed an automatic shelf registration statement with the SEC that permits us to issue an unspecified amount of debt or equity securities.
Loan repayments and maturing investment securities are a relatively predictable source of funds. However, deposit flows, calls of investment securities, and prepayments of loans and mortgage-related securities are not as predictable as they are strongly influenced by interest rates, events at other banking organizations, the housing market, general and local economic conditions, and competition in the marketplace. We continually monitor marketplace trends to identify patterns that might improve the predictability of the timing of deposit flows or asset prepayments.
A maturity schedule for Old National Bank’s time deposits is shown in the following table at March 31, 2024.
(dollars in thousands)
Maturity BucketAmountRate
2024$4,898,915 4.54 %
2025906,669 3.85 
202681,108 1.49 
202738,107 0.97 
202814,494 1.48 
2027 and beyond11,541 1.40 
Total$5,950,834 4.35 %
Our ability to acquire funding at competitive prices is influenced by rating agencies’ views of our credit quality, liquidity, capital, and earnings.
The credit ratings of Old National and Old National Bank at March 31, 2024 are shown in the following table.
 Moody’s Investors Service
 Long-termShort-term
Old NationalBaa1N/A
Old National BankA1P-1
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Old National Bank maintains relationships in capital markets with brokers and dealers to issue certificates of deposit and short-term and medium-term bank notes as well. At March 31, 2024, Old National and its subsidiaries had the following availability of liquid funds and borrowings:
(dollars in thousands)Parent CompanySubsidiaries
Available liquid funds:
Cash and due from banks$313,936 $625,563 
Unencumbered government-issued debt securities— 924,475 
Unencumbered investment grade municipal securities— 79,479 
Unencumbered corporate securities— 35,884 
Availability of borrowings*:
Amount available from Federal Reserve discount window— 5,049,450 
Amount available from Federal Home Loan Bank— 6,966,263 
Total available funds$313,936 $13,681,114 
* Based on collateral pledged
Old National Bancorp has routine funding requirements consisting primarily of operating expenses, dividends to shareholders, debt service, net derivative cash flows, and funds used for acquisitions. Old National Bancorp can obtain funding to meet its obligations from dividends and management fees collected from its subsidiaries, operating line of credit, and through the issuance of debt securities. Additionally, Old National Bancorp has a shelf registration in place with the SEC permitting ready access to the public debt and equity markets. At March 31, 2024, Old National Bancorp’s other borrowings outstanding were $478.5 million. Management believes the Company has the ability to generate and obtain adequate amounts of liquidity to meet its requirements in the short-term and the long-term.
Federal banking laws regulate the amount of dividends that may be paid by Old National Bank to Old National Bancorp on an unconsolidated basis without obtaining prior regulatory approval. Prior regulatory approval is required if dividends to be declared in any year would exceed net earnings of the current year plus retained net profits for the preceding two years. Prior regulatory approval to pay dividends was not required in 2023 and is not currently required.
CRITICAL ACCOUNTING ESTIMATES
Our most significant accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. Certain of these accounting policies require management to use significant judgment and estimates, which can have a material impact on the carrying value of certain assets and liabilities. We consider these policies to be our critical accounting estimates. The judgment and assumptions made are based upon historical experience, future forecasts, or other factors that management believes to be reasonable under the circumstances. Because of the nature of the judgment and assumptions, actual results could differ from estimates, which could have a material effect on our financial condition and results of operations.
For additional information regarding critical accounting estimates, see the section titled “Critical Accounting Estimates” included in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes in the Company’s application of critical accounting estimates since December 31, 2023.
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk and Liquidity Risk.
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ITEM 4.  CONTROLS AND PROCEDURES
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Evaluation of Disclosure Controls and Procedures. Old National’s principal executive officer and principal financial officer have concluded that Old National’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended), based on their evaluation of these controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q, are effective at the reasonable assurance level as discussed below to ensure that information required to be disclosed by Old National in the reports it files under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to Old National’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Limitations on the Effectiveness of Controls. Management, including the principal executive officer and principal financial officer, does not expect that Old National’s disclosure controls and internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be only reasonable assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, the system of controls may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Control over Financial Reporting. There were no changes in Old National’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, Old National’s internal control over financial reporting.
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PART II
OTHER INFORMATION
ITEM 1A.  RISK FACTORS
There have been no material changes from the risk factors disclosed in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c)ISSUER PURCHASES OF EQUITY SECURITIES
Period
Total
Number
of Shares
Purchased (1)
Average
Price
Paid Per
Share
Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans
or Programs (2)
Maximum
Dollar Value of
Shares that
May Yet
Be Purchased
Under the Plans
or Programs (2)
01/01/24 - 01/31/241,208 $16.91 — $170,476,849 
02/01/24 - 02/29/24229,379 $16.53 — $200,000,000 
03/01/24 - 03/31/24203,382 $16.56 — $200,000,000 
Total433,969 $16.55 — $200,000,000 
(1)Consists of shares acquired pursuant to the Company’s share-based incentive programs. Under the terms of the Company’s share-based incentive programs, the Company accepts previously owned shares of common stock surrendered to satisfy tax withholding obligations associated with the vesting of restricted stock or performance shares earned.
(2)On February 21, 2024, the Company’s Board of Directors approved a stock repurchase program, under which the Company is authorized to repurchase up to $200 million of its outstanding common stock through February 28, 2025. This stock repurchase program replaced the prior $200 million program that expired on February 29, 2024.
ITEM 5.  OTHER INFORMATION
(a)None
(b)There have been no material changes in the procedure by which security holders recommend nominees to the Company’s board of directors.
(c)During the three months ended March 31, 2024, no director or Section 16 officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.
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ITEM 6.  EXHIBITS
Exhibit No.
 Description
2.1 
3.1 
3.2 
3.3 
3.4 
3.5  
31.1  
31.2  
32.1  
32.2  
101  
The following materials from Old National’s Form 10-Q Report for the quarterly period ended March 31, 2024, formatted in inline XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.
104  
The cover page from Old National’s Form 10-Q Report for the quarterly period ended March 31, 2024, formatted in inline XBRL and contained in Exhibit 101.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
  OLD NATIONAL BANCORP
  (Registrant)
   
By: /s/  John V. Moran, IV
  John V. Moran, IV
  Executive Vice President, Interim Chief Financial Officer,
and Chief Strategy Officer
  Duly Authorized Officer and Principal Financial Officer
   
  
Date:  May 1, 2024

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