ONB
$18.32
Old National Bncp
($.66)
(3.48%)
Earnings Details
3rd Quarter September 2021
Tuesday, October 19, 2021 8:00:00 AM
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Summary

Old National Bncp (ONB) Recent Earnings

Old National Bncp (ONB) reported 3rd Quarter September 2021 earnings of $0.43 per share on revenue of $216.5 million. The consensus earnings estimate was $0.35 per share on revenue of $202.0 million. Revenue fell 3.7% compared to the same quarter a year ago.

Old National Bancorp is a financial holding company. It provides commercial and consumer loan and depository services, investment and brokerage services, lease financing and other traditional banking services.

Results
Reported Earnings
$0.43
Earnings Whisper
-
Consensus Estimate
$0.35
Reported Revenue
$216.5 Mil
Revenue Estimate
$202.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Old National's strong 3rd quarter driven by commercial loan growth of 7% annualized

EVANSVILLE, Ind., Oct. 19, 2021 (GLOBE NEWSWIRE) --  

Old National Bancorp (NASDAQ: ONB) reports 3Q21 net income of $71.7 million, diluted EPS of $0.43.
Adjusted1 net income of $71.8 million, or $0.43 per diluted share.

CEO COMMENTARY:

"Old National's excellent 3rd quarter results were driven by multiple success factors, including strong commercial loan growth, good deposit growth, increased fee income, reduced expenses and strong credit metrics," said Chairman and CEO Jim Ryan. "In addition, we continued to make smooth, steady progress throughout the quarter on activities related to our merger of equals with First Midwest Bank, which we expect to be completed as soon as we receive Federal Reserve approval. As previously disclosed, we have already received approval from the OCC."

THIRD QUARTER HIGHLIGHTS2:

Net income

  • Net income of $71.7 million
  • Earnings per diluted share of $0.43
  
Net interest
income/NIM


  • Net interest income on a fully taxable equivalent basis of $155.1 million compared to $153.4 million
  • Net interest margin on a fully taxable equivalent basis of 2.92% compared to 2.91%
  
Operating
Performance










  • Pre-provision net revenue1 (“PPNR”) of $88.3 million
  • Adjusted PPNR1 of $90.2 million
  • Noninterest expense of $121.3 million
  • Adjusted noninterest expense1 of $118.2 million
  • Efficiency ratio1 of 56.86%
  • Adjusted efficiency ratio1 of 55.38%
  
Loans and Credit Quality













  • End-of-period total loans3 of $13,636.1 million compared to $13,834.8 million
    • Total commercial loans increased $171.7 million, excluding the $366.1 million decrease in PPP loans

  • Third-quarter total commercial production of $1.0 billion
  • Provision for credit losses was a recapture of $4.6 million
  • September 30 pipeline of $2.7 billion
  • Net recoveries of $3.0 million compared to net recoveries of $336 thousand
  • Non-performing loans of 0.94% of total loans compared to 1.03%
 
Return Profile & Capital





  • Return on average common equity of 9.48%
  • Return on average tangible common equity1 of 15.13%
  • Adjusted return on average tangible common equity1 of 15.16%
  • No shares of common stock were repurchased during the current quarter
  
Notable Items

  • $1.7 million in tax credit amortization
  • $1.4 million in merger charges

1 Non-GAAP financial measure that Management believes is useful in evaluating the financial results of the Company – please refer to the Non GAAP reconciliations contained in this release 2 Comparisons are on a linked-quarter basis, unless otherwise noted 3 Includes loans held for sale

RESULTS OF OPERATIONS
Old National Bancorp ("Old National") reported third quarter 2021 net income of $71.7 million, or $0.43 per diluted share.

Included in the third quarter were pre-tax charges of $1.4 million for the pending merger with First Midwest Bancorp, Inc. Excluding these charges from the current quarter and netting out debt securities gains, adjusted net income was $71.8 million, or $0.43 per diluted share.

LOANS
Strong commercial production results in over 7% annualized commercial loan growth.

  • Period-end total loans were $13,636.1 million at September 30, 2021, a decrease of $198.7 million, or 5.7% annualized, when compared to the $13,834.8 million at June 30, 2021.
  • Paycheck Protection Program (PPP) loans declined $366.1 million to $354.9 million at September 30, 2021, compared to $721.1 million at June 30, 2021.
  • Excluding the $366.1 million decrease in PPP loans during the quarter, total loans increased $167.5 million, or 5.1% annualized.
  • Excluding PPP loans, total commercial loans increased $171.7 million, or 7.4% annualized.
  • Total commercial loan production in the third quarter was $1.0 billion; period-end pipeline totaled $2.7 billion.
  • Consumer loans decreased $15.1 million to $1,564.2 million and residential mortgage loans increased $9.7 million to $2,224.8 million.
  • Average total loans in the third quarter were $13,687.3 million, a decrease of $308.0 million from the second quarter of 2021.
  • Excluding PPP loans, average total loans in the third quarter increased $185.8 million from the second quarter of 2021.

DEPOSITS
Total deposit growth bolstered by strong increase in noninterest-bearing demand deposits.

  • Period-end total deposits were $18,196.1 million at September 30, 2021, an increase of $327.2 million, or 7.3% annualized, when compared to the $17,868.9 million at June 30, 2021.
  • Noninterest-bearing deposits increased $297.8 million to $6,440.5 million at September 30, 2021 from $6,142.7 million at June 30, 2021.
  • On average, total deposits in the third quarter increased $122.9 million to $17,976.0 million, compared to $17,853.1 million in the second quarter of 2021.

NET INTEREST INCOME AND MARGIN
Net interest income and margin both increase as funding costs stabilize.

  • Net interest income increased to $151.6 million in the third quarter of 2021 compared to $149.9 million in the second quarter of 2021.
  • The net interest margin on a fully taxable equivalent basis increased 1 basis point to 2.92% compared to 2.91% in the second quarter of 2021.
  • PPP interest and net fees combined were $12.2 million, or 16 basis points of net interest margin, in the third quarter of 2021 compared to $11.9 million, or 9 basis points of net interest margin, in the second quarter of 2021.
  • Accretion income was $3.0 million, or 6 basis points of net interest margin, in the third quarter of 2021 compared to $5.1 million, or 10 basis points of net interest margin, in the second quarter of 2021.
  • Interest collected on nonaccrual loans was $2.3 million, or 4 basis points of net interest margin, in the third quarter of 2021 compared to $1.2 million, or 2 basis points of net interest margin, in the second quarter of 2021.
  • The cost of total deposits remained unchanged at 0.06% in the third quarter of 2021 and the cost of total interest-bearing deposits also remained unchanged at 0.09%.

CREDIT QUALITY
Strong credit quality remains a hallmark of the Old National franchise.

  • Old National recorded a provision recapture in the third quarter of 2021 of $4.6 million, compared to $4.9 million in provision recapture recorded in the second quarter of 2021.
  • Net recoveries in the third quarter were $3.0 million, compared to net recoveries of $336 thousand in the second quarter of 2021.
  • 30-89 day delinquencies were 0.10% at the end of the third quarter.
  • Non-performing loans decreased as a percentage of total loans to 0.94%.
  • Loans acquired from previous acquisitions were recorded at fair value at the acquisition date. As of September 30, 2021, the remaining discount on these acquired loans was $37.7 million.
  • The allowance for credit losses stood at $107.9 million, or 0.79% of total loans at September 30, 2021.

NONINTEREST INCOME
Noninterest income increased primarily due to higher mortgage banking revenue.

  • Total noninterest income for the third quarter of 2021 was $54.5 million, an increase of $3.0 million from the second quarter of 2021.
  • Mortgage banking revenue increased $3.0 million when compared to the second quarter of 2021, due primarily to a stabilizing pipeline valuation.
  • Gains on sales of debt securities increased $0.5 million when compared to the second quarter of 2021.

NONINTEREST EXPENSE
Decline in third quarter expenses due to reductions in personnel and occupancy expenses.

  • Noninterest expense for the third quarter of 2021 was $121.3 million and included $1.4 million in diligence, integration and merger charges and $1.7 million in tax credit amortization.
  • Excluding these items, adjusted noninterest expense for the third quarter was $118.2 million, compared to the $120.9 million in adjusted noninterest expense in the second quarter of 2021.
  • The third quarter efficiency ratio was 56.86%, while the adjusted efficiency ratio was 55.38%.

INCOME TAXES

  • On a fully taxable-equivalent basis, income tax expense in the third quarter was $21.2 million, resulting in a 22.8% FTE tax rate, compared to 21.7% in the second quarter of 2021.
  • Income tax expense included $1.5 million in tax credit benefit.

CAPITAL AND LIQUIDITY
Capital ratios remain strong.

  • At the end of the third quarter, preliminary total risk-based capital was 12.84% and preliminary regulatory tier 1 capital was 12.08%.
  • Tangible common equity to tangible assets was 8.55% at the end of the third quarter compared to 8.47% in the second quarter of 2021.
  • The Company did not repurchase any shares of common stock during the third quarter.
  • A low loan to deposit ratio of 74.9%, combined with existing funding sources plus available unencumbered, high-quality collateral, provides strong liquidity.

NON-GAAP RECONCILIATIONS

($ in millions, except EPS, shares in 000s)3Q21Adjustments4Adjusted 3Q21
Total Revenues (FTE)$209.6   $(1.2) $208.4   
Less: Provision for Credit Losses4.6   —   4.6   
Less: Noninterest Expenses(121.3) 1.4   (119.9) 
Income before Income Taxes (FTE)$92.9   $0.2   $93.1   
Income Taxes (FTE)(21.2) (0.1) (21.3) 
Net Income$71.7   $0.1   $71.8   
Average Shares Outstanding165,939   —   165,939   
Earnings Per Share - Diluted$0.43   $—   $0.43   

4 Tax-effect calculations use the current statutory FTE tax rates (federal + state)

($ in millions)3Q212Q21
Net Interest Income$151.6   $149.9   
Add: FTE Adjustment3.5   3.5   
Net Interest Income (FTE)$155.1   $153.4   
Average Earning Assets$21,228.6   $21,095.3   
Net Interest Margin (FTE)2.92 % 2.91 % 


($ in millions)3Q213Q20
Net Interest Income$151.6  $145.6  
Add: FTE Adjustment3.5  3.4  
Net Interest Income (FTE)$155.1  $149.0  
Add: Total Noninterest Income54.5  64.7  
Less: Noninterest Expense121.3  120.2  
Pre-Provision Net Revenue$88.3  $93.5  
Less: Debt Securities Gains/Losses(1.2) (4.9) 
Add: Diligence, Acquisition and Integration Charges1.4    
Add: ONB Way Charges  2.9  
Add: Amortization of Tax Credit Investments1.7  3.1  
Adjusted Pre-Provision Net Revenue$90.2  $94.6  


($ in millions)3Q212Q213Q20
Noninterest Expense$121.3  $129.6  $120.2  
Less: ONB Way Charges  (0.4) (2.9) 
Less: Diligence, Acquisition and Integration Charges(1.4) (6.5)   
Noninterest Expense less Charges$119.9  $122.7  $117.3  
Less: Amortization of Tax Credit Investments(1.7) (1.8) (3.1) 
Adjusted Noninterest Expense$118.2  $120.9  $114.2  
Less: Intangible Amortization(2.8) (2.9) (3.4) 
Adjusted Noninterest Expense Less Intangible Amortization$115.4  $118.0  $110.8  
Net Interest Income$151.6  $149.9  $145.6  
FTE Adjustment3.5  3.5  3.4  
Net Interest Income (FTE)$155.1  $153.4  $149.0  
Total Noninterest Income54.5  51.5  64.7  
Total Revenue (FTE)$209.6  $204.9  $213.7  
Less: Debt Securities Gains/Losses(1.2) (0.7) (4.9) 
Adjusted Total Revenue (FTE)$208.4  $204.2  $208.8  
Efficiency Ratio56.86 %62.05 %55.93 %
Adjusted Efficiency Ratio55.38 %57.74 %53.06 %

                

($ in millions)3Q212Q21
Net Income$71.7  $62.8  
Add: Intangible Amortization (net of tax5)2.1  2.2  
Tangible Net Income$73.8  $65.0  
Less: Securities Gains/Losses (net of tax5)(0.9) (0.5) 
Add: Diligence, Acquisition and Integration Charges (net of tax5)1.1  4.9  
Add: ONB Way Charges (net of tax5)  0.3  
Adjusted Tangible Net Income$74.0  $69.7  
Average Total Shareholders’ Equity3,027.9  2,992.7  
Less: Average Goodwill(1,037.0) (1,037.0) 
Less: Average Intangibles(38.6) (41.4) 
Average Tangible Shareholders’ Equity$1,952.3  $1,914.3  
Return on Average Tangible Common Equity15.13 %13.58 %
Adjusted Return on Average Tangible Common Equity15.16 %14.56 %

5 Tax-effect calculations use the current statutory FTE tax rates (federal + state)

CONFERENCE CALL AND WEBCAST
Old National will host a conference call and live webcast at 9:00 a.m. Central Time on Tuesday, October 19, 2021, to review third-quarter 2021 financial results. The live audio webcast link and corresponding presentation slides will be available on the Company’s Investor Relations web page at oldnational.com and will be archived there for 12 months. To listen to the live conference call, dial U.S. (877) 660-9071 or International (929) 517-9523, Conference I.D. 4242648. A replay of the call will also be available from Noon Central Time on October 19 through November 2. To access the replay, dial (855) 859-2056, Conference ID Code 4242648.

ABOUT OLD NATIONAL
Old National Bancorp (NASDAQ: ONB), the holding company of Old National Bank, is the largest bank holding company headquartered in Indiana. With $24.0 billion in assets, it ranks among the top 100 banking companies in the U.S. and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for ten consecutive years.  Since its founding in Evansville in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships and keeping our clients at the center of all we do. This is an approach to business that we call The ONB Way. Today, Old National’s footprint includes Indiana, Kentucky, Michigan, Minnesota and Wisconsin. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investment and capital market services. For more information and financial data, please visit Investor Relations at oldnational.com.

USE OF NON-GAAP FINANCIAL MEASURES
This earnings release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Old National’s results of operations or financial position. 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 tables of this release.

FORWARD-LOOKING STATEMENTS
This communication includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to Old National’s future plans, objectives, performance, revenues, growth, profits, operating expenses or Old National’s underlying assumptions; First Midwest’s and Old National’s beliefs, goals, intentions, and expectations regarding the proposed transaction, revenues, earnings, loan production, asset quality, and capital levels, among other matters; our estimates of future costs and benefits of the actions we may take; our assessments of expected losses on loans; our assessments of interest rate and other market risks; our ability to achieve our financial and other strategic goals; the expected timing of completion of the proposed transaction; the expected cost savings, synergies and other anticipated benefits from the proposed transaction; and other statements that are not historical facts.

Forward-looking statements are typically identified by such words as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “should,” “will,” and other similar words and expressions, and are subject to numerous assumptions, risks, and uncertainties, which change over time. These forward-looking statements include, without limitation, those relating to the terms, timing and closing of the proposed transaction.

Additionally, forward-looking statements speak only as of the date they are made; Old National does not assume any duty, and does not undertake, to update such forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise. Furthermore, because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those indicated in such forward-looking statements as a result of a variety of factors, many of which are beyond the control of Old National. Such statements are based upon the current beliefs and expectations of the management of Old National and are subject to significant risks and uncertainties outside of the control of the parties. Caution should be exercised against placing undue reliance on forward-looking statements. The factors that could cause actual results to differ materially include the following: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between First Midwest and Old National; the outcome of any legal proceedings that may be instituted against First Midwest or Old National; the possibility that the proposed transaction will not close when expected or at all because required regulatory or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated (and the risk that required regulatory approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction); the ability of First Midwest and Old National to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of either or both parties to the proposed transaction; the possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where First Midwest and Old National do business; certain restrictions during the pendency of the proposed transaction that may impact the parties’ ability to pursue certain business opportunities or strategic transactions; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management’s attention from ongoing business operations and opportunities; the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes or at all and to successfully integrate First Midwest’s operations and those of Old National; such integration may be more difficult, time consuming or costly than expected; revenues following the proposed transaction may be lower than expected; First Midwest’s and Old National’s success in executing their respective business plans and strategies and managing the risks involved in the foregoing; the dilution caused by Old National’s issuance of additional shares of its capital stock in connection with the proposed transaction; effects of the announcement, pendency or completion of the proposed transaction on the ability of First Midwest and Old National to retain customers and retain and hire key personnel and maintain relationships with their suppliers, and on their operating results and businesses generally; risks related to the potential impact of general economic, political and market factors on the companies or the proposed transaction and other factors that may affect future results of First Midwest and Old National; uncertainty as to the extent of the duration, scope, and impacts of the COVID-19 pandemic on First Midwest, Old National and the proposed transaction; and the other factors discussed in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of each of First Midwest’s and Old National’s Annual Report on Form 10-K for the year ended December 31, 2020, in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of each of First Midwest’s and Old National’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, and in other reports First Midwest and Old National file with the U.S. Securities and Exchange Commission (the “SEC”).

       
Financial Highlights (unaudited)
($ and shares in thousands, except per share data)
       
 Three Months Ended Nine Months Ended
 September 30,June 30,September 30, September 30,September 30,
 202120212020 20212020
Income Statement      
Net interest income$151,572  $149,927  $145,573   $449,619  $435,015 
Tax equivalent adjustment (1)3,501  3,470  3,379   10,471  10,069 
Net interest income - tax equivalent basis155,073  153,397  148,952   460,090  445,084 
Provision for credit losses(4,613) (4,929)    (26,898) 39,495 
Noninterest income54,515  51,508  64,759   162,735  180,722 
Noninterest expense121,274  129,618  120,234   368,632  399,099 
Net income71,746  62,786  77,944   221,350  152,289 
                     
                     
Per Common Share Data                    
Weighted average diluted shares165,939  165,934  165,419   165,862  166,370 
Net income (diluted)$0.43  $0.38  $0.47   $1.33  $0.92 
Cash dividends0.14  0.14  0.14   0.42  0.42 
Common dividend payout ratio (2)33 %37 %30 % 31 %46%
Book value$18.31  $18.05  $17.67   $18.31  $17.67 
Stock price16.95  17.61  12.56   16.95  12.56 
Tangible common book value (3)11.83  11.55  11.10   11.83  11.10 
                     
                     
Performance Ratios                    
Return on average assets1.20 %1.06 %1.40 % 1.25 %0.95%
Return on average common equity9.48 %8.39 %10.79 % 9.85 %7.11%
Return on tangible common equity (3)15.05 %13.58 %17.56 % 15.49 %11.66%
Return on average tangible common equity (3)15.13 %13.58 %17.88 % 15.84 %12.12%
Net interest margin (FTE)2.92 %2.91 %3.03 % 2.92 %3.15%
Efficiency ratio (4)56.86 %62.05 %55.93 % 58.14 %63.11%
Net charge-offs (recoveries) to average loans(0.09)%(0.01)%(0.09)% (0.03)%0.04%
Allowance for credit losses to ending loans0.79 %0.79 %0.95 % 0.79 %0.95%
Non-performing loans to ending loans0.94 %1.03 %1.15 % 0.94 %1.15%
                     
                     
Balance Sheet (EOP)                    
Total loans$13,584,828  $13,784,677  $13,892,509   $13,584,828   $13,892,509 
Total assets 24,018,733   23,675,666   22,460,476    24,018,733   22,460,476 
Total deposits 18,196,149   17,868,911   16,506,494    18,196,149   16,506,494 
Total borrowed funds 2,536,303   2,559,113   2,725,731    2,536,303   2,725,731 
Total shareholders' equity 3,035,892   2,991,118   2,921,149    3,035,892   2,921,149 
                     
                  
Capital Ratios (3)                 
Risk-based capital ratios (EOP):                 
Tier 1 common equity12.08 %11.95 %11.84 % 12.08 %11.84%
Tier 112.08 %11.95 %11.84 % 12.08 %11.84%
Total12.84 %12.73 %12.81 % 12.84 %12.81%
Leverage ratio (to average assets)8.54 %8.38 %8.15 % 8.54 %8.15%
                
Total equity to assets (averages)12.69 %12.61 %12.97 % 12.69 %13.33%
Tangible common equity to tangible assets8.55 %8.47 %8.58 % 8.55 %8.58%
          
                     
Nonfinancial Data                    
Full-time equivalent employees 2,410   2,465   2,484    2,410   2,484 
Banking centers 162   162   162    162   162 
                  
(1) Calculated using the federal statutory tax rate in effect of 21% for all periods.         
(2) Cash dividends per share divided by net income per share (basic). 
(3) Represents a non-GAAP financial measure. Refer the "Non-GAAP Measures" table for reconciliations to GAAP financial measures. 
September 30, 2021 capital ratios are preliminary.      
(4) Efficiency ratio is defined as noninterest expense before amortization of intangibles as a percent of FTE net interest income and 
noninterest revenues, excluding net gains from debt securities transactions. This presentation excludes amortization of intangibles
and net debt securities gains, as is common in other company releases, and better aligns with true operating performance. 
FTE - Fully taxable equivalent basis      EOP - End of period actual balances 


       
Income Statement (unaudited)
($ and shares in thousands, except per share data)
       
 Three Months Ended Nine Months Ended
 September 30,June 30,September 30, September 30,September 30,
 202120212020 20212020
Interest income$162,026  $160,458  $160,086  $481,721  $490,059 
Less: interest expense10,454  10,531  14,513  32,102  55,044 
Net interest income151,572  149,927  145,573  449,619  435,015 
Provision for credit losses(4,613) (4,929)   (26,898) 39,495 
Net interest income after provision for credit losses156,185  154,856  145,573  476,517  395,520 
Wealth management fees10,134  10,734  9,239  30,576  27,547 
Service charges on deposit accounts8,926  8,514  8,698  25,564  26,357 
Debit card and ATM fees4,942  5,583  5,276  15,668  15,106 
Mortgage banking revenue10,870  7,827  18,110  35,222  46,542 
Investment product fees6,475  6,042  5,351  18,381  16,070 
Capital markets income6,017  5,871  5,428  15,603  15,935 
Company-owned life insurance2,355  2,783  2,830  7,852  8,878 
Other income3,589  3,462  4,906  9,977  13,681 
Gains (losses) on sales of debt securities1,207  692  4,921  3,892  10,606 
Total noninterest income54,515  51,508  64,759  162,735  180,722 
Salaries and employee benefits71,005  72,640  69,860  211,762  215,589 
Occupancy12,757  14,054  13,930  41,683  42,308 
Equipment3,756  4,506  3,754  12,231  12,912 
Marketing3,267  2,632  2,140  7,961  7,632 
Data processing11,508  11,697  9,628  35,558  28,724 
Communication2,372  2,411  2,241  7,661  7,335 
Professional fees3,416  8,528  3,083  14,668  10,921 
FDIC assessment1,628  1,226  1,319  4,461  4,942 
Amortization of intangibles2,779  2,909  3,459  8,763  10,847 
Amortization of tax credit investments1,736  1,813  3,115  4,751  8,917 
Other expense7,050  7,202  7,705  19,133  48,972 
Total noninterest expense121,274  129,618  120,234  368,632  399,099 
Income before income taxes89,426  76,746  90,098  270,620  177,143 
Income tax expense17,680  13,960  12,154  49,270  24,854 
Net income$71,746  $62,786  $77,944  $221,350  $152,289 
                    
Diluted Earnings Per Share                    
Net income$0.43  $0.38  $0.47  $1.33  $0.92 
                    
Average Common Shares Outstanding                   
Basic 165,258   165,175   164,773   165,144   165,748 
Diluted 165,939   165,934   165,419   165,862   166,370 
                    
Common shares outstanding at end of period 165,814   165,732   165,333   165,814   165,333 


 
Balance Sheet (unaudited)
($ in thousands)
 September 30, June 30, September 30,
 2021 2021 2020
Assets     
Federal Reserve Bank account$600,581  $287,446  $87,682 
Money market investments16,294  15,294  13,437 
Investments:     
Treasury and government-sponsored agencies1,803,273  1,657,079  501,771 
Mortgage-backed securities3,354,701  3,280,983  3,382,280 
States and political subdivisions1,609,283  1,567,931  1,426,495 
Other securities442,503  441,037  462,958 
Total investments7,209,760  6,947,030  5,773,504 
Loans held for sale, at fair value51,306  50,121  85,091 
Loans:     
Commercial3,505,183  3,802,943  4,264,568 
Commercial and agriculture real estate6,290,632  6,187,318  5,701,493 
Consumer:     
Home equity554,322  549,951  549,115 
Other consumer loans1,009,909  1,029,409  1,112,034 
Subtotal of commercial and consumer loans11,360,046  11,569,621  11,627,210 
Residential real estate2,224,782  2,215,056  2,265,299 
Total loans13,584,828  13,784,677  13,892,509 
Total earning assets21,462,769  21,084,568  19,852,223 
      
Allowance for credit losses(107,868) (109,444) (131,388)
Non-earning Assets:     
Cash and due from banks180,583  188,391  229,631 
Premises and equipment, net476,036  484,879  463,253 
Operating lease right-of-use assets69,912  72,207  77,482 
Goodwill and other intangible assets1,074,245  1,077,024  1,086,252 
Company-owned life insurance461,310  459,565  455,975 
Other assets401,746  418,476  427,048 
Total non-earning assets2,663,832  2,700,542  2,739,641 
Total assets$24,018,733  $23,675,666  $22,460,476 
      
Liabilities and Equity     
Noninterest-bearing demand deposits$6,440,526  $6,142,724  $5,463,007 
Interest-bearing:     
Checking and NOW accounts4,956,012  4,921,430  4,588,432 
Savings accounts3,708,807  3,675,701  3,287,302 
Money market accounts2,097,967  2,126,537  1,904,404 
Other time deposits992,837  1,002,519  1,206,658 
Total core deposits18,196,149  17,868,911  16,449,803 
Brokered deposits    56,691 
Total deposits18,196,149  17,868,911  16,506,494 
      
Federal funds purchased and interbank borrowings34  1,523  1,259 
Securities sold under agreements to repurchase375,247  396,129  399,141 
Federal Home Loan Bank advances1,890,054  1,891,143  2,087,648 
Other borrowings270,968  270,318  237,683 
Total borrowed funds2,536,303  2,559,113  2,725,731 
Operating lease liabilities76,771  81,333  88,552 
Accrued expenses and other liabilities173,618  175,191  218,550 
Total liabilities20,982,841  20,684,548  19,539,327 
Common stock, surplus, and retained earnings2,979,082  2,928,856  2,771,865 
Accumulated other comprehensive income (loss), net of tax56,810  62,262  149,284 
Total shareholders' equity3,035,892  2,991,118  2,921,149 
Total liabilities and shareholders' equity$24,018,733  $23,675,666  $22,460,476 


             
Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
             
             
  Three Months Ended Three Months Ended Three Months Ended
  September 30, 2021 June 30, 2021 September 30, 2020
  AverageIncome (1)/Yield/ AverageIncome (1)/Yield/ AverageIncome (1)/Yield/
Earning Assets: BalanceExpenseRate BalanceExpenseRate BalanceExpenseRate
Money market and other interest-earning            
investments $467,572  $177 0.15% $232,723  $48 0.08% $137,880  $59 0.17%
Investments:            
Treasury and government-sponsored agencies 1,730,553  6,968 1.61% 1,637,396  5,967 1.46% 454,005  2,457 2.17%
Mortgage-backed securities 3,313,027  14,509 1.75% 3,287,254  15,067 1.83% 3,342,284  17,478 2.09%
States and political subdivisions 1,586,743  12,609 3.18% 1,503,447  12,364 3.29% 1,383,765  11,860 3.43%
Other securities 443,393  2,638 2.38% 439,197  2,690 2.45% 487,405  2,922 2.40%
Total investments 7,073,716  36,724 2.08% 6,867,294  36,088 2.10% 5,667,459  34,717 2.45%
Loans: (2)            
Commercial 3,645,197  36,139 3.88% 4,019,553  34,715 3.42% 4,274,894  33,223 3.04%
Commercial and agriculture real estate 6,200,144  57,820 3.65% 6,146,057  57,655 3.71% 5,546,486  55,891 3.94%
Consumer:            
Home equity 549,229  4,448 3.21% 538,999  4,201 3.13% 551,380  4,336 3.13%
Other consumer loans 1,018,385  9,690 3.77% 1,034,439  9,747 3.78% 1,120,681  11,635 4.13%
Subtotal commercial and consumer loans 11,412,955  108,097 3.76% 11,739,048  106,318 3.63% 11,493,441  105,085 3.64%
Residential real estate loans 2,274,347  20,529 3.61% 2,256,215  21,474 3.81% 2,355,512  23,604 4.01%
             
Total loans 13,687,302  128,626 3.70% 13,995,263  127,792 3.62% 13,848,953  128,689 3.66%
             
Total earning assets $21,228,590  $165,527 3.08% $21,095,280  $163,928 3.09% $19,654,292  $163,465 3.29%
             
Less: Allowance for credit losses (111,216)    (117,020)    (132,447)   
             
Non-earning Assets:            
Cash and due from banks $272,855     $238,326     $346,343    
Other assets 2,479,079     2,520,937     2,405,517    
             
Total assets $23,869,308     $23,737,523     $22,273,705    
             
Interest-Bearing Liabilities:            
Checking and NOW accounts $4,873,914  $484 0.04% $4,948,773  $513 0.04% $4,607,427  $886 0.08%
Savings accounts 3,678,944  500 0.05% 3,647,952  492 0.05% 3,232,375  634 0.08%
Money market accounts 2,110,981  438 0.08% 2,081,286  433 0.08% 1,902,407  724 0.15%
Other time deposits 998,060  1,156 0.46% 1,024,777  1,293 0.51% 1,253,058  2,852 0.91%
Total interest-bearing core deposits 11,661,899  2,578 0.09% 11,702,788  2,731 0.09% 10,995,267  5,096 0.18%
Brokered deposits    0.00% 9,890  1 0.05% 150,545  201 0.53%
Total interest-bearing deposits 11,661,899  2,578 0.09% 11,712,678  2,732 0.09% 11,145,812  5,297 0.19%
             
Federal funds purchased and interbank borrowings 689   0.00% 1,460   0.02% 18,347  12 0.25%
Securities sold under agreements to repurchase 384,724  90 0.09% 406,251  95 0.09% 385,149  160 0.16%
Federal Home Loan Bank advances 1,890,916  5,326 1.12% 1,906,078  5,218 1.10% 2,021,468  6,709 1.32%
Other borrowings 270,597  2,460 3.64% 269,259  2,486 3.69% 237,811  2,335 3.93%
Total borrowed funds 2,546,926  7,876 1.23% 2,583,048  7,799 1.21% 2,662,775  9,216 1.38%
             
Total interest-bearing liabilities $14,208,825  $10,454 0.29% $14,295,726  $10,531 0.30% $13,808,587  $14,513 0.42%
             
Noninterest-Bearing Liabilities and Shareholders' Equity            
Demand deposits $6,314,100     $6,140,424     $5,291,037    
Other liabilities 318,448     308,680     284,536    
Shareholders' equity 3,027,935     2,992,693     2,889,545    
             
Total liabilities and shareholders' equity $23,869,308     $23,737,523     $22,273,705    
             
Net interest rate spread   2.79%   2.79%   2.87%
             
Net interest margin (FTE)   2.92%   2.91%   3.03%
             
FTE adjustment  $3,501    $3,470    $3,379  
             
(1) Interest income is reflected on a fully taxable equivalent basis (FTE). 
(2) Includes loans held for sale. 


         
Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
         
         
  Nine Months Ended Nine Months Ended
  September 30, 2021 September 30, 2020
  AverageIncome (1)/Yield/ AverageIncome (1)/Yield/
Earning Assets: BalanceExpenseRate BalanceExpenseRate
Money market and other interest-earning        
investments $357,151  $313 0.12% $94,149  $442 0.63%
Investments:        
Treasury and government-sponsored agencies 1,509,931  17,820 1.57% 513,055  9,187 2.39%
Mortgage-backed securities 3,304,200  45,408 1.83% 3,231,439  54,474 2.25%
States and political subdivisions 1,523,175  37,174 3.25% 1,317,136  35,026 3.55%
Other securities 445,298  8,071 2.42% 493,016  9,361 2.53%
Total investments $6,782,604  $108,473 2.13% $5,554,646  $108,048 2.59%
Loans: (2)        
Commercial 3,878,630  106,421 3.62% 3,745,803  94,005 3.30%
Commercial and agriculture real estate 6,109,795  171,221 3.70% 5,359,254  176,337 4.32%
Consumer:        
Home equity 544,111  12,801 3.15% 554,800  14,180 3.41%
Other consumer loans 1,037,038  29,613 3.82% 1,141,399  35,384 4.14%
Subtotal commercial and consumer loans 11,569,574  320,056 3.70% 10,801,256  319,906 3.96%
Residential real estate loans 2,268,142  63,350 3.72% 2,365,037  71,732 4.04%
         
Total loans 13,837,716  383,406 3.67% 13,166,293  391,638 3.93%
         
Total earning assets $20,977,471  $492,192 3.11% $18,815,088  $500,128 3.52%
         
Less: Allowance for credit losses (120,619)    (107,860)   
         
Non-earning Assets:        
Cash and due from banks $266,543     $322,318    
Other assets 2,495,512     2,392,893    
         
Total assets $23,618,907     $21,422,439    
         
Interest-Bearing Liabilities:        
Checking and NOW accounts $4,895,539  $1,608 0.04% $4,381,919  $4,820 0.15%
Savings accounts 3,608,078  1,479 0.05% 3,040,889  2,669 0.12%
Money market accounts 2,060,325  1,293 0.08% 1,843,902  4,141 0.30%
Other time deposits 1,034,389  4,058 0.52% 1,397,222  11,823 1.13%
Total interest-bearing core deposits 11,598,331  8,438 0.10% 10,663,932  23,453 0.29%
Brokered deposits 55,312  31 0.08% 101,112  940 1.24%
Total interest-bearing deposits 11,653,643  8,469 0.10% 10,765,044  24,393 0.30%
         
Federal funds purchased and interbank borrowings 1,096   0.00% 184,397  1,296 0.94%
Securities sold under agreements to repurchase 396,495  305 0.10% 355,039  729 0.27%
Federal Home Loan Bank advances 1,907,322  15,953 1.12% 2,043,617  21,321 1.39%
Other borrowings 267,650  7,375 3.67% 243,255  7,305 4.00%
Total borrowed funds 2,572,563  23,633 1.23% 2,826,308  30,651 1.45%
         
Total interest-bearing liabilities 14,226,206  32,102 0.30% 13,591,352  55,044 0.54%
         
Noninterest-Bearing Liabilities and Shareholders' Equity        
Demand deposits $6,072,310     $4,710,969    
Other liabilities 323,310     263,841    
Shareholders' equity 2,997,081     2,856,277    
         
Total liabilities and shareholders' equity $23,618,907     $21,422,439    
         
Net interest rate spread   2.81%   2.98%
         
Net interest margin (FTE)   2.92%   3.15%
         
FTE adjustment  $10,471    $10,069  
         
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.        


       
Asset Quality (EOP) (unaudited)
($ in thousands)
       
 Three Months Ended Nine Months Ended
 September 30,June 30,September 30, September 30,September 30,
 202120212020 20212020
       
Beginning allowance for credit losses$109,444  $114,037  $128,394   $131,388  $54,619  
Impact of adopting ASC 326 on 01/01/2020         41,347  
       
Provision for credit losses(4,613) (4,929)    (26,898) 39,495  
       
Gross charge-offs(1,215) (980) (4,169)  (3,765) (14,846) 
Gross recoveries4,252  1,316  7,163   7,143  10,773  
Net (charge-offs) recoveries3,037  336  2,994   3,378  (4,073) 
       
Ending allowance for credit losses$107,868  $109,444  $131,388   $107,868  $131,388  
       
Net charge-offs (recoveries) / average loans (1)(0.09)%(0.01)%(0.09)% (0.03)%0.04 %
       
Average loans outstanding (1)$13,675,436  $13,984,295  $13,827,019   $13,824,569  $13,150,805  
       
EOP loans outstanding (1)13,584,828  13,784,677  13,892,509   13,584,828  13,892,509  
       
Allowance for credit losses / EOP loans (1)0.79 %0.79 %0.95 % 0.79 %0.95 %
       
Underperforming Assets:      
Loans 90 Days and over (still accruing)$113  $9  $90   $113  $90  
       
Non-performing loans:      
Nonaccrual loans (2)111,586  128,268  137,611   111,586  137,611  
TDRs still accruing16,420  14,222  22,037   16,420  22,037  
Total non-performing loans128,006  142,490  159,648   128,006  159,648  
       
Foreclosed properties1,943  520  1,248   1,943  1,248  
       
Total underperforming assets$130,062  $143,019  $160,986   $130,062  $160,986  
       
Classified and Criticized Assets:      
Nonaccrual loans (2)111,586  128,268  137,611   111,586  137,611  
Substandard accruing loans164,192  160,995  189,524   164,192  189,524  
Loans 90 days and over (still accruing)113  9  90   113  90  
Total classified loans - "problem loans"$275,891  $289,272  $327,225   $275,891  $327,225  
       
Other classified assets4,300  4,305  3,860   4,300  3,860  
Criticized loans - "special mention loans"240,215  228,264  272,859   240,215  272,859  
       
Total classified and criticized assets$520,406  $521,841  $603,944   $520,406  $603,944  
       
Non-performing loans / EOP loans (1)0.94 %1.03 %1.15 % 0.94 %1.15 %
       
Allowance to non-performing loans84 %77 %82 % 84 %82 %
       
Under-performing assets / EOP loans (1)0.96 %1.04 %1.16 % 0.96 %1.16 %
       
EOP total assets$24,018,733  $23,675,666  $22,460,476   $24,018,733  $22,460,476  
       
Under-performing assets / EOP assets0.54 %0.60 %0.72 % 0.54 %0.72 %
       
EOP - End of period actual balances      
(1) Excludes loans held for sale.    
(2) Includes non-accruing TDRs totaling $12.8 million at September 30, 2021, $13.6 million at June 30, 2021, and $7.7 million at September 30, 2020.


       
Non-GAAP Measures (unaudited)
($ in thousands)
       
 Three Months Ended Nine Months Ended
 September 30,June 30,September 30, September 30,September 30,
 202120212020 20212020
Actual End of Period Balances      
GAAP shareholders' equity$3,035,892 $2,991,118 $2,921,149  $3,035,892 $2,921,149 
       
Deduct:      
Goodwill1,036,994 1,036,994 1,036,994  1,036,994 1,036,994 
Intangibles37,251 40,030 49,258  37,251 49,258 
 1,074,245 1,077,024 1,086,252  1,074,245 1,086,252 
       
Tangible shareholders' equity $1,961,647 $1,914,094 $1,834,897  $1,961,647 $1,834,897 
       
Average Balances      
GAAP shareholders' equity$3,027,935 $2,992,693 $2,889,545  $2,997,081 $2,856,277 
       
Deduct:      
Goodwill1,036,994 1,036,994 1,036,994  1,036,994 1,036,994 
Intangibles38,585 41,410 50,926  41,447 54,488 
 1,075,579 1,078,404 1,087,920  1,078,441 1,091,482 
       
Average tangible shareholders' equity $1,952,356 $1,914,289 $1,801,625  $1,918,640 $1,764,795 
       
Actual End of Period Balances      
GAAP assets$24,018,733 $23,675,666 $22,460,476  $24,018,733 $22,460,476 
       
Add:      
Trust overdrafts116 24 17  116 17 
       
Deduct:      
Goodwill1,036,994 1,036,994 1,036,994  1,036,994 1,036,994 
Intangibles37,251 40,030 49,258  37,251 49,258 
 1,074,245 1,077,024 1,086,252  1,074,245 1,086,252 
       
Tangible assets $22,944,604 $22,598,666 $21,374,241  $22,944,604 $21,374,241 
       
Risk-weighted assets (2)$16,227,070 $15,971,711 $14,770,750  $16,227,070 $14,770,750 
       
GAAP net income$71,746 $62,786 $77,944  $221,350 $152,289 
       
Add:      
Amortization of intangibles (net of tax)2,084 2,182 2,595  6,572 8,152 
       
Tangible net income$73,830 $64,968 $80,539  $227,922 $160,441 
       
Tangible Ratios       
Return on tangible common equity15.05%13.58%17.56% 15.49%11.66%
Return on average tangible common equity15.13%13.58%17.88% 15.84%12.12%
Return on tangible assets1.29%1.15%1.51% 1.32%1.00%
Tangible common equity to tangible assets8.55%8.47%8.58% 8.55%8.58%
Tangible common equity to risk-weighted assets (2)12.09%11.98%12.42% 12.09%12.42%
Tangible common book value (1)11.83 11.55 11.10  11.83 11.10 
       
Tangible common equity presentation includes other comprehensive income as is common in other company releases. 
(1) Tangible common shareholders' equity divided by common shares issued and outstanding at period-end. 
       
Tier 1 common equity (2)$1,960,340 $1,908,053 $1,748,150  $1,960,340 $1,748,150 
       
Risk-weighted assets (2)16,227,070 15,971,711 14,770,750  16,227,070 14,770,750 
       
Tier 1 common equity to risk-weighted assets (2)12.08%11.95%11.84% 12.08%11.84%
       
(2) September 30, 2021 figures are preliminary.      
       

Media: Kathy A. Schoettlin (812) 465-7269
Investors: Lynell J. Walton (812) 464-1366


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Source: Old National Bancorp