Old National Bancorp : Fourth Quarter 2024 Presentation

Published: 2025-01-21 07:29:04 ET ONB

4th Quarter 2024

Financial Review

January 21, 2025

Non-GAAP Financial Measures

The Company's accounting and reporting policies conform to U.S. generally accepted accounting principles ("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 investors 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 appendix to this financial review.

The Company presents EPS, the efficiency ratio, return on average common equity, return on average tangible common equity, and net income applicable to common shares, all adjusted for certain notable items. These items include merger-related charges associated with completed and pending acquisitions, separation expense, current expected credit loss ("CECL") Day 1 non-PCD provision expense, debt securities gains/losses, distribution of excess pension assets expense, FDIC special assessment expense, gain on sale of Visa Class B restricted shares, contract termination charges, 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 EPS, the efficiency ratio, return on average common equity, and return on average tangible common equity 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 Company presents adjusted noninterest expense, which excludes merger-related charges, separation expense, distribution of excess pension assets expense, FDIC special assessment expense, contract termination charges, Louisville expenses, property optimization charges, as well as adjusted noninterest income, which excludes debt securities gains/losses and the gain on sale of Visa Class B restricted shares and . Management believes that excluding these items from noninterest expense and noninterest income may be useful in assessing the Company's underlying operational performance as these items either do not pertain to its core business operations or their exclusion may facilitate better comparability between periods and for peer comparison purposes.

The tax-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 analysts and investors, 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 stockholders' equity and retain the effect of accumulated other comprehensive loss in stockholders' equity.

Although intended to enhance investors' 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 following reconciliations in the "Non-GAAP Reconciliations" section for details on the calculation of these measures to the extent presented herein.

Full-Year 2024 Highlights

Reported

Adjusted1

EPS

$1.68

$1.86

Net Income

$523

$578

Return on Average Assets

1.03%

1.14%

Return on Average TCE1

15.4%

16.9%

Efficiency Ratio1

55.9%

52.2%

Tangible common book value1

$11.91

Total Deposit Growth

9.6%

Total Cost of Deposits

213 bps

Total Loan2 Growth

10.0%

Highlights

Key Performance Drivers

• Disciplined expense management reflected in efficiency ratio1 of 55.9%; 52.2% adjusted1

• TBV1 up 8% YoY

• NCOs of 17 bps; 13 bps excluding PCD loans

$ in Millions, except per share data 1 Non-GAAP financial measure that management believes is useful in evaluating the financial results of the Company - see Appendix for Non-GAAP reconciliation 2 Includes loans held-for-sale

NCOs - net charge-offs PCD - purchased credit deteriorated TBV - tangible common book value YoY - Year-over-year TCE - tangible common equity

Fourth-Quarter 2024 Highlights

Reported

Adjusted1

EPS

$0.47

$0.49

Net Income

$150

$156

Return on Average Assets

1.14%

1.19%

Return on Average TCE1

16.4%

17.0%

Efficiency Ratio1

54.4%

51.8%

Tangible common book value1

$11.91

Total Deposit Growth

(0.2)%

(annualized)

Total Cost of Deposits

208 bps

Total Loan2 Growth

(1.6)%

(annualized)

Key Performance Drivers

NCOs - net charge-offs PCD - purchased credit deteriorated NIB - noninterest-bearing TCE - tangible common equity

Liquid, Well-Capitalized Balance Sheet

End of Period Balances

4Q24

3Q24

4Q23

% Change

4Q24 vs. 3Q24

4Q24 vs. 4Q23

Available-for-sale securities, at fair value

$7,458

$7,432

$6,713

11%

Held-to-maturity securities, at amortized cost

$2,955

$2,969

$3,013

(2)%

Total loans1

$36,320

$36,463

$33,024

10%

Total assets

$53,552

$53,602

$49,090

Total deposits

$40,824

$40,846

$37,235

10%

Borrowings

$5,412

$5,449

$5,331

(1)%

Total liabilities

$47,212

$47,235

$43,527

Shareholders' equity

$6,340

$6,367

$5,563

14%

CET1 capital to RWA2

11.38%

11.00%

10.70%

AOCI

$(746)

$(604)

$(739)

(24)%

(1)%

Tangible common book value3

$11.91

$11.97

$11.00

(1)%

Loans / Deposits

89%

Total loans1 and deposits CAGR of 8.0% since 2022, exceeding industry performance4

$ in millions 1 Includes loans held-for-sale 2 4Q24 figures are preliminary 3 Non-GAAP financial measure that management believes is useful

in evaluating the financial results of the Company - see Appendix for Non-GAAP reconciliation 4 Based on Federal Reserve Board H.8 data

CET1 - common equity Tier 1 RWA - risk-weighted assets AOCI - accumulated other comprehensive income

CAGR - compound annual growth rate

Earning Assets

Total Loans1

$36,463$36,320

$33,024

6.36%6.14%

6.06%

Total loans1

4Q23

3Q24

4Q24

• Growth of 10.0% YoY; 4.1% excl. CapStar

Loan Yields

Total Securities2

Securities

$10,870

$10,884

• Duration3 of 4.1, increased from 3.9 for 3Q24

$10,173

• 4Q24 new money yield of 5.30%

• Estimated NTM cash flows4 of ~$1.5 billion

3.63%

• High-quality portfolio

3.50%

- 78% U.S. treasuries and agency-backed

- 15% highly-rated municipals securities

3.46%

- 7% corporate and other

- All CMBSs are agency-backed

4Q23

3Q24

4Q24

Securities Yields

Peer-Leading Deposit Franchise

Period End Total Deposits

Key Performance Drivers

• Period end deposits stable;

$37.2

$40.8

$1.7

$40.8

$1.5

- Core deposits up 1.9% annualized

$1.0

$4.2

$4.0

- Includes normal seasonal patterns in public funds;

$3.6

$13.5

$14.9

$15.1

down ~$200 million

- Brokered deposits down $204 million

$19.1

$20.0

$20.2

• Total deposits growth of 9.6% YoY; 4.8% excl. CapStar

• NIB deposits represent 24% of core deposits

4Q23

3Q24

4Q24

• Spot rate of 1.93% on total deposits at December 31,

Retail

Commercial

Public

Brokered

2024

• 35% of total deposits are exception priced at an

average rate1 of 3.44% at December 31, 2024

• 4Q24 down-beta of 93% for exception priced deposits

Average Total Deposits

$37.2

$40.6

$41.1

$10.0

$9.4

$9.5

$31.2

$31.6

$27.2

2.53%

2.93%

2.71%

4Q23

3Q24

4Q24

IBNIB

Total Cost of Deposits

Quarter

Month

3.77%

4.17%

4.29%

4.37%

4.27%

3.92%

3.44%

3.92%

3.69%

3.44%

1.15%

1.61%

1.85%

2.01%

2.16%

2.25%

2.08%

2.17%

2.09%

1.99%

2Q23

3Q23

4Q23

1Q24

2Q24

3Q24

4Q24

Oct. '24

Nov. '24

Dec. '24

Cost of Deposits

Exception Pricing1

$ in billions 1 Weighted average rate at end of period

IB - interest-bearing NIB - noninterest-bearing YoY - Year-over-year

Fourth-Quarter 2024 Results

4Q24

3Q24

4Q23

% Change

4Q24 vs. 3Q24

4Q24 vs. 4Q23

Net Interest Income (FTE)1,2

$400

$398

$370

Provision for credit losses

$27

$29

$12

(7%)

125%

Adjusted noninterest income1

22%

Net securities losses

(1)

N/M

Gain on sale of Visa Class B restricted shares

N/M

Adjusted noninterest expense1

269

263

255

Merger-related and other charges3

(20%)

(72%)

Income taxes (FTE)1,2

(19%)

(10%)

Net income

$154

$144

$132

17%

Preferred Dividends

Net income applicable to common shares

$150

$140

$128

17%

Net income applicable to common shares,

$156

$147

$135

16%

adjusted2

NIM (FTE)1,2

3.30%

3.32%

3.39%

(2) bps

(9) bps

Earnings per diluted share

$0.47

$0.44

Adjusted earnings per diluted share1

$0.49

$0.46

Return on average assets

1.14%

1.08%

1.09%

6 bps

5 bps

Adjusted return on average assets1

1.19%

1.13%

1.14%

6 bps

5 bps

Return on average tangible common equity1

16.4%

16.0%

18.1%

40 bps

(170) bps

Adjusted return on average tangible common

17.0%

16.8%

19.0%

20 bps

(200) bps

equity1

$ in millions, except per-share data 1 Non-GAAP financial measures that management believes is useful in evaluating the financial results of the

Company - see Appendix for Non-GAAP reconciliation

2 Fully Taxable Equivalent Basis 3 Includes merger-related expenses and separation

expense

N/M - not meaningful

Net Interest Income & Net Interest Margin1

Net Interest Income1

$398$400

$370

3.39%

3.32%3.30%

4Q23

3Q24

4Q24

NIM1

Impacts on Net Interest Margin1

Key Performance Drivers

3.32%0.22% 3.30%

0.02%

(0.26)%

3Q24

Rate / volume

Accretion

IB Deposit

4Q24

mix

Costs

$ in millions 1 Fully Taxable Equivalent Basis; Non-GAAP financial measure that management believes is useful in evaluating the financial results of the Company - see Appendix for Non-GAAP reconciliation NIM - Net interest margin IB - interest-bearing YoY - Year-over-year

Disclaimer

Old National Bancorp published this content on January 21, 2025, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on January 21, 2025 at 12:28:04.268.