OLD NATIONAL BANCORP /IN/

Previous wording

The following is an analysis and discussion of our results of operations for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, and financial condition as of September 30, 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.

Current wording

The following is an analysis generally discussing our results of operations for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, and financial condition as of March 31, 2025 compared to December 31, 2024. This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes, as well as our annual report on Form 10-K for the year ended December 31, 2024 (“2024 Annual Report on Form 10-K”).

Previous wording

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…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This report contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”), Section 27A of the Securities Act of 1933 and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934 and Rule 3b-6 promulgated thereunder, 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,” “guidance,” “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, including trade and tariff 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 risk that the expected cost savings, revenue synergies, and other financial benefits from the Merger between Old National and Bremer are not realized or take longer than anticipated to be realized; risks relating to the integration of Bremer’s operations into the operations of Old National, including the risk that such integration will be delayed or will be more costly or difficult than anticipated; potential disruptions, adverse reactions or changes to customer, business or employee relationships, including those resulting from the completion of the Merger; the impact of purchase accounting with respect to the Merger, or any change in the assumptions used regarding the assets acquired and liabil…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

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.

Current wording

Investors should consider these risks, uncertainties, and other factors in addition to the factors under the heading “Risk Factors” included in Item 1A of Part I of Old National’s 2024 Form 10-K and our other filings with the SEC.

Previous wording

The Company presents net income per common share and net income applicable to common shares, adjusted for certain notable items. These items include merger-related charges associated with completed and pending acquisitions, separation expense, debt securities gains/losses, CECL Day 1 non-PCD provision expense, 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 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.

Current wording

The Company presents net income per common share and net income applicable to common shares, adjusted for certain notable items. These items include merger-related charges associated with completed and pending acquisitions, separation expense, debt securities gains/losses, CECL Day 1 non-PCD provision expense, distribution of excess pension assets expense, and FDIC special assessment expense. 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.

Previous wording

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 $54 billion at September 30, 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 and Southeast regions of the United States. In addition to providing extensive services in consumer and commercial banking, Old National offers comprehensive wealth management and capital markets services.

Current wording

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 $53.9 billion at March 31, 2025. The Company’s corporate headquarters and principal executive office are 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 and Southeast regions of the United States. In addition to providing extensive services in consumer and commercial banking, Old National offers comprehensive wealth management and capital markets services.

Previous wording

Net income applicable to common shares for the third quarter of 2024 was $139.8 million, or $0.44 per diluted common share, compared to $117.2 million, or $0.37 per diluted common share, for the second quarter of 2024.

Current wording

Net income applicable to common shares for the first quarter of 2025 was $140.6 million, or $0.44 per diluted common share, compared to $149.8 million, or $0.47 per diluted common share, for the fourth quarter of 2024.

Previous wording

Results for the third quarter of 2024 were impacted by $6.9 million in pre-tax merger-related expenses primarily related to the April 1, 2024 acquisition of CapStar and $2.6 million of separation expense associated with a mutual separation agreement with a former executive. Results for the second quarter of 2024 were impacted by $19.4 million of merger-related expenses and $15.3 million of CECL Day 1 non-PCD provision expense related to the allowance for credit losses established on acquired non-PCD loans. Excluding these items, net income applicable to common shares for the third quarter of 2024 was $147.2 million, or $0.46 per diluted common share on an adjusted basis 1, compared to $144.1 million, or $0.46 per diluted common share on an adjusted basis 1, for the second quarter of 2024.

Current wording

Results for the first quarter of 2025 were impacted by $5.9 million in pre-tax merger-related expenses and $0.1 million of net securities losses. Results for the fourth quarter of 2024 were impacted by $8.1 million of merger-related expenses and $0.1 million of net securities losses. Excluding these items, net income applicable to common shares for the first quarter of 2025 was $145.5 million, or $0.45 per diluted common share on an adjusted basis 1, compared to $156.0 million, or $0.49 per diluted common share on an adjusted basis 1, for the fourth quarter of 2024.

Previous wording

Our results for the third quarter of 2024 reflected growth in total loans and deposits, increased net interest income and noninterest income, resilient credit quality, and disciplined expense management.

Current wording

Our results for the first quarter of 2025 reflected growth in total loans and deposits, modest compression of net interest income reflective of lower accretion and fewer days in the quarter, resilient credit quality, and disciplined expense management.

Previous wording

Deposits: Period-end total deposits increased $846.5 million, or 8.5% annualized, to $40.8 billion at September 30, 2024 compared to June 30, 2024.

Current wording

Deposits: Period-end total deposits increased $211.0 million, or 2.1% annualized, to $41.0 billion at March 31, 2025 compared to December 31, 2024.

Previous wording

Loans: Our loan balances, excluding loans held-for-sale, increased $250.1 million, or 2.8% annualized, to $36.4 billion at September 30, 2024 compared to June 30, 2024.

Current wording

Loans: Our loan balances, excluding loans held-for-sale, increased $128.1 million, or 1.4% annualized, to $36.4 billion at March 31, 2025 compared to December 31, 2024. Excluding $71 million of commercial real estate loans sold in the quarter, total loans increased 2.3% annualized.

Previous wording

Net Interest Income: Net interest income increased $3.3 million to $391.7 million compared to the second quarter of 2024 driven by loan growth as well as higher asset yields and accretion, partly offset by higher funding costs.

Current wording

Net Interest Income: Net interest income decreased $6.5 million to $387.6 million compared to the fourth quarter of 2024 driven by lower accretion, fewer days in the quarter, and earning asset mix, partly offset by lower funding costs.

Previous wording

Noninterest Expense: Noninterest expense decreased $10.7 million compared to the second quarter of 2024. For the third quarter of 2024, noninterest expense included $6.9 million of pre-tax merger-related expenses and $2.6 million of separation expense associated with a mutual separation agreement with a former executive compared to $19.4 million of merger-related expenses in the second quarter of 2024. Excluding these expenses, noninterest expense was $262.8 million for the third quarter of 2024, consistent with $263.6 million for the second quarter of 2024.

Current wording

Noninterest Expense: Noninterest expense decreased $8.4 million compared to the fourth quarter of 2024. For the first quarter of 2025, noninterest expense included $5.9 million of pre-tax merger-related expenses compared to $8.1 million of merger-related expenses in the fourth quarter of 2024. Excluding these expenses, noninterest expense was $262.6 million for the first quarter of 2025, a decrease of $6.1 million from $268.7 million for the fourth quarter of 2024 driven by lower FDIC assessment expense, other expense, and tax credit amortization.