OLD NATIONAL BANCORP /IN/ - Quarter Report: 2024 June (Form 10-Q)

Investment securities - available-for-sale, at fair value (amortized cost

$ and $, respectively)

Investment securities - held-to-maturity, at amortized cost (fair value

$ and $, respectively)

Federal Home Loan Bank/Federal Reserve Bank stock, at cost Loans held-for-sale, at fair value Loans:Commercial Commercial real estate Residential real estate Consumer Total loans, net of unearned income Allowance for credit losses on loans()()Net loans Premises and equipment, net Goodwill Other intangible assets Company-owned life insurance Accrued interest receivable and other assets Total assets$ $ LiabilitiesDeposits:Noninterest-bearing demand$ $ Interest-bearing:Checking and NOW Savings Money market Time deposits Total deposits Federal funds purchased and interbank borrowings Securities sold under agreements to repurchase Federal Home Loan Bank advances Other borrowings Accrued expenses and other liabilities Total liabilities Shareholders’ Equity

Preferred stock, shares authorized, shares issued and outstanding

Common stock, no par value, $ per share stated value, shares authorized,

and shares issued and outstanding, respectively

Capital surplus Retained earnings Accumulated other comprehensive income (loss), net of tax()()Total shareholders’ equity Total liabilities and shareholders’ equity$ $

The accompanying notes to consolidated financial statements are an integral part of these statements.

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Three Months Ended
June 30,

Six Months Ended
June 30,

(dollars and shares in thousands, except per share data)

2024

2023

2024

2023

Interest Income

Loans including fees:

Taxable

Nontaxable

Investment securities:

Taxable

Nontaxable

Money market and other interest-earning investments

Total interest income

Interest Expense

Deposits

Federal funds purchased and interbank borrowings

Securities sold under agreements to repurchase

Federal Home Loan Bank advances

Other borrowings

Total interest expense

Net interest income

Provision for credit losses

Net interest income after provision for credit losses

Noninterest Income

Wealth and investment services fees

Service charges on deposit accounts

Debit card and ATM fees

Mortgage banking revenue

Capital markets income

Company-owned life insurance

Debt securities gains (losses), net

()

Other income

Total noninterest income

Noninterest Expense

Salaries and employee benefits

Occupancy

Equipment

Marketing

Technology

Communication

Professional fees

FDIC assessment

Amortization of intangibles

Amortization of tax credit investments

Other expense

Total noninterest expense

Income before income taxes

Income tax expense

Net income

Preferred dividends

()

Net income applicable to common shareholders

Net income per common share - basic

Net income per common share - diluted

Weighted average number of common shares outstanding - basic

Weighted average number of common shares outstanding - diluted

Dividends per common share

The accompanying notes to consolidated financial statements are an integral part of these statements.

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)


	Three Months Ended June 30,		Six Months Ended June 30,
(dollars in thousands)	2024	2023	2024	2023
Net income	$	$	$	$

Other comprehensive income (loss):

Change in debt securities available-for-sale:
Unrealized holding gains (losses) for the period	()	()	()	()

Reclassification adjustment for securities (gains) losses realized in income	()	()
Income tax effect
Unrealized gains (losses) on available-for-sale securities	()	()	()	()

Change in securities held-to-maturity:

Amortization of unrealized losses on securities transferred from available-for-sale
Income tax effect	()	()	()	()
Changes from securities held-to-maturity

Change in hedges:
Net unrealized derivative gains (losses) on hedges	()		()
Reclassification adjustment for (gains) losses realized in net income		()		()
Income tax effect				()
Changes from hedges	()	()	()

Change in defined benefit pension plans:
Amortization of net (gains) losses recognized in income				()
Income tax effect		()
Changes from defined benefit pension plans				()
Other comprehensive income (loss), net of tax	()	()	()	()
Comprehensive income (loss)	$	$	$	$

The accompanying notes to consolidated financial statements are an integral part of these statements.

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)

(dollars in thousands, except per
share data)

Preferred Stock

Common Stock

Capital Surplus

Retained Earnings

Accumulated
Other
Comprehensive Income (Loss)

Total
Shareholders’ Equity

Balance, December 31, 2022

()

Net income

—

Other comprehensive income (loss)

—

Cash dividends:

Common ($ per share)

—

()

—

()

Preferred ($ per share)

—

()

—

()

Common stock issued

—

Common stock repurchased

—

()

—

()

Share-based compensation expense

—

Stock activity under incentive
compensation plans

—

()

—

()

Balance, March 31, 2023

()

Net income

—

Other comprehensive income (loss)

—

()

Cash dividends:

Common ($ per share)

—

()

—

()

Preferred ($ per share)

—

()

—

()

Common stock issued

—

Common stock repurchased

—

()

—

()

Share-based compensation expense

—

Stock activity under incentive
compensation plans

—

()

—

()

Balance, June 30, 2023

()

December 31, 2023

()

Net income

—

Other comprehensive income (loss)

—

()

Cash dividends:

Common ($ per share)

—

()

—

()

Preferred ($ per share)

—

()

—

()

Common stock issued

—

Common stock repurchased

—

()

—

()

Share-based compensation expense

—

Stock activity under incentive
compensation plans

—

()

—

()

Balance, March 31, 2024

()

Net income

—

Other comprehensive income (loss)

—

()

Acquisition of CapStar Financial
Holdings, Inc.

—

Cash dividends:

Common ($ per share)

—

()

—

()

Preferred ($ per share)

—

()

—

()

Common stock issued

—

Common stock repurchased

—

()

—

()

Share-based compensation expense

—

Stock activity under incentive
compensation plans

—

()

—

()

Balance, June 30, 2024

()

The accompanying notes to consolidated financial statements are an integral part of these statements.

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)


	Six Months Ended June 30,
(dollars in thousands)	2024	2023
Cash Flows From Operating Activities
Net income	$	$
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation
Amortization of other intangible assets
Amortization of tax credit investments
Net premium amortization on investment securities
Accretion income related to acquired loans	()	()
Share-based compensation expense
Provision for credit losses
Debt securities (gains) losses, net
Net (gains) losses on sales of loans and other assets	()	()
Increase in cash surrender value of company-owned life insurance	()	()
Residential real estate loans originated for sale	()	()
Proceeds from sales of residential real estate loans
(Increase) decrease in interest receivable	()	()
(Increase) decrease in other assets		()
Increase (decrease) in accrued expenses and other liabilities	()	()
Net cash flows provided by (used in) operating activities
Cash Flows From Investing Activities
Cash received from merger, net
Purchases of investment securities available-for-sale	()	()
Purchases of investment securities held-to-maturity		()
Purchases of Federal Home Loan Bank/Federal Reserve Bank stock	()	()
Purchases of equity securities	()	()
Proceeds from maturities, prepayments, and calls of investment securities available-for-sale
Proceeds from sales of investment securities available-for-sale
Proceeds from maturities, prepayments, and calls of investment securities held-to-maturity
Proceeds from sales of Federal Home Loan Bank/Federal Reserve Bank stock
Proceeds from sales of equity securities
Loan originations and payments, net	()	()
Proceeds from sales of commercial loans
Proceeds from company-owned life insurance death benefits
Proceeds from sales of premises and equipment and other assets
Purchases of premises and equipment and other assets	()	()
Net cash flows provided by (used in) investing activities	()	()
Cash Flows From Financing Activities
Net increase (decrease) in:
Deposits
Federal funds purchased and interbank borrowings		()
Securities sold under agreements to repurchase	()	()
Other borrowings
Payments for maturities of Federal Home Loan Bank advances	()	()
Proceeds from Federal Home Loan Bank advances
Cash dividends paid	()	()
Common stock repurchased	()	()
Common stock issued
Net cash flows provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period	$	$

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) – (Continued)


	Six Months Ended June 30,
(dollars in thousands)	2024	2023
Supplemental Cash Flow Information:
Total interest paid	$	$
Total income taxes paid (net of refunds)
Noncash Investing and Financing Activities:
Common stock issued for merger, net
Operating lease right-of-use assets obtained in exchange for lease obligations
Finance lease right-of-use assets obtained in exchange for lease obligations

The accompanying notes to consolidated financial statements are an integral part of these statements.

OLD NATIONAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTE 1 –

NOTE 2 –

NOTE 3 –

shares of Old National common stock plus cash in lieu of fractional shares. All system conversions related to the transaction were completed in early July of 2024.

Investment securities FHLB/Federal Reserve Bank stock Loans held-for-sale Loans, net of allowance for credit losses Premises and equipment Goodwill Other intangible assets Company-owned life insurance Other assets Total assets$ LiabilitiesDeposits$ Federal Home Loan Bank advances Other borrowings Accrued expenses and other liabilities Total liabilities$ Fair value of consideration

Common stock ( shares issued at $ per share)

$ Total consideration$

Goodwill related to this merger will not be deductible for tax purposes.

Other intangible assets acquired included core deposit intangibles. The estimated fair value of the core deposit intangible was $ million and is being amortized over an estimated useful life of years.

The fair value of PCD assets was $ million on the date of merger. The gross contractual amounts receivable relating to the PCD assets was $ million. Old National estimates, on the date of the merger, that $ million of the contractual cash flows specific to the PCD assets will not be collected.

Transaction costs primarily associated with the CapStar merger have been expensed for the three and six months ended June 30, 2024 totaling $ million and $ million, respectively, and additional transaction and integration costs will be expensed in future periods as incurred.

NOTE 4 –

$ $ $ Preferred dividends()()()()Net income applicable to common shares$ $ $ $ Weighted average common shares outstanding:Weighted average common shares outstanding (basic) Effect of dilutive securities:Restricted stock Stock appreciation rights Weighted average diluted shares outstanding Basic Net Income Per Common Share$ $ $ $ Diluted Net Income Per Common Share$ $ $ $

NOTE 5 –

$ $()$()$ U.S. government-sponsored entities and agencies ()() Mortgage-backed securities - Agency () States and political subdivisions () Pooled trust preferred securities () Other securities () Total available-for-sale securities$ $ $()$()$ Held-to-MaturityU.S. government-sponsored entities and agencies$ $ $()$ $ Mortgage-backed securities - Agency () States and political subdivisions () Allowance for securities held-to-maturity()— — — ()Total held-to-maturity securities$ $ $()$ $ December 31, 2023Available-for-SaleU.S. Treasury$ $ $()$()$ U.S. government-sponsored entities and agencies ()() Mortgage-backed securities - Agency () States and political subdivisions () Pooled trust preferred securities () Other securities () Total available-for-sale securities$ $ $()$()$ Held-to-MaturityU.S. government-sponsored entities and agencies$ $ $()$ $ Mortgage-backed securities - Agency () States and political subdivisions () Allowance for securities held-to-maturity()— — — ()Total held-to-maturity securities$ $ $()$ $

(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.

$ $ $ Realized gains Realized losses()()()()

$  %One to five years   Five to ten years   Beyond ten years   Total$ $  %Held-to-MaturityWithin one year$ $  %One to five years   Five to ten years   Beyond ten years   Total$ $  % $()$ $()$ $()U.S. government-sponsored entities
   and agencies () () ()Mortgage-backed securities - Agency () () ()States and political subdivisions () () ()Pooled trust preferred securities   () ()Other securities () () ()Total available-for-sale$ $()$ $()$ $()December 31, 2023Available-for-SaleU.S. Treasury$ $()$ $()$ $()U.S. government-sponsored entities
   and agencies   () ()Mortgage-backed securities - Agency () () ()States and political subdivisions () () ()Pooled trust preferred securities   () ()Other securities () () ()Total available-for-sale$ $()$ $()$ $()

$ $ $()$ $()Mortgage-backed securities - Agency () ()States and political subdivisions () () ()Total held-to-maturity$ $()$ $()$ $()December 31, 2023Held-to-MaturityU.S. government-sponsored entities
and agencies$ $ $ $()$ $()Mortgage-backed securities - Agency () ()States and political subdivisions () ()Total held-to-maturity$ $ $ $()$ $()

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 $ million at June 30, 2024 and $ 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.

allowance for credit losses on available-for-sale debt securities was needed at June 30, 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 $ million at June 30, 2024 and December 31, 2023. Accrued interest receivable on the securities portfolio is excluded from the estimate of credit losses and totaled $ million at June 30, 2024 and $ million at December 31, 2023.

At June 30, 2024, Old National’s securities portfolio consisted of securities, 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 June 30, 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 six months ended June 30, 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 $ million at June 30, 2024 and $ million at December 31, 2023. There were losses on equity securities of $ million during the three months ended June 30, 2024 and $ million during the six months ended June 30, 2024, compared to gains of $

million during the six months ended June 30, 2023.

Alternative Investments

Old National has alternative investments without readily determinable fair values that are included in other assets totaling $ million at June 30, 2024, consisting of $ million of illiquid investments in partnerships, limited liability companies, and other ownership interests that support affordable housing and $ million of economic development and community revitalization initiatives in low-to-moderate income neighborhoods. These alternative investments totaled $ million at December 31, 2023. There have been impairments or adjustments on equity securities without readily determinable fair values, except for amortization of tax credit investments in the six months ended June 30, 2024 and 2023. See Note 9 to the consolidated financial statements for detail regarding these investments.

NOTE 6 –

billion, of which $ billion had been sold to other financial institutions and $ 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.

loan portfolios used to monitor and analyze interest income and yields – commercial, commercial real estate, residential real estate, and consumer – are reclassified into 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. $()$ Commercial real estate () BBCCN/A Residential real estate Consumer ()N/AIndirectN/A DirectN/A Home equityN/A

Total loans (2)

$ $ $ Allowance for credit losses on loans()— ()Net loans$ $ $ December 31, 2023

Commercial (1)

$ $()$ Commercial real estate () BBCCN/A Residential real estate Consumer ()N/AIndirectN/A DirectN/A Home equityN/A

Total loans (2)

$ $ $ Allowance for credit losses on loans()— ()Net loans$ $ $

(1)Includes direct finance leases of $ million at June 30, 2024 and $ million at December 31, 2023.

(2) Includes unearned income of $ million at June 30, 2024 and $ 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

%, 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 % at June 30, 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 such changes as 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

$ $()$ $ $ Commercial real estate () BBCC () Residential real estate Indirect () Direct () Home equity () Total$ $ $()$ $ $ Three Months Ended June 30, 2023Commercial$ $ $()$ $ $ Commercial real estate () BBCC () Residential real estate () Indirect () () Direct () () Home equity () Total$ $ $()$ $ $ Six Months Ended June 30, 2024Commercial$ $ $()$ $ $ Commercial real estate () BBCC () Residential real estate Indirect () Direct () Home equity () Total$ $ $()$ $ $ Six Months Ended June 30, 2023Commercial$ $ $()$ $ $ Commercial real estate () BBCC () Residential real estate () () Indirect () Direct () () Home equity () Total$ $ $()$ $ $

The allowance for credit losses on loans at June 30, 2024 included $ million of allowance for credit losses on acquired PCD loans established through acquisition accounting adjustments on or after the CapStar acquisition date.

million to establish an allowance for credit losses on non-PCD loans acquired in the CapStar transaction. Accrued interest receivable on loans is excluded from the estimate of credit losses and totaled $ million at June 30, 2024, compared to $ million at December 31, 2023.

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.

$ $ $ Provision for credit losses on unfunded loan commitments
acquired during the period Provision (release) for credit losses on unfunded loan
commitments() () Balance at end of period$ $ $ $

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:

Special Mention. Loans categorized as special mention 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 special mention, classified – substandard, classified – nonaccrual, or classified – doubtful.

$ $ $ $ $ $ $ $ Special Mention Classified:Substandard Nonaccrual Doubtful Total$ $ $ $ $ $ $ $ $ Commercial real estate:Pass$ $ $ $ $ $ $ $ $ Special Mention Classified:Substandard Nonaccrual Doubtful Total$ $ $ $ $ $ $ $ $ BBCC:Pass$ $ $ $ $ $ $ $ $ Special Mention Classified:Substandard Nonaccrual Doubtful Total$ $ $ $ $ $ $ $ $


	Origination Year							Revolving to Term
	2023	2022	2021	2020	2019	Prior	Revolving		Total
December 31, 2023
Commercial:

Pass	$	$	$	$	$	$	$	$	$
Special Mention
Classified:
Substandard
Nonaccrual
Doubtful
Total	$	$	$	$	$	$	$	$	$

Commercial real estate:

Pass	$	$	$	$	$	$	$	$	$
Special Mention
Classified:
Substandard
Nonaccrual
Doubtful
Total	$	$	$	$	$	$	$	$	$

BBCC:

Pass	$	$	$	$	$	$	$	$	$
Special Mention
Classified:
Substandard
Nonaccrual
Doubtful
Total	$	$	$	$	$	$	$	$	$

$ $ $ $ $ $ $ $ Nonperforming Total$ $ $ $ $ $ $ $ $ Indirect:Risk Rating:Performing$ $ $ $ $ $ $ $ $ Nonperforming Total$ $ $ $ $ $ $ $ $ Direct:Risk Rating:Performing$ $ $ $ $ $ $ $ $ Nonperforming Total$ $ $ $ $ $ $ $ $ Home equity:Risk Rating:Performing$ $ $ $ $ $ $ $ $ Nonperforming Total$ $ $ $ $ $ $ $ $


	Origination Year							Revolving to Term
	2023	2022	2021	2020	2019	Prior	Revolving		Total
December 31, 2023
Residential real estate:
Risk Rating:
Performing	$	$	$	$	$	$	$	$	$
Nonperforming
Total	$	$	$	$	$	$	$	$	$

Indirect:
Risk Rating:
Performing	$	$	$	$	$	$	$	$	$
Nonperforming
Total	$	$	$	$	$	$	$	$	$

Direct:
Risk Rating:
Performing	$	$	$	$	$	$	$	$	$
Nonperforming
Total	$	$	$	$	$	$	$	$	$

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 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

$ $ $ $ $ Commercial real estate BBCC Residential Indirect Direct Home equity Total$ $ $ $ $ $ December 31, 2023Commercial$ $ $ $ $ $ Commercial real estate BBCC Residential Indirect Direct Home equity Total$ $ $ $ $ $ $ $ $ $ $ Commercial real estate BBCC Residential Indirect Direct Home equity Total$ $ $ $ $ $ % % % % %

Old National closely monitors the performance of financial difficulty modifications to understand the effectiveness of its efforts. The following table presents the performance of financial difficulty modifications in the twelve months following modification:

(dollars in thousands)

30-59 Days
Past Due

60-89 Days
Past Due

Past Due
90 Days or
More

Total
Past Due

Current

Total
Loans

June 30, 2024

Commercial

Commercial real estate

Total

June 30, 2023

Commercial

Commercial real estate

Total

During the three and six months ended June 30, 2024, there were payment defaults on $ million of loans to borrowers whose loans were modified due to financial difficulties within the previous twelve months. The payment defaults did not materially impact the allowance for credit losses on loans. There were payment defaults during the three and six months ended June 30, 2023 on loans that had been modified within the previous twelve months.

Old National had t committed to lend any material additional funds to the borrowers whose loans were modified due to financial difficulties at June 30, 2024 or December 31, 2023.

Purchased Credit Deteriorated Loans

Allowance for credit losses at acquisition Non-credit discount/(premium) at acquisition Par value of acquired loans at acquisition$

(1)Old National acquired CapStar effective April 1, 2024.

NOTE 7 –

to 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.

$ $ $ Finance lease cost: Amortization of right-of-use assetsOccupancy expense Interest on lease liabilitiesInterest expense Sub-lease incomeOccupancy expense()()()()Total $ $ $ $ $ Operating lease liabilities Finance LeasesPremises and equipment, net Other borrowings Weighted-Average Remaining Lease Term (in Years)Operating leasesFinance leasesWeighted-Average Discount RateOperating leases % %Finance leases % % $ Operating cash flows from finance leases Financing cash flows from finance leases

$ 2025 2026 2027 2028 Thereafter Total undiscounted lease payments Amounts representing interest()()Lease liability$ $

NOTE 8 –

$ $ $ Acquisitions and adjustments Balance at end of period$ $ $ $

During the three months ended June 30, 2024, Old National recorded $ million of goodwill associated with the acquisition of CapStar. See Note 2 to the consolidated financial statements for additional detail regarding this transaction.

Old National performed the required annual goodwill impairment test as of August 31, 2023 and there was 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.

$()$ Customer trust relationships () Total other intangible assets$ $()$ December 31, 2023Core deposit$ $()$ Customer trust relationships () Total other intangible assets$ $()$

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 to years. During the three months ended June 30, 2024, Old National recorded $ million of core deposit intangibles associated with the acquisition of CapStar. See Note 2 to the consolidated financial statements for additional detail regarding this transaction.

impairment charges were recorded during the six months ended June 30, 2024 or 2023. Total amortization expense associated with intangible assets was $ million and $ million for the three and six months ended June 30, 2024, respectively, compared to $ million and $ million for the three and six months ended June 30, 2023, respectively. 2025 2026 2027 2028 Thereafter Total$

NOTE 9 –

$ $ $ FHTC

Proportional amortization (2)

NMTCConsolidation Renewable EnergyEquity Total $ $ $ $

(1)All commitments will be paid by Old National by December 31, 2036.

(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.

$()FHTC ()NMTC ()Renewable Energy Total$ $()Three Months Ended June 30, 2023LIHTC$ $()FHTC ()NMTC ()Renewable Energy Total$ $()Six Months Ended June 30, 2024LIHTC$ $()FHTC ()NMTC ()Renewable Energy Total$ $()Six Months Ended June 30, 2023LIHTC$ $()FHTC ()NMTC ()Renewable Energy Total$ $()

(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 on January 1, 2024, 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).

NOTE 10 –

$ Average amount outstanding during the period Maximum amount outstanding at any month-end during the period Weighted-average interest rate:During the period % %At period end % %

At December 31, 2023, securities sold under agreements to repurchase totaled $ million with a weighted-average interest rate of %.

$ $ $ $ Total$ $ $ $ $

NOTE 11 –

% to %

and variable rates % to %) maturing

September 2024 to March 2044

$ $ Fair value hedge basis adjustments and unamortized
prepayment fees()()Total$ $

FHLB advances had weighted-average rates of % at June 30, 2024 and % 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 June 30, 2024, total unamortized prepayment fees related to all FHLB advance debt modifications completed in prior years totaled $ million, compared to $ million at December 31, 2023.

Due in 2025 Due in 2026 Due in 2028 Thereafter Fair value hedge basis adjustments and unamortized prepayment fees()Total$

NOTE 12 –

%) maturing August 2024$ $ Unamortized debt issuance costs related to senior unsecured notes()()

Subordinated debentures (fixed rate %) maturing September 2026

Subordinated debentures (fixed rate %) maturing June 2030

Junior subordinated debentures (rates of % to %) maturing

July 2031 to September 2037

Other basis adjustments Old National Bank:Finance lease liabilities

Subordinated debentures (3-month SOFR plus %; variable rate %)

maturing October 2025

Leveraged loans for NMTC (fixed rates of % to %)

maturing December 2046 to June 2060

Other (1)

Total other borrowings$ $

(1)Includes overnight borrowings to collateralize certain derivative positions totaling $ million at June 30, 2024 and $ million at December 31, 2023.

Due in 2025 Due in 2026 Due in 2027 Due in 2028 Thereafter Unamortized debt issuance costs and other basis adjustments Total$

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.

3-month SOFR plus %

%July 31, 2031Bridgeview Capital Trust IIDecember 2002

3-month SOFR plus %

%January 7, 2033First Midwest Capital Trust INovember 2003

% fixed

%December 1, 2033St. Joseph Capital Trust IIMarch 2005

3-month SOFR plus %

%March 17, 2035Northern States Statutory Trust ISeptember 2005

3-month SOFR plus %

%September 15, 2035Anchor Capital Trust IIIAugust 2005

3-month SOFR plus %

%September 30, 2035Great Lakes Statutory Trust IIDecember 2005

3-month SOFR plus %

%December 15, 2035Home Federal Statutory
Trust ISeptember 2006

3-month SOFR plus %

%September 15, 2036Monroe Bancorp Capital
Trust IJuly 2006

3-month SOFR plus %

%October 7, 2036Tower Capital Trust 3December 2006

3-month SOFR plus %

%March 1, 2037Monroe Bancorp Statutory
Trust IIMarch 2007

3-month SOFR plus %

%June 15, 2037Great Lakes Statutory Trust IIIJune 2007

3-month SOFR plus %

%September 15, 2037Total$

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 $ million at June 30, 2024. See Note 7 to the consolidated financial statements for a maturity analysis of the Company’s finance lease liabilities.

NOTE 13 –

)$()$()$ $()Other comprehensive income (loss) before
reclassifications() () ()

Amounts reclassified from AOCI to income (1)

() Balance at end of period$()$()$()$ $()Three Months Ended June 30, 2023Balance at beginning of period$()$()$ $()$()Other comprehensive income (loss) before
reclassifications() ()

Amounts reclassified from AOCI to income (1)

() () ()Balance at end of period$()$()$()$ $()Six Months Ended June 30, 2024Balance at beginning of period$()$()$ $ $()Other comprehensive income (loss) before
reclassifications() () ()

Amounts reclassified from AOCI to income (1)

Balance at end of period$()$()$()$ $()Six Months Ended June 30, 2023Balance at beginning of period$()$()$()$ $()Other comprehensive income (loss) before
reclassifications() ()

Amounts reclassified from AOCI to income (1)

()()()Balance at end of period$()$()$()$ $()

(1)See table below for details about reclassifications to income.

$ Debt securities gains (losses), net  ()Income tax (expense) benefit $ $ Net incomeAmortization of unrealized losses on
   held-to-maturity securities transferred
   from available-for-sale$()$()Interest income (expense)   Income tax (expense) benefit $()$()Net incomeGains and losses on hedges
   Interest rate contracts$()$ Interest income (expense)  ()Income tax (expense) benefit $()$ Net incomeAmortization of defined benefit
   pension items Actuarial gains (losses)$ $()Salaries and employee benefits   Income tax (expense) benefit $ $()Net incomeTotal reclassifications for the period$()$ Net income

)$()Debt securities gains (losses), net   Income tax (expense) benefit $()$()Net incomeAmortization of unrealized losses on
   held-to-maturity securities transferred
   from available-for-sale$()$()Interest income (expense)   Income tax (expense) benefit $()$()Net incomeGains and losses on hedges
   Interest rate contracts$()$ Interest income (expense)  ()Income tax (expense) benefit $()$ Net incomeAmortization of defined benefit
   pension items Actuarial gains (losses)$ $ Salaries and employee benefits  ()Income tax (expense) benefit $ $ Net incomeTotal reclassifications for the period$()$ Net income

NOTE 14 –

$ $ $ Tax-exempt income:Tax-exempt interest()()()()Section 291/265 interest disallowance Company-owned life insurance income()()()()Tax-exempt income()()()()State income taxes Interim period effective rate adjustment() ()Tax credit investments - federal()()()()Officer compensation limitation Non-deductible FDIC premiums Other, net () ()Income tax expense$ $ $ $ Effective tax rate % % % %

million, compared to $ million at December 31, 2023. valuation allowance was required on the Company’s deferred tax assets at June 30, 2024 or December 31, 2023.

The Company’s retained earnings at June 30, 2024 included an appropriation for acquired thrifts’ tax bad debt allowances totaling $ 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 $ million at June 30, 2024 and $ million at December 31, 2023. This federal net operating loss was acquired from the acquisition of Anchor BanCorp Wisconsin Inc. in 2016, First Midwest Bancorp, Inc. in 2022, and CapStar Financial Holdings, Inc. in 2024. If not used, the federal net operating loss carryforwards will begin expiring in 2032 and later. Old National has recorded state net operating loss carryforwards totaling $ million at June 30, 2024 and $ 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 –

% 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 $ million notional amount at both June 30, 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 $ billion notional amount at June 30, 2024 and $ 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.

billion notional amount at June 30, 2024 and $ million notional amount at December 31, 2023. Interest rate swaps of certain available-for-sale investment securities were designated as fair value hedges totaling $ million notional amount at both June 30, 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. $ $ $ $ $

Interest rate swaps on borrowings (3)

Fair value hedges

Interest rate swaps on investment securities (3)

Interest rate swaps on borrowings (3)

Total$ $ $ $

(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.

)Fixed-rate debtInterest income/(expense)$ Interest rate contractsInterest income/(expense) Fixed-rate
investment
securitiesInterest income/(expense)()Total$ $()Three Months Ended
June 30, 2023Interest rate contractsInterest income/(expense)$()Fixed-rate debtInterest income/(expense)$ Interest rate contractsInterest income/(expense) Fixed-rate
investment
securitiesInterest income/(expense)()Total$ $()

Six Months Ended
June 30, 2024

Interest rate contractsInterest income/(expense)$()Fixed-rate debtInterest income/(expense)$ Interest rate contractsInterest income/(expense) Fixed-rate
investment
securitiesInterest income/(expense)()Total$ $()Six Months Ended
June 30, 2023Interest rate contractsInterest income/(expense)$()Fixed-rate debtInterest income/(expense)$ Interest rate contractsInterest income/(expense)()Fixed-rate
investment
securitiesInterest income/(expense) Total$()$

The effect of derivative instruments in cash flow hedging relationships on the consolidated statements of income were as follows:


		Three Months Ended June 30,			Three Months Ended June 30,
(dollars in thousands)		2024		2023	2024		2023
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 contracts	Interest income/(expense)	$	()	$	$	()	$
		Six Months Ended June 30,			Six Months Ended June 30,
		2024		2023	2024		2023
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 contracts	Interest income/(expense)	$	()	$	$	()	$

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

million will be reclassified to interest income and $ 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 June 30, 2024, the notional amounts of the interest rate lock commitments were $ million and forward commitments were $ million. At December 31, 2023, the notional amounts of the interest rate lock commitments were $ million and forward commitments were $ 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 $ billion at both June 30, 2024 and 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 needs of its clients. Old National does not designate these foreign currency forward contracts for hedge accounting treatment.

$ $ $ $ $ Forward mortgage loan contracts Customer interest rate swaps

Counterparty interest rate swaps (3)

Customer foreign currency contracts Counterparty foreign currency contracts Total$ $ $ $

(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.

)$ Mortgage contractsMortgage banking revenue() Foreign currency contractsOther income/(expense)()()Total $()$ Six Months Ended
June 30, 20242023Derivatives Not Designated as
Hedging InstrumentsLocation of Gain or (Loss)
Recognized in Income on
DerivativeGain (Loss)
Recognized in Income on
Derivative

Interest rate contracts (1)

Other income/(expense)$ $ Mortgage contractsMortgage banking revenue Foreign currency contractsOther income/(expense)()()Total $ $

(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.

$ $ $ Less: amounts offset in the Consolidated Balance Sheet Net amount presented in the Consolidated Balance Sheet Gross amounts not offset in the Consolidated Balance SheetOffsetting derivative positions()()()()Cash collateral pledged () ()Net credit exposure$ $ $ $

NOTE 16 –

or less. These commitments are not recorded in the consolidated financial statements. $

Standby letters of credit (1)

(1)Notional amount, which represents the maximum amount of future funding requirements. The carrying value was $ million at June 30, 2024 and $ million at December 31, 2023.

At June 30, 2024, approximately % of the unfunded loan commitments had fixed rates, with the remainder having floating rates ranging from % to %. The allowance for unfunded loan commitments totaled $ million at June 30, 2024 and $ million at December 31, 2023.

Old National is a party in risk participation transactions of interest rate swaps, which had total notional amounts of $ million at June 30, 2024 and $ million at December 31, 2023.

NOTE 17 –

$ $ $ Investment securities available-for-sale:U.S. Treasury U.S. government-sponsored entities and agencies Mortgage-backed securities - Agency States and political subdivisions Pooled trust preferred securities Other securities Loans held-for-sale Derivative assets Financial LiabilitiesDerivative liabilities

Fair Value Measurements at December 31, 2023 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)

Financial Assets

Equity securities

Investment securities available-for-sale:

U.S. Treasury

U.S. government-sponsored entities and agencies

Mortgage-backed securities - Agency

States and political subdivisions

Pooled trust preferred securities

Other securities

Loans held-for-sale

Derivative assets

Financial Liabilities

Derivative liabilities

Non-Recurring Basis

$ $ $ Commercial real estate loans Foreclosed Assets:Commercial Residential

million, with a valuation allowance of $ million at June 30, 2024. Old National recorded provision expense associated with these loans totaling $ million and $ million for the three and six months ended June 30, 2024, respectively, compared to $ million and $ million for the three and six months ended June 30, 2023, respectively.

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 June 30, 2024. There were $ million write-downs on other real estate owned for the three and six months ended June 30, 2024, compared to $ million of write-downs for the three and six months ended June 30, 2023.

$ $ $ Commercial real estate loans Foreclosed Assets:Commercial real estate

At December 31, 2023, commercial and commercial real estate loans that are deemed collateral dependent had a principal amount of $ million, with a valuation allowance of $ million.

DiscountedDiscount for type of property,

% - % (%)

cash flowage of appraisal, and current statusCommercial real estate loans DiscountedDiscount for type of property,

% - % (%)

cash flowage of appraisal, and current statusForeclosed Assets

Commercial real estate (2)

Fair value ofDiscount for type of property,

collateralage of appraisal, and current status

Residential (2)

Fair value ofDiscount for type of property,

collateralage of appraisal, and current statusDecember 31, 2023 Collateral Dependent Loans Commercial loans$ DiscountedDiscount for type of property,

% - % (%)

cash flowage of appraisal, and current statusCommercial real estate loans DiscountedDiscount for type of property,

% - % (%)

cash flowage of appraisal, and current statusForeclosed Assets Commercial real estate Fair value ofDiscount for type of property,

% - % (%)

collateralage of appraisal, and current status

(1)Unobservable inputs were weighted by the relative fair value of the instruments.

(2)There was only foreclosed commercial real estate property and foreclosed residential real estate property at June 30, 2024 with write-downs during the six months ended June 30, 2024, so no range or weighted average is reported.

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 $ million for three months ended June 30, 2024 and $ million for the six months ended June 30, 2024, compared to $ million and $ million for the three and six months ended June 30, 2023, respectively.

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.

$ $ December 31, 2023Loans held-for-sale$ $ $

Accrued interest at period end is included in the fair value of the instruments.

$ $ $ Three Months Ended June 30, 2023Loans held-for-sale$ $ $()$ Six Months Ended June 30, 2024Loans held-for-sale$()$ $()$()Six Months Ended June 30, 2023Loans held-for-sale$ $ $()$

$ $ $ Investment securities held-to-maturity:U.S. government-sponsored entities and agencies Mortgage-backed securities - Agency State and political subdivisions Loans, net:Commercial Commercial real estate Residential real estate Consumer credit Accrued interest receivable Financial LiabilitiesDeposits:Noninterest-bearing demand deposits$ $ $ $ Checking, NOW, savings, and money market
interest-bearing deposits Time deposits Federal funds purchased and interbank borrowings Securities sold under agreements to repurchase FHLB advances Other borrowings Accrued interest payable Standby letters of credit Off-Balance Sheet Financial InstrumentsCommitments to extend credit$ $ $ $

The methods utilized to measure the fair value of financial instruments at June 30, 2024 and December 31, 2023 represent an approximation of exit price, however, an actual exit price may differ.

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 and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, and financial condition as of June 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.

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.

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)	June 30,			March 31,			December 31,			September 30,			June 30,
	2024			2024			2023			2023			2023
Income Statement:
Net interest income	$	388,421		$	356,458		$	364,408		$	375,086		$	382,171
Taxable equivalent adjustment (1) (3)	6,340			6,253			6,100			5,837			5,825
Net interest income - taxable equivalent basis (3)	394,761			362,711			370,508			380,923			387,996
Provision for credit losses	36,214			18,891			11,595			19,068			14,787
Noninterest income	87,271			77,522			100,094			80,938			81,629
Noninterest expense	282,999			262,317			284,235			244,776			246,584
Net income available to common shareholders	117,196			116,250			128,446			143,842			151,003
Per Common Share Data:
Weighted average diluted common shares	316,461			292,207			292,029			291,717			291,266
Net income (diluted)	$	0.37		$	0.40		$	0.44		$	0.49		$	0.52
Cash dividends	0.14			0.14			0.14			0.14			0.14
Common dividend payout ratio (2)	38		%	35		%	32		%	29		%	27		%
Book value	$	18.28		$	18.24		$	18.18		$	17.07		$	17.25
Stock price	17.19			17.41			16.89			14.54			13.94
Tangible common book value (3)	11.05			11.10			11.00			9.87			10.03
Performance Ratios:
Return on average assets	0.92		%	0.98		%	1.09		%	1.22		%	1.29		%
Return on average common equity	8.17			8.74			10.20			11.39			12.01

Return on average tangible common equity (3)	14.07			14.93			18.11			20.18			21.35
Net interest margin (3)	3.33			3.28			3.39			3.49			3.60
Efficiency ratio (3)	57.17			58.34			59.05			51.66			51.22
Net charge-offs (recoveries) to average loans	0.16			0.14			0.12			0.24			0.13
Allowance for credit losses on loans to ending loans	1.01			0.95			0.93			0.93			0.93
Allowance for credit losses (4) to ending loans	1.08			1.03			1.03			1.03			1.04
Non-performing loans to ending loans	0.94			0.98			0.83			0.80			0.91
Balance Sheet:
Total loans	$	36,150,513		$	33,623,319		$	32,991,927		$	32,577,834		$	32,432,473
Total assets	53,119,645			49,534,918			49,089,836			49,059,448			48,496,755
Total deposits	39,999,228			37,699,418			37,235,180			37,252,676			36,231,315
Total borrowed funds	6,085,204			5,331,161			5,331,147			5,556,010			6,034,008
Total shareholders’ equity	6,075,072			5,595,408			5,562,900			5,239,537			5,292,095
Capital Ratios:
Risk-based capital ratios:
Tier 1 common equity	10.73		%	10.76		%	10.70		%	10.41		%	10.14		%
Tier 1	11.33			11.40			11.35			11.06			10.79
Total	12.71			12.74			12.64			12.32			12.14
Leverage ratio (to average assets)	8.90			8.96			8.83			8.70			8.59
Total equity to assets (averages)	11.31			11.32			10.81			10.88			10.96
Tangible common equity to tangible assets (3)	6.94			6.86			6.85			6.15			6.33
Nonfinancial Data:
Full-time equivalent employees	4,267			3,955			3,940			3,981			4,021
Banking centers	280			258			258			257			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.

The following table sets forth certain financial highlights of Old National for the year-to-date periods:


	Six Months Ended June 30,
(dollars and shares in thousands, except per share data)	2024			2023
Income Statement:
Net interest income	$	744,879		$	763,659
Taxable equivalent adjustment (1) (3)	12,593			11,491
Net interest income - taxable equivalent basis (3)	757,472			775,150
Provision for credit losses	55,105			28,224
Noninterest income	164,793			152,310
Noninterest expense	545,316			497,295
Net income available to common shareholders	233,446			293,569
Per Common Share Data:
Weighted average diluted common shares	304,207			291,870
Net income (diluted)	$	0.77		$	1.01
Cash dividends	0.28			0.28
Common dividend payout ratio (2)	36		%	28		%
Book value	$	18.28		$	17.25
Stock price	17.19			13.94
Tangible common book value (3)	11.05			10.03
Performance Ratios:
Return on average assets	0.95		%	1.27		%
Return on average common equity	8.45			11.80

Return on average tangible common equity (3)	14.48			21.19
Net interest margin (3)	3.31			3.65
Efficiency ratio (3)	57.73			52.01
Net charge-offs (recoveries) to average loans	0.15			0.17
Allowance for credit losses on loans to ending loans	1.01			0.93
Allowance for credit losses (4) to ending loans	1.08			1.04
Non-performing loans to ending loans	0.94			0.91
Balance Sheet:
Total loans	$	36,150,513		$	32,432,473
Total assets	53,119,645			48,496,755
Total deposits	39,999,228			36,231,315
Total borrowed funds	6,085,204			6,034,008
Total shareholders’ equity	6,075,072			5,292,095
Capital Ratios:
Risk-based capital ratios:
Tier 1 common equity	10.73		%	10.14		%
Tier 1	11.33			10.79
Total	12.71			12.14
Leverage ratio (to average assets)	8.90			8.59
Total equity to assets (averages)	11.31			10.98
Tangible common equity to tangible assets (3)	6.94			6.33
Nonfinancial Data:
Full-time equivalent employees	4,267			4,021
Banking centers	280			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.

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 merger-related charges associated with completed and pending acquisitions, CECL Day 1 non-PCD provision expense, debt securities gains/losses, the expense associated with the distribution of excess pension assets, 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.

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.

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)	June 30,			March 31,			December 31,			September 30,			June 30,
	2024			2024			2023			2023			2023
Net income per common share:
Net income applicable to common shares	$	117,196		$	116,250		$	128,446		$	143,842		$	151,003
Adjustments:
Merger-related charges	19,440			2,908			5,529			6,257			2,372
CECL Day 1 non-PCD provision expense	15,312			—			—			—			—
Debt securities (gains) losses	(2)			16			825			241			(17)
Distribution of excess pension assets expense	—			13,318			—			—			—
FDIC special assessment	—			2,994			19,052			—			—
Gain on sale of Visa Class B restricted shares	—			—			(21,635)			—			—
Contract termination charge	—			—			4,413			—			—
Louisville expenses	—			—			—			—			3,361
Property optimization charges	—			—			—			—			242
Less: tax effect on net total adjustments (2)	(7,888)			(4,695)			(1,988)			(1,082)			(695)
Net income applicable to common shares, adjusted (1)	$	144,058		$	130,791		$	134,642		$	149,258		$	156,266
Weighted average diluted common shares outstanding	316,461			292,207			292,029			291,717			291,266
Net income per common share, diluted	$	0.37		$	0.40		$	0.44		$	0.49		$	0.52
Adjusted net income per common share, diluted (1)	$	0.46		$	0.45		$	0.46		$	0.51		$	0.54
Tangible common book value:
Shareholders’ common equity	$	5,831,353		$	5,351,689		$	5,319,181		$	4,995,818		$	5,048,376
Deduct: Goodwill and intangible assets	2,306,204			2,095,511			2,100,966			2,106,835			2,112,875

Tangible shareholders’ common equity (1)	$	3,525,149		$	3,256,178		$	3,218,215		$	2,888,983		$	2,935,501
Period end common shares	318,969			293,330			292,655			292,586			292,597
Tangible common book value (1)	11.05			11.10			11.00			9.87			10.03
Return on average tangible common equity:
Net income applicable to common shares	$	117,196		$	116,250		$	128,446		$	143,842		$	151,003
Add: Intangible amortization (net of tax) (2)	5,569			4,091			4,402			4,530			4,545
Tangible net income (1)	$	122,765		$	120,341		$	132,848		$	148,372		$	155,548




Average shareholders’ common equity	$	5,735,257		$	5,321,823		$	5,037,768		$	5,050,353		$	5,030,083
Deduct: Average goodwill and intangible assets	2,245,405			2,098,338			2,103,935			2,109,944			2,115,894

Average tangible shareholders’ common equity (1)	$	3,489,852		$	3,223,485		$	2,933,833		$	2,940,409		$	2,914,189
Return on average tangible common equity (1)	14.07		%	14.93		%	18.11		%	20.18		%	21.35		%
Net interest margin:
Net interest income	$	388,421		$	356,458		$	364,408		$	375,086		$	382,171
Taxable equivalent adjustment	6,340			6,253			6,100			5,837			5,825
Net interest income - taxable equivalent basis (1)	$	394,761		$	362,711		$	370,508		$	380,923		$	387,996
Average earning assets	$	47,406,849		$	44,175,079		$	43,701,283		$	43,617,456		$	43,097,198
Net interest margin (1)	3.33		%	3.28		%	3.39		%	3.49		%	3.60		%
Efficiency ratio:
Noninterest expense	$	282,999		$	262,317		$	284,235		$	244,776		$	246,584
Deduct: Intangible amortization expense	7,425			5,455			5,869			6,040			6,060
Adjusted noninterest expense (1)	$	275,574		$	256,862		$	278,366		$	238,736		$	240,524
Net interest income - taxable equivalent basis (1) (see above)	$	394,761		$	362,711		$	370,508		$	380,923		$	387,996
Noninterest income	87,271			77,522			100,094			80,938			81,629
Deduct: Debt securities gains (losses), net	2			(16)			(825)			(241)			17
Adjusted total revenue (1)	$	482,030		$	440,249		$	471,427		$	462,102		$	469,608
Efficiency ratio (1)	57.17		%	58.34		%	59.05		%	51.66		%	51.22		%
Tangible common equity to tangible assets:
Tangible shareholders’ equity (1) (see above)	$	3,525,149		$	3,256,178		$	3,218,215		$	2,888,983		$	2,935,501
Assets	$	53,119,645		$	49,534,918		$	49,089,836		$	49,059,448		$	48,496,755

Deduct: Goodwill and intangible assets	2,306,204			2,095,511			2,100,966			2,106,835			2,112,875

Tangible assets (1)	$	50,813,441		$	47,439,407		$	46,988,870		$	46,952,613		$	46,383,880
Tangible common equity to tangible assets (1)	6.94		%	6.86		%	6.85		%	6.15		%	6.33		%

(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).

The following table presents GAAP to non-GAAP reconciliations for the year-to-date periods:


	Six Months Ended June 30,
(dollars and shares in thousands, except per share data)	2024			2023
Net income per common share:
Net income applicable to common shares	$	233,446		$	293,569
Adjustments:
Merger-related charges	22,348			16,930
CECL Day 1 non-PCD provision expense	15,312			—
Distribution of excess pension assets expense	13,318			—
FDIC special assessment	2,994			—
Debt securities (gains) losses	14			5,199
Louisville expenses	—			3,361
Property optimization charges	—			1,559
Less: tax effect on net total adjustments (2)	(12,583)			(5,291)
Net income applicable to common shares, adjusted (1)	$	274,849		$	315,327
Weighted average diluted common shares outstanding	304,207			291,870
Net income per common share, diluted	$	0.77		$	1.01
Adjusted net income per common share, diluted (1)	$	0.90		$	1.08
Tangible common book value:
Shareholders’ common equity	$	5,831,353		$	5,048,376
Deduct: Goodwill and intangible assets	2,306,204			2,112,875

Tangible shareholders’ common equity (1)	$	3,525,149		$	2,935,501
Period end common shares	318,969			292,597
Tangible common book value (1)	11.05			10.03
Return on average tangible common equity:
Net income applicable to common shares	$	233,446		$	293,569
Add: Intangible amortization (net of tax) (2)	9,660			9,184
Tangible net income (1)	$	243,106		$	302,753

Average shareholders’ common equity	$	5,528,540		$	4,976,573
Deduct: Average goodwill and intangible assets	2,171,872			2,119,008

Average tangible shareholders’ common equity (1)	$	3,356,668		$	2,857,565
Return on average tangible common equity (1)	14.48		%	21.19		%
Net interest margin:
Net interest income	$	744,879		$	763,659
Taxable equivalent adjustment	12,593			11,491
Net interest income - taxable equivalent basis (1)	$	757,472		$	775,150
Average earning assets	$	45,790,964		$	42,522,747
Net interest margin (1)	3.31		%	3.65		%
Efficiency ratio:
Noninterest expense	$	545,316		$	497,295
Deduct: Intangible amortization expense	12,880			12,246
Adjusted noninterest expense (1)	$	532,436		$	485,049
Net interest income - taxable equivalent basis (1) (see above)	$	757,472		$	775,150
Noninterest income	164,793			152,310
Deduct: Debt securities gains (losses), net	(14)			(5,199)
Adjusted total revenue (1)	$	922,279		$	932,659
Efficiency ratio (1)	57.73		%	52.01		%
Tangible common equity to tangible assets:
Tangible shareholders’ equity (1) (see above)	$	3,525,149		$	2,935,501
Assets	$	53,119,645		$	48,496,755
Deduct: Goodwill and intangible assets	2,306,204			2,112,875

Tangible assets (1)	$	50,813,441		$	46,383,880
Tangible common equity to tangible assets (1)	6.94		%	6.33		%

(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).

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 $53 billion at June 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.

Net income applicable to common shares for the second quarter of 2024 was $117.2 million, or $0.37 per diluted common share, compared to $116.3 million, or $0.40 per diluted common share, for the first quarter of 2024.

Results for the second quarter of 2024 were impacted by $19.4 million in pre-tax merger-related expenses primarily related to the April 1, 2024 acquisition of CapStar 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. 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, $3.0 million for an FDIC special assessment, and $2.9 million of merger-related expenses. Excluding these items, net income applicable to common shares for the second quarter of 2024 was $144.1 million, or $0.46 per diluted common share on an adjusted basis1, compared to $130.8 million, or $0.45 per diluted common share on an adjusted basis1, for the first quarter of 2024.

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

Deposits: Period-end total deposits increased $2.3 billion to $40.0 billion at June 30, 2024 compared to March 31, 2024, including $2.1 billion of end of period deposits assumed in the CapStar transaction. Excluding deposits assumed in the CapStar transaction, period-end total deposits were up 2.4% annualized.

Loans: Our loan balances, excluding loans held-for-sale, increased $2.5 billion to $36.2 billion at June 30, 2024 compared to March 31, 2024, including $2.1 billion of period end loans acquired in the CapStar transaction. Excluding loans acquired in the CapStar transaction, period-end total loans were up 5.9% annualized.

Net Interest Income: Net interest income increased $32.0 million to $388.4 million compared to the first quarter of 2024 driven by CapStar, loan growth, and higher asset yields, partly offset by higher funding costs.

Provision for Credit Losses: Provision for credit losses was $36.2 million; $20.9 million excluding $15.3 million of CECL Day 1 non-PCD provision expense related to the allowance for credit losses established on acquired non-PCD loans in the CapStar transaction, compared to $18.9 million for the first quarter of 2024, reflecting net charge-offs and loan growth, as well as economic factors.

Noninterest Income: Noninterest income increased $9.7 million to $87.3 million compared to the first quarter of 2024 reflecting $6.5 million of CapStar revenue as well as higher wealth fees, mortgage fees, and capital markets income.

Noninterest Expense: Noninterest expense increased $20.7 million compared to the first quarter of 2024. For the second quarter of 2024, noninterest expense included $19.4 million of pre-tax merger-related expenses compared 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, as well as pre-tax charges of $3.0 million for the FDIC special assessment and $2.9 million of merger-related and other expenses in the first quarter of 2024. Excluding these expenses, noninterest expense was $263.6 million for the second quarter of 2024, compared to $243.1 million for the first quarter of 2024, due primarily to operating costs associated with CapStar.

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

CAPSTAR TRANSACTION

On April 1, 2024, Old National completed its acquisition of CapStar, and its wholly-owned subsidiary, CapStar Bank. This partnership strengthens Old National’s Nashville, Tennessee presence and adds several new high-growth markets. At closing, CapStar had approximately $3.1 billion of total assets, $2.1 billion of total loans, and $2.6 billion of deposits. The consideration paid totaled $417.6 million and consisted of 24.0 million shares of Old National common stock. All system conversions related to the transaction were completed in early July of 2024.

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 June 30,						% Change		Six Months Ended June 30,						% Change
	2024			2023					2024			2023
Income Statement Summary:
Net interest income	$	388,421		$	382,171		1.6	%	$	744,879		$	763,659		(2.5)	%
Provision for credit losses	36,214			14,787			144.9		55,105			28,224			95.2
Noninterest income	87,271			81,629			6.9		164,793			152,310			8.2
Noninterest expense	282,999			246,584			14.8		545,316			497,295			9.7
Net income applicable to common shareholders	117,196			151,003			(22.4)		233,446			293,569			(20.5)
Net income per common share - diluted	0.37			0.52			(28.8)		0.77			1.01			(23.8)
Other Data:
Return on average common equity	8.17		%	12.01		%			8.45		%	11.80		%

Return on average tangible common equity (1)	14.07			21.35					14.48			21.19
Efficiency ratio (1)	57.17			51.22					57.73			52.01
Tier 1 leverage ratio	8.90			8.59					8.90			8.59
Net charge-offs (recoveries) to average loans	0.16			0.13					0.15			0.17

(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 six months ended June 30, 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 second quarter of 2024 and increased interest rates compared to June 30, 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 June 30, 2024 compared to 5.08% at June 30, 2023. 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.

The following tables 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 June 30, 2024						Three Months Ended June 30, 2023
Earning Assets	Average Balance		Income (1)/ Expense		Yield/ Rate		Average Balance		Income (1)/ Expense		Yield/ Rate
Money market and other interest-earning investments	$	814,944	$	11,311	5.58	%	$	724,601	$	8,966	4.96	%
Investment securities:
Treasury and government sponsored agencies	2,208,935		21,531		3.90	%	2,222,269		19,355		3.48	%
Mortgage-backed securities	5,828,225		47,904		3.29	%	5,301,084		34,291		2.59	%
States and political subdivisions	1,686,994		14,290		3.39	%	1,768,897		14,396		3.26	%
Other securities	788,571		12,583		6.38	%	824,482		9,995		4.85	%
Total investment securities	10,512,725		96,308		3.66	%	10,116,732		78,037		3.09	%
Loans: (2)
Commercial	10,345,098		183,425		7.09	%	9,862,728		163,721		6.64	%
Commercial real estate	15,870,809		260,407		6.56	%	13,164,390		199,287		6.06	%
Residential real estate loans	6,952,942		67,683		3.89	%	6,643,254		60,717		3.66	%
Consumer	2,910,331		50,869		7.03	%	2,585,493		39,999		6.21	%
Total loans	36,079,180		562,384		6.24	%	32,255,865		463,724		5.75	%
Total earning assets	47,406,849		$	670,003	5.66	%	43,097,198		$	550,727	5.11	%
Deduct: Allowance for credit losses on loans	(331,043)						(301,311)
Non-Earning Assets
Cash and due from banks	430,256						418,972
Other assets	5,341,022						4,884,694
Total assets	$	52,847,084					$	48,099,553

Interest-Bearing Liabilities
Checking and NOW	$	8,189,454	$	34,398	1.69	%	$	7,881,863	$	24,358	1.24	%
Savings	5,044,800		5,254		0.42	%	5,785,603		3,247		0.23	%
Money market	10,728,156		102,560		3.84	%	6,084,963		35,358		2.33	%
Time deposits, excluding brokered deposits	5,358,103		56,586		4.25	%	3,680,029		26,633		2.90	%
Brokered deposits	1,244,237		17,008		5.50	%	948,397		11,378		4.81	%
Total interest-bearing deposits	30,564,750		215,806		2.84	%	24,380,855		100,974		1.66	%
Federal funds purchased and interbank borrowings	148,835		1,986		5.37	%	441,145		5,655		5.14	%
Securities sold under agreements to repurchase	249,939		639		1.03	%	340,178		900		1.06	%
FHLB advances	4,473,978		44,643		4.01	%	5,283,728		45,088		3.42	%
Other borrowings	891,609		12,168		5.49	%	796,536		10,114		5.09	%
Total borrowed funds	5,764,361		59,436		4.15	%	6,861,587		61,757		3.61	%
Total interest-bearing liabilities	$	36,329,111	$	275,242	3.05	%	$	31,242,442	$	162,731	2.09	%

Noninterest-Bearing Liabilities and Shareholders’ Equity
Demand deposits	$	9,558,675					$	10,741,646
Other liabilities	980,322						841,663
Shareholders’ equity	5,978,976						5,273,802
Total liabilities and shareholders’ equity	$	52,847,084					$	48,099,553

Net interest income - taxable equivalent basis			$	394,761	3.33	%			$	387,996	3.60	%
Taxable equivalent adjustment			(6,340)						(5,825)
Net interest income (GAAP)			$	388,421	3.28	%			$	382,171	3.55	%

(1)Interest income is reflected on a fully taxable equivalent basis.

(2)Includes loans held-for-sale.


(Tax equivalent basis, dollars in thousands)	Six Months Ended June 30, 2024						Six Months Ended June 30, 2023
Earning Assets	Average Balance		Income (1)/ Expense		Yield/ Rate		Average Balance		Income (1)/ Expense		Yield/ Rate
Money market and other interest-earning investments	$	786,094	$	21,296	5.45	%	$	611,903	$	12,064	3.98	%
Investment securities:
Treasury and government sponsored agencies	2,285,706		44,797		3.92	%	2,209,916		35,886		3.25	%
Mortgage-backed securities	5,592,655		86,792		3.10	%	5,364,788		69,381		2.59	%
States and political subdivisions	1,683,585		28,266		3.36	%	1,788,498		29,086		3.25	%
Other securities	779,504		24,756		6.35	%	781,549		18,599		4.76	%
Total investment securities	10,341,450		184,611		3.57	%	10,144,751		152,952		3.02	%
Loans: (2)
Commercial	9,942,741		350,688		7.05	%	9,661,029		311,341		6.45	%
Commercial real estate	15,119,590		490,493		6.49	%	12,910,787		378,762		5.87	%
Residential real estate loans	6,823,378		130,686		3.83	%	6,582,982		118,817		3.61	%
Consumer	2,777,711		94,463		6.84	%	2,611,295		78,106		6.03	%
Total loans	34,663,420		1,066,330		6.16	%	31,766,093		887,026		5.59	%
Total earning assets	45,790,964		$	1,272,237	5.56	%	42,522,747		$	1,052,042	4.95	%
Deduct: Allowance for credit losses on loans	(322,256)						(302,844)
Non-Earning Assets
Cash and due from banks	396,466						428,370
Other assets	5,151,308						4,895,843
Total assets	$	51,016,482					$	47,544,116

Interest-Bearing Liabilities
Checking and NOW	$	7,665,327	$	59,650	1.56	%	$	7,934,927	$	43,717	1.11	%
Savings	5,035,100		10,271		0.41	%	5,983,407		5,477		0.18	%
Money market	10,322,808		196,773		3.83	%	5,864,351		55,368		1.90	%
Time deposits, excluding brokered deposits	5,023,620		104,018		4.16	%	3,370,668		41,922		2.51	%
Brokered deposits	1,145,744		30,533		5.36	%	725,701		17,083		4.75	%
Total interest-bearing deposits	29,192,599		401,245		2.76	%	23,879,054		163,567		1.38	%
Federal funds purchased and interbank borrowings	108,962		2,947		5.44	%	430,278		10,494		4.92	%
Securities sold under agreements to repurchase	273,088		1,556		1.15	%	376,298		1,679		0.90	%
FHLB advances	4,430,236		85,810		3.90	%	4,781,326		83,084		3.50	%
Other borrowings	858,727		23,207		5.43	%	788,921		18,068		4.62	%
Total borrowed funds	5,671,013		113,520		4.03	%	6,376,823		113,325		3.58	%
Total interest-bearing liabilities	$	34,863,612	$	514,765	2.97	%	$	30,255,877	$	276,892	1.85	%

Noninterest-Bearing Liabilities and Shareholders’ Equity
Demand deposits	$	9,408,406					$	11,131,789
Other liabilities	972,205						936,158
Shareholders’ equity	5,772,259						5,220,292
Total liabilities and shareholders’ equity	$	51,016,482					$	47,544,116

Net interest income - taxable equivalent basis			$	757,472	3.31	%			$	775,150	3.65	%
Taxable equivalent adjustment			(12,593)						(11,491)
Net interest income (GAAP)			$	744,879	3.25	%			$	763,659	3.59	%

(1)Interest income is reflected on a fully taxable equivalent basis.

(2)Includes loans held-for-sale.

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 June 30, 2023 to Three Months Ended June 30, 2024						From Six Months Ended June 30, 2023 to Six Months Ended June 30, 2024
	Total Change (1)		Attributed to				Total Change (1)		Attributed to
(dollars in thousands)			Volume		Rate				Volume		Rate
Interest Income
Money market and other interest-earning investments	$	2,345	$	1,172	$	1,173	$	9,232	$	4,096	$	5,136
Investment securities (2)	18,271		3,342		14,929		31,659		3,239		28,420
Loans (3)	98,660		57,130		41,530		179,304		85,235		94,069
Total interest income	119,276		61,644		57,632		220,195		92,570		127,625
Interest Expense
Checking and NOW deposits	10,040		1,065		8,975		15,933		(1,787)		17,720
Savings deposits	2,007		(606)		2,613		4,794		(1,416)		6,210
Money market deposits	67,202		35,610		31,592		141,405		63,637		77,768
Time deposits, excluding brokered deposits	29,953		14,880		15,073		62,096		27,460		34,636
Brokered deposits	5,630		3,782		1,848		13,450		10,600		2,850
Federal funds purchased and interbank borrowings	(3,669)		(3,838)		169		(7,547)		(8,286)		739
Securities sold under agreements to repurchase	(261)		(235)		(26)		(123)		(525)		402
FHLB advances	(445)		(7,588)		7,143		2,726		(6,387)		9,113
Other borrowings	2,054		1,239		815		5,139		1,766		3,373
Total interest expense	112,511		44,309		68,202		237,873		85,062		152,811
Net interest income	$	6,765	$	17,335	$	(10,570)	$	(17,678)	$	7,508	$	(25,186)

(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 and $5.6 million during the three and six months ended June 30, 2024, respectively, using the federal statutory rate in effect of 21%.

(3)Interest income on loans includes taxable equivalent adjustments of $3.5 million and $7.0 million during the three and six months ended June 30, 2024, respectively, using the federal statutory rate in effect of 21%.

The increase in net interest income for the three months ended June 30, 2024 when compared to the same period in 2023 was driven by the acquisition of CapStar and loan growth as well as higher rates on loans, partially offset by higher costs and balances of average interest-bearing liabilities. The decrease in net interest income for the six months ended June 30, 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 $11.6 million and $16.7 million for the three and six months ended June 30, 2024, respectively, compared to $6.6 million and $14.5 million for the same periods in 2023.

The decrease in the net interest margin on a fully taxable equivalent basis for the three and six months ended June 30, 2024 compared to the same periods 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 55 basis points and the cost of interest-bearing liabilities increased 96 basis points in the three months ended June 30, 2024 compared to the same quarter a year ago. The yield on interest earning assets increased 61 basis points and the cost of interest-bearing liabilities increased 112 basis points in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Accretion income represented 10 basis points and 7 basis points of the net interest margin in the three and six months ended June 30, 2024, respectively, compared to 6 basis points and 7 basis points in the three and six months ended June 30, 2023, respectively.

Average earning assets were $47.4 billion and $43.1 billion for the three months ended June 30, 2024 and 2023, respectively, an increase of $4.3 billion, or 10%, primarily due to loans and securities acquired in the CapStar transaction as well as strong loan growth. Average earning assets were $45.8 billion and $42.5 billion for the six months ended June 30, 2024 and 2023, respectively, an increase of $3.3 billion, or 8%, primarily due to loans and securities acquired in the CapStar transaction as well as strong loan growth.

Average loans, including loans held-for-sale, increased $3.8 billion and $2.9 billion for the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023 primarily due to loans acquired in the CapStar transaction as well as strong commercial real estate loan growth. Loans acquired in the CapStar transaction totaled $2.1 billion.

Average noninterest-bearing deposits decreased $1.2 billion while average interest-bearing deposits increased $6.2 billion for the three months ended June 30, 2024 when compared to the same period in 2023 reflecting a mix shift as a result of the current rate environment, deposits assumed in the CapStar transaction, and organic growth. Average noninterest-bearing deposits decreased $1.7 billion while average interest-bearing deposits increased $5.3 billion for the six months ended June 30, 2024 when compared to the same period in 2023 reflecting a mix shift as a result of the current rate environment, deposits assumed in the CapStar transaction, and organic growth. Deposits assumed in the CapStar transaction totaled $2.6 billion.

Provision for Credit Losses

The following table details the components of the provision for credit losses:


	Three Months Ended June 30,						%		Six Months Ended June 30,						%
(dollars in thousands)	2024			2023			Change		2024			2023			Change
Provision for credit losses on loans	$	36,745		$	11,936		207.9	%	$	60,598		$	23,405		158.9	%
Provision (release) for credit losses on unfunded loan commitments	(531)			2,851			(118.6)		(5,493)			4,819			(214.0)

Total provision for credit losses	$	36,214		$	14,787		144.9	%	$	55,105		$	28,224		95.2	%

Net (charge-offs) recoveries on non-PCD loans	$	(9,821)		$	(4,689)		109.4	%	$	(15,882)		$	(8,727)		82.0	%
Net (charge-offs) recoveries on PCD loans	(4,224)			(5,403)			(21.8)		(9,913)			(17,794)			(44.3)
Total net (charge-offs) recoveries on loans	$	(14,045)		$	(10,092)		39.2	%	$	(25,795)		$	(26,521)		(2.7)	%
Net charge-offs (recoveries) to average loans	0.16		%	0.13		%	24.5	%	0.15		%	0.17		%	(10.8)

Total provision for credit losses on loans increased in the three and six months ended June 30, 2024 compared to the same periods in 2023 reflecting loan growth and macroeconomic factors. In addition, the provision for credit losses on loans in the three and six months ended June 30, 2024 included $15.3 million to establish an allowance for credit losses on non-PCD loans acquired in the CapStar transaction. 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 June 30,				%		Six Months Ended June 30,				%
(dollars in thousands)	2024		2023		Change		2024		2023		Change
Wealth and investment services fees	$	29,358	$	26,521	10.7	%	$	57,662	$	53,441	7.9	%
Service charges on deposit accounts	19,350		17,751		9.0		37,248		34,754		7.2
Debit card and ATM fees	10,993		10,653		3.2		21,047		20,635		2.0
Mortgage banking revenue	7,064		4,165		69.6		11,542		7,565		52.6
Capital markets income	4,729		6,173		(23.4)		7,629		13,112		(41.8)
Company-owned life insurance	5,739		4,698		22.2		9,173		7,884		16.3
Debt securities gains (losses), net	2		17		(88.2)		(14)		(5,199)		(99.7)
Other income	10,036		11,651		(13.9)		20,506		20,118		1.9
Total noninterest income	$	87,271	$	81,629	6.9	%	$	164,793	$	152,310	8.2	%

Noninterest income increased $5.6 million and $12.5 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023 primarily due to the acquisition of CapStar on April 1, 2024. In addition, noninterest income for the six months ended June 30, 2023 was impacted by $5.2 million of net losses on sales of debt securities.

Mortgage banking revenue increased $2.9 million and $4.0 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023 primarily due to higher mortgage originations and increased loan sales.

Capital markets income decreased $1.4 million and $5.5 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023 primarily due to lower levels of commercial real estate client interest rate swap fees.

Other income decreased $1.6 million for the three months ended June 30, 2024 compared to the same period in 2023 primarily due to lower gains on sales of other assets, partially offset by additional other income associated with the acquisition of CapStar.

Noninterest Expense

The following table details the components in noninterest expense:


	Three Months Ended June 30,				%		Six Months Ended June 30,				%
(dollars in thousands)	2024		2023		Change		2024		2023		Change
Salaries and employee benefits	$	159,193	$	135,810	17.2	%	$	308,996	$	273,174	13.1	%
Occupancy	26,547		26,085		1.8		53,566		54,367		(1.5)
Equipment	8,704		7,721		12.7		17,375		15,110		15.0
Marketing	11,284		9,833		14.8		21,918		19,250		13.9
Technology	24,002		20,056		19.7		44,025		39,258		12.1
Communication	4,480		4,232		5.9		8,480		8,693		(2.5)
Professional fees	10,552		6,397		65.0		16,958		13,129		29.2
FDIC assessment	9,676		9,624		0.5		20,989		20,028		4.8
Amortization of intangibles	7,425		6,060		22.5		12,880		12,246		5.2
Amortization of tax credit investments	2,747		2,762		(0.5)		5,496		5,523		(0.5)

Other expense	18,389		18,004		2.1		34,633		36,517		(5.2)
Total noninterest expense	$	282,999	$	246,584	14.8	%	$	545,316	$	497,295	9.7	%

Noninterest expense included $19.4 million and $2.4 million of merger-related expenses for the three months ended June 30, 2024 and 2023, respectively. In addition the three months ended June 30, 2023 included $3.4 million of expenses related to the Louisville tragedy and $0.2 million for property optimization charges. Excluding these

expenses, noninterest expense increased to $263.6 million for the three months ended June 30, 2024, compared to $240.6 million for the three months ended June 30, 2023. This increase was driven by the additional operating costs associated with the acquisition of CapStar, as well as higher salary and employee benefits reflective of merit increases.

Noninterest expense for the six months ended June 30, 2024 included $22.3 million of merger-related expenses, 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, and $3.0 million for the FDIC special assessment. Noninterest expense for the six months ended June 30, 2023 included $16.9 million of merger-related expenses, $3.4 million of expenses related to the Louisville tragedy, and $1.6 million for property optimization charges. Excluding these expenses, noninterest expense increased to $506.7 million for the six months ended June 30, 2024, compared to $475.4 million for the six months ended June 30, 2023. This increase was driven by the additional operating costs associated with the acquisition of CapStar, as well as higher salary and employee benefits reflective of merit increases.

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 22.5% and 21.9% for the three and six months ended June 30, 2024, respectively, compared to 23.4% and 22.8% for the three and six months ended June 30, 2023, respectively. The decreases in the effective tax rates for the three and six months ended June 30, 2024 when compared to the three and six months ended June 30, 2023 reflected 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 June 30, 2024 based on the current estimate of the effective annual rate.

FINANCIAL CONDITION

Overview

At June 30, 2024, our assets were $53.1 billion, a $4.0 billion increase compared to assets of $49.1 billion at December 31, 2023. The increase was driven primarily by the acquisition of CapStar, as well as disciplined loan growth.

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 $47.6 billion at June 30, 2024, a $3.6 billion increase compared to earning assets of $43.9 billion at December 31, 2023.

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 $10.6 billion at June 30, 2024, compared to $10.2 billion at December 31, 2023. The increase was driven primarily by the acquisition of CapStar. Investment securities represented 22% of earning assets at June 30, 2024, compared to 23% at December 31, 2023. At June 30, 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 $932.0 million and $869.5 million at June 30, 2024 and December 31, 2023, respectively. The investment securities held-to-maturity portfolio had net unrealized losses of $473.9 million and $412.3 million at June 30, 2024 and December 31, 2023, respectively.

The investment securities available-for-sale portfolio including securities hedges had an effective duration of 4.18 at June 30, 2024, compared to 4.24 at December 31, 2023. The total investment securities portfolio had an effective duration of 5.23 at June 30, 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 3.66% and 3.57% for the three and six months ended June 30, 2024, respectively, compared to 3.09% and 3.02% for the three and six months ended June 30, 2023, respectively.

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)	June 30, 2024		December 31, 2023		$ Change		% Change
Commercial	$	10,332,631	$	9,512,230	$	820,401	8.6	%
Commercial real estate	16,016,958		14,140,629		1,876,329		13.3
Residential real estate	6,894,957		6,699,443		195,514		2.9
Consumer	2,905,967		2,639,625		266,342		10.1
Total loans	$	36,150,513	$	32,991,927	$	3,158,586	9.6	%

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 June 30, 2024, compared to 54% at December 31, 2023. The increase in commercial and commercial real estate loans at June 30, 2024 from December 31, 2023 was driven primarily by the acquisition of CapStar, as well as disciplined loan production that was well balanced across our market footprint and product lines.

The following table provides detail on commercial loans by industry classification (as defined by the North American Industry Classification System) and by loan size.


	June 30, 2024									December 31, 2023
(dollars in thousands)	Outstanding			Exposure(1)			Nonaccrual			Outstanding			Exposure(1)			Nonaccrual
By Industry:
Health care and social assistance	$	1,699,428		$	2,034,742		$	1,105		$	1,567,286		$	1,949,250		$	7,390
Manufacturing	1,698,087			2,764,161			19,573			1,589,727			2,734,935			7,408
Wholesale trade	879,982			1,684,226			2,285			748,058			1,541,951			3,789
Construction	755,914			1,587,470			2,478			554,312			1,437,025			2,040
Real estate rental and leasing	722,903			1,103,496			13,584			686,008			1,035,073			700
Finance and insurance	696,351			1,038,128			151			637,630			966,842			1
Professional, scientific, and technical services	541,489			960,129			5,848			458,133			821,738			3,825
Transportation and warehousing	539,579			715,776			7,514			453,630			703,976			1,746
Accommodation and food services	439,124			517,001			2,511			389,591			503,990			705
Administrative and support and waste management and remediation services	399,175			599,449			1,324			321,018			487,359			347
Retail trade	370,758			653,040			5,361			345,944			620,308			5,273
Educational services	270,487			403,267			6			263,539			406,867			7
Agriculture, forestry, fishing, and hunting	260,631			396,167			1,329			255,811			392,098			415
Other services	225,167			399,363			16,306			208,012			400,195			9,328
Public administration	206,816			263,039			—			216,939			285,963			—
Other	626,740			925,894			1,515			816,592			1,111,030			1,537
Total	$	10,332,631		$	16,045,348		$	80,890		$	9,512,230		$	15,398,600		$	44,511

By Loan Size:
Less than $200,000	3		%	3		%	4		%	3		%	3		%	5		%
$200,000 to $1,000,000	12			12			21			11			10			20
$1,000,000 to $5,000,000	24			25			43			24			25			48
$5,000,000 to $10,000,000	16			15			—			16			16			7
$10,000,000 to $25,000,000	29			27			32			31			28			20
Greater than $25,000,000	16			18			—			15			18			—
Total	100		%	100		%	100		%	100		%	100		%	100		%

(1) Includes unfunded loan commitments.

The following table provides detail on commercial real estate loans classified by property type.


	June 30, 2024						December 31, 2023
(dollars in thousands)	Outstanding		Exposure(1)		Nonaccrual		Outstanding		Exposure(1)		Nonaccrual
By Property Type:
Multifamily	$	5,543,433	$	6,900,297	$	49,236	$	4,794,605	$	6,422,311	$	6,050
Warehouse / Industrial	2,927,878		3,318,702		9,510		2,704,656		3,308,273		6,459
Retail	2,248,607		2,386,802		24,413		1,886,233		1,958,254		29,823
Office	2,131,421		2,290,094		33,639		1,948,430		2,112,157		58,111
Senior housing	887,502		955,344		32,445		848,903		947,168		41,632
Single family	539,113		566,327		4,625		450,560		476,946		3,187

Other (2)	1,739,004		2,110,433		29,587		1,507,242		1,824,177		15,530
Total	$	16,016,958	$	18,527,999	$	183,455	$	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

Company’s primary market area. Approximately 27% of the commercial real estate portfolio is owner-occupied as of June 30, 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 June 30, 2024, the Company held $372.3 million of non-owner-occupied commercial real estate loans, or 1% of total loans, that mature within 18 months with an interest rate below 4%.

Residential Real Estate Loans

At June 30, 2024, residential real estate loans held in our loan portfolio were $6.9 billion, an increase of $195.5 million compared to December 31, 2023 driven primarily by the acquisition of CapStar. 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 $266.3 million to $2.9 billion at June 30, 2024 compared to December 31, 2023 driven primarily by the acquisition of CapStar.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets at June 30, 2024 totaled $2.3 billion, an increase of $205.2 million compared to December 31, 2023 as a result of goodwill and other intangible assets recorded with the acquisition of CapStar.

Funding

The following table summarizes Old National’s total funding, comprised of deposits and wholesale borrowings:


(dollars in thousands)	June 30, 2024		December 31, 2023		$ Change		% Change
Deposits:
Noninterest-bearing demand	$	9,336,042	$	9,664,247	$	(328,205)	(3.4)	%
Interest-bearing:
Checking and NOW	8,081,218		7,331,487		749,731		10.2	%
Savings	4,983,811		5,099,186		(115,375)		(2.3)	%
Money market	10,549,944		9,561,116		988,828		10.3	%
Time deposits	7,048,213		5,579,144		1,469,069		26.3	%
Total deposits	39,999,228		37,235,180		2,764,048		7.4	%
Wholesale borrowings:
Federal funds purchased and interbank borrowings	250,154		390		249,764		N/M
Securities sold under agreements to repurchase	240,713		285,206		(44,493)		(15.6)	%
Federal Home Loan Bank advances	4,744,560		4,280,681		463,879		10.8	%
Other borrowings	849,777		764,870		84,907		11.1	%
Total wholesale borrowings	6,085,204		5,331,147		754,057		14.1	%
Total funding	$	46,084,432	$	42,566,327	$	3,518,105	8.3	%

The increase in total deposits was primarily due to deposits assumed in the CapStar transaction. 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 13% at both June 30, 2024 and December 31, 2023.

Capital

Shareholders’ equity totaled $6.1 billion at June 30, 2024 and $5.6 billion at December 31, 2023. Old National issued 24.0 million shares of Common Stock in conjunction with the acquisition of CapStar on April 1, 2024 totaling $417.6 million in shareholders’ equity. Retained earnings were partially offset by dividends and changes in unrealized gains (losses) on available-for-sale investment securities during the six months ended June 30, 2024.

Capital Adequacy

Old National and the banking industry are subject to various regulatory capital requirements administered by the federal banking agencies. At June 30, 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.

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		June 30, 2024		December 31, 2023

Tier 1 capital to total average assets (leverage ratio)	4.00	%	N/A	%	8.90	%	8.83	%
Common equity Tier 1 capital to risk-weighted total assets	7.00		N/A		10.73		10.70
Tier 1 capital to risk-weighted total assets	8.50		6.00		11.33		11.35
Total capital to risk-weighted total assets	10.50		10.00		12.71		12.64
Shareholders’ equity to assets	N/A		N/A		11.44		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		June 30, 2024		December 31, 2023

Tier 1 capital to total average assets (leverage ratio)	4.00	%	5.00	%	8.85	%	8.99	%
Common equity Tier 1 capital to risk-weighted total assets	7.00		6.50		11.26		11.57
Tier 1 capital to risk-weighted total assets	8.50		8.00		11.26		11.57
Total capital to risk-weighted total assets	10.50		10.00		12.08		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, Enterprise Risk Committee of our Board, 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.

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 June 30, 2024, our average commercial loan size was approximately $610,000 and our average commercial real estate loan size was approximately $1,330,000. 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 June 30, 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 and Southeast regions of the United States.

The following table presents a summary of under-performing, special mention, and classified assets:


(dollars in thousands)	June 30, 2024			December 31, 2023
Total nonaccrual loans	$	340,181		$	274,821
Total past due loans (90 days or more and still accruing)	5,251			961
Foreclosed assets	8,290			9,434
Total under-performing assets	$	353,722		$	285,216
Classified loans (includes nonaccrual, past due 90 days, and other problem loans)	$	1,186,519		$	875,140
Other classified assets (1)	60,772			48,930
Special mention loans	967,655			843,920
Total criticized and classified assets	$	2,214,946		$	1,767,990
Asset Quality Ratios:
Nonaccrual loans/total loans (2)	0.94		%	0.83		%

Under-performing assets/total loans (2)	0.98			0.86
Under-performing assets/total assets	0.67			0.58
Allowance for credit losses on loans/under-performing assets	103.57			107.85
Allowance for credit losses on loans/nonaccrual loans	107.69			111.93

(1)Includes investment securities that fell below investment grade rating.

(2)Loans exclude loans held-for-sale.

Under-performing assets increased to $353.7 million at June 30, 2024, compared to $285.2 million at December 31, 2023. Under-performing assets as a percentage of total loans at June 30, 2024 were 0.98%, a 12 basis point increase from 0.86% at December 31, 2023.

Nonaccrual loans increased $65.4 million from December 31, 2023 to June 30, 2024 reflecting the migration of certain non-owner-occupied commercial real estate loans as they progress to resolution as well as $17.2 million of nonaccrual loans acquired in the CapStar acquisition. As a percentage of nonaccrual loans, the allowance for credit losses on loans was 107.69% at June 30, 2024, compared to 111.93% at December 31, 2023.

Total criticized and classified assets were $2.2 billion at June 30, 2024, an increase of $447.0 million from December 31, 2023 primarily due to higher criticized and classified commercial real estate loans as well as $73.1 million of criticized and classified loans related to the CapStar acquisition. Other classified assets include investment securities that fell below investment grade rating totaling $60.8 million at June 30, 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 $14.0 million during the three months ended June 30, 2024, compared to $10.1 million for the same period in 2023. Annualized, net charge-offs to average loans were 0.16% for the three months ended June 30, 2024, compared to 0.13% for the same period in 2023. The three months ended June 30, 2024 included net charge-offs on PCD loans totaling $4.2 million, or 0.05% on an annualized basis of average loans, compared to net charge-offs on PCD loans totaling $5.4 million, or 0.07% on an annualized basis of average loans for the three months ended June 30, 2023. Net charge-offs on loans totaled $25.8 million during the six months ended June 30, 2024, compared to $26.5 million for the same period in 2023. Annualized, net charge-offs to average loans were 0.15% for the six months ended June 30, 2024, compared to 0.17% for the same period in 2023. The six months ended June 30, 2024 included net charge-offs on PCD loans totaling $9.9 million, or 0.06% on an annualized basis of average loans, compared to net charge-offs on PCD loans totaling $17.8 million, or 0.11% on an annualized basis of average loans for the six months ended June 30, 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 $366.3 million at June 30, 2024, compared to $307.6 million at December 31, 2023. The increase reflects $23.9 million of allowance for credit losses on acquired PCD loans established through acquisition accounting adjustments on or after the CapStar acquisition date. In addition, the provision for credit losses on loans in the three and six months ended June 30, 2024 included $15.3 million to establish an allowance for credit losses on non-PCD loans acquired in the CapStar transaction. 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 $25.7 million at June 30, 2024, compared to $31.2 million at December 31, 2023. We increased the allowance for

credit losses on unfunded loans commitments by $1.8 million in the three and six months ended June 30, 2024 as a result of the CapStar transaction.

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 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 June 30, 2024.

The following table illustrates our projected net interest income sensitivity over a two-year cumulative horizon based on the asset/liability model at June 30, 2024 and 2023:


	Immediate Rate Decrease									June 30, 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
June 30, 2024
Projected interest income:
Money market, other interest earning investments, and investment securities	$	855,249		$	839,638		$	885,050		$	894,175		$	932,986		$	990,743		$	1,047,039		$	1,102,619
Loans	3,417,630			3,822,978			4,230,649			4,363,917			4,629,910			5,026,272			5,422,326			5,817,978
Total interest income	4,272,879			4,662,616			5,115,699			5,258,092			5,562,896			6,017,015			6,469,365			6,920,597
Projected interest expense:
Deposits	678,766			993,235			1,310,490			1,373,925			1,626,368			1,967,119			2,319,244			2,664,273
Borrowings	496,153			573,485			665,844			682,410			757,854			849,959			942,053			1,034,021
Total interest expense	1,174,919			1,566,720			1,976,334			2,056,335			2,384,222			2,817,078			3,261,297			3,698,294
Net interest income	$	3,097,960		$	3,095,896		$	3,139,365		$	3,201,757		$	3,178,674		$	3,199,937		$	3,208,068		$	3,222,303
Change from base	$	(80,714)		$	(82,778)		$	(39,309)		$	23,083					$	21,263		$	29,394		$	43,629
% change from base	(2.54)		%	(2.60)		%	(1.24)		%	0.73		%				0.67		%	0.92		%	1.37		%

	Immediate Rate Decrease												Immediate Rate Increase
	-300 Basis Points			-200 Basis Points			-100 Basis Points			Base			+100 Basis Points			+200 Basis Points			+300 Basis Points
June 30, 2023
Projected interest income:
Money market, other interest earning investments, and investment securities	$	703,760		$	700,039		$	751,180		$	805,138		$	858,682		$	912,190		$	966,037
Loans	2,812,913			3,179,212			3,546,919			3,910,105			4,266,532			4,623,023			4,979,447
Total interest income	3,516,673			3,879,251			4,298,099			4,715,243			5,125,214			5,535,213			5,945,484
Projected interest expense:
Deposits	358,077			570,196			785,031			1,012,889			1,259,985			1,507,077			1,754,162
Borrowings	373,267			415,553			513,309			600,910			683,328			765,754			848,179
Total interest expense	731,344			985,749			1,298,340			1,613,799			1,943,313			2,272,831			2,602,341
Net interest income	$	2,785,329		$	2,893,502		$	2,999,759		$	3,101,444		$	3,181,901		$	3,262,382		$	3,343,143
Change from base	$	(316,115)		$	(207,942)		$	(101,685)					$	80,457		$	160,938		$	241,699
% change from base	(10.19)		%	(6.70)		%	(3.28)		%				2.59		%	5.19		%	7.79		%

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 $13.6 million at June 30, 2024, compared to a net asset position with a fair value gain of $4.5 million at

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 June 30, 2024.


(dollars in thousands)
Maturity Bucket	Amount		Rate
2024	$	4,696,839	4.78	%
2025	2,122,569		4.38
2026	147,181		1.29
2027	46,249		1.28
2028	17,624		1.51
2027 and beyond	17,751		1.74
Total	$	7,048,213	4.55	%

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 June 30, 2024 are shown in the following table.


	Moody’s Investors Service
	Long-term	Short-term
Old National	Baa1	N/A
Old National Bank	A1	P-1

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 June 30, 2024, Old National and its subsidiaries had the following availability of liquid funds and borrowings:


(dollars in thousands)	Parent Company		Subsidiaries
Available liquid funds:
Cash and due from banks	$	436,277	$	796,769
Unencumbered government-issued debt securities	—		1,654,342
Unencumbered investment grade municipal securities	—		101,611
Unencumbered corporate securities	—		43,761
Availability of borrowings*:
Amount available from Federal Reserve discount window	—		4,178,105
Amount available from Federal Home Loan Bank	—		6,476,625
Total available funds	$	436,277	$	13,251,213

* 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 June 30, 2024, Old National Bancorp’s other borrowings outstanding were $507.3 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.

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.

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)
04/01/24 - 04/30/24	69,517	$	16.65	—	$	200,000,000
05/01/24 - 05/31/24	5,312	$	16.77	—	$	200,000,000
06/01/24 - 06/30/24	1,743	$	17.09	—	$	200,000,000
Total	76,572	$	16.67	—	$	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 June 30, 2024, no director or Section 16 officer of the Company or 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.

ITEM 6. EXHIBITS


Exhibit No.						Description



2.1						Agreement and Plan of Merger dated as of October 26, 2023 by and between Old National and CapStar Financial Holdings, Inc. (the schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K) (incorporated by reference to Exhibit 2.1 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 31, 2023).

3.1						Fifth Amended and Restated Articles of Incorporation of Old National, amended April 30, 2020 (incorporated by reference to Exhibit 3.1 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 18, 2020).

3.2						Articles of Amendment to the Fifth Amended and Restated Articles of Incorporation of Old National authorizing additional shares of Old National capital stock (incorporated by reference to Exhibit 3.2 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 16, 2022).

3.3						Articles of Amendment to the Fifth Amended and Restated Articles of Incorporation of Old National designating the New Old National Series A Preferred Stock (incorporated by reference to Exhibit 3.3 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 16, 2022).

3.4						Articles of Amendment to the Fifth Amended and Restated Articles of Incorporation of Old National designating the New Old National Series C Preferred Stock (incorporated by reference to Exhibit 3.4 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 16, 2022).

3.5						Amended and Restated By-Laws of Old National, amended February 21, 2024 (incorporated by reference to Exhibit 3.1 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 27, 2024).







31.1						Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101						The following materials from Old National’s Form 10-Q Report for the quarterly period ended June 30, 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 June 30, 2024, formatted in inline XBRL and contained in Exhibit 101.

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: July 31, 2024

OLD NATIONAL BANCORP /IN/ - Quarter Report: 2024 June (Form 10-Q)

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