OLD NATIONAL BANCORP /IN/ - Quarter Report: 2024 September (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
September 30,

Nine Months Ended
September 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 September 30,			Nine Months Ended September 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

()

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, September 30, 2023

()

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited) – (Continued)

(dollars in thousands, except per
share data)

Preferred Stock

Common Stock

Capital Surplus

Retained Earnings

Accumulated
Other
Comprehensive Income (Loss)

Total
Shareholders’ Equity

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

()

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, September 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)


	Nine Months Ended September 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)


	Nine Months Ended September 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
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 and integration costs primarily associated with the CapStar merger have been expensed for the three and nine months ended September 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$ $ $()$()$ 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$ $ $()$()$

(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.

$ $()$ Mortgage-backed securities - Agency () States and political subdivisions () Allowance for securities held-to-maturity()— — ()Total held-to-maturity securities$ $ $()$ December 31, 2023Held-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$ $ $()$

Substantially all of the mortgage-backed securities in the investment portfolio are residential mortgage-backed securities.

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

The table below shows the amortized cost and fair value of the investment securities portfolio by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

$ %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 September 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 September 30, 2024 or December 31, 2023.

million at September 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 September 30, 2024 and $ million at December 31, 2023.

At September 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 September 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 nine months ended September 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 September 30, 2024 and $ million at December 31, 2023. There were gains on equity securities of $ million during the three months ended September 30, 2024 and $ million during the nine months ended September 30, 2024, compared to losses of $ million during the three months ended September 30, 2023 and $ million during the nine months ended September 30, 2023.

Alternative Investments

Old National has alternative investments without readily determinable fair values that are included in other assets totaling $ million at September 30, 2024 and $ million at December 31, 2023. These investments consisted 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 at September 30, 2024, compared to $ million and $ million for the same investment types, respectively, 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 nine months ended September 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

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 September 30, 2024 and $ million at December 31, 2023.

(2) Includes unearned income of $ million at September 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.

%, 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 September 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.

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

The allowance for credit losses on loans at September 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. In addition, the provision for credit losses on loans in the nine months ended September 30, 2024 included $ million to establish an allowance for credit losses on non-PCD loans acquired in the CapStar transaction.

million at September 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, commercial real estate, and BBCC 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	$	$	$	$	$	$	$	$	$

% % % % %

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

September 30, 2024

Commercial

Commercial real estate

Total

September 30, 2023

Commercial

Commercial real estate

There were payment defaults on $ million and $ million of loans during the three and nine months ended September 30, 2024, respectively, 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 nine months ended September 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 September 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 leasesDue in 2028 Thereafter Fair value hedge basis adjustments and unamortized prepayment fees()Total$

NOTE 12 –

%) maturing September 2026$ $

Subordinated debentures (fixed rate %) maturing June 2030

Junior subordinated debentures (rates of % to %) maturing

July 2031 to September 2037

Senior unsecured notes (fixed rate %) matured August 2024

Unamortized debt issuance costs related to senior unsecured notes ()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 September 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 September 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$()$()$ $ $()Three Months Ended September 30, 2023Balance at beginning of period$()$()$()$ $()Other comprehensive income (loss) before
reclassifications() () ()

Amounts reclassified from AOCI to income (1)

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

Amounts reclassified from AOCI to income (1)

Balance at end of period$()$()$ $ $()Nine Months Ended September 30, 2023Balance at beginning of period$()$()$()$ $()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 incomeTotal reclassifications for the period$()$()Net income

The following table summarizes the amounts reclassified out of each component of AOCI for the nine months ended September 30, 2024 and 2023:


	Nine Months Ended September 30,
(dollars in thousands)	2024		2023
Details about AOCI Components	Amount Reclassified from AOCI				Affected Line Item in the Statement of Income
Unrealized gains and losses on available-for-sale securities	$	()	$	()	Debt securities gains (losses), net
					Income tax (expense) benefit
	$	()	$	()	Net income
Amortization of unrealized losses on held-to-maturity securities transferred from available-for-sale	$	()	$	()	Interest income (expense)
					Income tax (expense) benefit
	$	()	$	()	Net income
Gains and losses on hedges Interest rate contracts	$	()	$		Interest income (expense)
			()		Income tax (expense) benefit
	$	()	$		Net income
Amortization of defined benefit pension items
Actuarial gains (losses)	$		$		Salaries and employee benefits
			()		Income tax (expense) benefit
	$		$		Net income

Total 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 % % % %

Net Deferred Tax Assets

Net deferred tax assets are included in other assets on the balance sheet. At September 30, 2024, net deferred tax assets totaled $ million, compared to $ million at December 31, 2023. valuation allowance was required on the Company’s deferred tax assets at September 30, 2024 or December 31, 2023.

The Company’s retained earnings at September 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 September 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 September 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 September 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 September 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.

Old National has designated its interest rate collars as cash flow hedges. The structure of these instruments is such that Old National pays the counterparty an incremental amount if the collar index exceeds the cap rate. Conversely, Old National receives an incremental amount if the index falls below the floor rate. No payments are required if the collar index falls between the cap and floor rates.

Old National has designated its interest rate floor transactions as cash flow hedges. The structure of these instruments is such that Old National receives an incremental amount if the index falls below the floor strike rate. No payments are required if the index remains above the floor strike rate.

Fair Value Hedges

Interest rate swaps of certain borrowings were designated as fair value hedges totaling $ billion notional amount at September 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 September 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
September 30, 2023Interest rate contractsInterest income/(expense)$()Fixed-rate debtInterest income/(expense)$ Interest rate contractsInterest income/(expense) Fixed-rate
investment
securitiesInterest income/(expense)()Total$ $()

Nine Months Ended
September 30, 2024

Interest rate contractsInterest income/(expense)$ Fixed-rate debtInterest income/(expense)$()Interest rate contractsInterest income/(expense)()Fixed-rate
investment
securitiesInterest income/(expense) Total$()$ September 30, 2024December 31, 2023(dollars in thousands)AssetsLiabilitiesAssetsLiabilitiesGross amounts recognized$ $ $ $ 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 September 30, 2024 and $ million at December 31, 2023.

At September 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 September 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 September 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 September 30, 2024. Old National recorded provision expense associated with these loans totaling $ million and $ million for the three and nine months ended September 30, 2024, respectively, compared to $ million and $ million for the three and nine months ended September 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 and had a net carrying amount of $ million at September 30, 2024. There were write-downs on other real estate owned totaling $ million and $ million for the three and nine months ended September 30, 2024, respectively, compared to $ thousand and $ million for the three and nine months ended September 30, 2023, respectively.

$ $ $ 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. Net carrying amount of other real estate owned and other repossessed property totaled $ million at December 31, 2023.

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 AssetsCommercial real estate 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 residential real estate property at September 30, 2024 with write-downs during the nine months ended September 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 September 30, 2024 and $ million for the nine months ended September 30, 2024, compared to $ million and $ million for the three and nine months ended September 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 September 30, 2023Loans held-for-sale$()$ $ $()Nine Months Ended September 30, 2024Loans held-for-sale$ $ $()$ Nine Months Ended September 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 September 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 nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, and financial condition as of September 30, 2024 compared to December 31, 2023. This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes, as well as our 2023 Annual Report on Form 10-K.

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)	September 30,			June 30,			March 31,			December 31,			September 30,
	2024			2024			2024			2023			2023
Income Statement:
Net interest income	$	391,724		$	388,421		$	356,458		$	364,408		$	375,086
Taxable equivalent adjustment (1) (3)	6,144			6,340			6,253			6,100			5,837
Net interest income - taxable equivalent basis (3)	397,868			394,761			362,711			370,508			380,923
Provision for credit losses	28,497			36,214			18,891			11,595			19,068
Noninterest income	94,138			87,271			77,522			100,094			80,938
Noninterest expense	272,283			282,999			262,317			284,235			244,776
Net income available to common shareholders	139,768			117,196			116,250			128,446			143,842
Per Common Share Data:
Weighted average diluted common shares	317,331			316,461			292,207			292,029			291,717
Net income (diluted)	$	0.44		$	0.37		$	0.40		$	0.44		$	0.49
Cash dividends	0.14			0.14			0.14			0.14			0.14
Common dividend payout ratio (2)	32		%	38		%	35		%	32		%	29		%
Book value	$	19.20		$	18.28		$	18.24		$	18.18		$	17.07
Stock price	18.66			17.19			17.41			16.89			14.54
Tangible common book value (3)	11.97			11.05			11.10			11.00			9.87
Performance Ratios:
Return on average assets	1.08		%	0.92		%	0.98		%	1.09		%	1.22		%
Return on average common equity	9.40			8.17			8.74			10.20			11.39

Return on average tangible common equity (3)	15.00			20.85
Net interest margin (3)	3.31			3.59
Efficiency ratio (3)	56.37			51.89
Net charge-offs (recoveries) to average loans	0.16			0.19
Allowance for credit losses on loans to ending loans	1.05			0.93
Allowance for credit losses (4) to ending loans	1.12			1.03
Non-performing loans to ending loans	1.22			0.80
Balance Sheet:
Total loans	$	36,400,643		$	32,577,834
Total assets	53,602,293			49,059,448
Total deposits	40,845,746			37,252,676
Total borrowed funds	5,449,096			5,556,010
Total shareholders’ equity	6,367,298			5,239,537
Capital Ratios:
Risk-based capital ratios:
Tier 1 common equity	11.00		%	10.41		%
Tier 1	11.60			11.06
Total	12.94			12.32
Leverage ratio (to average assets)	9.05			8.70
Total equity to assets (averages)	11.41			10.95
Tangible common equity to tangible assets (3)	7.44			6.15
Nonfinancial Data:
Full-time equivalent employees	4,105			3,981
Banking centers	280			257

(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, separation expense, debt securities gains/losses, CECL Day 1 non-PCD provision expense, distribution of excess pension assets expense, FDIC special assessment expense, gain on sale of Visa Class B restricted shares, contract termination charges, expenses related to the tragic April 10, 2023 event at our downtown Louisville location (“Louisville expenses”), and property optimization charges. Management believes excluding these items from net income per common share and net income applicable to common shares may be useful in assessing the Company's underlying operational performance since these items do not pertain to its core business operations and their exclusion may facilitate better comparability between periods. Management believes that excluding merger-related charges from these metrics may be useful to the Company, as well as analysts and investors, since these expenses can vary significantly based on the size, type, and structure of each acquisition. Additionally, management believes excluding these items from these metrics may enhance comparability for peer comparison purposes.

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)	September 30,			June 30,			March 31,			December 31,			September 30,
	2024			2024			2024			2023			2023
Net income per common share:
Net income applicable to common shares	$	139,768		$	117,196		$	116,250		$	128,446		$	143,842
Adjustments:
Merger-related charges	6,860			19,440			2,908			5,529			6,257
Separation expense	2,646			—			—			—			—
Debt securities (gains) losses	76			(2)			16			825			241
CECL Day 1 non-PCD provision expense	—			15,312			—			—			—
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			—


Less: tax effect on net total adjustments (2)	(2,134)			(7,888)			(4,695)			(1,988)			(1,082)
Net income applicable to common shares, adjusted (1)	$	147,216		$	144,058		$	130,791		$	134,642		$	149,258
Weighted average diluted common shares outstanding	317,331			316,461			292,207			292,029			291,717
Net income per common share, diluted	$	0.44		$	0.37		$	0.40		$	0.44		$	0.49
Adjusted net income per common share, diluted (1)	$	0.46		$	0.46		$	0.45		$	0.46		$	0.51
Tangible common book value:
Shareholders’ common equity	$	6,123,579		$	5,831,353		$	5,351,689		$	5,319,181		$	4,995,818
Deduct: Goodwill and intangible assets	2,305,084			2,306,204			2,095,511			2,100,966			2,106,835

Tangible shareholders’ common equity (1)	$	3,818,495		$	3,525,149		$	3,256,178		$	3,218,215		$	2,888,983
Period end common shares	318,955			318,969			293,330			292,655			292,586
Tangible common book value (1)	11.97			11.05			11.10			11.00			9.87
Return on average tangible common equity:
Net income applicable to common shares	$	139,768		$	117,196		$	116,250		$	128,446		$	143,842
Add: Intangible amortization (net of tax) (2)	5,558			5,569			4,091			4,402			4,530
Tangible net income (1)	$	145,326		$	122,765		$	120,341		$	132,848		$	148,372




Average shareholders’ common equity	$	5,946,352		$	5,735,257		$	5,321,823		$	5,037,768		$	5,050,353
Deduct: Average goodwill and intangible assets	2,304,597			2,245,405			2,098,338			2,103,935			2,109,944

Average tangible shareholders’ common equity (1)	$	3,641,755		$	3,489,852		$	3,223,485		$	2,933,833		$	2,940,409
Return on average tangible common equity (1)	15.96		%	14.07		%	14.93		%	18.11		%	20.18		%
Net interest margin:
Net interest income	$	391,724		$	388,421		$	356,458		$	364,408		$	375,086
Taxable equivalent adjustment	6,144			6,340			6,253			6,100			5,837
Net interest income - taxable equivalent basis (1)	$	397,868		$	394,761		$	362,711		$	370,508		$	380,923
Average earning assets	$	47,905,463		$	47,406,849		$	44,175,079		$	43,701,283		$	43,617,456
Net interest margin (1)	3.32		%	3.33		%	3.28		%	3.39		%	3.49		%
Efficiency ratio:
Noninterest expense	$	272,283		$	282,999		$	262,317		$	284,235		$	244,776
Deduct: Intangible amortization expense	7,411			7,425			5,455			5,869			6,040
Adjusted noninterest expense (1)	$	264,872		$	275,574		$	256,862		$	278,366		$	238,736
Net interest income - taxable equivalent basis (1) (see above)	$	397,868		$	394,761		$	362,711		$	370,508		$	380,923
Noninterest income	94,138			87,271			77,522			100,094			80,938
Deduct: Debt securities gains (losses), net	(76)			2			(16)			(825)			(241)
Adjusted total revenue (1)	$	492,082		$	482,030		$	440,249		$	471,427		$	462,102
Efficiency ratio (1)	53.83		%	57.17		%	58.34		%	59.05		%	51.66		%
Tangible common equity to tangible assets:
Tangible shareholders’ equity (1) (see above)	$	3,818,495		$	3,525,149		$	3,256,178		$	3,218,215		$	2,888,983
Assets	$	53,602,293		$	53,119,645		$	49,534,918		$	49,089,836		$	49,059,448

Deduct: Goodwill and intangible assets	2,305,084			2,306,204			2,095,511			2,100,966			2,106,835

Tangible assets (1)	$	51,297,209		$	50,813,441		$	47,439,407		$	46,988,870		$	46,952,613
Tangible common equity to tangible assets (1)	7.44		%	6.94		%	6.86		%	6.85		%	6.15		%

(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:


	Nine Months Ended September 30,
(dollars and shares in thousands, except per share data)	2024			2023
Net income per common share:
Net income applicable to common shares	$	373,214		$	437,411
Adjustments:
Merger-related charges	29,208			23,187
Separation expense	2,646			—
Debt securities (gains) losses	90			5,440
CECL Day 1 non-PCD provision expense	15,312			—
Distribution of excess pension assets expense	13,318			—
FDIC special assessment	2,994			—
Louisville expenses	—			3,361
Property optimization charges	—			1,559
Less: tax effect on net total adjustments (2)	(14,717)			(6,373)
Net income applicable to common shares, adjusted (1)	$	422,065		$	464,585
Weighted average diluted common shares outstanding	308,605			291,809
Net income per common share, diluted	$	1.21		$	1.50
Adjusted net income per common share, diluted (1)	$	1.37		$	1.59
Tangible common book value:
Shareholders’ common equity	$	6,123,579		$	4,995,818
Deduct: Goodwill and intangible assets	2,305,084			2,106,835

Tangible shareholders’ common equity (1)	$	3,818,495		$	2,888,983
Period end common shares	318,955			292,586
Tangible common book value (1)	11.97			9.87
Return on average tangible common equity:
Net income applicable to common shares	$	373,214		$	437,411
Add: Intangible amortization (net of tax) (2)	15,218			13,714
Tangible net income (1)	$	388,432		$	451,125

Average shareholders’ common equity	$	5,668,827		$	5,001,437
Deduct: Average goodwill and intangible assets	2,216,437			2,115,953

Average tangible shareholders’ common equity (1)	$	3,452,390		$	2,885,484
Return on average tangible common equity (1)	15.00		%	20.85		%
Net interest margin:
Net interest income	$	1,136,603		$	1,138,745
Taxable equivalent adjustment	18,737			17,328
Net interest income - taxable equivalent basis (1)	$	1,155,340		$	1,156,073
Average earning assets	$	46,500,942		$	42,891,660
Net interest margin (1)	3.31		%	3.59		%
Efficiency ratio:
Noninterest expense	$	817,599		$	742,071
Deduct: Intangible amortization expense	20,291			18,286
Adjusted noninterest expense (1)	$	797,308		$	723,785
Net interest income - taxable equivalent basis (1) (see above)	$	1,155,340		$	1,156,073
Noninterest income	258,931			233,248
Deduct: Debt securities gains (losses), net	(90)			(5,440)
Adjusted total revenue (1)	$	1,414,361		$	1,394,761
Efficiency ratio (1)	56.37		%	51.89		%
Tangible common equity to tangible assets:
Tangible shareholders’ equity (1) (see above)	$	3,818,495		$	2,888,983
Assets	$	53,602,293		$	49,059,448
Deduct: Goodwill and intangible assets	2,305,084			2,106,835

Tangible assets (1)	$	51,297,209		$	46,952,613
Tangible common equity to tangible assets (1)	7.44		%	6.15		%

(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 $54 billion at September 30, 2024. The Company’s corporate headquarters and principal executive office is located in Evansville, Indiana with commercial and consumer banking operations headquartered in Chicago, Illinois. Through our wholly-owned banking subsidiary and non-bank affiliates, we provide a wide range of services primarily throughout the Midwest and Southeast regions of the United States. In addition to providing extensive services in consumer and commercial banking, Old National offers comprehensive wealth management and capital markets services.

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

Results for the third quarter of 2024 were impacted by $6.9 million in pre-tax merger-related expenses primarily related to the April 1, 2024 acquisition of CapStar and $2.6 million of separation expense associated with a mutual separation agreement with a former executive. Results for the second quarter of 2024 were impacted by $19.4 million of merger-related expenses and $15.3 million of CECL Day 1 non-PCD provision expense related to the allowance for credit losses established on acquired non-PCD loans. Excluding these items, net income applicable to common shares for the third quarter of 2024 was $147.2 million, or $0.46 per diluted common share on an adjusted basis1, compared to $144.1 million, or $0.46 per diluted common share on an adjusted basis1, for the second quarter of 2024.

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

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

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

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

Provision for Credit Losses: Provision for credit losses was $28.5 million compared to $36.2 million, or $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 in the second quarter of 2024.

Noninterest Income: Noninterest income increased $6.9 million to $94.1 million compared to the second quarter of 2024 reflecting higher service charges, mortgage fees, capital markets income, and other income.

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

(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 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 September 30,						% Change		Nine Months Ended September 30,						% Change
	2024			2023					2024			2023
Income Statement Summary:
Net interest income	$	391,724		$	375,086		4.4	%	$	1,136,603		$	1,138,745		(0.2)	%
Provision for credit losses	28,497			19,068			49.4		83,602			47,292			76.8
Noninterest income	94,138			80,938			16.3		258,931			233,248			11.0
Noninterest expense	272,283			244,776			11.2		817,599			742,071			10.2
Net income applicable to common shareholders	139,768			143,842			(2.8)		373,214			437,411			(14.7)
Net income per common share - diluted	0.44			0.49			(10.2)		1.21			1.50			(19.3)
Other Data:
Return on average common equity	9.40		%	11.39		%			8.78		%	11.66		%

Return on average tangible common equity (1)	15.96			20.18					15.00			20.85
Efficiency ratio (1)	53.83			51.66					56.37			51.89
Tier 1 leverage ratio	9.05			8.70					9.05			8.70
Net charge-offs (recoveries) to average loans	0.19			0.24					0.16			0.19

(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 81% of revenues for the nine months ended September 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 decreased its interest rates during the third quarter of 2024. The Federal Reserve’s Federal Funds Rate is currently in a target range of 4.75% to 5.00%, with the Effective Federal Funds Rate of 4.83% at September 30, 2024 compared to 5.33% at September 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 present 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 September 30, 2024						Three Months Ended September 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	$	904,176	$	11,696	5.15	%	$	980,813	$	13,194	5.34	%
Investment securities:
Treasury and government sponsored agencies	2,255,629		21,851		3.87	%	2,376,864		23,037		3.88	%
Mortgage-backed securities	5,977,058		48,425		3.24	%	5,079,091		33,237		2.62	%
States and political subdivisions	1,668,454		14,042		3.37	%	1,737,037		14,220		3.27	%
Other securities	785,107		12,547		6.39	%	793,196		10,127		5.11	%
Total investment securities	10,686,248		96,865		3.63	%	9,986,188		80,621		3.23	%
Loans: (2)
Commercial	10,373,340		183,878		7.09	%	9,612,102		163,869		6.82	%
Commercial real estate	16,216,842		274,832		6.78	%	13,711,156		219,575		6.41	%
Residential real estate loans	6,833,597		67,084		3.93	%	6,712,269		62,775		3.74	%
Consumer	2,891,260		51,714		7.12	%	2,614,928		42,322		6.42	%
Total loans	36,315,039		577,508		6.36	%	32,650,455		488,541		5.98	%
Total earning assets	47,905,463		$	686,069	5.73	%	43,617,456		$	582,356	5.34	%
Deduct: Allowance for credit losses on loans	(366,667)						(300,071)
Non-Earning Assets
Cash and due from banks	413,583						382,755
Other assets	5,394,032						4,960,383
Total assets	$	53,346,411					$	48,660,523

Interest-Bearing Liabilities
Checking and NOW	$	7,551,264	$	29,344	1.55	%	$	7,515,439	$	25,531	1.35	%
Savings	4,860,161		5,184		0.42	%	5,414,775		4,268		0.31	%
Money market	11,064,433		106,148		3.82	%	7,979,999		65,549		3.26	%
Time deposits, excluding brokered deposits	5,928,241		64,435		4.32	%	4,229,692		37,110		3.48	%
Brokered deposits	1,829,218		24,616		5.35	%	1,183,228		14,970		5.02	%
Total interest-bearing deposits	31,233,317		229,727		2.93	%	26,323,133		147,428		2.22	%
Federal funds purchased and interbank borrowings	14,549		292		7.98	%	62,921		910		5.74	%
Securities sold under agreements to repurchase	239,524		612		1.02	%	302,305		710		0.93	%
FHLB advances	4,572,046		47,719		4.15	%	4,537,250		40,382		3.53	%
Other borrowings	754,544		9,851		5.19	%	841,307		12,003		5.66	%
Total borrowed funds	5,580,663		58,474		4.17	%	5,743,783		54,005		3.73	%
Total interest-bearing liabilities	$	36,813,980	$	288,201	3.11	%	$	32,066,916	$	201,433	2.49	%

Noninterest-Bearing Liabilities and Shareholders’ Equity
Demand deposits	$	9,371,698					$	10,338,267
Other liabilities	970,662						961,268
Shareholders’ equity	6,190,071						5,294,072
Total liabilities and shareholders’ equity	$	53,346,411					$	48,660,523

Net interest income - taxable equivalent basis			$	397,868	3.32	%			$	380,923	3.49	%
Taxable equivalent adjustment			(6,144)						(5,837)
Net interest income (GAAP)			$	391,724	3.27	%			$	375,086	3.44	%

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

(2)Includes loans held-for-sale.


(Tax equivalent basis, dollars in thousands)	Nine Months Ended September 30, 2024						Nine Months Ended September 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	$	825,743	$	32,992	5.34	%	$	736,225	$	25,258	4.59	%
Investment securities:
Treasury and government sponsored agencies	2,275,607		66,648		3.91	%	2,266,177		58,923		3.47	%
Mortgage-backed securities	5,721,725		135,217		3.15	%	5,268,509		102,618		2.60	%
States and political subdivisions	1,678,504		42,308		3.36	%	1,771,155		43,306		3.26	%
Other securities	781,385		37,303		6.37	%	785,474		28,726		4.88	%
Total investment securities	10,457,221		281,476		3.59	%	10,091,315		233,573		3.09	%
Loans: (2)
Commercial	10,087,322		534,566		7.07	%	9,644,541		475,210		6.57	%
Commercial real estate	15,488,010		765,325		6.59	%	13,180,509		598,337		6.05	%
Residential real estate loans	6,826,809		197,770		3.86	%	6,626,551		181,592		3.65	%
Consumer	2,815,837		146,177		6.93	%	2,612,519		120,428		6.16	%
Total loans	35,217,978		1,643,838		6.22	%	32,064,120		1,375,567		5.72	%
Total earning assets	46,500,942		$	1,958,306	5.62	%	42,891,660		$	1,634,398	5.08	%
Deduct: Allowance for credit losses on loans	(337,168)						(301,909)
Non-Earning Assets
Cash and due from banks	402,213						412,998
Other assets	5,232,807						4,917,592
Total assets	$	51,798,794					$	47,920,341

Interest-Bearing Liabilities
Checking and NOW	$	7,627,029	$	88,994	1.56	%	$	7,793,561	$	69,248	1.19	%
Savings	4,976,361		15,455		0.41	%	5,791,780		9,745		0.22	%
Money market	10,571,821		302,921		3.83	%	6,577,317		120,917		2.46	%
Time deposits, excluding brokered deposits	5,327,361		168,453		4.22	%	3,660,156		79,032		2.89	%
Brokered deposits	1,375,231		55,149		5.36	%	879,886		32,053		4.87	%
Total interest-bearing deposits	29,877,803		630,972		2.82	%	24,702,700		310,995		1.68	%
Federal funds purchased and interbank borrowings	77,262		3,239		5.60	%	306,480		11,404		4.97	%
Securities sold under agreements to repurchase	261,818		2,168		1.11	%	351,362		2,389		0.91	%
FHLB advances	4,477,851		133,529		3.98	%	4,699,074		123,466		3.51	%
Other borrowings	823,746		33,058		5.36	%	806,575		30,071		4.98	%
Total borrowed funds	5,640,677		171,994		4.07	%	6,163,491		167,330		3.63	%
Total interest-bearing liabilities	$	35,518,480	$	802,966	3.02	%	$	30,866,191	$	478,325	2.07	%

Noninterest-Bearing Liabilities and Shareholders’ Equity
Demand deposits	$	9,396,081					$	10,864,375
Other liabilities	971,687						944,619
Shareholders’ equity	5,912,546						5,245,156
Total liabilities and shareholders’ equity	$	51,798,794					$	47,920,341

Net interest income - taxable equivalent basis			$	1,155,340	3.31	%			$	1,156,073	3.59	%
Taxable equivalent adjustment			(18,737)						(17,328)
Net interest income (GAAP)			$	1,136,603	3.26	%			$	1,138,745	3.54	%

(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 September 30, 2023 to Three Months Ended September 30, 2024						From Nine Months Ended September 30, 2023 to Nine Months Ended September 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	$	(1,498)	$	(1,027)	$	(471)	$	7,734	$	2,823	$	4,911
Investment securities (2)	16,244		5,999		10,245		47,903		9,160		38,743
Loans (3)	88,967		56,360		32,607		268,271		141,126		127,145
Total interest income	103,713		61,332		42,381		323,908		153,109		170,799
Interest Expense
Checking and NOW deposits	3,813		105		3,708		19,746		(1,702)		21,448
Savings deposits	916		(515)		1,431		5,710		(1,958)		7,668
Money market deposits	40,599		27,302		13,297		182,004		94,041		87,963
Time deposits, excluding brokered deposits	27,325		16,595		10,730		89,421		44,411		45,010
Brokered deposits	9,646		8,382		1,264		23,096		18,991		4,105
Federal funds purchased and interbank borrowings	(618)		(833)		215		(8,165)		(9,078)		913
Securities sold under agreements to repurchase	(98)		(154)		56		(221)		(675)		454
FHLB advances	7,337		299		7,038		10,063		(6,171)		16,234
Other borrowings	(2,152)		(1,199)		(953)		2,987		678		2,309
Total interest expense	86,768		49,982		36,786		324,641		138,537		186,104
Net interest income	$	16,945	$	11,350	$	5,595	$	(733)	$	14,572	$	(15,305)

(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 $8.4 million during the three and nine months ended September 30, 2024, respectively, using the federal statutory rate in effect of 21%.

(3)Interest income on loans includes taxable equivalent adjustments of $3.4 million and $10.4 million during the three and nine months ended September 30, 2024, respectively, using the federal statutory rate in effect of 21%.

The increase in net interest income for the three months ended September 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 balances and costs of average interest-bearing liabilities. The decrease in net interest income for the nine months ended September 30, 2024 when compared to the same period in 2023 was primarily due to higher balances and costs of average interest-bearing liabilities, substantially offset by loan growth as well as higher rates on loans. Accretion income associated with acquired loans and borrowings totaled $15.6 million and $32.3 million for the three and nine months ended September 30, 2024, respectively, compared to $7.5 million and $22.1 million for the same periods in 2023.

The decrease in the net interest margin on a fully taxable equivalent basis for the three and nine months ended September 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 39 basis points and the cost of interest-bearing liabilities increased 62 basis points in the three months ended September 30, 2024 compared to the same quarter a year ago. The yield on interest earning assets increased 54 basis points and the cost of interest-bearing liabilities increased 95 basis points in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Accretion income represented 13 basis points and 9 basis points of the net interest margin in the three and nine months ended September 30, 2024, respectively, compared to 7 basis points in both the three and nine months ended September 30, 2023.

Average earning assets were $47.9 billion and $43.6 billion for the three months ended September 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 $46.5 billion and $42.9 billion for the nine months ended September 30, 2024 and 2023, respectively, an increase of $3.6 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 $3.7 billion and $3.2 billion for the three and nine months ended September 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 $1.0 billion while average interest-bearing deposits increased $4.9 billion for the three months ended September 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 $1.5 billion while average interest-bearing deposits increased $5.2 billion for the nine months ended September 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 September 30,						%		Nine Months Ended September 30,						%
(dollars in thousands)	2024			2023			Change		2024			2023			Change
Provision for credit losses on loans	$	29,176		$	23,115		26.2	%	$	89,774		$	46,520		93.0	%
Provision (release) for credit losses on unfunded loan commitments	(679)			(4,047)			(83.2)		(6,172)			772			(899.5)

Total provision for credit losses	$	28,497		$	19,068		49.4	%	$	83,602		$	47,292		76.8	%

Net (charge-offs) recoveries on non-PCD loans	$	(13,996)		$	(20,143)		(30.5)	%	$	(29,878)		$	(28,870)		3.5	%
Net (charge-offs) recoveries on PCD loans	(3,478)			455			(864.4)		(13,391)			(17,339)			(22.8)
Total net (charge-offs) recoveries on loans	$	(17,474)		$	(19,688)		(11.2)	%	$	(43,269)		$	(46,209)		(6.4)	%
Net charge-offs (recoveries) to average loans	0.19		%	0.24		%	(20.2)	%	0.16		%	0.19		%	(14.7)

Total provision for credit losses on loans increased in the three and nine months ended September 30, 2024 compared to the same periods in 2023 due to credit migration and allowance for credit losses on individually evaluated loans. In addition, the provision for credit losses on loans in the nine months ended September 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 September 30,				%		Nine Months Ended September 30,				%
(dollars in thousands)	2024		2023		Change		2024		2023		Change
Wealth and investment services fees	$	29,117	$	26,687	9.1	%	$	86,779	$	80,128	8.3	%
Service charges on deposit accounts	20,350		18,524		9.9		57,598		53,278		8.1
Debit card and ATM fees	11,362		10,818		5.0		32,409		31,453		3.0
Mortgage banking revenue	7,669		5,063		51.5		19,211		12,628		52.1
Capital markets income	7,426		5,891		26.1		15,055		19,003		(20.8)
Company-owned life insurance	5,315		3,740		42.1		14,488		11,624		24.6
Debt securities gains (losses), net	(76)		(241)		(68.5)		(90)		(5,440)		(98.3)
Other income	12,975		10,456		24.1		33,481		30,574		9.5
Total noninterest income	$	94,138	$	80,938	16.3	%	$	258,931	$	233,248	11.0	%

Noninterest income increased $13.2 million and $25.7 million for the three and nine months ended September 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 nine months ended September 30, 2023 was impacted by $5.4 million of net losses on sales of debt securities.

Mortgage banking revenue increased $2.6 million and $6.6 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 primarily due to higher mortgage originations and increased loan sales.

Capital markets income increased $1.5 million for the three months ended September 30, 2024 compared to the same period in 2023 primarily due to higher levels of commercial real estate client interest rate swap fees. Capital markets income decreased $3.9 million for the nine months ended September 30, 2024 compared to the same period in 2023 primarily due to lower levels of commercial real estate client interest rate swap fees.

Other income increased $2.5 million and $2.9 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 primarily due to additional other income associated with the acquisition of CapStar, higher commercial loan fees, and higher income on equity securities.

Noninterest Expense

The following table details the components in noninterest expense:


	Three Months Ended September 30,				%		Nine Months Ended September 30,				%
(dollars in thousands)	2024		2023		Change		2024		2023		Change
Salaries and employee benefits	$	147,494	$	131,541	12.1	%	$	456,490	$	404,715	12.8	%
Occupancy	27,130		25,795		5.2		80,696		80,162		0.7
Equipment	9,888		8,284		19.4		27,263		23,394		16.5
Marketing	11,036		9,448		16.8		32,954		28,698		14.8
Technology	23,343		20,592		13.4		67,368		59,850		12.6
Communication	4,681		4,075		14.9		13,161		12,768		3.1
Professional fees	7,278		5,956		22.2		24,236		19,085		27.0
FDIC assessment	11,722		9,000		30.2		32,711		29,028		12.7
Amortization of intangibles	7,411		6,040		22.7		20,291		18,286		11.0
Amortization of tax credit investments	3,277		2,644		23.9		8,773		8,167		7.4

Other expense	19,023		21,401		(11.1)		53,656		57,918		(7.4)
Total noninterest expense	$	272,283	$	244,776	11.2	%	$	817,599	$	742,071	10.2	%

Noninterest expense for the three months ended September 30, 2024 included $6.9 million of merger-related expenses and $2.6 million of separation expense associated with a mutual separation agreement with a former

executive. Noninterest expense for the three months ended September 30, 2023 included $6.3 million of merger-related expenses. Excluding these expenses, noninterest expense increased to $262.8 million for the three months ended September 30, 2024, compared to $238.5 million for the three months ended September 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 nine months ended September 30, 2024 included $29.2 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, $3.0 million for the FDIC special assessment, and $2.6 million of separation expense. Noninterest expense for the nine months ended September 30, 2023 included $23.2 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 $769.4 million for the nine months ended September 30, 2024, compared to $714.0 million for the nine months ended September 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 22.3% and 22.1% for the three and nine months ended September 30, 2024, respectively, compared to 23.1% and 22.9% for the three and nine months ended September 30, 2023, respectively. The decreases in the effective tax rates for the three and nine months ended September 30, 2024 compared to the same periods in 2023 was driven by 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 September 30, 2024 based on the current estimate of the effective annual rate.

FINANCIAL CONDITION

Overview

At September 30, 2024, our assets were $53.6 billion, a $4.5 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 $48.0 billion at September 30, 2024, a $4.1 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 $10.9 billion at September 30, 2024, compared to $10.2 billion at December 31, 2023. The increase was driven primarily by the acquisition of CapStar. Investment securities represented 23% of earning assets at both September 30, 2024 and December 31, 2023. At September 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 $714.9 million and $869.5 million at September 30, 2024 and December 31, 2023, respectively. The investment securities held-to-maturity portfolio had net unrealized losses of $365.3 million and $412.3 million at September 30, 2024 and December 31, 2023, respectively.

The investment securities available-for-sale portfolio including securities hedges had an effective duration of 3.87 at September 30, 2024, compared to 4.24 at December 31, 2023. The total investment securities portfolio had an effective duration of 4.96 at September 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 3.63% and 3.59% for the three and nine months ended September 30, 2024, respectively, compared to 3.23% and 3.09% for the three and nine months ended September 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)	September 30, 2024		December 31, 2023		$ Change		% Change
Commercial	$	10,408,095	$	9,512,230	$	895,865	9.4	%
Commercial real estate	16,356,216		14,140,629		2,215,587		15.7
Residential real estate	6,757,896		6,699,443		58,453		0.9
Consumer	2,878,436		2,639,625		238,811		9.0
Total loans	$	36,400,643	$	32,991,927	$	3,408,716	10.3	%

The following table presents the composition of the loan portfolio by state:


(dollars in thousands)	Commercial		Commercial Real Estate		Residential Real Estate		Consumer		Total Loans		Percent of Total
September 30, 2024
Illinois	$	2,910,766	$	3,802,335	$	1,367,764	$	566,494	$	8,647,359	24	%
Indiana	1,619,615		1,803,405		1,043,202		895,024		5,361,246		15	%
Minnesota	977,703		2,233,650		579,926		145,543		3,936,822		11	%
Wisconsin	892,295		2,189,295		478,409		136,959		3,696,958		10	%
Michigan	587,233		1,429,184		650,923		254,036		2,921,376		8	%
Tennessee	396,432		1,244,276		186,155		253,879		2,080,742		6	%
Kentucky	475,163		611,575		256,598		391,794		1,735,130		5	%
Florida	126,819		434,259		384,611		31,556		977,245		3	%
Texas	209,103		238,816		262,180		17,633		727,732		2	%
California	177,996		25,861		427,436		43,451		674,744		2	%
Ohio	264,786		337,452		5,653		16,977		624,868		2	%
Other	1,770,184		2,006,108		1,115,039		125,090		5,016,421		14	%
Total	$	10,408,095	$	16,356,216	$	6,757,896	$	2,878,436	$	36,400,643	100	%

Geographic location in the preceding table is determined by collateral location for real estate loans and borrower location for non-real estate loans.

Commercial and Commercial Real Estate Loans

Commercial and commercial real estate loans are the largest classifications within earning assets, representing 56% of earning assets at September 30, 2024, compared to 54% at December 31, 2023. The increase in commercial and commercial real estate loans at September 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.


	September 30, 2024									December 31, 2023
(dollars in thousands)	Outstanding			Exposure(1)			Nonaccrual			Outstanding			Exposure(1)			Nonaccrual
By Industry:
Manufacturing	$	1,807,888		$	2,909,339		$	20,446		$	1,589,727		$	2,734,935		$	7,408
Health care and social assistance	1,625,990			1,962,637			280			1,567,286			1,949,250			7,390
Real estate rental and leasing	875,905			1,293,222			10,610			686,008			1,035,073			700
Wholesale trade	806,848			1,572,476			3,693			748,058			1,541,951			3,789
Construction	758,228			1,650,863			12,868			554,312			1,437,025			2,040
Finance and insurance	655,348			1,010,155			144			637,630			966,842			1
Professional, scientific, and technical services	558,928			960,659			5,582			458,133			821,738			3,825
Transportation and warehousing	549,155			709,404			18,282			453,630			703,976			1,746
Accommodation and food services	527,527			614,660			2,412			389,591			503,990			705
Retail trade	383,459			637,205			9,963			345,944			620,308			5,273
Administrative and support and waste management and remediation services	379,177			559,962			1,280			321,018			487,359			347
Educational services	266,385			383,724			5			263,539			406,867			7
Agriculture, forestry, fishing, and hunting	259,764			392,983			2,980			255,811			392,098			415
Other services	245,633			423,221			15,608			208,012			400,195			9,328
Public administration	194,259			256,286			—			216,939			285,963			—
Other	513,601			878,012			3,146			816,592			1,111,030			1,537
Total	$	10,408,095		$	16,214,808		$	107,299		$	9,512,230		$	15,398,600		$	44,511

By Loan Size:
Less than $200,000	3		%	3		%	3		%	3		%	3		%	5		%
$200,000 to $1,000,000	12			11			14			11			10			20
$1,000,000 to $5,000,000	24			25			52			24			25			48
$5,000,000 to $10,000,000	15			15			1			16			16			7
$10,000,000 to $25,000,000	29			27			30			31			28			20
Greater than $25,000,000	17			19			—			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.


	September 30, 2024						December 31, 2023
(dollars in thousands)	Outstanding		Exposure(1)		Nonaccrual		Outstanding		Exposure(1)		Nonaccrual
By Property Type:
Multifamily	$	5,636,684	$	6,864,789	$	72,936	$	4,794,605	$	6,422,311	$	6,050
Warehouse / Industrial	3,010,379		3,354,809		10,248		2,704,656		3,308,273		6,459
Retail	2,317,773		2,400,249		23,348		1,886,233		1,958,254		29,823
Office	2,173,702		2,323,437		59,403		1,948,430		2,112,157		58,111
Senior housing	945,911		976,626		53,943		848,903		947,168		41,632
Single family	538,282		554,764		6,456		450,560		476,946		3,187

Other (2)	1,733,485		2,038,709		22,931		1,507,242		1,824,177		15,530
Total	$	16,356,216	$	18,513,383	$	249,265	$	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 September 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 September 30, 2024, the Company held $384.1 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 September 30, 2024, residential real estate loans held in our loan portfolio were $6.8 billion, an increase of $58.5 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 $238.8 million to $2.9 billion at September 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 September 30, 2024 totaled $2.3 billion, an increase of $204.1 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)	September 30, 2024		December 31, 2023		$ Change		% Change
Deposits:
Noninterest-bearing demand	$	9,429,285	$	9,664,247	$	(234,962)	(2.4)	%
Interest-bearing:
Checking and NOW	7,815,463		7,331,487		483,976		6.6	%
Savings	4,781,447		5,099,186		(317,739)		(6.2)	%
Money market	11,663,557		9,561,116		2,102,441		22.0	%
Time deposits	7,155,994		5,579,144		1,576,850		28.3	%
Total deposits	40,845,746		37,235,180		3,610,566		9.7	%
Wholesale borrowings:
Federal funds purchased and interbank borrowings	135,263		390		134,873		N/M
Securities sold under agreements to repurchase	244,626		285,206		(40,580)		(14.2)	%
Federal Home Loan Bank advances	4,471,153		4,280,681		190,472		4.4	%
Other borrowings	598,054		764,870		(166,816)		(21.8)	%
Total wholesale borrowings	5,449,096		5,331,147		117,949		2.2	%
Total funding	$	46,294,842	$	42,566,327	$	3,728,515	8.8	%

The increase in total deposits was primarily due to deposits assumed in the CapStar transaction as well as organic growth. We use wholesale funding to augment deposit funding and to help maintain our desired interest rate risk position. Wholesale funding as a percentage of total funding was 12% at September 30, 2024 and 13% at December 31, 2023.

Capital

Shareholders’ equity totaled $6.4 billion at September 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 and changes in unrealized gains (losses) on available-for-sale investment securities were partially offset by dividends during the nine months ended September 30, 2024.

Capital Adequacy

Old National and the banking industry are subject to various regulatory capital requirements administered by the federal banking agencies. At September 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		September 30, 2024		December 31, 2023

Tier 1 capital to total average assets (leverage ratio)	4.00	%	N/A	%	9.05	%	8.83	%
Common equity Tier 1 capital to risk-weighted total assets	7.00		N/A		11.00		10.70
Tier 1 capital to risk-weighted total assets	8.50		6.00		11.60		11.35
Total capital to risk-weighted total assets	10.50		10.00		12.94		12.64
Shareholders’ equity to assets	N/A		N/A		11.88		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		September 30, 2024		December 31, 2023

Tier 1 capital to total average assets (leverage ratio)	4.00	%	5.00	%	8.95	%	8.99	%
Common equity Tier 1 capital to risk-weighted total assets	7.00		6.50		11.48		11.57
Tier 1 capital to risk-weighted total assets	8.50		8.00		11.48		11.57
Total capital to risk-weighted total assets	10.50		10.00		12.35		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 September 30, 2024, our average commercial loan size was approximately $725,000 and our average commercial real estate loan size was approximately $1,550,000. 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 September 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)	September 30, 2024			December 31, 2023
Total nonaccrual loans	$	443,597		$	274,821
Total past due loans (90 days or more and still accruing)	1,177			961
Foreclosed assets	4,077			9,434
Total under-performing assets	$	448,851		$	285,216
Classified loans (includes nonaccrual, past due 90 days, and other problem loans)	$	1,519,017		$	875,140
Other classified assets (1)	59,485			48,930
Special mention loans	837,543			843,920
Total criticized and classified assets	$	2,416,045		$	1,767,990
Asset Quality Ratios:
Nonaccrual loans/total loans (2)	1.22		%	0.83		%

(1)Represents the upper bound, Federal Funds Rate.

(2)Represents the Federal Funds Rate in month 12 given a gradual, parallel “ramp” relative to the base implied forward scenario.

Our projected net interest income increased year over year driven by loan growth and asset repricing due to current interest rates and economic conditions. Our overall strategy is consistent period over period, as we continue to manage our balance sheet toward a neutral interest rate risk position in a disciplined manner.

A key element in the measurement and modeling of interest rate risk is the re-pricing assumptions of our transaction deposit accounts, which align with our approach to deposit pricing and are consistent period over period. 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 asset position with a fair value gain of $22.4 million at September 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 September 30, 2024.


(dollars in thousands)
Maturity Bucket	Amount		Rate
2024	$	3,015,267	4.76	%
2025	3,860,503		4.43
2026	123,720		2.05
2027	52,401		1.54
2028	16,666		1.49
2027 and beyond	87,437		0.52
Total	$	7,155,994	4.45	%

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 September 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 September 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	$	273,201		$	918,369
Unencumbered government-issued debt securities	—			1,543,928
Unencumbered investment grade municipal securities	—			192,872
Unencumbered corporate securities	—			39,893
Availability of borrowings*:
Amount available from Federal Reserve discount window	—			4,442,859
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).

10.1			Form of 2024 Relative TSR Performance Units Award Agreement between Old National and certain key associates pursuant to the Old National Bancorp Amended and Restated 2008 Incentive Compensation Plan, as further amended.

10.2			Form of 2024 ROATCE Performance Units Award Agreement between Old National and certain key associates pursuant to the Old National Bancorp Amended and Restated 2008 Incentive Compensation Plan, as further amended.

10.3			Form of 2024 Restricted Stock Award Agreement between Old National and certain key associates pursuant to the Old National Bancorp Amended and Restated 2008 Incentive Compensation Plan, as further amended.

10.4			Form of 2024 Restricted Stock Award Agreement between Old National and certain key associates pursuant to the Old National Bancorp Amended and Restated 2008 Incentive Compensation Plan, as further amended.

10.5			Mutual Separation Agreement dated August 28, 2024 by and between the Company and Brendon B. Falconer (incorporated by reference to Exhibit 10.2 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 4, 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 September 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 September 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
						Senior Executive Vice President and Chief Financial Officer
						Duly Authorized Officer and Principal Financial Officer

						Date: October 30, 2024

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

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