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Old National's 2nd Quarter Results Supported by Strong Deposit Franchise, Ample Capital, Stable Credit and Expense Discipline

EVANSVILLE, Ind., July 25, 2023 (GLOBE NEWSWIRE) --

Old National Bancorp (NASDAQ: ONB) reports 2Q23 net income applicable to common shares of $151.0 million, diluted EPS of $0.52; $156.3 million and $0.54 on an adjusted1 basis, respectively.

CEO COMMENTARY:

 "The strength of Old National’s deposit franchise was evident once again with a nearly 4% quarterly increase in total deposits that bolstered our already strong liquidity position," said CEO Jim Ryan. "In addition, Old National continues to be well capitalized with disciplined expense management and strong credit metrics as we execute on our growth strategy and continue to serve our clients and communities with passion, strength and stability." 


SECOND
QUARTER HIGHLIGHTS2:

Net Income
  • Net income applicable to common shares of $151.0 million; adjusted net income applicable to common shares1 of $156.3 million
  • Earnings per diluted common share ("EPS") of $0.52; adjusted EPS1 of $0.54
  
Net Interest Income/NIM
  • Net interest income on a fully taxable equivalent basis1 of $388.0 million
  • Net interest margin on a fully taxable equivalent basis1 ("NIM") of 3.60%, down 9 basis points ("bps")
  
Operating Performance
  • Pre-provision net revenue1 (“PPNR”) of $223.0 million; adjusted PPNR1 of $229.0 million
  • Noninterest expense of $246.6 million; adjusted noninterest expense1 of $240.6 million
  • Efficiency ratio1 of 51.2%; adjusted efficiency ratio1 of 49.4%
  
Deposits and Funding
  • Period-end total deposits of $36.2 billion, up 3.8%; core deposits up 2.4%
  • Granular low-cost deposit franchise; total deposit costs of 115 bps and a cycle to date (2Q22-2Q23) total deposit beta of 23% (interest-bearing deposit beta of 33%)
  
Loans and Credit Quality
  • End-of-period total loans3 of $32.5 billion, up 2.2%
  • Provision for credit losses4 ("provision") of $14.8 million
  • Net charge-offs of $10.1 million, or 13 bps of average loans; 6 bps excluding purchased credit deteriorated ("PCD") loans that had an allowance at acquisition
  • 30+ day delinquencies of 0.12% and non-performing loans of 0.91% of total loans
 
Return Profile & Capital
  • Return on average tangible common equity1 of 21.4%; adjusted return on average tangible common equity1 of 22.1%
  
Notable Items
  • $3.4 million of Louisville expenses5
  • $2.4 million of merger-related charges
  • $0.2 million of property optimization charges

Non-GAAP financial measure that management believes is useful in evaluating the financial results of the Company – refer to the Non-GAAP reconciliations contained in this release Comparisons are on a linked-quarter basis, unless otherwise noted Includes loans held for sale     
4 Includes the provision for unfunded commitments     Includes expenses related to the tragic April 10 event at our downtown Louisville location      Uninsured and uncollateralized deposits include the estimate of Old National Bank federally uninsured deposits for regulatory purposes, as adjusted for $1.5 billion of affiliate deposits and $4.2 billion of collateralized or otherwise insured deposits


LOUISVILLE UPDATE

Our Old National Bancorp ("Old National") family continues to recover and heal from the Louisville tragedy on April 10 that claimed the lives of five of our team members and impacted many others. More than three months later, our ONB family continues to do our best to love, care and support one another. Additionally, in June, our downtown Louisville team began serving clients at a new location: 400 West Market Street in the heart of downtown Louisville. Once again, Old National wants to say thank you to the countless individuals and organizations who have cared for and supported our family during this challenging time.

RESULTS OF OPERATIONS
Old National reported second quarter 2023 net income applicable to common shares of $151.0 million, or $0.52 per diluted common share.

Included in the second quarter were pre-tax charges of $3.4 million for Louisville expenses5, $2.4 million related to the February 15, 2022 merger with First Midwest Bancorp, Inc. ("First Midwest") and $0.2 million for property optimization. Excluding these transactions from the current quarter, adjusted net income was $156.3 million, or $0.54 per diluted common share.

DEPOSITS AND FUNDING
Growth in low-cost deposits including normal seasonal patterns in public funds.

  • Period-end total deposits were $36.2 billion at June 30, 2023, up 3.8%; core deposits increased 2.4%.
    • Reflect continuing effective competition for new client relationships.
    • Include normal seasonal patterns in public funds.
  • On average, total deposits for the second quarter were $35.1 billion, an increase of 0.6%.
  • Granular low-cost deposit franchise; total deposit costs of 115 bps and a cycle to date total deposit beta of 23% (interest-bearing deposit beta of 33%).
  • Deposits that were either insured or collateralized6 at June 30, 2023 were more than 70% of total deposits.
  • A loan to deposit ratio of 90% at June 30, 2023, combined with existing funding sources provides strong liquidity.

LOANS
Broad-based disciplined commercial loan growth.

  • Period-end total loans3 were $32.5 billion at June 30, 2023, up 2.2% from March 31, 2023.
  • Total commercial loan production in the second quarter was $1.9 billion; period-end commercial pipeline totaled $3.1 billion, down from $5.4 billion at March 31, 2023.
  • Average total loans in the second quarter were $32.3 billion, an increase of $985.0 million from the first quarter of 2023.

CREDIT QUALITY
Strong credit quality continues to be a hallmark of Old National.

  • Provision4 expense in the second quarter of 2023 was $14.8 million, compared to $13.4 million in the first quarter of 2023, reflecting loan and unfunded commitment growth, as well as economic factors.
  • Net charge-offs in the second quarter were $10.1 million, or 13 bps of average loans compared to net charge-offs of 21 bps of average loans in the first quarter of 2023.
    • Excluding PCD loans that had an allowance for credit losses established at acquisition, net charge-offs to average loans were 6 bps for the second quarter and 5 bps for the first quarter of 2023.
  • 30+ day delinquencies as a percentage of loans were 0.12% at the end of the second quarter of 2023, compared to 0.14% at the end of the first quarter of 2023.
  • Non-performing loans as a percentage of total loans were 0.91% compared to 0.74% for the first quarter of 2023, up due primarily to migration of PCD loans.
  • Loans acquired from previous acquisitions were recorded at fair value at the acquisition date. As of June 30, 2023, the remaining discount on these acquired loans was $90 million.
  • The allowance for credit losses, including the allowance for credit losses on unfunded commitments, stood at $337.6 million, or 1.04% of total loans at June 30, 2023, compared to $332.9 million, or 1.05% of total loans at March 31, 2023.

NET INTEREST INCOME AND MARGIN
Growth in net interest income; margin compression reflective of the rate environment.

  • Net interest income on a fully taxable equivalent basis increased to $388.0 million in the second quarter of 2023 compared to $387.2 million in the first quarter of 2023, driven by loan growth, the higher rate environment and more days in the quarter, which were partly offset by higher funding costs and lower accretion income on loans.
  • Net interest margin on a fully taxable equivalent basis decreased 9 bps to 3.60% compared to the first quarter of 2023.
  • Accretion income on loans and borrowings was $6.6 million, or 6 bps of net interest margin, in the second quarter of 2023 compared to $7.9 million, or 8 bps of net interest margin, in the first quarter of 2023.
  • Cost of total deposits was 1.15%, increasing 43 bps and the cost of total interest-bearing deposits increased       57 bps to 1.66% in the second quarter of 2023.

NONINTEREST INCOME
Higher bank fees, mortgage banking revenue and other income.

  • Total noninterest income for the second quarter of 2023 was $81.6 million.
  • Excluding realized debt securities gains/losses for both periods, adjusted noninterest income for the second quarter was up 8.8% compared to the first quarter of 2023, driven by higher service charges on deposit accounts, debit card and ATM fees, mortgage banking revenue, company-owned life insurance and other income.

NONINTEREST EXPENSE
Disciplined expense management.

  • Noninterest expense for the second quarter of 2023 was $246.6 million and included $3.4 million of Louisville expenses5, $2.4 million of merger-related charges and $0.2 million for property optimization.
  • Excluding these items, adjusted noninterest expense for the second quarter was $240.6 million, compared to $234.8 million for the first quarter of 2023; increase was driven by higher salary and employee benefits resulting from performance-driven incentive accruals.
  • The efficiency ratio1 was 51.2%, while the adjusted efficiency ratio1 was 49.4% for the second quarter of 2023 compared to 52.8% and 48.8%, respectively, for the first quarter of 2023.

INCOME TAXES

  • Income tax expense in the second quarter of 2023 was $47.4 million, resulting in an effective tax rate of 23.4% compared to 22.0% in the first quarter of 2023. On an adjusted fully taxable equivalent ("FTE") basis, the effective tax rate was 25.2% in the second quarter compared to 24.1% in the first quarter.
  • Income tax expense included $3.1 million of tax credit benefit.

CAPITAL
Capital ratios remain strong.

  • All regulatory capital ratios grew in the quarter with preliminary total risk-based capital up 18 bps to 12.14% and preliminary regulatory Tier 1 capital up 15 bps to 10.79%, driven by retained earnings, partly offset by loan growth and merger-related charges.
  • Tangible common equity to tangible assets was 6.33% at the end of the second quarter compared to 6.37% in the first quarter of 2023.

CONFERENCE CALL AND WEBCAST
Old National will host a conference call and live webcast at 9:00 a.m. Central Time on Tuesday, July 25, 2023, to review second quarter financial results. The live audio webcast link and corresponding presentation slides will be available on the Company’s Investor Relations web page at oldnational.com and will be archived there for 12 months. To listen to the live conference call, dial U.S. (888) 300-3045 or International (646) 568-1027, Access code 5258325. A replay of the call will also be available from approximately noon Central Time on July 25, 2023 through August 8, 2023. To access the replay, dial U.S. (800) 770-2030 or International (647) 362-9199, Access code 5258325.

ABOUT OLD NATIONAL
Old National Bancorp (NASDAQ: ONB) is the holding company of Old National Bank, which is the sixth largest commercial bank headquartered in the Midwest. With approximately $48 billion of assets and $29 billion of assets under management, Old National ranks among the top 30 banking companies headquartered in the U.S. Tracing our roots to 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships with clients and in the communities it serves. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investment, and capital market services. For more information and financial data, please visit Investor Relations at oldnational.com.

USE OF NON-GAAP FINANCIAL MEASURES
The Company's accounting and reporting policies conform to U.S. generally accepted accounting principles ("GAAP") and general practices within the banking industry. As a supplement to GAAP, the Company provides non-GAAP performance results, which the Company believes are useful because they assist investors in assessing the Company's operating performance. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables at the end of this release.

The Company presents EPS, the efficiency ratio, return on average common equity, and return on average tangible common equity, all adjusted for certain notable items. These items include the current expected credit loss ("CECL") Day 1 non-PCD provision expense, Louisville expenses5, merger-related charges associated with completed acquisitions, gain on sale of health savings accounts, property optimization charges and gains/losses on sales of debt securities. Management believes excluding these items from EPS, the efficiency ratio, return on average common equity, and return on average tangible common equity may be useful in assessing the Company's underlying operational performance since these items do not pertain to its core business operations and their exclusion may facilitate better comparability between periods. Management believes that excluding merger-related charges and the CECL Day 1 non-PCD provision expense 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.

Income tax expense, provision for credit losses, and the certain notable items listed above are excluded from the calculation of pre-provision net revenues, adjusted due to the fluctuation in income before income tax and the level of provision for credit losses required. Management believes pre-provision net revenues, adjusted may be useful in assessing the Company's underlying operating performance and their exclusion may facilitate better comparability between periods and for peer comparison purposes.

The Company presents adjusted noninterest expense, which excludes Louisville expenses5, merger-related charges and property optimization charges, as well as adjusted noninterest income, which excludes the gain on sale of health savings accounts and gains/losses on sales of debt securities. Management believes that excluding these items from noninterest expense and noninterest income may be useful in assessing the Company’s underlying operational performance as these items either do not pertain to its core business operations or their exclusion may facilitate better comparability between periods and for peer comparison purposes.

The tax-equivalent adjustment to net interest income and net interest margin recognizes the income tax savings when comparing taxable and tax-exempt assets. Interest income and yields on tax-exempt securities and loans are presented using the current federal income tax rate of 21%. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on a fully tax-equivalent basis and that it may enhance comparability for peer comparison purposes.

In management's view, tangible common equity measures are capital adequacy metrics that may be meaningful to the Company, as well as analysts and investors, in assessing the Company's use of equity and in facilitating comparisons with peers. These non-GAAP measures are valuable indicators of a financial institution's capital strength since they eliminate intangible assets from stockholders' equity and retain the effect of accumulated other comprehensive loss in stockholders' equity.

Although intended to enhance investors' understanding of the Company's business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. In addition, these non-GAAP financial measures may differ from those used by other financial institutions to assess their business and performance. See the 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.

FORWARD-LOOKING STATEMENTS
This communication 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 or with our approval 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 the words "anticipate," "believe," "contemplate," "could," "estimate," "expect," "intend," "may," "outlook," "plan," "should," 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. Factors that might cause such a difference include, but are 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; uncertainty about the discontinued use of LIBOR and the transition to an alternative rate; 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 communication; and other factors identified in our Annual Report on Form 10-K for the year ended December 31, 2022 and other filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date of this communication and are not guarantees of future results, performance or outcomes, and Old National does not undertake an obligation to update these forward-looking statements to reflect events or conditions after the date of this communication.

CONTACTS:  
Media: Kathy Schoettlin Investors: Lynell Walton
(812) 465-7269 (812) 464-1366
Kathy.Schoettlin@oldnational.com Lynell.Walton@oldnational.com
   


        
Financial Highlights (unaudited)
($ and shares in thousands, except per share data)
         
 Three Months Ended Six Months Ended
 June 30,March 31,December 31,September 30,June 30, June 30,June 30,
 20232023202220222022 20232022
Income Statement        
Net interest income$382,171 $381,488 $391,090 $376,589 $337,472  $763,659 $560,257 
FTE adjustment1,4 5,825  5,666  5,378  4,950  4,314   11,491  8,086 
Net interest income - tax equivalent basis4 387,996  387,154  396,468  381,539  341,786   775,150  568,343 
Provision for credit losses2 14,787  13,437  11,408  15,490  9,165   28,224  117,901 
Noninterest income 81,629  70,681  165,037  80,385  89,117   152,310  154,357 
Noninterest expense2 246,584  250,711  282,675  262,444  277,475   497,295  493,064 
Net income (loss) available to common shareholders$151,003 $142,566 $196,701 $136,119 $110,952  $293,569 $81,349 
Per Common Share Data        
Weighted average diluted shares 291,266  292,756  293,131  292,483  291,881   291,870  260,253 
EPS, diluted$0.52 $0.49 $0.67 $0.47 $0.38  $1.01 $0.31 
Cash dividends 0.14  0.14  0.14  0.14  0.14   0.28  0.28 
Dividend payout ratio3 27% 29% 21% 30% 37%  28% 90%
Book value$17.25 $17.24 $16.68 $16.05 $16.51  $17.25 $16.51 
Stock price 13.94  14.42  17.98  16.47  14.79   13.94  14.79 
Tangible book value4 10.03  9.98  9.42  8.75  9.23   10.03  9.23 
Performance Ratios        
ROAA 1.29% 1.25% 1.74% 1.22% 1.01%  1.27% 0.43%
ROAE 12.0% 11.6% 16.8% 11.1% 9.1%  11.8% 3.6%
ROATCE4 21.4% 21.0% 31.5% 20.5% 16.9%  21.2% 6.8%
NIM (FTE) 3.60% 3.69% 3.85% 3.71% 3.33%  3.65% 3.13%
Efficiency ratio4 51.2% 52.8% 49.1% 55.3% 62.7%  52.0% 66.6%
Efficiency ratio (prior presentation)5N/AN/AN/A 56.2% 62.7% N/A 68.1%
NCOs to average loans 0.13% 0.21% 0.05% 0.10% 0.02%  0.17% 0.04%
ACL on loans to EOP loans 0.93% 0.94% 0.98% 0.99% 0.97%  0.93% 0.97%
ACL6 to EOP loans 1.04% 1.05% 1.08% 1.08% 1.05%  1.04% 1.05%
NPLs to EOP loans 0.91% 0.74% 0.81% 0.81% 0.78%  0.91% 0.78%
Balance Sheet (EOP)        
Total loans$32,432,473 $31,822,374 $31,123,641 $30,528,933 $29,553,648  $32,432,473 $29,553,648 
Total assets 48,496,755  47,842,644  46,763,372  46,215,526  45,748,355   48,496,755  45,748,355 
Total deposits 36,231,315  34,917,792  35,000,830  36,053,663  35,538,975   36,231,315  35,538,975 
Total borrowed funds 6,034,008  6,740,454  5,586,314  4,264,750  4,384,411   6,034,008  4,384,411 
Total shareholders' equity 5,292,095  5,277,426  5,128,595  4,943,383  5,078,783   5,292,095  5,078,783 
Capital Ratios        
Risk-based capital ratios (EOP):        
Tier 1 common equity 10.14% 9.98% 10.03% 9.88% 9.90%  10.14% 9.90%
Tier 1 capital 10.79% 10.64% 10.71% 10.58% 10.63%  10.79% 10.63%
Total capital 12.14% 11.96% 12.02% 11.84% 12.03%  12.14% 12.03%
Leverage ratio (average assets) 8.59% 8.53% 8.52% 8.26% 8.19%  8.59% 8.19%
Equity to assets (averages)4 10.96% 11.00% 10.70% 11.18% 11.22%  10.98% 11.57%
TCE to TA4 6.33% 6.37% 6.18% 5.82% 6.20%  6.33% 6.20%
Nonfinancial Data        
Full-time equivalent employees 4,021  4,023  3,967  4,008  4,196   4,021  4,196 
Banking centers 256  256  263  263  266   256  266 
1 Calculated using the federal statutory tax rate in effect of 21% for all periods.     
2 Provision for unfunded commitments is included in the provision for credit losses. The reclassification of the provision for unfunded commitments out of other expense as a component of noninterest expense was made to amounts prior to December 31, 2022 to conform to the current period presentation.
3 Cash dividends per common share divided by net income per common share (basic).     
4 Represents a non-GAAP financial measure. Refer the "Non-GAAP Measures" table for reconciliations to GAAP financial measures.
    June 30, 2023 capital ratios are preliminary.
5 Presented as calculated prior to December 31, 2022, which included the provision for unfunded commitments in noninterest expense. Management believes that removing the provision for unfunded commitments from this metric enhances comparability for peer comparison purposes.
6 Includes the allowance for credit losses on loans and unfunded commitments.     
         
FTE - Fully taxable equivalent basis ROAA - Return on average assets ROAE - Return on average equity ROATCE - Return on average tangible common equity
NCOs - Net Charge-offs ALL - Allowance for loan losses ACL - Allowance for Credit Losses
EOP - End of period actual balances NPLs - Non-performing Loans TCE - Tangible common equity TA - Tangible assets


         
Income Statement (unaudited)
($ and shares in thousands, except per share data)
 
 Three Months Ended Six Months Ended
 June 30,March 31,December 31,September 30,June 30, June 30,June 30,
 20232023202220222022 20232022
Interest income$544,902 $495,649 $457,821 $406,518 $354,358  $1,040,551 $589,863 
Less: interest expense 162,731  114,161  66,731  29,929  16,886   276,892  29,606 
Net interest income 382,171  381,488  391,090  376,589  337,472   763,659  560,257 
Provision for credit losses1 14,787  13,437  11,408  15,490  9,165   28,224  117,901 
Net interest income after provision for credit losses 367,384  368,051  379,682  361,099  328,307   735,435  442,356 
Wealth and investment services fees 26,521  26,920  25,668  25,359  27,872   53,441  49,824 
Service charges on deposit accounts 17,751  17,003  18,109  20,042  20,324   34,754  34,350 
Debit card and ATM fees 10,653  9,982  10,798  10,608  11,222   20,635  18,821 
Mortgage banking revenue 4,165  3,400  3,888  5,360  6,522   7,565  13,767 
Capital markets income 6,173  6,939  5,377  8,906  7,261   13,112  11,703 
Company-owned life insurance 4,698  3,186  3,108  3,361  4,571   7,884  8,095 
Gain on sale of health savings accounts     90,673          
Other income 11,651  8,467  7,589  6,921  11,430   20,118  17,540 
Gains (losses) on sales of debt securities 17  (5,216) (173) (172) (85)  (5,199) 257 
Total noninterest income 81,629  70,681  165,037  80,385  89,117   152,310  154,357 
Salaries and employee benefits 135,810  137,364  142,459  147,203  161,817   273,174  285,964 
Occupancy 26,085  28,282  26,488  26,418  26,496   54,367  47,515 
Equipment 7,721  7,389  7,591  7,328  7,550   15,110  12,718 
Marketing 9,833  9,417  8,508  10,361  9,119   19,250  13,395 
Technology 20,056  19,202  19,951  20,269  25,883   39,258  44,645 
Communication 4,232  4,461  4,159  5,392  5,878   8,693  9,295 
Professional fees 6,397  6,732  6,360  6,559  6,336   13,129  26,127 
FDIC assessment 9,624  10,404  5,809  6,249  4,699   20,028  7,274 
Amortization of intangibles 6,060  6,186  6,787  7,089  7,170   12,246  11,981 
Amortization of tax credit investments 2,762  2,761  5,258  2,662  1,525   5,523  3,041 
Property optimization 242  1,317  26,818       1,559   
Other expense1 17,762  17,196  22,487  22,914  21,002   34,958  31,109 
Total noninterest expense 246,584  250,711  282,675  262,444  277,475   497,295  493,064 
Income (loss) before income taxes 202,429  188,021  262,044  179,040  139,949   390,450  103,649 
Income tax expense (benefit) 47,393  41,421  61,309  38,887  24,964   88,814  16,250 
Net income (loss)$155,036 $146,600 $200,735 $140,153 $114,985  $301,636 $87,399 
Preferred dividends (4,033) (4,034) (4,034) (4,034) (4,033)  (8,067) (6,050)
Net income (loss) applicable to common shares$151,003 $142,566 $196,701 $136,119 $110,952  $293,569 $81,349 
         
EPS, diluted$0.52 $0.49 $0.67 $0.47 $0.38  $1.01 $0.31 
Weighted Average Common Shares Outstanding        
Basic 290,559  291,088  291,012  290,961  290,862   290,822  259,108 
Diluted 291,266  292,756  293,131  292,483  291,881   291,870  260,253 
Common shares outstanding (EOP) 292,597  291,922  292,903  292,880  292,893   292,597  292,893 
         
1 Provision for unfunded commitments is included in the provision for credit losses. The reclassification of the provision for unfunded commitments out of other expense as a component of noninterest expense was made to amounts prior to December 31, 2022 to conform to the current period presentation.
         


 
End of Period Balance Sheet (unaudited)
($ in thousands)
 
 June 30,March 31,December 31,September 30,June 30,
  2023  2023  2022  2022  2022 
Assets     
Cash and due from banks$473,023 $386,879 $453,432 $466,846 $455,620 
Money market and other interest-earnings investments 724,863  727,056  274,980  334,765  342,344 
Investments:     
Treasury and government-sponsored agencies 2,309,285  2,236,413  2,195,175  2,186,551  2,461,173 
Mortgage-backed securities 5,168,458  5,395,680  5,476,718  5,584,241  5,976,921 
States and political subdivisions 1,760,725  1,785,072  1,827,164  1,829,561  1,839,333 
Other securities 802,323  826,575  730,476  693,303  719,223 
Total investments 10,040,791  10,243,740  10,229,533  10,293,656  10,996,650 
Loans held for sale, at fair value 114,369  10,584  11,926  19,748  26,217 
Loans:     
Commercial 9,698,241  9,751,875  9,508,904  9,311,148  8,923,983 
Commercial and agriculture real estate 13,450,209  12,908,380  12,457,070  12,227,888  11,796,503 
Residential real estate 6,684,480  6,568,666  6,460,441  6,267,306  6,079,057 
Consumer 2,599,543  2,593,453  2,697,226  2,722,591  2,754,105 
Total loans 32,432,473  31,822,374  31,123,641  30,528,933  29,553,648 
Allowance for credit losses on loans (300,555) (298,711) (303,671) (302,254) (288,003)
Premises and equipment, net 564,299  566,758  557,307  588,021  586,031 
Operating lease right-of-use assets 184,700  183,687  189,714  187,626  192,196 
Goodwill and other intangible assets 2,112,875  2,118,935  2,125,121  2,135,792  2,131,815 
Company-owned life insurance 771,753  770,471  768,552  767,089  769,595 
Other assets 1,378,164  1,310,871  1,332,837  1,195,304  982,242 
Total assets$48,496,755 $47,842,644 $46,763,372 $46,215,526 $45,748,355 
      
Liabilities and Equity     
Noninterest-bearing demand deposits$10,532,838 $10,995,083 $11,930,798 $12,400,077 $12,388,379 
Interest-bearing:     
Checking and NOW accounts 7,654,202  7,903,520  8,340,955  8,963,014  8,473,510 
Savings accounts 5,578,323  6,030,255  6,326,158  6,616,512  6,796,152 
Money market accounts 7,200,288  5,867,239  5,389,139  5,602,729  5,373,318 
Other time deposits 4,012,813  3,361,979  2,775,991  2,393,083  2,479,304 
Total core deposits 34,978,464  34,158,076  34,763,041  35,975,415  35,510,663 
Brokered deposits 1,252,851  759,716  237,789  78,248  28,312 
Total deposits 36,231,315  34,917,792  35,000,830  36,053,663  35,538,975 
      
Federal funds purchased and interbank borrowings 136,060  618,955  581,489  301,031  1,561 
Securities sold under agreements to repurchase 311,447  393,018  432,804  438,053  476,173 
Federal Home Loan Bank advances 4,771,183  4,981,612  3,829,018  2,804,617  3,283,963 
Other borrowings 815,318  746,869  743,003  721,049  622,714 
Total borrowed funds 6,034,008  6,740,454  5,586,314  4,264,750  4,384,411 
Operating lease liabilities 206,178  205,249  211,964  207,725  215,188 
Accrued expenses and other liabilities 733,159  701,723  835,669  746,005  530,998 
Total liabilities 43,204,660  42,565,218  41,634,777  41,272,143  40,669,572 
Preferred stock, common stock, surplus, and retained earnings 6,100,728  5,985,784  5,915,017  5,751,833  5,647,916 
Accumulated other comprehensive income (loss), net of tax (808,633) (708,358) (786,422) (808,450) (569,133)
Total shareholders' equity 5,292,095  5,277,426  5,128,595  4,943,383  5,078,783 
Total liabilities and shareholders' equity$48,496,755 $47,842,644 $46,763,372 $46,215,526 $45,748,355 
 


             
Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
             
  Three Months Ended Three Months Ended Three Months Ended
  June 30, 2023 March 31, 2023 June 30, 2022
  AverageIncome1/Yield/ AverageIncome1/Yield/ AverageIncome1/Yield/
Earning Assets: BalanceExpenseRate BalanceExpenseRate BalanceExpenseRate
Money market and other interest-earning investments $724,601 $8,9664.96% $497,953 $3,0982.52% $1,088,005 $1,8300.67%
Investments:            
Treasury and government-sponsored agencies  2,222,269  19,3553.48%  2,197,426  16,5313.01%  2,487,717  11,8181.90%
Mortgage-backed securities  5,301,084  34,2912.59%  5,429,200  35,0902.59%  6,008,470  33,5342.23%
States and political subdivisions  1,768,897  14,3963.26%  1,808,316  14,6903.25%  1,834,189  14,5713.18%
Other securities  824,482  9,9954.85%  738,139  8,6044.66%  723,279  5,4673.02%
Total investments  10,116,732  78,0373.09%  10,173,081  74,9152.95%  11,053,655  65,3902.37%
Loans:2            
Commercial  9,862,728  163,7216.64%  9,457,089  147,6206.24%  8,692,646  95,7434.36%
Commercial and agriculture real estate  13,164,390  199,2876.06%  12,654,366  179,4755.67%  11,547,958  113,5453.89%
Residential real estate loans  6,643,254  60,7173.66%  6,523,074  58,0993.56%  5,905,151  51,6863.50%
Consumer  2,585,493  39,9996.21%  2,636,350  38,1085.86%  2,715,923  30,4784.50%
Total loans  32,255,865  463,7245.75%  31,270,879  423,3025.42%  28,861,678  291,4524.01%
             
Total earning assets $43,097,198 $550,7275.11% $41,941,913 $501,3154.79% $41,003,338 $358,6723.48%
             
Less: Allowance for credit losses on loans  (301,311)    (304,393)    (282,943)  
             
Non-earning Assets:            
Cash and due from banks $418,972    $437,872    $277,283   
Other assets  4,884,694     4,907,115     4,735,701   
             
Total assets $48,099,553    $46,982,507    $45,733,379   
             
Interest-Bearing Liabilities:            
Checking and NOW accounts $7,881,863 $24,3581.24% $7,988,579 $19,3590.98% $8,445,683 $1,7860.08%
Savings accounts  5,785,603  3,2470.23%  6,183,409  2,2300.15%  6,835,675  6730.04%
Money market accounts  6,084,963  35,3582.33%  5,641,288  20,0101.44%  5,317,300  1,0270.08%
Other time deposits  3,680,029  26,6332.90%  3,057,870  15,2892.03%  2,491,998  1,6270.26%
Total interest-bearing core deposits  23,432,458  89,5961.53%  22,871,146  56,8881.01%  23,090,656  5,1130.09%
Brokered deposits  948,397  11,3784.81%  500,530  5,7054.62%  7,447  740.00%
Total interest-bearing deposits  24,380,855  100,9741.66%  23,371,676  62,5931.09%  23,098,103  5,1870.09%
             
Federal funds purchased and interbank borrowings  441,145  5,6555.14%  419,291  4,8394.68%  1,222  20.47%
Securities sold under agreements to repurchase  340,178  9001.06%  412,819  7790.77%  466,885  850.07%
Federal Home Loan Bank advances  5,283,728  45,0883.42%  4,273,343  37,9963.61%  3,053,423  6,9250.91%
Other borrowings  796,536  10,1145.09%  781,221  7,9544.13%  611,772  4,6873.06%
Total borrowed funds  6,861,587  61,7573.61%  5,886,674  51,5683.55%  4,133,302  11,6991.14%
             
Total interest-bearing liabilities $31,242,442 $162,7312.09% $29,258,350 $114,1611.58% $27,231,405 $16,8860.25%
             
Noninterest-Bearing Liabilities and Shareholders' Equity            
Demand deposits $10,741,646    $11,526,267    $12,714,946   
Other liabilities  841,663     1,031,702     657,128   
Shareholders' equity  5,273,802     5,166,188     5,129,900   
             
Total liabilities and shareholders' equity $48,099,553    $46,982,507    $45,733,379   
             
Net interest rate spread   3.02%   3.21%   3.23%
             
Net interest margin (GAAP)   3.55%   3.64%   3.29%
             
Net interest margin (FTE)3   3.60%   3.69%   3.33%
             
FTE adjustment  $5,825   $5,666   $4,314 
             
1 Interest income is reflected on a FTE. 
2 Includes loans held for sale. 
3 Represents a non-GAAP financial measure. Refer the "Non-GAAP Measures" table for reconciliations to GAAP financial measures. 
 


         
Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
         
  Six Months Ended Six Months Ended
  June 30, 2023 June 30, 2022
  AverageIncome1/Yield/ AverageIncome1/Yield/
Earning Assets: BalanceExpenseRate BalanceExpenseRate
Money market and other interest-earning investments $611,903 $12,0643.98% $1,211,518 $2,1380.36%
Investments:        
Treasury and government-sponsored agencies  2,209,916  35,8863.25%  2,342,401  20,0381.71%
Mortgage-backed securities  5,364,788  69,3812.59%  5,441,902  57,9102.13%
States and political subdivisions  1,788,498  29,0863.25%  1,786,684  28,2083.16%
Other securities  781,549  18,5994.76%  664,741  9,6112.89%
Total investments $10,144,751 $152,9523.02% $10,235,728 $115,7672.26%
Loans:2        
Commercial  9,661,029  311,3416.45%  7,301,008  151,0264.11%
Commercial and agriculture real estate  12,910,787  378,7625.87%  10,156,292  190,9523.74%
Residential real estate loans  6,582,982  118,8173.61%  4,953,222  85,6733.46%
Consumer  2,611,295  78,1066.03%  2,411,976  52,3934.38%
Total loans  31,766,093  887,0265.59%  24,822,498  480,0443.86%
         
Total earning assets $42,522,747 $1,052,0424.95% $36,269,744 $597,9493.29%
         
Less: Allowance for credit losses on loans  (302,844)    (225,876)  
         
Non-earning Assets:        
Cash and due from banks $428,370    $273,083   
Other assets  4,895,843     4,111,637   
         
Total assets $47,544,116    $40,428,588   
         
Interest-Bearing Liabilities:        
Checking and NOW accounts $7,934,927 $43,7171.11% $7,619,757 $2,3810.06%
Savings accounts  5,983,407  5,4770.18%  6,073,081  1,2620.04%
Money market accounts  5,864,351  55,3681.90%  4,552,241  1,7190.08%
Other time deposits  3,370,668  41,9222.51%  2,120,638  2,9450.28%
Total interest-bearing core deposits  23,153,353  146,4841.28%  20,365,717  8,3070.08%
Brokered deposits  725,701  17,0834.75%  3,744  743.99%
Total interest-bearing deposits  23,879,054  163,5671.38%  20,369,461  8,3810.08%
         
Federal funds purchased and interbank borrowings  430,278  10,4944.92%  1,168  20.25%
Securities sold under agreements to repurchase  376,298  1,6790.90%  458,459  1810.08%
Federal Home Loan Bank advances  4,781,326  83,0843.50%  2,822,984  12,8880.92%
Other borrowings  788,921  18,0684.62%  522,599  8,1543.12%
Total borrowed funds  6,376,823  113,3253.58%  3,805,210  21,2251.12%
         
Total interest-bearing liabilities  30,255,877  276,8921.85%  24,174,671  29,6060.25%
         
Noninterest-Bearing Liabilities and Shareholders' Equity       
Demand deposits $11,131,789    $11,014,359   
Other liabilities  936,158     562,882   
Shareholders' equity  5,220,292     4,676,676   
         
Total liabilities and shareholders' equity $47,544,116    $40,428,588   
         
Net interest rate spread   3.10%   3.04%
         
Net interest margin (GAAP)   3.59%   3.09%
         
Net interest margin (FTE)3   3.65%   3.13%
         
FTE adjustment  $11,491   $8,086 
         
1 Interest income is reflected on a FTE.
2 Includes loans held for sale. 
3 Represents a non-GAAP financial measure. Refer the "Non-GAAP Measures" table for reconciliations to GAAP financial measures. 
 


         
Asset Quality (EOP) (unaudited)
($ in thousands)
         
 Three Months Ended Six Months Ended
 June 30,March 31,December 31,September 30,June 30, June 30,June 30,
  2023  2023  2022  2022  2022   2023  2022 
Allowance for credit losses:        
Beginning allowance for credit losses on loans$298,711 $303,671 $302,254 $288,003 $280,507  $303,671 $107,341 
Allowance established for acquired PCD loans       10,558       78,531 
Provision for credit losses on loans 11,936  11,469  5,389  11,288  9,254   23,405  106,663 
Gross charge-offs (14,331) (18,180) (7,081) (11,440) (4,096)  (32,511) (8,760)
Gross recoveries 4,239  1,751  3,109  3,845  2,338   5,990  4,228 
NCOs (10,092) (16,429) (3,972) (7,595) (1,758)  (26,521) (4,532)
Ending allowance for credit losses on loans$300,555 $298,711 $303,671 $302,254 $288,003  $300,555 $288,003 
Beginning allowance for credit losses on unfunded commitments$34,156 $32,188 $26,169 $21,966 $22,046  $32,188 $10,879 
Provision (release) for credit losses on unfunded commitments 2,851  1,968  6,019  4,203  (80)  4,819  11,087 
Ending allowance for credit losses on unfunded commitments$37,007 $34,156 $32,188 $26,169 $21,966  $37,007 $21,966 
Allowance for credit losses$337,562 $332,867 $335,859 $328,423 $309,969  $337,562 $309,969 
Provision for credit losses on loans$11,936 $11,469 $5,389 $11,288 $9,254  $23,405 $106,663 
Provision (release) for credit losses on unfunded commitments1 2,851  1,968  6,019  4,203  (80)  4,819  11,087 
Provision for credit losses1$14,787 $13,437 $11,408 $15,491 $9,174  $28,224 $117,750 
NCOs / average loans2 0.13% 0.21% 0.05% 0.10% 0.02%  0.17% 0.04%
Average loans2$32,251,242 $31,267,836 $30,732,473 $29,890,008 $28,847,003  $31,762,256 $24,808,593 
EOP loans2 32,432,473  31,822,374  31,123,641  30,528,933  29,553,648   32,432,473  29,553,648 
ACL on loans / EOP loans2 0.93% 0.94% 0.98% 0.99% 0.97%  0.93% 0.97%
ACL / EOP loans2 1.04% 1.05% 1.08% 1.08% 1.05%  1.04% 1.05%
Underperforming Assets:        
Loans 90 days and over (still accruing)$303 $1,231 $2,650 $767 $882  $303 $882 
NPLs:        
Nonaccrual loans3,4 295,509  234,337  238,178  233,659  214,924   295,509  214,924 
TDRs still accruing4N/AN/A 15,313  13,674  15,665  N/A 15,665 
Total NPLs 295,509  234,337  253,491  247,333  230,589   295,509  230,589 
Foreclosed assets 9,824  10,817  10,845  11,967  12,618   9,824  12,618 
Total underperforming assets$305,636 $246,385 $266,986 $260,067 $244,089  $305,636 $244,089 
Classified and Criticized Assets:        
Nonaccrual loans3$295,509 $234,337 $238,178 $233,659 $214,924  $295,509 $214,924 
Substandard loans (still accruing) 524,709  570,229  504,657  476,724  490,566   524,709  490,566 
Loans 90 days and over (still accruing) 303  1,231  2,650  767  882   303  882 
Total classified loans - "problem loans" 820,521  805,797  745,485  711,150  706,372   820,521  706,372 
Other classified assets 40,942  26,441  24,735  24,773  25,004   40,942  25,004 
Criticized loans - "special mention loans" 614,547  593,307  636,069  549,994  452,835   614,547  452,835 
Total classified and criticized assets$1,476,010 $1,425,545 $1,406,289 $1,285,917 $1,184,211  $1,476,010 $1,184,211 
Loans 30-89 days past due$39,748 $42,071 $55,522 $65,632 $48,889  $39,748 $48,889 
NPLs / EOP loans2 0.91% 0.74% 0.81% 0.81% 0.78%  0.91% 0.78%
ACL to NPLs 114% 142% 132% 133% 134%  114% 134%
Under-performing assets/EOP loans2 0.94% 0.77% 0.86% 0.85% 0.83%  0.94% 0.83%
Under-performing assets/EOP assets 0.63% 0.51% 0.57% 0.56% 0.53%  0.63% 0.53%
30+ day delinquencies/EOP loans2 0.12% 0.14% 0.19% 0.22% 0.17%  0.12% 0.17%
1 Excludes $0.2 million of expense to establish an allowance on held-to-maturity securities during the first quarter of 2022. Provision for unfunded commitments is included in the provision for credit losses. The reclassification of the provision for unfunded commitments out of other expense as a component of noninterest expense was made to amounts prior to December 31, 2022 to conform to the current period presentation.
2 Excludes loans held for sale.      
3 Includes non-accruing TDRs totaling $24.0 million at December 31, 2022, $23.8 million at September 30, 2022, and $24.3 million at June 30, 2022.
4 As a result of accounting guidance adopted in 2023, the TDR classification is no longer applicable subsequent to December 31, 2022.
PCD - Purchased credit deteriorated TDR - Troubled debt restructuring     
         

                

         
Non-GAAP Measures (unaudited)
($ and shares in thousands, except per share data)
         
 Three Months Ended Six Months Ended
 June 30,March 31,December 31,September 30,June 30, June 30,June 30,
  2023  2023  2022  2022  2022   2023  2022 
Earnings Per Share:        
Net income applicable to common shares$151,003 $142,566 $196,701 $136,119 $110,952  $293,569 $81,349 
Adjustments:        
Louisville expenses 3,361           3,361   
Tax effect1 (392)          (392)  
Louisville expenses, net 2,969           2,969   
Merger-related charges2 2,372  14,558  20,314  22,743  36,585   16,930  88,884 
Tax effect1 (277) (3,172) (5,160) (8,529) (13,057)  (3,449) (22,591)
Merger-related charges, net 2,095  11,386  15,154  14,214  23,528   13,481  66,293 
Debt Securities (gains) losses (17) 5,216  173  172  85   5,199  (257)
Tax effect1 2  (1,137) (44) (65) (30)  (1,135) 32 
Debt securities (gains) losses, net (15) 4,079  129  107  55   4,064  (225)
Property optimization charges 242  1,317  26,818       1,559   
Tax effect1 (28) (287) (6,812)      (315)  
Property optimization charges, net 214  1,030  20,006       1,244   
Gain on sale of health savings accounts     (90,673)         
Tax effect1     23,031          
Gain on sale of health savings accounts, net     (67,642)         
Day 1 non-PCD              96,270 
Tax effect1              (17,550)
Day 1 non-PCD, net              78,720 
Total adjustments, net 5,263  16,495  (32,353) 14,321  23,583   21,758  144,788 
Net income applicable to common shares, adjusted$156,266 $159,061 $164,348 $150,440 $134,535  $315,327 $226,137 
Weighted average diluted common shares outstanding 291,266  292,756  293,131  292,483  291,881   291,870  260,253 
EPS, diluted$0.52 $0.49 $0.67 $0.47 $0.38  $1.01 $0.31 
Adjusted EPS, diluted$0.54 $0.54 $0.56 $0.51 $0.46  $1.08 $0.87 
NIM:        
Net interest income$382,171 $381,488 $391,090 $376,589 $337,472  $763,659 $560,257 
Add: FTE adjustment3 5,825  5,666  5,378  4,950  4,314   11,491  8,086 
Net interest income (FTE)$387,996 $387,154 $396,468 $381,539 $341,786  $775,150 $568,343 
Average earning assets$43,097,198 $41,941,913 $41,206,695 $41,180,026 $41,003,338  $42,522,747 $36,269,744 
NIM (GAAP) 3.55% 3.64% 3.80% 3.66% 3.29%  3.59% 3.09%
NIM (FTE) 3.60% 3.69% 3.85% 3.71% 3.33%  3.65% 3.13%
         
Refer to last page of Non-GAAP reconciliations for footnotes. 


         
Non-GAAP Measures (unaudited)
($ in thousands)
         
 Three Months Ended Six Months Ended
 June 30,March 31,December 31,September 30,June 30, June 30,June 30,
  2023  2023  2022  2022  2022   2023  2022 
PPNR:        
Net interest income (FTE)3$387,996 $387,154 $396,468 $381,539 $341,786  $775,150 $568,343 
Add: Noninterest income 81,629  70,681  165,037  80,385  89,117   152,310  154,357 
Total revenue (FTE) 469,625  457,835  561,505  461,924  430,903   927,460  722,700 
Less: Noninterest expense (246,584) (250,711) (282,675) (262,444) (277,475)  (497,295) (493,064)
PPNR$223,041 $207,124 $278,830 $199,480 $153,428  $430,165 $229,636 
Adjustments:        
Gain on sale of health savings accounts$ $ $(90,673)$ $  $ $ 
Debt securities (gains) losses (17) 5,216  173  172  85   5,199  (257)
Noninterest income adjustments (17) 5,216  (90,500) 172  85   5,199  (257)
Adjusted noninterest income 81,612  75,897  74,537  80,557  89,202   157,509  154,100 
Adjusted revenue$469,608 $463,051 $471,005 $462,096 $430,988  $932,659 $722,443 
Adjustments:        
Louisville expenses$3,361 $ $ $ $  $3,361 $ 
Merger-related charges4 2,372  14,558  20,314  22,743  36,585   16,930  77,871 
Property optimization charges 242  1,317  26,818       1,559   
Noninterest expense adjustments 5,975  15,875  47,132  22,743  36,585   21,850  77,871 
Adjusted total noninterest expense (240,609) (234,836) (235,543) (239,701) (240,890)  (475,445) (415,193)
Adjusted PPNR$228,999 $228,215 $235,462 $222,395 $190,098  $457,214 $307,250 
Efficiency Ratio:        
Noninterest expense$246,584 $250,711 $282,675 $262,444 $277,475  $497,295 $493,064 
Less: Amortization of intangibles (6,060) (6,186) (6,787) (7,089) (7,170)  (12,246) (11,981)
Noninterest expense, excl. amortization of intangibles 240,524  244,525  275,888  255,355  270,305   485,049  481,083 
Less: Amortization of tax credit investments (2,762