Old National reports 4th quarter earnings of $74.1 million, or $0.44 per share

EVANSVILLE, Ind., Jan. 19, 2021 (GLOBE NEWSWIRE) --

CEO COMMENTARY:

FOURTH QUARTER HIGHLIGHTS²:

¹ Non-GAAP financial measure that Management believes is useful in evaluating the financial results of the Company – please refer to the Non GAAP reconciliations contained in this release   ² Comparisons are on a linked-quarter basis, unless otherwise noted   ³ Includes loans held for sale

RESULTS OF OPERATIONS

Old National Bancorp reported fourth quarter 2020 net income of $74.1 million, or $0.44 per diluted share.

Included in the fourth quarter were pre-tax charges of $3.6 million for the ONB Way. Excluding these charges from the current quarter and netting out debt securities gains, adjusted net income was $76.6 million, or $0.46 per diluted share.

LOANS
Strong commercial production continued; PPP loan forgiveness accelerated.

• Period-end total loans were $13,849.7 million at December 31, 2020, a decrease of $127.9 million, or 3.7% annualized, when compared to the $13,977.6 million at September 30, 2020.
• Excluding the $536.2 million decline in PPP loans during the quarter, total loans increased $408.3 million, or 13.1% annualized.
• Excluding PPP loans, commercial and industrial loans increased $228.1 million, or 32.8% annualized.
• Commercial real estate loans increased $245.0 million to $5,946.5 million, or 17.2% annualized growth.
• Total commercial loan production in the fourth quarter was $1,197.1 million; period-end pipeline totaled $2.1 billion.
• Consumer loans decreased $26.0 million to $1,635.1 million and residential mortgage loans decreased $16.9 million to $2,248.4 million.
• Average total loans in the fourth quarter were $13,927.7 million, an increase of $78.8 million from the third quarter of 2020.
• Excluding PPP loans, average total loans in the fourth quarter increased $333.9 million from the third quarter of 2020.

DEPOSITS
A low-cost core deposit franchise continues to be one of Old National's strengths.

• Period-end total deposits were $17,037.5 million at December 31, 2020, an increase of $531.0 million, or 12.9% annualized, when compared to the $16,506.5 million at September 30, 2020.
• Interest-bearing checking deposits increased $288.6 million to $4,877.0 million at December 31, 2020.
• Noninterest-bearing deposits increased $170.7 million to $5,633.7 million at December 31, 2020 from $5,463.0 million at September 30, 2020.
• On average, total deposits in the fourth quarter were $16,810.6 million, compared to $16,436.8 million in the third quarter of 2020.

NET INTEREST INCOME AND MARGIN
Net interest income and margin benefit from accelerated PPP loan forgiveness; deposit and funding costs continue to decline.

• Net interest income increased to $161.1 million in the fourth quarter of 2020.
• The net interest margin on a fully taxable equivalent basis increased 23 basis points to 3.26% compared to 3.03% in the third quarter of 2020.
• PPP interest and net fees combined were $22.6 million, or 26 basis points of net interest margin, in the fourth quarter of 2020 compared to $8.8 million, or a 5 basis points reduction to the net interest margin, in the third quarter of 2020.
• Accretion income was $5.4 million, or 10 basis points of net interest margin, in the fourth quarter of 2020 compared to $5.4 million, or 11 basis points of net interest margin, in the third quarter of 2020. In the fourth quarter of 2020, accretion income was 2.4% of adjusted total revenue.
• Interest collected on nonaccrual loans was $0.9 million, or 2 basis points of net interest margin, in the fourth quarter of 2020 compared to $1.0 million, or 2 basis point of net interest margin, in the third quarter of 2020.
• The cost of total deposits declined 4 basis points to 0.09% in the fourth quarter of 2020 while the cost of total interest-bearing deposits decreased 6 basis points to 0.13%.

CREDIT QUALITY
Strong credit quality remains a hallmark of the Old National franchise.

• Old National recorded a provision recapture in the fourth quarter of 2020 of $1.1 million, compared to no provision recorded in the third quarter.
• Net recoveries in the fourth quarter were $1.1 million, compared to net recoveries of $3.0 million in the third quarter.
• 30-89 day delinquencies were 0.15% at the end of the fourth quarter.
• Non-performing loans increased as a percentage of total loans to 1.20%.
• Loans acquired from previous acquisitions were recorded at fair value at the acquisition date. As of December 31, 2020, the remaining discount on these acquired loans was $50.6 million.
• The allowance for credit losses remained unchanged at $131.4 million, or 0.95% of total loans at December 31, 2020.

NONINTEREST INCOME
Noninterest income decreased due to lower securities gains and a seasonal decline in mortgage banking revenue.

• Total noninterest income for the fourth quarter of 2020 was $58.5 million, a decrease of $6.2 million from the third quarter of 2020.
• Mortgage banking revenue decreased $1.9 million when compared to the third quarter of 2020.
• Gains on sales of debt securities decreased $4.8 million when compared to the third quarter of 2020.
  

NONINTEREST EXPENSE
Fourth quarter results demonstrate benefit of The ONB Way, helping drive positive operating leverage¹.

• Noninterest expense for the fourth quarter of 2020 was $142.3 million and included $3.6 million in ONB Way charges and $9.9 million in tax credit amortization.
• Excluding these items, adjusted noninterest expense for the fourth quarter was $128.8 million, compared to the $114.2 million in adjusted noninterest expense in the third quarter of 2020.
• The fourth quarter of 2020 also included $8.1 million in additional incentive compensation which is included in adjusted noninterest expense defined above.
• The fourth quarter efficiency ratio was 62.37%, while the adjusted efficiency ratio was 56.35%.
• Adjusted operating leverage¹ was +917 basis points for the fourth quarter of 2020 as compared to the fourth quarter of 2019.
  

INCOME TAXES

• On a fully taxable-equivalent basis, income tax expense in the fourth quarter was $7.8 million, resulting in a 9.5% FTE tax rate.
• Income tax expense included $13.6 million in tax credit benefit.

CAPITAL AND LIQUIDITY
Capital ratios remain strong.

• At the end of the fourth quarter, preliminary total risk-based capital was 12.69% and preliminary regulatory tier 1 capital was 11.75%.
• Tangible common equity to tangible assets was 8.64% at the end of the fourth quarter compared to 8.58% in the third quarter of 2020.
• The Company did not repurchase any shares of common stock during the fourth quarter.
• A low loan to deposit ratio of 81.3%, combined with existing funding sources plus available unencumbered, high-quality collateral, provides strong liquidity.

NON-GAAP RECONCILIATIONS

⁴ Tax-effect calculations use the current statutory FTE tax rates (federal + state)

⁴ Tax-effect calculations use the current statutory FTE tax rates (federal + state)

⁵ Year-over-year basis point change in noninterest expenses plus change in total revenue
⁶ Year-over-year basis point change in adjusted noninterest expense plus change in adjusted total revenue

⁷Tax-effect calculations use the current statutory FTE tax rates (federal + state)

CONFERENCE CALL AND WEBCAST
Old National will host a conference call and live webcast at 9:00 a.m. Central Time on Tuesday, January 19, 2021, to review fourth-quarter 2020 financial results. The live audio web cast of the call, along with the 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. A replay of the call will also be available from Noon Central Time on January 19 through February 2. To access the replay, dial 1-855-859-2056, Conference ID Code 6389837.

ABOUT OLD NATIONAL
Old National Bancorp ONB, the holding company of Old National Bank, is the largest bank holding company headquartered in Indiana. With $23.0 billion in assets, it ranks among the top 100 banking companies in the U.S. and has been recognized as a World's Most Ethical Company by the Ethisphere Institute for nine consecutive years.  Since its founding in Evansville in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships and keeping our clients at the center of all we do. This is an approach to business that we call The ONB Way. Today, Old National's footprint includes Indiana, Kentucky, Michigan, Minnesota and Wisconsin. 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
This earnings release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Old National's results of operations or financial position. 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 of this release.

FORWARD-LOOKING STATEMENT
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements include, but are not limited to, descriptions of Old National Bancorp's ("Old National's") financial condition, results of operations, asset and credit quality trends and profitability.  Forward-looking statements can be identified by the use of the words "anticipate," "believe," "expect," "intend," "could" and "should," 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, such as statements about the potential impacts of the COVID-19 pandemic. There are a number of factors that could cause actual results to differ materially from those in such statements.  Factors that might cause such a difference include, but are not limited to: the severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic and of businesses' and governments' responses to the pandemic on our operations and personnel, and on commercial activity and demand across our and our customers' businesses; market, economic, operational, liquidity, credit and interest rate risks associated with Old National's business (including developments and volatility arising from the COVID-19 pandemic); competition; heightened regulatory and governmental oversight and scrutiny of Old National's business practices; current, pending or future government legislation and policies (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and its related regulations); ability of Old National to execute its business plan, including the anticipated impact from the ONB Way strategic plan that may differ from current estimates; changes in the economy which could materially impact credit quality trends and the ability to generate loans and gather deposits; failure or circumvention of our internal controls; failure or disruption of our information systems; significant changes in accounting, tax or regulatory practices or requirements, including the impact of the CECL standard as well as changes to address the impact of COVID-19; new legal obligations or liabilities or unfavorable resolutions of litigations; disruptive technologies in payment systems and other services traditionally provided by banks; computer hacking and other cybersecurity threats; other matters discussed in this press release; and other factors identified in our Annual Report on Form 10-K and other periodic filings with the SEC.  These forward-looking statements are made only as of the date of this press release, and Old National does not undertake an obligation to release revisions to these forward-looking statements to reflect events or conditions after the date of this press release.

Media: Kathy A. Schoettlin (812) 465-7269
Investors: Lynell J. Walton (812) 464-1366