ONB Investment Thesis 2Q24
2nd Quarter 2024
Investment Thesis
Executive Summary
Slides 5 -15
Forward-Looking Statements
These materials contain 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
3
Non-GAAP Financial Measures
The Company's accounting and reporting policies conform to
The Company presents EPS, the efficiency ratio, retuon average common equity, retuon average tangible common equity, and net income applicable to common shares, all adjusted for certain notable items. These items include merger-related charges associated with completed and pending acquisitions, current expected credit loss ("CECL") Day 1 non-PCD provision expense, debt securities gains/losses, distribution of excess pension assets expense,
The Company presents adjusted noninterest expense, which excludes merger-related charges, distribution of excess pension assets expense,
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 following reconciliations in the "Non-GAAP Reconciliations" section for details on the calculation of these measures to the extent presented herein.
4
Corporate Strategy
Old National's primary strategic objective is to be a top quartile performing "basic bank" that is a primary,
trusted partner to our clients in the communities we serve, and a highly respected, highly valued
employer that continually empowers our team members to grow, develop and succeed.
Execute with Relentless Focus and Win in our Key Markets
Granular & Diversified
Loan Portfolio
Strong Credit Culture
Drive Long-
Term
Shareholder
Value
Quality, Low-Cost
Deposit Base
Proven Acquirer
Diversified Revenue
Streams
5
Snapshot of Old National
|
Summary1 |
Company Description |
|
Headquarters |
|
|
Market Cap |
|
|
P/ TBV |
167% |
|
Dividend Yield |
3.0% |
|
LTM Average Daily Volume (Actual) |
2,036,765 |
|
Total Assets |
|
|
Wealth Assets Under Management |
|
|
Loan Mix2 |
Deposit Mix |
||
|
Consumer |
|||
|
8% |
|||
|
CRE Non- |
Money |
Time |
|
|
Residential |
19% |
||
|
Owner |
Market |
||
|
Real Estate |
Occupied |
26% |
|
|
19% |
32% |
|
Savings |
Demand |
||
|
24% |
|||
|
12% |
|||
|
C&I |
|||
|
NOW |
|||
|
29% |
|||
|
CRE Owner |
19% |
||
|
Occupied |
|||
|
12% |
- 6th largest commercial bank headquartered in Midwest - top 30 banking company based in the
U.S. by assets -
- 280 branches and 351 ATMs
Key Financial Metrics
|
Cost of Total Deposits |
216 bps |
|
Cycle to Date Total Deposit Beta |
41% |
|
Insured Deposits to Total Deposits3 |
>70% |
|
Loan-to-Deposit Ratio2 |
91% |
|
Price / Tangible Book Value |
|
|
Efficiency Ratio As Reported/ Adjusted4 |
57.2% / 52.6% |
|
Net Charge-Offs / Average Loans, |
0.11% |
|
excluding PCD |
|
|
30-89 Day Delinquent Loans |
0.14% |
|
Non-Performing Loans / Total Loans |
0.94% |
|
Tangible Common Equity to Tangible Assets |
6.9% |
|
ROATCE As Reported / Adjusted4 |
14.1% / 17.2% |
|
$ in millions, except as noted; |
Financial data as of or for the quarter ended |
|
2 Includes loans held for sale |
3 Includes the estimate of |
P / TBV - price to tangible book value PCD - purchased credit deteriorated ROATCE - retuon average tangible common equity LTM - last twelve months
6
The Best of Offense and Defense
OFFENSE
Top quartile 2Q2024 financial metrics
- 17.2% Adj. ROATCE1
- 52.6% Adj. Efficiency. Ratio1
Ample liquidity and capital
- >70% of insured deposits to total deposits2
- 91% loan-to-deposit ratio3
- 10.73% CET1 capital to RWA
- TBV1 up 10% YoY
DEFENSE
Quality, peer-leading deposit franchise
- Growth in total deposits of 2.4% annualized, excluding
CapStar - Low total deposit costs of 216 bps
- Cycle-to-datetotal deposit beta of 41%
- 76% of core deposits have tenure >5 years
- YOY growth in total deposits of 10%
Strong credit culture
- Well-reserved- 100% weighted Moody's S3 scenario
$392 million allowance for credit losses, or 1.08% of total loans, includes ~4% reserve on PCD loans- Additionally,
$190 million of discount on acquired loans - Granular and diversified loan portfolio
- Low net charge-offs of 11 bps, excluding PCD loans
Financial data as of or for the quarter ended
AOCI - accumulated other income PCD - purchased credit deteriorated
7
Low-Risk Balance Sheet Relative to Peers
|
Risk-Weighted Assets / Total Assets1 |
3 and 15-Year Cumulative NCOs / Avg. Loans2 |
|
93% |
||
|
79% |
87% |
6.19% |
|
76% |
||
|
72% |
||
1.58%
0.13% 0.32%
|
Lower |
Average |
Upper |
|
ONB |
3-Year |
|
Quartile |
Quartile |
ONB3
15-Year
Peer Average
Financial data as of or for the quarter ended
NCOs - net charge-offs
8
ONB is
|
ROA1 |
ROATCE1 |
2024E Payout Ratio1,2 |
HWC
SNV
WBS COLB ASB CADE PNFP WTFC FNB ONB CMA UMBF BOKF FHN WAL ZION VLY
|
1.3% |
SNV |
|
1.3% |
WBS |
|
1.2% |
CMA |
|
1.2% |
ZION |
|
1.1% |
ASB |
|
1.1% |
HWC |
|
1.1% |
ONB |
|
1.1% |
UMBF |
|
1.1% |
COLB |
|
1.1% |
FNB |
|
1.0% |
WTFC |
|
1.0% |
WAL |
|
1.0% |
BOKF |
|
1.0% |
PNFP |
|
0.9% |
FHN |
|
0.9% |
|
|
0.5% |
VLY |
|
18.1 |
VLY |
|
17.2% |
COLB |
|
16.5% |
CMA |
|
16.2% |
ASB |
|
15.9% |
FHN |
|
15.9% |
|
|
15.7% |
ZION |
|
14.9% |
SNV |
|
14.6% |
FNB |
|
14.5% |
HWC |
|
13.8% |
ONB |
|
13.4% |
WBS |
|
13.1% |
BOKF |
|
12.8% |
WAL |
|
11.8% |
WTFC |
|
10.6% |
UMBF |
|
6.0% |
PNFP |
63%
57%
56%
42%
41%
39%
36%
36%
35%
31%
31%
30%
28%
20%
18%
18%
13%
Source:
9
Strong TBV Per Share Growth Glidepath
|
7% |
||||
|
of |
||||
|
2021 |
CAGR |
|||
|
- |
|
|||
|
2016 |
||||
|
|
|
|||
|
|
|
|
Ex. |
AOCI1
|
TBV Per Share CAGR (%) ex. AOCI2 |
|||
|
Old National |
KRX |
||
|
3-Year |
9.0% |
8.9% |
|
|
(3.8)% Incl. AOCI |
1.3% Incl. AOCI |
||
|
5-Year |
7.0% |
7.0% |
|
|
2.2% Incl. AOCI |
3.5% Incl. AOCI |
||
|
7-Year |
6.3% |
7.0% |
|
|
2.3% Incl. AOCI |
3.7% Incl. AOCI |
||
|
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
2022 |
2023 |
1Q'24 |
2Q'24 |
Source:
10
Attachments
Disclaimer


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