UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023March 31, 2024
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number 001-15817
 
Old National Bancorp
(Exact name of registrant as specified in its charter)
 
Indiana35-1539838
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
 
One Main Street47708
Evansville,Indiana(Zip Code)
(Address of principal executive offices)
(800) 731-2265
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading
Symbol(s)
 Name of each exchange on which registered
Common stock, no par value ONB TheNASDAQ NASDAQStockGlobal Select Market LLC
Depositary Shares, each representing a 1/40th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series AONBPPTheNASDAQ NASDAQStockGlobal Select Market LLC
Depositary Shares, each representing a 1/40th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series CONBPOTheNASDAQ NASDAQStockGlobal Select Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer   Accelerated filer 
Non-accelerated filer   Smaller reporting company 
Emerging growth company     
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
The registrant has one class of common stock (no par value) with 292,589,000318,971,000 shares outstanding at July 31, 2023.April 30, 2024.



OLD NATIONAL BANCORP
FORM 10-Q
TABLE OF CONTENTS
  Page
PART I. 
Item 1. 
 
 
 
 
 
 
 Note 1.
 Note 2.
Note 3.
 Note 4.
 Note 5.
 Note 6.
 Note 7.
 Note 8.
 Note 9.
 Note 10.
 Note 11.
 Note 12.
 Note 13.
 Note 14.
 Note 15.
 Note 16.
 Note 17.
Item 2.
 
 
 
 
 
 
 
 
Item 3.
Item 4.
PART II.
Item 1A.
Item 2.
Item 5.
Item 6.
2


GLOSSARY OF ABBREVIATIONS AND ACRONYMS
As used in this report, references to “Old National,” “the Company,” “we,” “our,” “us,” and similar terms refer to the consolidated entity consisting of Old National Bancorp and its wholly-owned subsidiaries. Old National Bancorp refers solely to the parent holding company, and Old National Bank refers to Old National Bancorp’s wholly-owned bank subsidiary.
The acronyms and abbreviations identified below are used throughout this report, including the Notes to Consolidated Financial Statements (Unaudited). You may find it helpful to refer to this page as you read this report.
AOCI:  accumulated other comprehensive income (loss)
AQR:  asset quality rating
ASC:  Accounting Standards Codification
ASU:  Accounting Standards Update
ATM:  automated teller machine
BBCC: business banking credit center (small business)
CapStar:  CapStar Financial Holdings, Inc.
CECL: current expected credit loss
Common Stock:  Old National Bancorp common stock, no par value
DTI:  debt-to-income
FASB:  Financial Accounting Standards Board
FDIC:  Federal Deposit Insurance Corporation
FHLB:  Federal Home Loan Bank
FHTC:  Federal Historic Tax Credit
FICO:  Fair Isaac Corporation
First Midwest: First Midwest Bancorp, Inc.
GAAP:  U.S. generally accepted accounting principles
LGD:  loss given default
LIBOR:  London Interbank Offered Rate
LIHTC:  Low Income Housing Tax Credit
LTV:  loan-to-value
N/A:  not applicable
N/M:  not meaningful
NASDAQ: The NASDAQ StockGlobal Select Market LLC
NMTC: New Markets Tax Credit
NOW:  negotiable order of withdrawal
OCC:  Office of the Comptroller of the Currency
PCD: purchased credit deteriorated
PD:  probability of default
Renewable Energy:  investment tax credits for solar projects
SEC:  U.S. Securities and Exchange Commission
TDR:  troubled debt restructuring
UMB: UMB Bank, n.a.SOFR: Secured Overnight Financing Rate


3


OLD NATIONAL BANCORP
CONSOLIDATED BALANCE SHEETS
(dollars and shares in thousands, except per share data)(dollars and shares in thousands, except per share data)June 30,
2023
December 31,
2022
(dollars and shares in thousands, except per share data)March 31,
2024
December 31,
2023
(unaudited)  (unaudited) 
AssetsAssets  Assets  
Cash and due from banksCash and due from banks$473,023 $453,432 
Money market and other interest-earning investmentsMoney market and other interest-earning investments724,863 274,980 
Total cash and cash equivalentsTotal cash and cash equivalents1,197,886 728,412 
Equity securities, at fair valueEquity securities, at fair value71,953 52,507 
Investment securities - available-for-sale, at fair value (amortized cost
$7,551,258 and $7,772,603, respectively)
6,500,515 6,773,712 
Investment securities - held-to-maturity, at amortized cost (fair value
$2,603,058 and $2,643,682, respectively)
3,054,997 3,089,147 
Investment securities - available-for-sale, at fair value (amortized cost
$7,834,082 and $7,684,889, respectively)
Investment securities - available-for-sale, at fair value (amortized cost
$7,834,082 and $7,684,889, respectively)
Investment securities - available-for-sale, at fair value (amortized cost
$7,834,082 and $7,684,889, respectively)
Investment securities - held-to-maturity, at amortized cost (fair value
$2,547,576 and $2,601,188, respectively)
Federal Home Loan Bank/Federal Reserve Bank stock, at costFederal Home Loan Bank/Federal Reserve Bank stock, at cost413,326 314,168 
Loans held for sale, at fair value114,369 11,926 
Loans held-for-sale, at fair value
Loans:Loans:
Commercial
Commercial
CommercialCommercial9,698,241 9,508,904 
Commercial real estateCommercial real estate13,450,209 12,457,070 
Residential real estateResidential real estate6,684,480 6,460,441 
Consumer credit, net of unearned income2,599,543 2,697,226 
Total loans32,432,473 31,123,641 
Consumer
Total loans, net of unearned income
Allowance for credit losses on loansAllowance for credit losses on loans(300,555)(303,671)
Net loansNet loans32,131,918 30,819,970 
Premises and equipment, netPremises and equipment, net564,299 557,307 
Operating lease right-of-use assets184,700 189,714 
Accrued interest receivable205,198 190,521 
Goodwill
Goodwill
GoodwillGoodwill1,998,716 1,998,716 
Other intangible assetsOther intangible assets114,159 126,405 
Company-owned life insuranceCompany-owned life insurance771,753 768,552 
Other assets1,172,966 1,142,315 
Accrued interest receivable and other assets
Total assetsTotal assets$48,496,755 $46,763,372 
LiabilitiesLiabilities
Deposits:Deposits:
Deposits:
Deposits:
Noninterest-bearing demand
Noninterest-bearing demand
Noninterest-bearing demandNoninterest-bearing demand$10,532,838 $11,930,798 
Interest-bearing:Interest-bearing:
Checking and NOW
Checking and NOW
Checking and NOWChecking and NOW7,654,202 8,340,955 
SavingsSavings5,578,323 6,326,158 
Money marketMoney market7,200,288 5,389,139 
Time depositsTime deposits5,265,664 3,013,780 
Total depositsTotal deposits36,231,315 35,000,830 
Federal funds purchased and interbank borrowingsFederal funds purchased and interbank borrowings136,060 581,489 
Securities sold under agreements to repurchaseSecurities sold under agreements to repurchase311,447 432,804 
Federal Home Loan Bank advancesFederal Home Loan Bank advances4,771,183 3,829,018 
Other borrowingsOther borrowings815,318 743,003 
Operating lease liabilities206,178 211,964 
Accrued expenses and other liabilities
Accrued expenses and other liabilities
Accrued expenses and other liabilitiesAccrued expenses and other liabilities733,159 835,669 
Total liabilitiesTotal liabilities43,204,660 41,634,777 
Shareholders' Equity
Shareholders’ Equity
Preferred stock, 2,000 shares authorized, 231 shares issued and outstandingPreferred stock, 2,000 shares authorized, 231 shares issued and outstanding230,500 230,500 
Common stock, no par value, $1.00 per share stated value, 600,000 shares authorized,
292,597 and 292,903 shares issued and outstanding, respectively
292,597 292,903 
Preferred stock, 2,000 shares authorized, 231 shares issued and outstanding
Preferred stock, 2,000 shares authorized, 231 shares issued and outstanding
Common stock, no par value, $1.00 per share stated value, 600,000 shares authorized,
293,330 and 292,655 shares issued and outstanding, respectively
Capital surplusCapital surplus4,149,089 4,174,265 
Retained earningsRetained earnings1,428,542 1,217,349 
Accumulated other comprehensive income (loss), net of taxAccumulated other comprehensive income (loss), net of tax(808,633)(786,422)
Total shareholders' equity5,292,095 5,128,595 
Total liabilities and shareholders' equity$48,496,755 $46,763,372 
Total shareholders’ equity
Total liabilities and shareholders’ equity
The accompanying notes to consolidated financial statements are an integral part of these statements.
4


OLD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
(dollars and shares in thousands, except per share data)(dollars and shares in thousands, except per share data)2023202220232022(dollars and shares in thousands, except per share data)20242023
Interest IncomeInterest Income    Interest Income  
Loans including fees:Loans including fees:    Loans including fees:  
TaxableTaxable$449,896 $285,249 $860,271 $469,264 
NontaxableNontaxable10,925 4,802 21,137 8,309 
Investment securities:Investment securities:
TaxableTaxable64,072 51,459 124,873 88,868 
Taxable
Taxable
NontaxableNontaxable11,043 11,018 22,206 21,284 
Money market and other interest-earning investmentsMoney market and other interest-earning investments8,966 1,830 12,064 2,138 
Total interest incomeTotal interest income544,902 354,358 1,040,551 589,863 
Interest ExpenseInterest Expense
Deposits
Deposits
DepositsDeposits100,974 5,187 163,567 8,381 
Federal funds purchased and interbank borrowingsFederal funds purchased and interbank borrowings5,655 10,494 
Securities sold under agreements to repurchaseSecurities sold under agreements to repurchase900 85 1,679 181 
Federal Home Loan Bank advancesFederal Home Loan Bank advances45,088 6,925 83,084 12,888 
Other borrowingsOther borrowings10,114 4,687 18,068 8,154 
Total interest expenseTotal interest expense162,731 16,886 276,892 29,606 
Net interest incomeNet interest income382,171 337,472 763,659 560,257 
Provision for credit lossesProvision for credit losses14,787 9,165 28,224 117,901 
Net interest income after provision for credit lossesNet interest income after provision for credit losses367,384 328,307 735,435 442,356 
Noninterest IncomeNoninterest Income
Wealth and investment services feesWealth and investment services fees26,521 27,872 53,441 49,824 
Wealth and investment services fees
Wealth and investment services fees
Service charges on deposit accountsService charges on deposit accounts17,751 20,324 34,754 34,350 
Debit card and ATM feesDebit card and ATM fees10,653 11,222 20,635 18,821 
Mortgage banking revenueMortgage banking revenue4,165 6,522 7,565 13,767 
Capital markets income
Capital markets income
Capital markets incomeCapital markets income6,173 7,261 13,112 11,703 
Company-owned life insuranceCompany-owned life insurance4,698 4,571 7,884 8,095 
Debt securities gains (losses), netDebt securities gains (losses), net17 (85)(5,199)257 
Other incomeOther income11,651 11,430 20,118 17,540 
Total noninterest incomeTotal noninterest income81,629 89,117 152,310 154,357 
Noninterest ExpenseNoninterest Expense
Salaries and employee benefits
Salaries and employee benefits
Salaries and employee benefitsSalaries and employee benefits135,810 161,817 273,174 285,964 
OccupancyOccupancy26,085 26,496 54,367 47,515 
EquipmentEquipment7,721 7,550 15,110 12,718 
MarketingMarketing9,833 9,119 19,250 13,395 
TechnologyTechnology20,056 25,883 39,258 44,645 
CommunicationCommunication4,232 5,878 8,693 9,295 
Professional feesProfessional fees6,397 6,336 13,129 26,127 
FDIC assessmentFDIC assessment9,624 4,699 20,028 7,274 
Amortization of intangiblesAmortization of intangibles6,060 7,170 12,246 11,981 
Amortization of tax credit investmentsAmortization of tax credit investments2,762 1,525 5,523 3,041 
Property optimization242 — 1,559 — 
Other expense
Other expense
Other expenseOther expense17,762 21,002 34,958 31,109 
Total noninterest expenseTotal noninterest expense246,584 277,475 497,295 493,064 
Income before income taxesIncome before income taxes202,429 139,949 390,450 103,649 
Income tax expenseIncome tax expense47,393 24,964 88,814 16,250 
Net incomeNet income155,036 114,985 301,636 87,399 
Preferred dividendsPreferred dividends(4,033)(4,033)(8,067)(6,050)
Net income applicable to common shareholdersNet income applicable to common shareholders$151,003 $110,952 $293,569 $81,349 
Net income per common share - basicNet income per common share - basic$0.52 $0.38 $1.01 $0.31 
Net income per common share - dilutedNet income per common share - diluted0.52 0.38 1.01 0.31 
Weighted average number of common shares outstanding - basicWeighted average number of common shares outstanding - basic290,559 290,862 290,822 259,108 
Weighted average number of common shares outstanding - dilutedWeighted average number of common shares outstanding - diluted291,266 291,881 291,870 260,253 
Dividends per common shareDividends per common share$0.14 $0.14 $0.28 $0.28 
The accompanying notes to consolidated financial statements are an integral part of these statements.
5


OLD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
(dollars in thousands)(dollars in thousands)2023202220232022(dollars in thousands)20242023
Net incomeNet income$155,036 $114,985 $301,636 $87,399 
Other comprehensive income (loss):Other comprehensive income (loss):
Other comprehensive income (loss):
Other comprehensive income (loss):
Change in debt securities available-for-sale:
Change in debt securities available-for-sale:
Change in debt securities available-for-sale:Change in debt securities available-for-sale:
Unrealized holding gains (losses) for the periodUnrealized holding gains (losses) for the period(120,159)(304,514)(95,435)(733,984)
Reclassification for securities transferred to held-to-maturity 143,310  165,473 
Unrealized holding gains (losses) for the period
Unrealized holding gains (losses) for the period
Reclassification adjustment for securities (gains) losses
realized in income
Reclassification adjustment for securities (gains) losses
realized in income
Reclassification adjustment for securities (gains) losses
realized in income
Reclassification adjustment for securities (gains) losses
realized in income
(17)85 5,199 (257)
Income tax effectIncome tax effect30,043 38,408 31,189 134,643 
Unrealized gains (losses) on available-for-sale securitiesUnrealized gains (losses) on available-for-sale securities(90,133)(122,711)(59,047)(434,125)
Change in securities held-to-maturity:Change in securities held-to-maturity:
Adjustment for securities transferred from available-for-sale (143,310) (165,473)
Change in securities held-to-maturity:
Change in securities held-to-maturity:
Amortization of unrealized losses on securities transferred
from available-for-sale
Amortization of unrealized losses on securities transferred
from available-for-sale
Amortization of unrealized losses on securities transferred
from available-for-sale
Amortization of unrealized losses on securities transferred
from available-for-sale
5,122 3,692 10,951 4,002 
Income tax effectIncome tax effect(1,300)34,146 (1,431)39,272 
Changes from securities held-to-maturityChanges from securities held-to-maturity3,822 (105,472)9,520 (122,199)
Change in hedges:Change in hedges:
Change in hedges:
Change in hedges:
Net unrealized derivative gains (losses) on hedges
Net unrealized derivative gains (losses) on hedges
Net unrealized derivative gains (losses) on hedgesNet unrealized derivative gains (losses) on hedges13,272 (3,418)61,121 (12,924)
Reclassification adjustment for (gains) losses realized in net
income
Reclassification adjustment for (gains) losses realized in net
income
(32,112)(219)(24,820)(888)
Income tax effectIncome tax effect4,872 894 (8,848)3,394 
Changes from hedgesChanges from hedges(13,968)(2,743)27,453 (10,418)
Change in defined benefit pension plans:Change in defined benefit pension plans:
Change in defined benefit pension plans:
Change in defined benefit pension plans:
Amortization of net (gains) losses recognized in income
Amortization of net (gains) losses recognized in income
Amortization of net (gains) losses recognized in incomeAmortization of net (gains) losses recognized in income6 (10)(182)(21)
Income tax effectIncome tax effect(2)45 
Changes from defined benefit pension plansChanges from defined benefit pension plans4 (8)(137)(16)
Other comprehensive income (loss), net of taxOther comprehensive income (loss), net of tax(100,275)(230,934)(22,211)(566,758)
Comprehensive income (loss)Comprehensive income (loss)$54,761 $(115,949)$279,425 $(479,359)
The accompanying notes to consolidated financial statements are an integral part of these statements.
6


OLD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'SHAREHOLDERS’ EQUITY (unaudited)
(dollars in thousands, except per
share data)
(dollars in thousands, except per
share data)
Preferred StockCommon StockCapital SurplusRetained EarningsAccumulated
Other
Comprehensive Income (Loss)
Total
Shareholders' Equity
(dollars in thousands, except per
share data)
Preferred StockCommon StockCapital SurplusRetained EarningsAccumulated
Other
Comprehensive Income (Loss)
Total
Shareholders’ Equity
Balance, December 31, 2021$— $165,838 $1,880,545 $968,010 $(2,375)$3,012,018 
Balance, December 31, 2022
Net income (loss)   (27,586) (27,586)
Net income
Net income
Net income
Other comprehensive income (loss)Other comprehensive income (loss)    (335,824)(335,824)
First Midwest Bancorp, Inc. merger:
Issuance of common stock— 129,365 2,316,947 — — 2,446,312 
Issuance of preferred stock, net of
issuance costs
230,500 — 13,219 — — 243,719 
Cash dividends:
Cash dividends:
Cash dividends:Cash dividends:
Common ($0.14 per share)Common ($0.14 per share)   (40,782) (40,782)
Preferred dividends   (2,017) (2,017)
Common ($0.14 per share)
Common ($0.14 per share)
Preferred ($17.50 per share)
Common stock issuedCommon stock issued— 10 155 —  165 
Common stock repurchasedCommon stock repurchased— (3,890)(66,188)  (70,078)
Share-based compensation expenseShare-based compensation expense  6,284   6,284 
Stock activity under incentive
compensation plans
Stock activity under incentive
compensation plans
— 1,636 (1,368)(365) (97)
Balance, March 31, 2022230,500 292,959 4,149,594 897,260 (338,199)5,232,114 
Net income   114,985  114,985 
Other comprehensive income (loss)    (230,934)(230,934)
Cash dividends:
Common ($0.14 per share)   (40,901) (40,901)
Preferred dividends   (4,033) (4,033)
Common stock issued— 10 152   162 
Common stock repurchased— (21)(301)  (322)
Share-based compensation expense  7,813   7,813 
Stock activity under incentive
compensation plans
— (55)285 (331) (101)
Balance, June 30, 2022$230,500 $292,893 $4,157,543 $966,980 $(569,133)$5,078,783 
Balance, March 31, 2023
Balance, December 31, 2022$230,500 $292,903 $4,174,265 $1,217,349 $(786,422)$5,128,595 
Net income   146,600  146,600 
Other comprehensive income (loss)    78,064 78,064 
Cash dividends:
Common ($0.14 per share)   (41,088) (41,088)
Preferred dividends   (4,034) (4,034)
Common stock issued 15 247   262 
Common stock repurchased (2,598)(41,112)  (43,710)
Share-based compensation expense  12,742   12,742 
Stock activity under incentive
compensation plans
 1,602 (1,412)(195) (5)
Balance, March 31, 2023230,500 291,922 4,144,730 1,318,632 (708,358)5,277,426 
Net income   155,036  155,036 
Other comprehensive income (loss)    (100,275)(100,275)
Cash dividends:
Common ($0.14 per share)   (40,932) (40,932)
Preferred dividends   (4,033) (4,033)
Common stock issued 20 252   272 
Common stock repurchased (8)(97)  (105)
Share-based compensation expense  5,247   5,247 
Stock activity under incentive
compensation plans
 663 (1,043)(161) (541)
Balance, June 30, 2023$230,500 $292,597 $4,149,089 $1,428,542 $(808,633)$5,292,095 
December 31, 2023
December 31, 2023
December 31, 2023
Net income
Net income
Net income
Other comprehensive income (loss)
Cash dividends:
Common ($0.14 per share)
Common ($0.14 per share)
Common ($0.14 per share)
Preferred ($17.50 per share)
Common stock issued
Common stock repurchased
Share-based compensation expense
Stock activity under incentive
compensation plans
Balance, March 31, 2024
The accompanying notes to consolidated financial statements are an integral part of these statements.
7


OLD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Six Months Ended
June 30,
Three Months Ended
March 31,
Three Months Ended
March 31,
(dollars in thousands)(dollars in thousands)20232022(dollars in thousands)20242023
Cash Flows From Operating ActivitiesCash Flows From Operating Activities  Cash Flows From Operating Activities  
Net incomeNet income$301,636 $87,399 
Adjustments to reconcile net income to cash provided by operating activities:Adjustments to reconcile net income to cash provided by operating activities:
Depreciation
Depreciation
DepreciationDepreciation18,386 17,742 
Amortization of other intangible assetsAmortization of other intangible assets12,246 11,981 
Amortization of tax credit investmentsAmortization of tax credit investments5,523 3,041 
Net premium amortization on investment securitiesNet premium amortization on investment securities7,061 9,413 
Accretion income related to acquired loansAccretion income related to acquired loans(11,485)(44,083)
Share-based compensation expenseShare-based compensation expense17,989 14,097 
Provision for credit lossesProvision for credit losses28,224 117,901 
Debt securities (gains) losses, netDebt securities (gains) losses, net5,199 (257)
Net (gains) losses on sales of loans and other assetsNet (gains) losses on sales of loans and other assets(45)(4,010)
Increase in cash surrender value of company-owned life insuranceIncrease in cash surrender value of company-owned life insurance(7,884)(8,095)
Residential real estate loans originated for saleResidential real estate loans originated for sale(225,753)(364,018)
Proceeds from sales of residential real estate loansProceeds from sales of residential real estate loans218,253 395,829 
(Increase) decrease in interest receivable(Increase) decrease in interest receivable(14,677)(19,468)
(Increase) decrease in other assets(Increase) decrease in other assets(38,540)127,991 
Increase (decrease) in accrued expenses and other liabilitiesIncrease (decrease) in accrued expenses and other liabilities(101,417)93,369 
Net cash flows provided by (used in) operating activitiesNet cash flows provided by (used in) operating activities214,716 438,832 
Cash Flows From Investing ActivitiesCash Flows From Investing Activities
Cash received from merger, net 1,912,629 
Purchases of investment securities available-for-sale
Purchases of investment securities available-for-sale
Purchases of investment securities available-for-salePurchases of investment securities available-for-sale(174,657)(1,276,205)
Purchases of investment securities held-to-maturityPurchases of investment securities held-to-maturity(1,941)(117,141)
Purchases of Federal Home Loan Bank/Federal Reserve Bank stockPurchases of Federal Home Loan Bank/Federal Reserve Bank stock(99,159)(97,359)
Purchases of equity securitiesPurchases of equity securities(20,820)(1,417)
Proceeds from maturities, prepayments, and calls of investment securities available-for-saleProceeds from maturities, prepayments, and calls of investment securities available-for-sale333,937 659,922 
Proceeds from sales of investment securities available-for-saleProceeds from sales of investment securities available-for-sale51,654 12,742 
Proceeds from maturities, prepayments, and calls of investment securities held-to-maturityProceeds from maturities, prepayments, and calls of investment securities held-to-maturity45,193 30,744 
Proceeds from sales of Federal Home Loan Bank/Federal Reserve Bank stock1 83,947 
Proceeds from sales of equity securities
Proceeds from sales of equity securities
Proceeds from sales of equity securitiesProceeds from sales of equity securities1,726 49,709 
Loan originations and payments, netLoan originations and payments, net(1,708,291)(1,524,289)
Proceeds from sales of commercial loansProceeds from sales of commercial loans291,368 — 
Proceeds from company-owned life insurance death benefitsProceeds from company-owned life insurance death benefits4,888 2,849 
Proceeds from sales of premises and equipment and other assetsProceeds from sales of premises and equipment and other assets2,369 2,751 
Purchases of premises and equipment and other assetsPurchases of premises and equipment and other assets(17,410)(17,459)
Net cash flows provided by (used in) investing activitiesNet cash flows provided by (used in) investing activities(1,291,142)(278,577)
Cash Flows From Financing ActivitiesCash Flows From Financing Activities
Net increase (decrease) in:Net increase (decrease) in:
Net increase (decrease) in:
Net increase (decrease) in:
Deposits
Deposits
DepositsDeposits1,230,485 (279,624)
Federal funds purchased and interbank borrowingsFederal funds purchased and interbank borrowings(445,429)1,285 
Securities sold under agreements to repurchaseSecurities sold under agreements to repurchase(121,357)(51,296)
Other borrowingsOther borrowings65,719 53,136 
Payments for maturities of Federal Home Loan Bank advancesPayments for maturities of Federal Home Loan Bank advances(1,650,150)(1,100,005)
Proceeds from Federal Home Loan Bank advancesProceeds from Federal Home Loan Bank advances2,600,000 1,350,000 
Proceeds from Federal Home Loan Bank advances
Proceeds from Federal Home Loan Bank advances
Cash dividends paid
Cash dividends paid
Cash dividends paidCash dividends paid(90,087)(87,733)
Common stock repurchasedCommon stock repurchased(43,815)(70,400)
Common stock issued
Common stock issued
Common stock issuedCommon stock issued534 327 
Net cash flows provided by (used in) financing activitiesNet cash flows provided by (used in) financing activities1,545,900 (184,310)
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents469,474 (24,055)
Cash and cash equivalents at beginning of periodCash and cash equivalents at beginning of period728,412 822,019 
Cash and cash equivalents at end of periodCash and cash equivalents at end of period$1,197,886 $797,964 

8


OLD NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (Continued)
Six Months Ended
June 30,
Three Months Ended
March 31,
Three Months Ended
March 31,
(dollars in thousands)(dollars in thousands)20232022(dollars in thousands)20242023
Supplemental cash flow information:Supplemental cash flow information:
Total interest paidTotal interest paid$253,542 $30,904 
Total interest paid
Total interest paid
Total income taxes paid (net of refunds)Total income taxes paid (net of refunds)87,668 (183)
Common stock issued for merger, net 2,446,312 
Preferred stock issued for merger, net 243,870 
Securities transferred from available-for-sale to held-to-maturity 2,986,736 
Operating lease right-of-use assets obtained in exchange for lease obligations
Operating lease right-of-use assets obtained in exchange for lease obligations
Operating lease right-of-use assets obtained in exchange for lease obligationsOperating lease right-of-use assets obtained in exchange for lease obligations7,542 3,141 
Finance lease right-of-use assets obtained in exchange for lease obligationsFinance lease right-of-use assets obtained in exchange for lease obligations9,141 $209 
The accompanying notes to consolidated financial statements are an integral part of these statements.
9


OLD NATIONAL BANCORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTE 1 – BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the accounts of Old National Bancorp and its wholly-owned subsidiaries (hereinafter collectively referred to as “Old National”) and have been prepared in conformity with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry. Such principles require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosures of contingent assets and liabilities at the date of the financial statements and amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, the consolidated financial statements contain all the normal and recurring adjustments necessary for a fair statement of the financial position of Old National as of June 30, 2023March 31, 2024 and December 31, 2022,2023, and the results of its operations for the three and six months ended June 30, 2023March 31, 2024 and 2022.2023. Interim results do not necessarily represent annual results. Certain information and disclosures normally included in notes to consolidated annual financial statements prepared in accordance with GAAP have been condensed or omitted in this Quarterly Report on Form 10-Q pursuant to SEC rules and regulations. These financial statements should be read in conjunction with Old National’s Annual Report on Form 10-K for the year ended December 31, 2022.2023.
All intercompany transactions and balances have been eliminated. Certain prior year amounts have been reclassified to conform to the current presentation. Such reclassifications had no effect on prior period net income or shareholders’ equity and were insignificant amounts.
Financial Difficulty Modifications
Any loans that are modified are reviewed by Old National to identify if a financial difficulty modification has occurred, which is when Old National Bank modifies a loan related to a borrower experiencing financial difficulties. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status. The modification of the terms of such loans includes one or a combination of the following: a reduction of the stated interest rate of the loan, an extension of the maturity date, a permanent reduction of the recorded investment of the loan, or an other-than-insignificant payment delay. The adoption of ASU 2022-02 on January 1, 2023 eliminated the recognition and measurement of TDRs and enhanced disclosures for modifications to loans related to borrowers experiencing financial difficulties. See Note 2 to the consolidated financial statements for additional detail regarding the adoption of ASU 2022-02.
Other than the changes for financial difficulty modifications, there have been no material changes from the significant accounting policies disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS
Accounting Guidance Adopted in 20232024
FASB ASC 805820 – In October 2021,June 2022, the FASB issued ASU 2021-08,2022-03, Business CombinationsFair Value Measurement (Topic 805)820): Accounting for Contract Assets and Contract Liabilities From Contracts With CustomersFair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, to address diversityclarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in practice and inconsistency related to the accounting for revenue contracts with customers acquired in a business combination. The amendments require that the acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The ASU also provides certain practical expedients for acquirers when recognizing and measuring acquired contract assets and liabilities.fair value. The amendments in this update are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Entities should apply the amendments prospectively to business combinations that occur after the effective date. The adoption of this guidance on January 1, 2023, did not have a material impact on the consolidated financial statements.
FASB ASC 815 – In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method, to expand the current single-layer method of electing hedge accounting to allow multiple hedged layers of a single closed portfolio under the method and rename the last-of-layer method the
10


portfolio layer method. The amendments in this update are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The adoption of this guidance on January 1, 20232024 did not have a material impact on the consolidated financial statements.
FASB ASC 326323 – In March 2022,2023, the FASB issued ASU 2022-02,2023-02, Financial Instruments—Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage DisclosuresStructures Using the Proportional Amortization Method, which allows reporting entities to eliminateelect to account for qualifying tax equity investments using the TDR recognition and measurement guidance and, instead, require that an entity evaluate (consistent withproportional amortization method, regardless of the accounting for other loan modifications) whetherprogram giving rise to the modification represents a new loan or a continuation of an existing loan. The amendments also enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. The amendments require that an entity disclose current-period gross charge-offs by year of origination for financing receivables and net investment in leases within the vintage disclosures required by ASC 326. The amendments in this update areincome tax credits. This ASU is effective for fiscal years beginning after December 15, 2022,2023, including interim periods within those fiscal years. Old National adopted the provision in ASU 2022-02 related to the recognition and measurementThe adoption of TDRsthis guidance on a prospectivemodified retrospective basis on January 1, 2023, which2024 did not have a material impact on the consolidated financial statements.
FASB ASC 848 – In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary, optional guidance to ease the potential burden in accounting for, or recognizing the effects of, the transition away from LIBOR or other interbank offered rate on financial reporting. The guidance is applicable only to contracts or hedge accounting relationships that reference LIBOR or another reference rate expected to be discontinued.
In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which defers the sunset date of relief provisions within Topic 848 from December 31, 2022 to December 31, 2024. The objective of the guidance in Topic 848 is to provide relief during the transition period.
The amendments in this ASU are effective March 12, 2020 through December 31, 2024. As of March 31, 2024, substantially all of the Company’s LIBOR exposure was addressed and remaining LIBOR-based contracts are expected to transition to alternate reference rates at their next index reset dates. Old National believes the adoption of this guidance on activities subsequent to June 30, 2023March 31, 2024 will not have a material impact on the consolidated financial statements.
10


Accounting Guidance Pending Adoption 
FASB ASC 820280 – In June 2022,November 2023, the FASB issued ASU 2022-03,2023-07, Fair Value MeasurementSegment Reporting (Topic 820)280): Fair Value MeasurementImprovements to Reportable Segment Disclosures. The amendments are intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of Equity Securities Subjectprofit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The purpose of the amendments is to Contractual Sale Restrictions,enable investors to clarify that a contractual restrictionbetter understand an entity’s overall performance and assess potential future cash flows. A public entity should apply the amendments retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the salesignificant segment expense categories identified and disclosed in the period of an equity securityadoption. This ASU is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.years beginning after December 15, 2024. Early adoption is permitted. Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements.
FASB ASC 842740 – In MarchDecember 2023, the FASB issued ASU 2023-01,2023-09, LeasesIncome Taxes (Topic 842)740): Common Control ArrangementsImprovements to Income Tax Disclosures, which requires all. Among other things, these amendments require that public business entities to amortize leasehold improvements associatedon an annual basis disclose additional information in specified categories with common control leases over the useful liferespect to the common control group. Thisreconciliation of the effective tax rate to the statutory rate for federal, state, and foreign income taxes. It also requires greater detail about individual reconciling items in the rate reconciliation to the extent the impact of those items exceeds a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (loss) by the applicable statutory income tax rate). In addition, the ASU isrequires information pertaining to taxes paid (net of refunds received) to be disaggregated for federal, state, and foreign taxes and further disaggregated for specific jurisdictions to the extent the related amounts are equal to or greater than 5 percent of total income taxes paid (net of refunds received). The amendments in this ASU are effective for fiscal yearsannual periods beginning after December 15, 2023, including interim periods within those fiscal years.2024. Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. Transition can be done either retrospectively or prospectively.permitted. Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements.
FASB ASC 323 – In March 2023, the FASB issued ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, which allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. This ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for all entities in any interim period. Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements.
11


NOTE 3 – ACQUISITION AND DIVESTITURE ACTIVITY
MergerPending Acquisition
First Midwest Bancorp,CapStar Financial Holdings, Inc.
On February 15, 2022,October 26, 2023, Old National announced that it had entered into a definitive merger agreement to acquire CapStar Financial Holdings, Inc. (“CapStar”) and its wholly-owned subsidiary, CapStar Bank, in an all-stock transaction. On April 1, 2024, Old National completed its previously announcedacquisition of CapStar. This partnership strengthens Old National’s Nashville, Tennessee presence and adds several new high-growth markets. At closing, CapStar had approximately $3.0 billion of total assets, $2.3 billion of total loans, and $2.6 billion of deposits. Under the terms of the merger agreement, each outstanding share of equals transaction with First Midwest pursuantCapStar common stock was converted into the right to an agreement and planreceive 1.155 shares of merger, dated as of May 30, 2021, to combine in an all-stock transaction. The combined organization has a presence in additional Midwestern markets, strong commercial banking capabilities, a robust retail footprint, a significant wealth management platform, and an enhanced ability to attract talent. The combined organization also creates the scale and profitability to accelerate digital and technology capabilities to drive future investments in consumer and commercial banking, as well as wealth management services.
As of December 31, 2022, Old National finalized its valuationcommon stock plus cash in lieu of all assets acquired and liabilities assumed. Transaction costs totaling $16.9fractional shares, resulting in consideration paid of $418 million associated with the merger have been expensed for the six months ended June 30, 2023, compared to $77.9 million during the six months ended June 30, 2022. Additional transaction and integration costs will be expensed in future periods as incurred.
Divestiture
On November 18, 2022,based on Old National’s stock price of $17.41 per share at close. Old National completed its previously announced transaction with UMB, pursuantexpects systems conversions related to which UMB acquired Old National’s business of acting as a qualified custodian for, and administering, health savings accounts. Old National served as custodian for health savings accounts comprised of both investment accounts and deposit accounts. At closing, the health savings accounts held in deposit accounts that were transferred totaled approximately $382 million and the transaction resultedto be completed in a $90.7 million pre-tax gain.the third quarter of 2024.
11


NOTE 4 – NET INCOME PER COMMON SHARE
Basic and diluted net income per common share are calculated using the two-class method. Net income applicable to common shares is divided by the weighted-average number of common shares outstanding during the period. Adjustments to the weighted averageweighted-average number of common shares outstanding are made only when such adjustments will dilute net income per common share. Net income applicable to common shares is then divided by the weighted-average number of common shares and common share equivalents during the period.
The following table presents the calculation of basic and diluted net income per common share:
Three Months Ended
June 30,
Six Months Ended
June 30,
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
(dollars and shares in thousands, except per share data)(dollars and shares in thousands, except per share data)2023202220232022(dollars and shares in thousands, except per share data)20242023
Net incomeNet income$155,036 $114,985 $301,636 $87,399 
Preferred dividendsPreferred dividends(4,033)(4,033)(8,067)(6,050)
Net income applicable to common sharesNet income applicable to common shares$151,003 $110,952 $293,569 $81,349 
Net income applicable to common shares
Net income applicable to common shares
Weighted average common shares outstanding:Weighted average common shares outstanding:
Weighted average common shares outstanding:
Weighted average common shares outstanding:
Weighted average common shares outstanding (basic)
Weighted average common shares outstanding (basic)
Weighted average common shares outstanding (basic)Weighted average common shares outstanding (basic)290,559 290,862 290,822 259,108 
Effect of dilutive securities:Effect of dilutive securities:
Restricted stock
Restricted stock
Restricted stockRestricted stock707 1,014 1,047 1,136 
Stock appreciation rightsStock appreciation rights 1 
Weighted average diluted shares outstandingWeighted average diluted shares outstanding291,266 291,881 291,870 260,253 
Basic Net Income Per Common ShareBasic Net Income Per Common Share$0.52 $0.38 $1.01 $0.31 
Diluted Net Income Per Common ShareDiluted Net Income Per Common Share$0.52 $0.38 $1.01 $0.31 

12


NOTE 5 – INVESTMENT SECURITIES
The following table summarizes the amortized cost and fair value of the available-for-sale and held-to-maturity investment securities portfolios and the corresponding amounts of gross unrealized gains, unrealized losses, and basis adjustments in AOCI and gross unrecognized gains and losses.
(dollars in thousands)(dollars in thousands)Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Basis
Adjustments (1)
Fair
Value
(dollars in thousands)Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Basis
Adjustments (1)
Fair
Value
June 30, 2023    
March 31, 2024
Available-for-SaleAvailable-for-Sale    
Available-for-Sale
Available-for-Sale
U.S. Treasury
U.S. Treasury
U.S. TreasuryU.S. Treasury$364,824 $ $(9,245)$(43,167)$312,412 
U.S. government-sponsored entities and agenciesU.S. government-sponsored entities and agencies1,448,873  (201,623)(72,894)1,174,356 
Mortgage-backed securities - AgencyMortgage-backed securities - Agency4,760,921 123 (663,273) 4,097,771 
States and political subdivisionsStates and political subdivisions623,196 844 (25,258) 598,782 
Pooled trust preferred securitiesPooled trust preferred securities13,791  (2,797) 10,994 
Other securitiesOther securities339,653 117 (33,570) 306,200 
Total available-for-sale securitiesTotal available-for-sale securities$7,551,258 $1,084 $(935,766)$(116,061)$6,500,515 
Held-to-MaturityHeld-to-Maturity
U.S. government-sponsored entities and agencies
U.S. government-sponsored entities and agencies
U.S. government-sponsored entities and agenciesU.S. government-sponsored entities and agencies$822,517 $ $(167,071)$ $655,446 
Mortgage-backed securities - AgencyMortgage-backed securities - Agency1,070,687  (142,191) 928,496 
States and political subdivisionsStates and political subdivisions1,161,943 437 (143,114) 1,019,266 
Allowance for securities held-to-maturityAllowance for securities held-to-maturity(150)   (150)
Allowance for securities held-to-maturity
Allowance for securities held-to-maturity
Total held-to-maturity securitiesTotal held-to-maturity securities$3,054,997 $437 $(452,376)$ $2,603,058 
December 31, 2022
December 31, 2023
December 31, 2023
December 31, 2023
Available-for-SaleAvailable-for-Sale
Available-for-Sale
Available-for-Sale
U.S. Treasury
U.S. Treasury
U.S. TreasuryU.S. Treasury$253,148 $$(5,189)$(47,037)$200,927 
U.S. government-sponsored entities and agenciesU.S. government-sponsored entities and agencies1,451,736 — (169,248)(107,408)1,175,080 
Mortgage-backed securities - AgencyMortgage-backed securities - Agency4,986,354 976 (617,428)— 4,369,902 
States and political subdivisionsStates and political subdivisions688,159 1,789 (26,096)— 663,852 
Pooled trust preferred securitiesPooled trust preferred securities13,783 — (2,972)— 10,811 
Other securitiesOther securities379,423 258 (26,541)— 353,140 
Total available-for-sale securitiesTotal available-for-sale securities$7,772,603 $3,028 $(847,474)$(154,445)$6,773,712 
Held-to-MaturityHeld-to-Maturity
U.S. government-sponsored entities and agencies
U.S. government-sponsored entities and agencies
U.S. government-sponsored entities and agenciesU.S. government-sponsored entities and agencies$819,168 $— $(162,810)$— $656,358 
Mortgage-backed securities - AgencyMortgage-backed securities - Agency1,106,817 — (123,854)— 982,963 
States and political subdivisionsStates and political subdivisions1,163,312 221 (159,022)— 1,004,511 
Allowance for securities held-to-maturityAllowance for securities held-to-maturity(150)— — — (150)
Total held-to-maturity securitiesTotal held-to-maturity securities$3,089,147 $221 $(445,686)$— $2,643,682 
(1)    Basis adjustments represent the cumulativeamount of fair value hedging adjustments included in the carrying amounts of fixed-rate investment securities assets designated in fair value hedging arrangements.arrangements. See Note 15 to the consolidated financial statements for additional information regarding these derivative financial instruments.
Substantially all of the mortgage-backed securities in the investment portfolio are residential mortgage-backed securities.
Proceeds from sales or calls of available-for-sale investment securities and the resulting realized gains and realized losses were as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
(dollars in thousands)(dollars in thousands)2023202220232022(dollars in thousands)20242023
ProceedsProceeds$24,933 $23,234 $82,888 $73,347 
Realized gainsRealized gains39 48 948 511 
Realized lossesRealized losses(22)(133)(6,147)(254)
13


Substantially all of the mortgage-backed securities in the investment portfolio are residential mortgage-backed securities.  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. Weighted average yield is based on amortized cost.
June 30, 2023 March 31, 2024
(dollars in thousands)(dollars in thousands)Amortized
Cost
Fair
Value
Weighted
Average
Yield
(dollars in thousands)Amortized
Cost
Fair
Value
Weighted
Average
Yield
MaturityMaturity
Available-for-Sale
Available-for-Sale
Available-for-SaleAvailable-for-Sale     
Within one yearWithin one year$242,424 $238,951 3.93 %Within one year$177,458 $$174,950 3.39 3.39 %
One to five yearsOne to five years1,621,101 1,478,764 2.77 
Five to ten yearsFive to ten years3,926,306 3,374,584 2.35 
Beyond ten yearsBeyond ten years1,761,427 1,408,216 2.43 
TotalTotal$7,551,258 $6,500,515 2.51 %Total$7,834,082 $$6,791,652 2.81 2.81 %
Held-to-MaturityHeld-to-Maturity
Within one year
Within one year
Within one year$157 $147 2.23 %
One to five yearsOne to five years162,082 135,763 2.71 %
Five to ten yearsFive to ten years888,640 780,437 2.61 
Beyond ten yearsBeyond ten years2,004,275 1,686,858 2.73 
TotalTotal$3,054,997 $2,603,058 2.69 %Total$3,001,349 $$2,547,576 2.68 2.68 %
The following table summarizes the available-for-sale investment securities with unrealized losses for which an allowance for credit losses has not been recorded by aggregated major security type and length of time in a continuous unrealized loss position:
Less than 12 months12 months or longerTotal Less than 12 months12 months or longerTotal
(dollars in thousands)(dollars in thousands)Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized Losses(dollars in thousands)Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized Losses
June 30, 2023
March 31, 2024
Available-for-SaleAvailable-for-Sale
Available-for-Sale
Available-for-Sale
U.S. Treasury
U.S. Treasury
U.S. TreasuryU.S. Treasury$124,751 $(258)$187,661 $(8,987)$312,412 $(9,245)
U.S. government-sponsored entities
and agencies
U.S. government-sponsored entities
and agencies
14,732 (264)1,159,624 (201,359)1,174,356 (201,623)
Mortgage-backed securities - AgencyMortgage-backed securities - Agency402,696 (19,217)3,677,906 (644,056)4,080,602 (663,273)
States and political subdivisionsStates and political subdivisions168,144 (1,406)264,829 (23,852)432,973 (25,258)
Pooled trust preferred securitiesPooled trust preferred securities  10,994 (2,797)10,994 (2,797)
Other securitiesOther securities25,133 (498)265,688 (33,072)290,821 (33,570)
Total available-for-saleTotal available-for-sale$735,456 $(21,643)$5,566,702 $(914,123)$6,302,158 $(935,766)
December 31, 2022
December 31, 2023
December 31, 2023
December 31, 2023
Available-for-SaleAvailable-for-Sale
Available-for-Sale
Available-for-Sale
U.S. Treasury
U.S. Treasury
U.S. TreasuryU.S. Treasury$130,967 $(3,264)$66,992 $(1,925)$197,959 $(5,189)
U.S. government-sponsored entities
and agencies
U.S. government-sponsored entities
and agencies
454,854 (75,795)720,226 (93,453)1,175,080 (169,248)
Mortgage-backed securities - AgencyMortgage-backed securities - Agency3,207,319 (358,507)1,116,205 (258,921)4,323,524 (617,428)
States and political subdivisionsStates and political subdivisions414,813 (25,555)2,703 (541)417,516 (26,096)
Pooled trust preferred securitiesPooled trust preferred securities— — 10,811 (2,972)10,811 (2,972)
Other securitiesOther securities257,775 (17,045)75,309 (9,496)333,084 (26,541)
Total available-for-saleTotal available-for-sale$4,465,728 $(480,166)$1,992,246 $(367,308)$6,457,974 $(847,474)
14


The following table summarizes the held-to-maturity investment securities with unrecognized losses aggregated by major security type and length of time in a continuous loss position:
Less than 12 months12 months or longerTotal Less than 12 months12 months or longerTotal
(dollars in thousands)(dollars in thousands)Fair
Value
Unrecognized
Losses
Fair
Value
Unrecognized
Losses
Fair
Value
Unrecognized
Losses
(dollars in thousands)Fair
Value
Unrecognized
Losses
Fair
Value
Unrecognized
Losses
Fair
Value
Unrecognized
Losses
June 30, 2023
March 31, 2024
Held-to-MaturityHeld-to-Maturity
Held-to-Maturity
Held-to-Maturity
U.S. government-sponsored entities
and agencies
U.S. government-sponsored entities
and agencies
U.S. government-sponsored entities
and agencies
U.S. government-sponsored entities
and agencies
$81,251 $(8,138)$574,195 $(158,933)$655,446 $(167,071)
Mortgage-backed securities - AgencyMortgage-backed securities - Agency244,643 (24,690)683,853 (117,501)928,496 (142,191)
States and political subdivisionsStates and political subdivisions38,302 (394)948,627 (142,720)986,929 (143,114)
Total held-to-maturityTotal held-to-maturity$364,196 $(33,222)$2,206,675 $(419,154)$2,570,871 $(452,376)
December 31, 2022
December 31, 2023
December 31, 2023
December 31, 2023
Held-to-MaturityHeld-to-Maturity
Held-to-Maturity
Held-to-Maturity
U.S. government-sponsored entities
and agencies
U.S. government-sponsored entities
and agencies
U.S. government-sponsored entities
and agencies
U.S. government-sponsored entities
and agencies
354,293 (110,523)302,066 (52,287)656,359 (162,810)
Mortgage-backed securities - AgencyMortgage-backed securities - Agency367,849 (42,438)615,114 (81,416)982,963 (123,854)
States and political subdivisionsStates and political subdivisions838,689 (127,355)135,573 (31,667)974,262 (159,022)
Total held-to-maturityTotal held-to-maturity$1,560,831 $(280,316)$1,052,753 $(165,370)$2,613,584 $(445,686)
Total held-to-maturity
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 $137.9$123.3 million at June 30, 2023March 31, 2024 and $148.9$127.6 million at December 31, 2022.2023. These unrecognized losses are included as a separate component of shareholders’ equity and are being amortized over the remaining term of the securities.
No allowance for credit losses on available-for-sale debt securities was needed at June 30, 2023March 31, 2024 or December 31, 2022.2023.
An allowance on held-to-maturity debt securities is maintained for certain municipal bonds to account for expected lifetime credit losses. Substantially all of the U.S. government-sponsored entities and agencies and agency mortgage-backed securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major credit rating agencies, and have a long history of no credit losses. Therefore, for those securities, we do not record expected credit losses. The allowance for credit losses on held-to-maturity debt securities was $0.2 million at June 30, 2023March 31, 2024 and December 31, 2022.
2023. Accrued interest receivable on the securities portfolio is excluded from the estimate of credit losses and totaled $50.6$40.3 million at June 30, 2023March 31, 2024 and $50.9$50.3 million at December 31, 2022.2023.
At June 30, 2023,March 31, 2024, Old National’s securities portfolio consisted of 3,0472,941 securities, 2,8082,702 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 temporary market movements. Old National’s pooled trust preferred securities are evaluated using collateral-specific assumptions to estimate the expected future interest and principal cash flows. At June 30, 2023,March 31, 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 two pooled trust preferred securities with fair values totaling $11.0 million and unrealized losses totaling $2.8 million 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 sixthree months ended June 30, 2023March 31, 2024 or 2022.2023.
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 $72.0$85.0 million at June 30, 2023March 31, 2024 and $52.5$80.4 million at December 31, 2022.2023. There were gains on equity securities of $0.1$0.3 million during the three months ended March 31, 2024, compared to losses of $0.8 million during the three months ended March 31, 2023.
15


months ended June 30, 2023 and losses of $0.7 million during the six months ended June 30, 2023, compared to losses of $2.4 million and $4.2 million during the three and six months ended June 30, 2022, respectively.
Alternative Investments
Old National has alternative investments without readily determinable fair values that are included in other assets totaling $401.4$474.7 million at June 30, 2023,March 31, 2024, consisting of $243.1$270.6 million of illiquid investments in partnerships, limited liability companies, and other ownership interests that support affordable housing and $158.3$204.1 million of economic development and community revitalization initiatives in low-to-moderate income neighborhoods. These alternative investments totaled $396.8$449.3 million at December 31, 2022.2023. There have been no impairments or adjustments on equity securities without readily determinable fair values, except for amortization of tax credit investments in the sixthree months ended June 30, 2023March 31, 2024 and 2022.2023. See Note 9 to the consolidated financial statements for detail regarding these investments.
NOTE 6 – LOANS AND ALLOWANCE FOR CREDIT LOSSES
Loans
Old National’s loans consist primarily of loans made to consumers and commercial clients in many diverse industries, including real estate rental and leasing, manufacturing, healthcare, wholesale trade, construction, and agriculture, among others. Most of Old National’s lending activity occurs within our principal geographic markets in the Midwest region.region of the United States. Old National manages concentrations of credit exposure by industry, product, geography, client relationship, and loan size.
Old National has loan participations, which qualify as participating interests, with other financial institutions. At March 31, 2024, these loans totaled $3.0 billion, of which $1.3 billion had been sold to other financial institutions and $1.7 billion was retained by Old National. The loan participations convey proportionate ownership rights with equal priority to each participating interest holder; involve no recourse (other than ordinary representations and warranties) to, or subordination by, any participating interest holder; all cash flows are divided among the participating interest holders in proportion to each holder’s share of ownership; and no holder has the right to pledge the entire financial asset unless all participating interest holders agree.
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The loan categories used to monitor and analyze interest income and yields are different than the portfolio segments used to determine the allowance for credit losses on loans. The allowance for credit losses was calculated by pooling loans of similar credit risk characteristics and credit monitoring procedures. The four loan portfolios used to monitor and analyze interest income and yields – commercial, commercial real estate, residential real estate, and consumer – are reclassified into seven 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. The portfolio segment reclassifications follow:
Balance Sheet
Line Item
Portfolio
Segment
Reclassifications
After
Reclassifications
(dollars in thousands)
June 30, 2023
Loans:
Commercial$9,698,241 $(227,414)$9,470,827 
Commercial real estate13,450,209 (162,841)13,287,368 
BBCCN/A390,255 390,255 
Residential real estate6,684,480  6,684,480 
Consumer2,599,543 (2,599,543)N/A
IndirectN/A1,003,287 1,003,287 
DirectN/A565,950 565,950 
Home equityN/A1,030,306 1,030,306 
Total$32,432,473 $ $32,432,473 
December 31, 2022
Loans:
Commercial$9,508,904 $(210,280)$9,298,624 
Commercial real estate12,457,070 (158,322)12,298,748 
BBCCN/A368,602 368,602 
Residential real estate6,460,441 — 6,460,441 
Consumer2,697,226 (2,697,226)N/A
IndirectN/A1,034,257 1,034,257 
DirectN/A629,186 629,186 
Home equityN/A1,033,783 1,033,783 
Total$31,123,641 $— $31,123,641 
The composition of loans by portfolio segment follows:
Balance Sheet
Line Item
Balance Sheet
Line Item
Portfolio
Segment
Reclassifications
Portfolio
Segment After
Reclassifications
(dollars in thousands)(dollars in thousands)June 30,
2023
December 31,
2022
(dollars in thousands)
(dollars in thousands)
March 31, 2024
March 31, 2024
March 31, 2024
Commercial (1)
Commercial (1)
Commercial (1)
Commercial (1)
$9,470,827 $9,298,624 
Commercial real estateCommercial real estate13,287,368 12,298,748 
BBCCBBCC390,255 368,602 
Residential real estateResidential real estate6,684,480 6,460,441 
ConsumerConsumer2,659,713 (2,659,713)N/A
IndirectIndirect1,003,287 1,034,257 
DirectDirect565,950 629,186 
Home equityHome equity1,030,306 1,033,783 
Total loans32,432,473 31,123,641 
Total loans (2)
Allowance for credit losses on loansAllowance for credit losses on loans(300,555)(303,671)
Net loansNet loans$32,131,918 $30,819,970 
December 31, 2023
December 31, 2023
December 31, 2023
Commercial (1)
Commercial (1)
Commercial (1)
Commercial real estate
BBCC
Residential real estate
ConsumerConsumer2,639,625 (2,639,625)N/A
Indirect
Direct
Home equity
Total loans (2)
Allowance for credit losses on loans
Net loans
(1)Includes direct finance leases of $176.7$161.7 million at June 30, 2023March 31, 2024 and $188.1$169.7 million at December 31, 2022.2023.
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(2)    Includes unearned income of $88.9 million at March 31, 2024 and $93.7 million at December 31, 2023.
The risk characteristics of each loan portfolio segment are as follows:
Commercial
Commercial loans are classified primarily on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its clients.
Commercial Real Estate
Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted
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on the property securing the loan. Commercial real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The properties securing Old National’s commercial real estate portfolio are diverse in terms of type and geographic location. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupiednon-owner-occupied loans.
Included with commercial real estate are construction loans, which are underwritten utilizing independent appraisal reviews, sensitivity analysis of absorption and lease rates, financial analysis of the developers and property owners, and feasibility studies, if available. Construction loans are generally based on estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders (including Old National), sales of developed property, or an interim loan commitment from Old National until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions, and the availability of long-term financing.
At 240%242%, Old National Bank’s applicable investor commercial real estate loans as a percentage of its risk-basedTier 1 capital plus the allowance for credit losses attributable to loans and leases remained below the regulatory guideline limit of 300% at June 30, 2023.March 31, 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 factors such as changes in 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
18


such as unemployment levels. Portfolio risk is mitigated by the fact that the loans are of smaller amounts spread over many borrowers conservative credit policies, 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 conservative 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 along with conservative credit policies.borrowers.
Home Equity
Home equity loans are generally secured by 1 - 41-4 family residences that are owner occupied.owner-occupied. Old National has established conservative 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
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fact that the loans are of smaller amounts spread over many borrowers, along with conservative credit policies as well as monitoring of updated borrower credit scores.
Allowance for Credit Losses
Loans
Credit quality within the loans held for investment portfolio is continuously monitored by management and is reflected within the allowance for credit losses on loans. The allowance for credit losses is an estimate of expected losses inherent within the Company’s loans held for investment portfolio. Credit quality is assessed and monitored by evaluating various attributes and the results of those evaluations are utilized in underwriting new loans and in our process for estimating expected credit losses. Expected credit loss inherent in non-cancelable off-balance-sheet credit exposures is accounted for as a separate liability included in other liabilities on the balance sheet. The allowance for credit losses on loans held for investment is adjusted by a credit loss expense, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries. Old National has made a policy election to report accrued interest receivable as a separate line item on the balance sheet. Accrued interest receivable on loans is excluded from the estimate of credit losses and totaled $149.9 million at June 30, 2023 and $137.7 million at December 31, 2022.
The allowance for credit loss estimation process involves procedures to appropriately consider the unique characteristics of our loan portfolio segments. These segments are further disaggregated into loan classes based on the level at which credit risk is monitored. Whenassumptions used when computing the level of expected credit losses credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status, and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense in those future periods.
The allowance level is influenced by loan volumes, loan AQR migration or delinquency status, changes in historical loss experience, and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions. The methodology for estimating the amount of expected credit losses reported in the allowance for credit losses has two basic components: first, an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans; and second, a pooled component for estimated expected credit losses for pools of loans that share similar risk characteristics.
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The base forecast scenario considers unemployment, gross domestic product, and the BBB ratio (BBB spread to the 10-year U.S. Treasury rate). In addition to the quantitative inputs, several qualitative factors are considered. These factors include the risk that unemployment, gross domestic product, housing product index, and the BBB ratio prove to be more severe and/or prolonged than our baseline forecast due to a variety of factors including monetary actions to control inflation, recent instability in the banking sector, conflict in Ukraine,global military conflicts, and global supply chain issues. Old National’s activity in the allowance for credit losses on loans by portfolio segment was as follows:
(dollars in thousands)(dollars in thousands)Balance at
Beginning of
Period
Allowance
Established
for Acquired
PCD Loans
Charge-offsRecoveriesProvision
for Loan
Losses
Balance at
End of
Period
Three Months Ended
June 30, 2023
   
(dollars in thousands)
(dollars in thousands)Balance at
Beginning of
Period
Charge-offsRecoveriesProvision
for Loan
Losses
Balance at
End of
Period
Three Months Ended March 31, 2024
Three Months Ended March 31, 2024
Three Months Ended March 31, 2024
Commercial
Commercial
CommercialCommercial$125,768 $ $(8,331)$1,814 $8,152 $127,403 
Commercial real estateCommercial real estate135,348  (2,458)1,029 2,978 136,897 
BBCCBBCC2,316  (94)31 523 2,776 
Residential real estateResidential real estate20,207  (218)53 379 20,421 
IndirectIndirect1,434  (402)612 (237)1,407 
DirectDirect6,766  (2,600)637 (48)4,755 
Home equityHome equity6,872  (228)63 189 6,896 
TotalTotal$298,711 $ $(14,331)$4,239 $11,936 $300,555 
Three Months Ended
June 30, 2022
Three Months Ended March 31, 2023
Three Months Ended March 31, 2023
Three Months Ended March 31, 2023
Commercial
Commercial
CommercialCommercial$99,471 $— $(1,344)$781 $3,911 $102,819 
Commercial real estateCommercial real estate140,490 — (318)320 1,310 141,802 
BBCCBBCC2,069 — (20)91 (76)2,064 
Residential real estateResidential real estate17,252 — (137)130 2,484 19,729 
IndirectIndirect1,648 — (528)320 201 1,641 
DirectDirect14,450 — (1,722)676 1,008 14,412 
Home equityHome equity5,127 — (27)20 416 5,536 
TotalTotal$280,507 $— $(4,096)$2,338 $9,254 $288,003 
Six Months Ended
June 30, 2023
Commercial$120,612 $ $(20,754)$2,097 $25,448 $127,403 
Commercial real estate138,244  (3,647)1,292 1,008 136,897 
BBCC2,431  (122)104 363 2,776 
Residential real estate21,916  (241)125 (1,379)20,421 
Indirect1,532  (1,599)1,024 450 1,407 
Direct12,116  (5,838)1,218 (2,741)4,755 
Home equity6,820  (310)130 256 6,896 
Total$303,671 $ $(32,511)$5,990 $23,405 $300,555 
Six Months Ended
June 30, 2022
Commercial$27,232 $35,040 $(3,223)$1,013 $42,757 $102,819 
Commercial real estate64,004 42,601 (824)502 35,519 141,802 
BBCC2,458 — (48)148 (494)2,064 
Residential real estate9,347 136 (324)570 10,000 19,729 
Indirect1,743 — (1,012)542 368 1,641 
Direct528 31 (3,251)1,270 15,834 14,412 
Home equity2,029 723 (78)183 2,679 5,536 
Total$107,341 $78,531 $(8,760)$4,228 $106,663 $288,003 
Accrued interest receivable on loans is excluded from the estimate of credit losses and totaled $171.6 million at March 31, 2024, compared to $169.8 million at December 31, 2023.
2019


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. Old National’s activity in the allowance for credit losses on unfunded loan commitments was as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
(dollars in thousands)(dollars in thousands)2023202220232022(dollars in thousands)20242023
Allowance for credit losses on unfunded loan commitments:Allowance for credit losses on unfunded loan commitments: 
Balance at beginning of periodBalance at beginning of period$34,156 $22,046 $32,188 $10,879 
Provision for credit losses on unfunded commitments
acquired during the period
 —  11,013 
Provision for unfunded loan commitments2,851 (80)4,819 74 
Balance at beginning of period
Balance at beginning of period
Provision (release) for credit losses on unfunded loan
commitments
Provision (release) for credit losses on unfunded loan
commitments
Provision (release) for credit losses on unfunded loan
commitments
Balance at end of periodBalance at end of period$37,007 $21,966 $37,007 $21,966 
Credit Quality
Old National’s management monitors the credit quality of its loans on an ongoing basis with the AQR for commercial loans reviewed annually or at renewal and the performance of its residential and consumer loans based upon the accrual status refreshed at least quarterly. Internally, management assigns an AQR to each non-homogeneous commercial, commercial real estate, and BBCC loan in the portfolio. The primary determinants of the AQR are the reliability of the primary source of repayment and the past, present, and projected financial condition of the borrower. The AQR will also consider current industry conditions. Major factors used in determining the AQR can vary based on the nature of the loan, but commonly include factors such as debt service coverage, internal cash flow, liquidity, leverage, operating performance, debt burden, FICO scores, occupancy, interest rate sensitivity, and expense burden. Old National uses the following definitions for risk ratings:
Criticized. Special mention loans that 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 criticized, classified – substandard, classified – nonaccrual, or classified – doubtful.
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The following table summarizes the amortized cost of term loans by risk category of commercial, commercial real estate, and BBCC loans by loan portfolio segment, class of loan, and origination year:
Origination YearRevolving to Term
(dollars in thousands)(dollars in thousands)20232022202120202019PriorRevolvingTotal
June 30, 2023
(dollars in thousands)
20242023202220212020PriorRevolvingTotal
March 31, 2024
Commercial:Commercial:
Risk Rating:
Commercial:
Commercial:
Pass
Pass
PassPass$1,108,984 $1,860,049 $1,307,700 $671,792 $604,875 $673,184 $2,185,539 $465,649 $8,877,772 
CriticizedCriticized28,284 84,240 15,092 23,548 29,772 32,376 74,437 25,524 313,273 
Classified:Classified:
Substandard
Substandard
SubstandardSubstandard17,252 16,246 36,914 36,303 4,671 22,508 52,794 37,482 224,170 
NonaccrualNonaccrual 349  585 824 6,681 1,064 2,210 11,713 
DoubtfulDoubtful 24,047 12,536 1,832 583 4,901   43,899 
TotalTotal$1,154,520 $1,984,931 $1,372,242 $734,060 $640,725 $739,650 $2,313,834 $530,865 $9,470,827 
Commercial real estate:Commercial real estate:
Risk Rating:
Commercial real estate:
Commercial real estate:
Pass
Pass
PassPass$1,188,882 $3,335,715 $2,791,366 $1,852,690 $1,083,211 $1,511,576 $84,574 $677,072 $12,525,086 
CriticizedCriticized28,324 30,372 31,377 32,238 54,738 88,116 3,893 23,353 292,411 
Classified:Classified:
Substandard
Substandard
SubstandardSubstandard14,685 71,131 17,505 19,748 79,998 44,060  49,825 296,952 
NonaccrualNonaccrual 866 18,463 1,064 456 16,081  3,272 40,202 
DoubtfulDoubtful 3,802 31,341 9,249 39,559 48,766   132,717 
TotalTotal$1,231,891 $3,441,886 $2,890,052 $1,914,989 $1,257,962 $1,708,599 $88,467 $753,522 $13,287,368 
BBCC:BBCC:
Risk Rating:
BBCC:
BBCC:
Pass
Pass
PassPass$52,620 $77,831 $53,068 $44,433 $32,200 $28,305 $69,107 $16,637 $374,201 
CriticizedCriticized987 1,445 1,081 360 1,045 483 1,836 1,626 8,863 
Classified:Classified:
Substandard
Substandard
SubstandardSubstandard10 497 629 49 226 836 484 856 3,587 
NonaccrualNonaccrual37 313 323 128 235 668  644 2,348 
DoubtfulDoubtful 408 219  55 74 500  1,256 
TotalTotal$53,654 $80,494 $55,320 $44,970 $33,761 $30,366 $71,927 $19,763 $390,255 
(dollars in thousands)Origination YearRevolving to Term
20232022202120202019PriorRevolvingTotal
December 31, 2023
Commercial:
Pass$1,826,289 $1,573,669 $985,964 $520,883 $450,911 $495,979 $2,051,985 $651,953 $8,557,633 
Criticized20,038 90,031 19,953 36,906 25,756 47,357 89,765 44,348 374,154 
Classified:
Substandard27,271 41,164 27,990 37,618 10,461 29,981 72,703 56,716 303,904 
Nonaccrual32 7,034 — — 823 3,411 — 5,461 16,761 
Doubtful— 7,261 5,925 4,875 1,742 7,211 — — 27,014 
Total$1,873,630 $1,719,159 $1,039,832 $600,282 $489,693 $583,939 $2,214,453 $758,478 $9,279,466 
Commercial real estate:
Pass$2,177,841 $3,515,702 $2,563,638 $1,576,044 $1,010,351 $1,161,119 $103,332 $960,386 $13,068,413 
Criticized69,648 69,946 68,708 27,059 52,107 95,896 3,893 64,730 451,987 
Classified:
Substandard26,638 56,423 21,401 28,983 61,186 49,558 — 48,760 292,949 
Nonaccrual— 21,919 10,706 1,975 1,634 8,632 — 1,400 46,266 
Doubtful5,360 429 30,897 2,306 37,777 35,187 — — 111,956 
Total$2,279,487 $3,664,419 $2,695,350 $1,636,367 $1,163,055 $1,350,392 $107,225 $1,075,276 $13,971,571 
BBCC:
Pass$81,102 $64,583 $44,307 $38,086 $27,557 $19,028 $68,807 $33,361 $376,831 
Criticized— — 857 700 1,001 349 2,144 12,728 17,779 
Classified:
Substandard436 193 252 — — 604 15 1,006 2,506 
Nonaccrual— — 482 — 1,105 — 1,402 2,993 
Doubtful302 727 254 286 60 84 — — 1,713 
Total$81,840 $65,503 $46,152 $39,072 $28,622 $21,170 $70,966 $48,497 $401,822 
22


Origination YearRevolving to Term
(dollars in thousands)20222021202020192018PriorRevolvingTotal
December 31, 2022
Commercial:
Risk Rating:
Pass$2,388,618 $1,754,364 $796,340 $738,208 $362,986 $388,617 $1,988,763 $329,119 $8,747,015 
Criticized40,856 30,661 63,557 33,490 9,195 5,312 61,036 4,327 248,434 
Classified:
Substandard37,223 47,522 16,540 22,925 4,844 21,204 67,402 25,143 242,803 
Nonaccrual3,627 1,453 566 — — — 1,634 6,623 13,903 
Doubtful2,821 17,604 3,720 8,005 5,968 8,351 — — 46,469 
Total$2,473,145 $1,851,604 $880,723 $802,628 $382,993 $423,484 $2,118,835 $365,212 $9,298,624 
Commercial real estate:
Risk Rating:
Pass$3,066,960 $2,828,758 $1,989,000 $1,219,025 $675,572 $1,018,719 $57,818 $689,553 $11,545,405 
Criticized75,306 34,422 22,569 82,637 86,504 56,864 — 23,282 381,584 
Classified:
Substandard46,231 16,928 24,319 78,468 57,824 21,591 — 4,108 249,469 
Nonaccrual3,151 9,541 5,014 — 2,312 22,155 — 3,257 45,430 
Doubtful1,934 38,386 10,011 4,605 1,523 20,401 — — 76,860 
Total$3,193,582 $2,928,035 $2,050,913 $1,384,735 $823,735 $1,139,730 $57,818 $720,200 $12,298,748 
BBCC:
Risk Rating:
Pass$90,341 $64,161 $52,304 $36,868 $23,618 $11,333 $60,016 $18,881 $357,522 
Criticized1,504 525 368 692 353 — 1,006 1,603 6,051 
Classified:
Substandard811 143 — 421 — — 543 682 2,600 
Nonaccrual42 37 118 — 429 284 — 639 1,549 
Doubtful40 107 439 157 64 73 — — 880 
Total$92,738 $64,973 $53,229 $38,138 $24,464 $11,690 $61,565 $21,805 $368,602 
2321


For residential real estate and consumer loan classes, Old National evaluates credit quality based on the aging status of the loan and by payment activity. The performing or nonperforming status is updated on an on-going basis dependent upon improvement and deterioration in credit quality. The following table presents the amortized cost of term residential real estate and consumer loans based on payment activity and origination year:
Origination YearRevolving to Term
Origination Year
(dollars in thousands)(dollars in thousands)20232022202120202019PriorRevolvingRevolving to TermTotal
June 30, 2023
(dollars in thousands)
(dollars in thousands)20242023202220212020PriorRevolvingTotal
March 31, 2024
Residential real estate:
Residential real estate:
Residential real estate:Residential real estate:
Risk Rating:Risk Rating:
Risk Rating:
Risk Rating:
Performing
Performing
PerformingPerforming$261,285 $1,480,926 $1,948,505 $1,709,893 $459,251 $785,089 $ $143 $6,645,092 
NonperformingNonperforming 1,892 2,727 4,200 3,378 27,191   39,388 
TotalTotal$261,285 $1,482,818 $1,951,232 $1,714,093 $462,629 $812,280 $ $143 $6,684,480 
Indirect:Indirect:
Indirect:
Indirect:
Risk Rating:Risk Rating:
Risk Rating:
Risk Rating:
Performing
Performing
PerformingPerforming$187,644 $425,822 $202,230 $98,742 $57,413 $27,397 $ $83 $999,331 
NonperformingNonperforming65 1,107 798 1,082 438 466   3,956 
TotalTotal$187,709 $426,929 $203,028 $99,824 $57,851 $27,863 $ $83 $1,003,287 
Direct:Direct:
Direct:
Direct:
Risk Rating:Risk Rating:
Risk Rating:
Risk Rating:
Performing
Performing
PerformingPerforming$53,778 $110,107 $121,141 $77,169 $41,509 $80,155 $74,945 $1,348 $560,152 
NonperformingNonperforming21 275 489 562 463 3,970 8 10 5,798 
TotalTotal$53,799 $110,382 $121,630 $77,731 $41,972 $84,125 $74,953 $1,358 $565,950 
Home equity:Home equity:
Home equity:
Home equity:
Risk Rating:Risk Rating:
Risk Rating:
Risk Rating:
Performing
Performing
PerformingPerforming$ $1,328 $843 $859 $943 $6,573 $988,669 $16,859 $1,016,074 
NonperformingNonperforming 51 130 82 1,057 4,776 1,961 6,175 14,232 
TotalTotal$ $1,379 $973 $941 $2,000 $11,349 $990,630 $23,034 $1,030,306 
Origination YearRevolving to Term
20222021202020192018PriorRevolvingTotal
December 31, 2022
Origination Year
2023
2023
20232022202120202019PriorRevolvingTotal
December 31, 2023
Residential real estate:
Residential real estate:
Residential real estate:Residential real estate:
Risk Rating:Risk Rating:
Risk Rating:
Risk Rating:
Performing
Performing
PerformingPerforming$1,327,168 $1,945,792 $1,825,762 $478,529 $136,260 $712,175 $$88 $6,425,781 
NonperformingNonperforming59 529 861 873 1,826 30,512 — — 34,660 
TotalTotal$1,327,227 $1,946,321 $1,826,623 $479,402 $138,086 $742,687 $$88 $6,460,441 
Indirect:Indirect:
Indirect:
Indirect:
Risk Rating:Risk Rating:
Risk Rating:
Risk Rating:
Performing
Performing
PerformingPerforming$504,410 $249,407 $144,265 $82,304 $31,484 $19,095 $— $62 $1,031,027 
NonperformingNonperforming348 1,074 645 531 304 328 — — 3,230 
TotalTotal$504,758 $250,481 $144,910 $82,835 $31,788 $19,423 $— $62 $1,034,257 
Direct:Direct:
Direct:
Direct:
Risk Rating:Risk Rating:
Risk Rating:
Risk Rating:
Performing
Performing
PerformingPerforming$132,934 $164,126 $77,406 $57,919 $45,299 $59,212 $87,622 $671 $625,189 
NonperformingNonperforming115 851 614 205 327 1,526 354 3,997 
TotalTotal$133,049 $164,977 $78,020 $58,124 $45,626 $60,738 $87,627 $1,025 $629,186 
Home equity:Home equity:
Home equity:
Home equity:
Risk Rating:Risk Rating:
Risk Rating:
Risk Rating:
Performing
Performing
PerformingPerforming$919 $896 $1,849 $1,497 $983 $11,646 $990,001 $14,792 $1,022,583 
NonperformingNonperforming166 160 166 446 794 4,308 1,698 3,462 11,200 
TotalTotal$1,085 $1,056 $2,015 $1,943 $1,777 $15,954 $991,699 $18,254 $1,033,783 
2422


The following table summarizes the gross charge-offs of loans by loan portfolio segment and origination year:
Origination Year
Origination Year
Origination Year
Origination Year
(dollars in thousands)(dollars in thousands)20232022202120202019PriorRevolvingTotal
Three Months Ended June 30, 2023
(dollars in thousands)
(dollars in thousands)20242023202220212020PriorRevolvingTotal
Three Months Ended March 31, 2024
Commercial
Commercial
CommercialCommercial$ $2,100 $5,931 $120 $ $ $180 $8,331 
Commercial real estateCommercial real estate     2,458  2,458 
BBCCBBCC 47  47    94 
Residential real estateResidential real estate     218  218 
IndirectIndirect10 164 124 48 16 40  402 
DirectDirect 430 588 172 414 195 801 2,600 
Home equityHome equity     228  228 
Total gross charge-offsTotal gross charge-offs$10 $2,741 $6,643 $387 $430 $3,139 $981 $14,331 
Six Months Ended June 30, 2023
Origination Year
Origination Year
Origination Year
2023
2023
20232022202120202019PriorRevolvingTotal
Three Months Ended March 31, 2023
Commercial
Commercial
CommercialCommercial$ $2,100 $11,161 $120 $6,789 $239 $345 $20,754 
Commercial real estateCommercial real estate 54 735 400  2,458  3,647 
BBCCBBCC 47 28 47    122 
Residential real estateResidential real estate     241  241 
IndirectIndirect10 678 554 141 127 89  1,599 
DirectDirect 901 1,382 458 741 390 1,966 5,838 
Home equityHome equity     310  310 
Total gross charge-offsTotal gross charge-offs$10 $3,780 $13,860 $1,166 $7,657 $3,727 $2,311 $32,511 
Nonaccrual and Past Due Loans
Old National does not record interest on nonaccrual loans until principal is recovered. For all loan classes, a loan is generally placed on nonaccrual status when principal or interest becomes 90 days past due unless it is well secured and in the process of collection, or earlier when concern exists as to the ultimate collectability of principal or interest. Interest accrued but not received is reversed against earnings. Cash interest received on these loans is applied to the principal balance until the principal is recovered or until the loan returns to accrual status. Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current, remain current for a prescribed period, and future payments are reasonably assured.
23


The following table presents the aging of the amortized cost basis in past due loans by class of loans:
(dollars in thousands)30-59 Days
Past Due
60-89 Days
Past Due
Past Due
90 Days or
More
Total
Past Due
CurrentTotal
Loans
June 30, 2023
Commercial$4,164 $3,719 $15,138 $23,021 $9,447,806 $9,470,827 
Commercial real estate7,760 10,441 35,906 54,107 13,233,261 13,287,368 
BBCC868 847 74 1,789 388,466 390,255 
Residential18,543 4,350 11,131 34,024 6,650,456 6,684,480 
Indirect4,296 1,162 840 6,298 996,989 1,003,287 
Direct3,225 775 1,257 5,257 560,693 565,950 
Home equity6,834 1,473 4,420 12,727 1,017,579 1,030,306 
Total$45,690 $22,767 $68,766 $137,223 $32,295,250 $32,432,473 
December 31, 2022
Commercial$14,147 $4,801 $11,080 $30,028 $9,268,596 $9,298,624 
Commercial real estate47,240 1,312 32,892 81,444 12,217,304 12,298,748 
BBCC730 365 603 1,698 366,904 368,602 
Residential24,181 5,033 11,753 40,967 6,419,474 6,460,441 
Indirect6,302 2,118 958 9,378 1,024,879 1,034,257 
Direct5,404 2,118 1,928 9,450 619,736 629,186 
Home equity6,585 1,966 4,707 13,258 1,020,525 1,033,783 
Total$104,589 $17,713 $63,921 $186,223 $30,937,418 $31,123,641 
25


(dollars in thousands)30-59 Days
Past Due
60-89 Days
Past Due
Past Due
90 Days or
More
Total
Past Due
CurrentTotal
Loans
March 31, 2024
Commercial$10,099 $1,620 $10,023 $21,742 $9,394,482 $9,416,224 
Commercial real estate8,838 27,844 32,539 69,221 14,412,078 14,481,299 
BBCC1,268 1,111 1,240 3,619 401,085 404,704 
Residential31,319 5,030 14,216 50,565 6,610,814 6,661,379 
Indirect5,488 1,351 1,205 8,044 1,083,954 1,091,998 
Direct4,751 1,115 3,454 9,320 496,985 506,305 
Home equity4,948 1,045 7,921 13,914 1,047,496 1,061,410 
Total$66,711 $39,116 $70,598 $176,425 $33,446,894 $33,623,319 
December 31, 2023
Commercial$16,128 $1,332 $4,861 $22,321 $9,257,145 $9,279,466 
Commercial real estate9,081 5,254 30,660 44,995 13,926,576 13,971,571 
BBCC1,368 134 977 2,479 399,343 401,822 
Residential12,358 367 15,249 27,974 6,671,469 6,699,443 
Indirect7,025 1,854 1,342 10,221 1,040,761 1,050,982 
Direct5,436 1,455 1,787 8,678 514,494 523,172 
Home equity7,791 2,347 6,659 16,797 1,048,674 1,065,471 
Total$59,187 $12,743 $61,535 $133,465 $32,858,462 $32,991,927 
The following table presents the amortized cost basis of loans on nonaccrual status and loans past due 90 days or more and still accruing by class of loan:
June 30, 2023December 31, 2022
March 31, 2024
March 31, 2024
March 31, 2024
(dollars in thousands)
(dollars in thousands)
(dollars in thousands)(dollars in thousands)Nonaccrual
Amortized
Cost
Nonaccrual
With No
Related
Allowance
Past Due
90 Days or
More and
Accruing
Nonaccrual
Amortized
Cost
Nonaccrual
With No
Related
Allowance
Past Due
90 Days or
More and
Accruing
CommercialCommercial$55,612 $12,666 $92 $60,372 $7,873 $152 
Commercial
Commercial
Commercial real estate
Commercial real estate
Commercial real estateCommercial real estate172,919 44,218 173 122,290 33,445 — 
BBCCBBCC3,604   2,429 — — 
BBCC
BBCC
Residential
Residential
ResidentialResidential39,388   34,660 — 1,808 
IndirectIndirect3,956   3,230 — 28 
Indirect
Indirect
Direct
Direct
DirectDirect5,798  25 3,997 — 133 
Home equityHome equity14,232  13 11,200 — 529 
Home equity
Home equity
Total
Total
TotalTotal$295,509 $56,884 $303 $238,178 $41,318 $2,650 
Interest income recognized on nonaccrual loans was insignificant during the three and six months ended June 30, 2023March 31, 2024 and 2022.2023.
24


When management determines that foreclosure is probable, expected credit losses for collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. A loan is considered collateral dependent when the borrower is experiencing financial difficulty, and the loan is expected to be repaid substantially through the operation or sale of the collateral. The class of loan represents the primary collateral type associated with the loan. Significant quarter-over-quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value. The following table presents the amortized cost basis of collateral dependent loans by class of loan:
Type of Collateral
(dollars in thousands)Real
Estate
Blanket
Lien
Investment
Securities/Cash
AutoOther
June 30, 2023
Commercial$14,450 $37,285 $652 $535 $366 
Commercial real estate156,570 3,908 1,246  6,259 
BBCC2,267 1,301  36  
Residential39,388     
Indirect   3,956  
Direct4,973 6  253 32 
Home equity14,232     
Total loans$231,880 $42,500 $1,898 $4,780 $6,657 
December 31, 2022
Commercial$8,962 $42,754 $2,690 $1,611 $980 
Commercial real estate108,871 — 1,718 — 6,411 
BBCC1,939 478 — 12 — 
Residential34,660 — — — — 
Indirect— — — 3,230 — 
Direct2,991 13 — 232 23 
Home equity11,200 — — — — 
Total loans$168,623 $43,245 $4,408 $5,085 $7,414 
Loan Participations
Old National has loan participations, which qualify as participating interests, with other financial institutions.  At June 30, 2023, these loans totaled $2.6 billion, of which $1.2 billion had been sold to other financial institutions and $1.4 billion was retained by Old National.  The loan participations convey proportionate ownership rights with equal priority to each participating interest holder; involve no recourse (other than ordinary representations and warranties) to, or subordination by, any participating interest holder; all cash flows are divided among the participating interest holders in proportion to each holder’s share of ownership; and no holder has the right to pledge the entire financial asset unless all participating interest holders agree.
26


Type of Collateral
(dollars in thousands)Real
Estate
Blanket
Lien
Investment
Securities/Cash
AutoOther
March 31, 2024
Commercial$11,284 $39,258 $5,728 $11,582 $319 
Commercial real estate163,753  1,133  6,031 
BBCC3,793 1,701  278  
Residential47,022     
Indirect   4,408  
Direct4,559  7 386 48 
Home equity17,958     
Total loans$248,369 $40,959 $6,868 $16,654 $6,398 
December 31, 2023
Commercial$14,303 $24,729 $2,577 $280 $328 
Commercial real estate146,425 — 1,167 — 6,107 
BBCC3,522 794 — 390 — 
Residential41,771 — — — — 
Indirect— — — 4,207 — 
Direct4,727 366 29 
Home equity16,248 — — — — 
Total loans$226,996 $25,524 $3,747 $5,243 $6,464 
Financial Difficulty Modifications
Occasionally, Old National modifies loans to borrowers experiencing financial difficulty in the form of principal forgiveness, term extension, an other-than-insignificant payment delay, or interest rate reduction (or a combination thereof). When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses on loans.
The following table presents the amortized cost basis of financial difficulty modifications at June 30, 2023 that were modified during the three and six months ended June 30, 2023for borrowers experiencing financial difficulty, by class of loans and type of modification:
(dollars in thousands)(dollars in thousands)Term
Extension
Total
Class of
Loans
Three Months Ended June 30, 2023
(dollars in thousands)
(dollars in thousands)Term
Extension
Total
Class of
Loans
Three Months Ended March 31, 2024
Commercial
Commercial
CommercialCommercial$1,231 0.0 %$29,426 0.3 0.3 %
Commercial real estateCommercial real estate12,449 0.1 %Commercial real estate120,891 0.8 0.8 %
TotalTotal$13,680 0.0 %
Six Months Ended June 30, 2023
Total
Total$150,317 0.4 %
Three Months Ended March 31, 2023
Three Months Ended March 31, 2023
Three Months Ended March 31, 2023
Commercial
Commercial
CommercialCommercial$18,517 0.2 %$17,342 0.2 0.2 %
Commercial real estateCommercial real estate19,280 0.1 %Commercial real estate9,926 0.1 0.1 %
TotalTotal$37,797 0.1 %
Total
Total$27,268 0.1 %
25


Old National closely monitors the performance of financial difficulty modifications to understand the effectiveness of its efforts. The following table presents the performance of loans identified as financial difficulty modifications at June 30, 2023:modifications:
(dollars in thousands)(dollars in thousands)30-59 Days
Past Due
60-89 Days
Past Due
Past Due
90 Days or
More
Total
Past Due
CurrentTotal
Loans
(dollars in thousands)30-59 Days
Past Due
60-89 Days
Past Due
Past Due
90 Days or
More
Total
Past Due
CurrentTotal
Loans
June 30, 2023
March 31, 2024
Commercial
Commercial
CommercialCommercial$ $ $2,600 $2,600 $15,917 $18,517 
Commercial real estateCommercial real estate 5,537  5,537 13,743 19,280 
TotalTotal$ $5,537 $2,600 $8,137 $29,660 $37,797 
Total
Total
December 31, 2023
December 31, 2023
December 31, 2023
Commercial
Commercial
Commercial
Commercial real estate
Total
Total
Total
The following table summarizes the nature of the financial difficulty modifications during the three and six months ended June 30, 2023 by class of loans:
(dollars in thousands)Weighted-
Average
Term
Extension
(in months)
Three Months Ended June 30, 2023March 31, 2024
Commercial7.09.1
Commercial real estate6.08.1
Total6.18.6
SixThree Months Ended June 30,March 31, 2023
Commercial6.8
Commercial real estate5.84.1
Total6.35.6
There were no payment defaults on these loans subsequent to their modifications during the three and six months ended June 30,March 31, 2024 or 2023. At June 30, 2023, Old National had not committed to lend any material additional funds to the borrowers whose loans were modified due to financial difficulties.difficulties at March 31, 2024 or December 31, 2023.
27


NOTE 7 – LEASES
Old National has operating and finance leases for land, office space, banking centers, and equipment. These leases are generally for periods of 5 to 20 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.
Old National has lease agreements with lease and non-lease components, which are generally accounted for separately. For real estate leases, non-lease components and other non-components, such as common area maintenance charges, real estate taxes, and insurance are not included in the measurement of the lease liability since they are generally able to be segregated. For certain equipment leases, Old National accounts for the lease and non-lease components as a single lease component using the practical expedient available for that class of assets.
Old National does not have any material sub-lease agreements.
26


The components of lease expense were as follows:
Affected Line
Item in the
Statement of Income
Three Months Ended
June 30,
Six Months Ended
June 30,
Affected Line
Item in the
Statement of Income
Affected Line
Item in the
Statement of Income
Affected Line
Item in the
Statement of Income
Three Months Ended
March 31,
(dollars in thousands)(dollars in thousands)Affected Line
Item in the
Statement of Income
2023202220232022(dollars in thousands)20242023
Operating lease costOperating lease cost$7,469 $8,558 $16,107 $13,666 
Finance lease cost:Finance lease cost: 
Amortization of right-of-use assetsAmortization of right-of-use assetsOccupancy expense737 648 1,428 1,323 
Amortization of right-of-use assets
Amortization of right-of-use assets
Interest on lease liabilitiesInterest on lease liabilitiesInterest expense184 103 353 210 
Sub-lease incomeSub-lease incomeOccupancy expense(102)(174)(162)(302)
Sub-lease income
Sub-lease income
TotalTotal $8,288 $9,135 $17,726 $14,897 
Supplemental balance sheet information related to leases was as follows:
(dollars in thousands)June 30,
2023
December 31,
2022
Operating Leases 
Operating lease right-of-use assets$184,700 $189,714 
Operating lease liabilities206,178 211,964 
 
Finance Leases
Premises and equipment, net20,435 10,799 
Other borrowings21,346 13,469 
 
Weighted-Average Remaining Lease Term (in Years)
Operating leases8.79.1
Finance leases10.57.2
 
Weighted-Average Discount Rate
Operating leases2.92 %2.88 %
Finance leases3.84 %3.30 %
28


(dollars in thousands)March 31,
2024
December 31,
2023
Operating Leases 
Operating lease right-of-use assets$189,593 $185,506 
Operating lease liabilities208,868 204,960 
Finance Leases
Premises and equipment, net18,877 19,820 
Other borrowings20,108 20,955 
Weighted-Average Remaining Lease Term (in Years)
Operating leases8.48.5
Finance leases10.310.5
Weighted-Average Discount Rate
Operating leases3.05 %3.04 %
Finance leases3.91 %3.90 %
Supplemental cash flow information related to leases was as follows:
Six Months Ended
June 30,
Three Months Ended
March 31,
Three Months Ended
March 31,
(dollars in thousands)(dollars in thousands)20232022(dollars in thousands)20242023
Cash paid for amounts included in the measurement of lease liabilities:Cash paid for amounts included in the measurement of lease liabilities: 
Operating cash flows from operating leasesOperating cash flows from operating leases$15,752 $13,705 
Operating cash flows from operating leases
Operating cash flows from operating leases
Operating cash flows from finance leasesOperating cash flows from finance leases353 210 
Financing cash flows from finance leasesFinancing cash flows from finance leases1,265 1,210 
The following table presents a maturity analysis of the Company’s lease liability by lease classification at June 30, 2023:March 31, 2024:
(dollars in thousands)(dollars in thousands)Operating
Leases
Finance
Leases
(dollars in thousands)Operating
Leases
Finance
Leases
2023$15,993 $1,611 
2024202431,241 3,278 
2025202529,621 3,301 
2026202628,575 2,075 
2027202727,604 2,079 
2028
ThereafterThereafter101,741 13,964 
Total undiscounted lease paymentsTotal undiscounted lease payments234,775 26,308 
Amounts representing interestAmounts representing interest(28,597)(4,962)
Lease liabilityLease liability$206,178 $21,346 

27


NOTE 8 – GOODWILL AND OTHER INTANGIBLE ASSETS
The following table presents the changes in the carrying amount of goodwill:
Three Months Ended
June 30,
Six Months Ended
June 30,
(dollars in thousands)2023202220232022
Balance at beginning of period$1,998,716 $1,997,157 $1,998,716 $1,036,994 
Acquisitions and adjustments (5,623) 954,540 
Balance at end of period$1,998,716 $1,991,534 $1,998,716 $1,991,534 
The decrease in goodwill for the three months ended June 30, 2022 resulted from measurement period adjustments related to the update of fair values of the assets acquired and liabilities assumed in the First Midwest merger. The increase in goodwill for the six months ended June 30, 2022 was due to the First Midwest merger. See Note 3 to the consolidated financial statements for additional detail regarding this transaction.
Three Months Ended
March 31,
(dollars in thousands)20242023
Balance at beginning of period$1,998,716 $1,998,716 
Acquisitions and adjustments — 
Balance at end of period$1,998,716 $1,998,716 
Old National performed the required annual goodwill impairment test as of August 31, 20222023 and there was no impairment. No events or circumstances since the August 31, 20222023 annual impairment test were noted that would indicate it was more likely than not a goodwill impairment exists.
29


The gross carrying amounts and accumulated amortization of other intangible assets were as follows: 
(dollars in thousands)(dollars in thousands)Gross
Carrying
Amount
Accumulated
Amortization
and Impairment
Net
Carrying
Amount
(dollars in thousands)Gross
Carrying
Amount
Accumulated
Amortization
and Impairment
Net
Carrying
Amount
June 30, 2023   
March 31, 2024March 31, 2024  
Core depositCore deposit$143,511 $(63,521)$79,990 
Customer trust relationshipsCustomer trust relationships52,621 (18,452)34,169 
Total other intangible assetsTotal other intangible assets$196,132 $(81,973)$114,159 
December 31, 2022
December 31, 2023
December 31, 2023
December 31, 2023
Core deposit
Core deposit
Core depositCore deposit$170,642 $(80,951)$89,691 
Customer trust relationshipsCustomer trust relationships56,243 (19,529)36,714 
Total other intangible assetsTotal other intangible assets$226,885 $(100,480)$126,405 
Other intangible assets consist of core deposit intangibles and customer relationship intangibles and are being amortized primarily on an accelerated basis over their estimated useful lives, generally over a period of 5 to 15 years.
Old National reviews other intangible assets for possible impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. No impairment charges were recorded during the sixthree months ended June 30, 2023March 31, 2024 or 2022.2023. Total amortization expense associated with intangible assets was $6.1 million and $12.2$5.5 million for the three and six months ended June 30, 2023, respectively,March 31, 2024, compared to $7.2 million and $12.0$6.2 million for the three and six months ended June 30, 2022, respectively.March 31, 2023.
Estimated amortization expense for future years is as follows:
(dollars in thousands)(dollars in thousands) (dollars in thousands) 
2023 remaining$11,909 
202421,239 
2024 remaining
2025202518,358 
2026202615,555 
2027202712,867 
2028
ThereafterThereafter34,231 
TotalTotal$114,159 
28


NOTE 9 – QUALIFIED AFFORDABLE HOUSING PROJECTS AND OTHER TAX CREDIT INVESTMENTS
Old National is a limited partner in several tax-advantaged limited partnerships whose purpose is to invest in approved qualified affordable housing, renewable energy, or other renovation or community revitalization projects. These investments are included in other assets on the balance sheet, with any unfunded commitments included with other liabilities. As of June 30, 2023,March 31, 2024, Old National expects to recover its remaining investments through the use of the tax credits that are generated by the investments.
The following table summarizes Old National’s investments in qualified affordable housing projects and other tax credit investments:
(dollars in thousands)(dollars in thousands) June 30, 2023December 31, 2022(dollars in thousands) March 31, 2024December 31, 2023
InvestmentInvestmentAccounting MethodInvestment
Unfunded
Commitment (1)
InvestmentUnfunded
Commitment
InvestmentAccounting MethodInvestment
Unfunded
Commitment (1)
InvestmentUnfunded
Commitment
LIHTCLIHTCProportional amortization$90,164 $53,327 $84,428 $55,754 
FHTCFHTCEquity19,797 10,016 19,316 9,588 
NMTCNMTCConsolidation47,728  51,912 — 
Renewable EnergyRenewable EnergyEquity608  1,099 — 
TotalTotal $158,297 $63,343 $156,755 $65,342 
(1)All commitments will be paid by Old National by December 31, 2027.
30


(2)
Old National’s FHTC investments were previously accounted for under the Equity method of accounting prior to the adoption of ASU 2023-02 on January 1, 2024.
The following table summarizes the amortization expense and tax benefit recognized for Old National’s qualified affordable housing projects and other tax credit investments:
(dollars in thousands)(dollars in thousands)
Amortization
Expense (1)
Tax Expense
(Benefit)
Recognized (2)
(dollars in thousands)
Amortization
Expense (1)
Tax Expense
(Benefit)
Recognized (2)
Three Months Ended June 30, 2023  
Three Months Ended March 31, 2024
Three Months Ended March 31, 2024
Three Months Ended March 31, 2024
LIHTC
LIHTC
LIHTCLIHTC$1,463 $(1,908)
FHTCFHTC424 (512)
NMTCNMTC2,092 (2,611)
Renewable EnergyRenewable Energy246  
TotalTotal$4,225 $(5,031)
Three Months Ended June 30, 2022
Three Months Ended March 31, 2023
Three Months Ended March 31, 2023
Three Months Ended March 31, 2023
LIHTC
LIHTC
LIHTCLIHTC$1,240 $(1,650)
FHTCFHTC215 (263)
NMTCNMTC1,100 (1,375)
Renewable EnergyRenewable Energy210 — 
TotalTotal$2,765 $(3,288)
Six Months Ended June 30, 2023
LIHTC$2,927 $(3,817)
FHTC848 (1,024)
NMTC4,183 (5,222)
Renewable Energy492  
Total$8,450 $(10,063)
Six Months Ended June 30, 2022
LIHTC$2,493 $(3,300)
FHTC420 (514)
NMTC2,201 (2,750)
Renewable Energy420 — 
Total$5,534 $(6,564)
(1)The amortization expense for the LIHTC and FHTC investments is included in our income tax expense. ThePrior to the adoption of ASU 2023-02, FHTC amortization expense was included in noninterest expense. NMTC amortization is recognized in noninterest expense in correlation to the recognition of tax credits on our tax return. Amortization expense for the FHTC, NMTC, and Renewable Energy tax credits is included in noninterest expense.
(2)All of the tax benefits recognized are included in our income tax expense. The tax benefit recognized for the FHTC, NMTC and Renewable Energy investments primarily reflects the tax credits generated from the investments and excludes the net tax expense (benefit) and deferred tax liability of the investments’ income (loss).
3129


NOTE 10 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities sold under agreements to repurchase are secured borrowings. Old National pledges investment securities to secure these borrowings. The following table presents securities sold under agreements to repurchase and related weighted-average interest rates:
At or for the Six Months
Ended June 30,
At or for the Three Months
Ended March 31,
At or for the Three Months
Ended March 31,
(dollars in thousands)(dollars in thousands)20232022(dollars in thousands)20242023
Outstanding at period endOutstanding at period end$311,447 $476,173 
Average amount outstanding during the periodAverage amount outstanding during the period376,298 458,459 
Maximum amount outstanding at any month-end during the periodMaximum amount outstanding at any month-end during the period430,537 509,275 
Weighted-average interest rate:Weighted-average interest rate:
During the periodDuring the period0.90 %0.08 %
During the period
During the period1.25 %0.77 %
At period endAt period end1.14 %0.08 %At period end3.61 %0.88 %
At December 31, 2022,2023, securities sold under agreements to repurchase totaled $432.8$285.2 million with a weighted-average interest rate of 1.31%3.64%.
The following table presents the contractual maturity of our secured borrowings and class of collateral pledged:
 At June 30, 2023
 Remaining Contractual Maturity of the Agreements
(dollars in thousands)Overnight and ContinuousUp to
30 Days
 30-90 DaysGreater Than 90 daysTotal
Repurchase Agreements:     
U.S. Treasury and agency securities$311,447 $ $ $ $311,447 
Total$311,447 $ $ $ $311,447 
The fair value of securities pledged to secure repurchase agreements may decline.  Old National has pledged securities valued at 125% of the gross outstanding balance of repurchase agreements at June 30, 2023 to manage this risk.
 At March 31, 2024
 Remaining Contractual Maturity of the Agreements
(dollars in thousands)Overnight and ContinuousUp to
30 Days
 30-90 DaysGreater Than 90 daysTotal
Repurchase Agreements:     
U.S. Treasury and agency securities$274,493 $ $ $ $274,493 
Total$274,493 $ $ $ $274,493 
NOTE 11 – FEDERAL HOME LOAN BANK ADVANCES
The following table summarizes Old National Bank’s FHLB advances:
(dollars in thousands)(dollars in thousands)June 30,
2023
December 31,
2022
(dollars in thousands)March 31,
2024
December 31,
2023
FHLB advances (fixed rates 0.00% to 5.49%
and variable rates 5.09% to 5.18%) maturing
September 2023 to September 2042
$4,800,528 $3,850,677 
FHLB advances (fixed rates 2.19% to 5.53%
and variable rates 5.33% to 5.36%) maturing
June 2024 to March 2044
Fair value hedge basis adjustments and unamortized
prepayment fees
Fair value hedge basis adjustments and unamortized
prepayment fees
(29,345)(21,659)
TotalTotal$4,771,183 $3,829,018 
FHLB advances had weighted-average rates of 3.23%3.58% at June 30, 2023March 31, 2024 and 3.15%3.45% at December 31, 2022. Certain2023. FHLB advances are collateralized with residentialby designated assets that may include qualifying commercial real estate loans, at 148%.residential and multifamily mortgages, home equity loans, and certain investment securities.
At June 30, 2023,March 31, 2024, total unamortized prepayment fees related to all FHLB advance debt modifications completed in prior years totaled $17.2$12.7 million, compared to $20.2$14.2 million at December 31, 2022.2023.
3230


Contractual maturities of FHLB advances at June 30, 2023March 31, 2024 were as follows:
(dollars in thousands) 
Due in 20232024$100,000100,243 
Due in 202425,243 
Due in 2025550,285 
Due in 2026100,000 
Due in 2028850,000 
Thereafter4,025,0002,625,000 
Fair value hedge basis adjustments and unamortized prepayment fees(29,345)(32,489)
Total$4,771,1834,193,039 

NOTE 12 – OTHER BORROWINGS
The following table summarizes Old National’s other borrowings:
(dollars in thousands)(dollars in thousands)June 30,
2023
December 31,
2022
(dollars in thousands)March 31,
2024
December 31,
2023
Old National Bancorp:Old National Bancorp:  Old National Bancorp:  
Senior unsecured notes (fixed rate 4.125%) maturing August 2024Senior unsecured notes (fixed rate 4.125%) maturing August 2024$175,000 $175,000 
Unamortized debt issuance costs related to senior unsecured notesUnamortized debt issuance costs related to senior unsecured notes(169)(247)
Subordinated debentures (fixed rate 5.875%) maturing September 2026Subordinated debentures (fixed rate 5.875%) maturing September 2026150,000 150,000 
Junior subordinated debentures (variable rates of
6.86% to 8.88%) maturing July 2031 to September 2037
136,643 136,643 
Junior subordinated debentures (rates of 6.95% to 9.15%) maturing
July 2031 to September 2037
Other basis adjustmentsOther basis adjustments20,785 23,363 
Old National Bank:Old National Bank:
Finance lease liabilitiesFinance lease liabilities21,346 13,469 
Subordinated debentures (variable rate 9.66%) maturing October 202512,000 12,000 
Finance lease liabilities
Finance lease liabilities
Subordinated debentures (3-month SOFR plus 4.618%; variable rate 9.94%)
maturing October 2025
Leveraged loans for NMTC (fixed rates of 1.00% to 1.43%)
maturing December 2046 to June 2060
Leveraged loans for NMTC (fixed rates of 1.00% to 1.43%)
maturing December 2046 to June 2060
143,745 143,187 
Other (1)
Other (1)
155,968 89,588 
Total other borrowingsTotal other borrowings$815,318 $743,003 
(1)Includes overnight borrowings to collateralize certain derivative positions totaling $155.1$134.2 million at June 30, 2023March 31, 2024 and $88.0$97.6 million at December 31, 2022.2023.
Contractual maturities of other borrowings at June 30, 2023March 31, 2024 were as follows:
(dollars in thousands) 
Due in 20232024$156,314311,233 
Due in 2024177,609 
Due in 202514,69614,747 
Due in 2026151,529151,582 
Due in 20271,5871,641 
Due in 20281,598 
Thereafter292,059315,407 
Unamortized debt issuance costs and other basis adjustments21,52417,005 
Total$815,318813,213 
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.
3331


Old National, at any time, may redeem the junior subordinated debentures at par and, thereby cause a redemption of the trust preferred securities in whole or in part.
The following table summarizes the terms of our outstanding junior subordinated debentures at June 30, 2023:March 31, 2024:
(dollars in thousands)   
Rate at
June 30,
2023
 
Name of TrustIssuance DateIssuance
Amount
RateMaturity Date
Bridgeview Statutory Trust IJuly 2001$15,464 3-month LIBOR plus 3.58%8.88%July 31, 2031
Bridgeview Capital Trust IIDecember 200215,464 3-month LIBOR plus 3.35%8.61%January 7, 2033
First Midwest Capital Trust INovember 200337,825 6.95% fixed6.95%December 1, 2033
St. Joseph Capital Trust IIMarch 20055,155 3-month LIBOR plus 1.75%7.26%March 17, 2035
Northern States Statutory Trust ISeptember 200510,310 3-month LIBOR plus 1.80%7.35%September 15, 2035
Anchor Capital Trust IIIAugust 20055,000 3-month LIBOR plus 1.55%7.09%September 30, 2035
Great Lakes Statutory Trust IIDecember 20056,186 3-month LIBOR plus 1.40%6.95%December 15, 2035
Home Federal Statutory
   Trust I
September 200615,464 3-month LIBOR plus 1.65%7.20%September 15, 2036
Monroe Bancorp Capital
   Trust I
July 20063,093 3-month LIBOR plus 1.60%6.86%October 7, 2036
Tower Capital Trust 3December 20069,279 3-month LIBOR plus 1.69%7.19%March 1, 2037
Monroe Bancorp Statutory
   Trust II
March 20075,155 3-month LIBOR plus 1.60%7.15%June 15, 2037
Great Lakes Statutory Trust IIIJune 20078,248 3-month LIBOR plus 1.70%7.25%September 15, 2037
Total$136,643 
Subordinated Debentures
Old National assumed $12.0 million of subordinated fixed-to-floating notes related to the acquisition of Anchor Bancorp, Inc. (MN).  The subordinated debentures had a 5.75% fixed rate of interest through October 29, 2020.  From October 30, 2020 to the October 30, 2025 maturity date, the debentures have a floating rate of interest equal to the three-month LIBOR rate plus 4.356%.
Old National assumed $150.0 million of subordinated fixed rate notes related to the First Midwest merger. The subordinated debentures have a 5.875% fixed rate of interest through the September 29, 2026 maturity date.
(dollars in thousands)   
Rate at
March 31,
2024
 
Name of TrustIssuance DateIssuance
Amount
RateMaturity Date
Bridgeview Statutory Trust IJuly 2001$15,464 3-month SOFR plus 3.58%9.15%July 31, 2031
Bridgeview Capital Trust IIDecember 200215,464 3-month SOFR plus 3.35%8.93%January 7, 2033
First Midwest Capital Trust INovember 200337,825 6.95% fixed6.95%December 1, 2033
St. Joseph Capital Trust IIMarch 20055,155 3-month SOFR plus 1.75%7.34%March 17, 2035
Northern States Statutory Trust ISeptember 200510,310 3-month SOFR plus 1.80%7.39%September 15, 2035
Anchor Capital Trust IIIAugust 20055,000 3-month SOFR plus 1.55%7.11%September 30, 2035
Great Lakes Statutory Trust IIDecember 20056,186 3-month SOFR plus 1.40%6.99%December 15, 2035
Home Federal Statutory
   Trust I
September 200615,464 3-month SOFR plus 1.65%7.24%September 15, 2036
Monroe Bancorp Capital
   Trust I
July 20063,093 3-month SOFR plus 1.60%7.18%October 7, 2036
Tower Capital Trust 3December 20069,279 3-month SOFR plus 1.69%7.29%March 1, 2037
Monroe Bancorp Statutory
   Trust II
March 20075,155 3-month SOFR plus 1.60%7.19%June 15, 2037
Great Lakes Statutory Trust IIIJune 20078,248 3-month SOFR plus 1.70%7.29%September 15, 2037
Total$136,643 
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 $21.3$20.1 million at June 30, 2023.March 31, 2024. See Note 7 to the consolidated financial statements for a maturity analysis of the Company’s finance lease liabilities.
3432


NOTE 13 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table summarizes the changes within each classification of AOCI, net of tax:
(dollars in thousands)(dollars in thousands)Unrealized
Gains and
Losses on
Available-
for-Sale
Debt
Securities
Unrealized
Gains and
Losses on
Held-to-
Maturity
Securities
Gains and
Losses on
Hedges
Defined
Benefit
Pension
Plans
Total(dollars in thousands)Unrealized
Gains and
Losses on
Available-
for-Sale
Debt
Securities
Unrealized
Gains and
Losses on
Held-to-
Maturity
Securities
Gains and
Losses on
Hedges
Defined
Benefit
Pension
Plans
Total
Three Months Ended June 30, 2023     
Three Months Ended March 31, 2024
Three Months Ended March 31, 2024
Three Months Ended March 31, 2024
Balance at beginning of period
Balance at beginning of period
Balance at beginning of periodBalance at beginning of period$(611,260)$(106,966)$9,872 $(4)$(708,358)
Other comprehensive income (loss) before
reclassifications
Other comprehensive income (loss) before
reclassifications
(90,121) 9,840  (80,281)
Amounts reclassified from AOCI to income (1)
Amounts reclassified from AOCI to income (1)
(12)3,822 (23,808)4 (19,994)
Balance at end of periodBalance at end of period$(701,393)$(103,144)$(4,096)$ $(808,633)
Three Months Ended June 30, 2022
Three Months Ended March 31, 2023
Three Months Ended March 31, 2023
Three Months Ended March 31, 2023
Balance at beginning of period
Balance at beginning of period
Balance at beginning of periodBalance at beginning of period$(314,364)$(16,727)$(7,132)$24 $(338,199)
Other comprehensive income (loss) before
reclassifications
Other comprehensive income (loss) before
reclassifications
(122,776)(108,266)(2,578)— (233,620)
Amounts reclassified from AOCI to income (1)
Amounts reclassified from AOCI to income (1)
65 2,794 (165)(8)2,686 
Balance at end of periodBalance at end of period$(437,075)$(122,199)$(9,875)$16 $(569,133)
Six Months Ended June 30, 2023
Balance at beginning of period$(642,346)$(112,664)$(31,549)$137 $(786,422)
Other comprehensive income (loss) before
reclassifications
(62,902)1,325 45,825  (15,752)
Amounts reclassified from AOCI to income (1)
3,855 8,195 (18,372)(137)(6,459)
Balance at end of period$(701,393)$(103,144)$(4,096)$ $(808,633)
Six Months Ended June 30, 2022
Balance at beginning of period$(2,950)$— $543 $32 $(2,375)
Other comprehensive income (loss) before
reclassifications
(433,929)(125,229)(9,748)— (568,906)
Amounts reclassified from AOCI to income (1)
(196)3,030 (670)(16)2,148 
Balance at end of period$(437,075)$(122,199)$(9,875)$16 $(569,133)
(1)See table below for details about reclassifications to income.
35


The following table summarizes the amounts reclassified out of each component of AOCI for the three months ended June 30, 2023March 31, 2024 and 2022:2023:
 Three Months Ended
June 30,
 
(dollars in thousands)20232022 
Details about AOCI ComponentsAmount Reclassified
from AOCI
Affected Line Item in the
Statement of Income
Unrealized gains and losses on
   available-for-sale securities
$17 $(85)Debt securities gains (losses), net
 (5)20 Income tax (expense) benefit
 $12 $(65)Net income (loss)
Unrealized gains and losses on
   held-to-maturity securities
$(5,122)$(3,692)Interest income (expense)
 1,300 898 Income tax (expense) benefit
 $(3,822)$(2,794)Net income (loss)
Gains and losses on hedges
   Interest rate contracts
$32,112 $219 Interest income (expense)
 (8,304)(54)Income tax (expense) benefit
 $23,808 $165 Net income (loss)
Amortization of defined benefit
   pension items
 
Actuarial gains (losses)$(6)$10 Salaries and employee benefits
 2 (2)Income tax (expense) benefit
 $(4)$Net income (loss)
Total reclassifications for the period$19,994 $(2,686)Net income (loss)
The following table summarizes the amounts reclassified out of each component of AOCI for the six months ended June 30, 2023 and 2022:
Six Months Ended
June 30,
  Three Months Ended
March 31,
 
(dollars in thousands)(dollars in thousands)20232022 (dollars in thousands)20242023 
Details about AOCI ComponentsDetails about AOCI ComponentsAmount Reclassified
from AOCI
Affected Line Item in the
Statement of Income
Details about AOCI ComponentsAmount Reclassified
from AOCI
Affected Line Item in the
Statement of Income
Unrealized gains and losses on
available-for-sale securities
Unrealized gains and losses on
available-for-sale securities
$(5,199)$257 Debt securities gains (losses), netUnrealized gains and losses on
available-for-sale securities
$(16)$$(5,216)Debt securities gains (losses), netDebt securities gains (losses), net
1,344 (61)Income tax (expense) benefit 4 1,349 1,349 Income tax (expense) benefitIncome tax (expense) benefit
$(3,855)$196 Net income (loss) $(12)$$(3,867)Net incomeNet income
Unrealized gains and losses on
held-to-maturity securities
$(10,951)$(4,002)Interest income (expense)
Amortization of unrealized losses on
held-to-maturity securities transferred
from available-for-sale
Amortization of unrealized losses on
held-to-maturity securities transferred
from available-for-sale
$(4,318)$(5,829)Interest income (expense)
2,756 972 Income tax (expense) benefit 1,097 1,456 1,456 Income tax (expense) benefitIncome tax (expense) benefit
$(8,195)$(3,030)Net income (loss) $(3,221)$$(4,373)Net incomeNet income
Gains and losses on hedges
Interest rate contracts
Gains and losses on hedges
Interest rate contracts
$24,820 $888 Interest income (expense)Gains and losses on hedges
Interest rate contracts
$(4,877)$$(7,292)Interest income (expense)Interest income (expense)
(6,448)(218)Income tax (expense) benefit 1,261 1,856 1,856 Income tax (expense) benefitIncome tax (expense) benefit
$18,372 $670 Net income (loss) $(3,616)$$(5,436)Net incomeNet income
Amortization of defined benefit
pension items
Amortization of defined benefit
pension items
 Amortization of defined benefit
pension items
 
Actuarial gains (losses)Actuarial gains (losses)$182 $21 Salaries and employee benefitsActuarial gains (losses)$ $$188 Salaries and employee benefitsSalaries and employee benefits
(45)(5)Income tax (expense) benefit  (47)(47)Income tax (expense) benefitIncome tax (expense) benefit
$137 $16 Net income (loss) $ $$141 Net incomeNet income
Total reclassifications for the periodTotal reclassifications for the period$6,459 $(2,148)Net income (loss)
Total reclassifications for the period
Total reclassifications for the period$(6,849)$(13,535)Net income
3633


NOTE 14 – INCOME TAXES
FollowingThe following is a summary of the major items comprising the differences in taxes from continuing operations computed at the federal statutory rate and as recorded in the consolidated statements of income:
Three Months Ended
June 30,
Six Months Ended
June 30,
(dollars in thousands)2023202220232022
Provision at statutory rate of 21%$42,510 $29,389 $81,995 $21,766 
Tax-exempt income:
Tax-exempt interest(4,605)(3,413)(9,091)(6,406)
Section 291/265 interest disallowance532 38 918 66 
Company-owned life insurance income(945)(938)(1,572)(1,656)
Tax-exempt income(5,018)(4,313)(9,745)(7,996)
State income taxes8,552 4,085 16,693 758 
Interim period effective rate adjustment993 (3,967)(723)3,073 
Tax credit investments - federal(2,526)(1,292)(5,051)(2,561)
Officer compensation limitation1,040 402 2,080 651 
Non-deductible FDIC premiums2,037 885 4,147 1,371 
Other, net(195)(225)(582)(812)
Income tax expense (benefit)$47,393 $24,964 $88,814 $16,250 
Effective tax rate23.4 %17.8 %22.8 %15.7 %
The provision for income taxes was recorded at June 30, 2023 and 2022 based on the current estimate of the effective annual rate.
The higher effective tax rate during the three and six months ended June 30, 2023 compared to the same periods in 2022 was primarily the result of an increase in pre-tax book income combined with smaller increases in tax-exempt income and tax credits. Other contributing factors were increases in non-deductible officer compensation and non-deductible FDIC premiums as well as the First Midwest merger in February 2022.
Three Months Ended
March 31,
(dollars in thousands)20242023
Provision at statutory rate of 21%$32,082 $39,484 
Tax-exempt income:
Tax-exempt interest(4,958)(4,486)
Section 291/265 interest disallowance885 386 
Company-owned life insurance income(694)(627)
Tax-exempt income(4,767)(4,727)
State income taxes5,147 8,142 
Interim period effective rate adjustment944 (1,717)
Tax credit investments - federal(3,055)(2,526)
Officer compensation limitation765 1,040 
Non-deductible FDIC premiums1,747 2,110 
Other, net(375)(385)
Income tax expense$32,488 $41,421 
Effective tax rate21.3 %22.0 %
Net Deferred Tax Assets
Net deferred tax assets are included in other assets on the balance sheet. At June 30, 2023,March 31, 2024, net deferred tax assets totaled $431.2$418.3 million, compared to $435.8$423.3 million at December 31, 2022.2023. No valuation allowance was required on the Company’s deferred tax assets at March 31, 2024 or December 31, 2023.
The Company’s retained earnings at June 30, 2023March 31, 2024 included an appropriation for acquired thrifts’ tax bad debt allowances totaling $58.6 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.
No valuation allowance was recorded at June 30, 2023 or December 31, 2022 because, based on current expectations, Old National believes it will generate sufficient income in future years to realize deferred tax assets.  Old National has federal net operating loss carryforwards totaling $72.7$60.1 million at June 30, 2023March 31, 2024 and $81.5$63.6 million at December 31, 2022.2023. This federal net operating loss was acquired from the acquisition of Anchor BanCorp Wisconsin Inc. in 2016 and First Midwest Bancorp, Inc. in 2022. If not used, the federal net operating loss carryforwards will begin expiring in 2030 and later. Old National has recorded state net operating loss carryforwards totaling $118.5$114.2 million at June 30, 2023March 31, 2024 and $124.4$116.9 million at December 31, 2022.2023. 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.
37


NOTE 15 – DERIVATIVE FINANCIAL INSTRUMENTS
As part of our overall interest rate risk management, Old National uses derivative instruments, including interest rate swaps, collars, caps, and floors. The notional amount does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual agreements. Derivative instruments are recognized on the balance sheet at their fair value and are not reported on a net basis.
Credit risk arises from the possible inability of counterparties to meet the terms of their contracts. Old National’s exposure is limited to the termination value of the contracts rather than the notional, principal, or contract amounts. There are provisions in our agreements with the counterparties that allow for certain unsecured credit exposure up to an agreed threshold. Exposures in excess of the agreed thresholds are collateralized. In addition, we minimize credit risk through credit approvals, limits, and monitoring procedures.
34


Derivatives Designated as Hedges
Subsequent changes in fair value for a hedging instrument that has been designated and qualifies as part of a hedging relationship are accounted for in the following manner:
Cash flow hedges: changes in fair value are recognized as a component in other comprehensive income (loss).
Fair value hedges: changes in fair value are recognized concurrently in earnings.
As long as a hedging instrument is designated and the results of the effectiveness testing support that the instrument qualifies for hedge accounting treatment, 100% 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 $250.0 million notional amount at June 30, 2023 and $150.0 million notional amount at both March 31, 2024 and December 31, 2022.2023. Interest rate swaps, collars, and floors related to variable-rate commercial loan pools were designated as cash flow hedges totaling $1.4$1.8 billion notional amount at June 30, 2023March 31, 2024 and $1.9$1.6 billion notional amount at December 31, 2022.2023. 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 $700.0$900.0 million notional amount at June 30, 2023both March 31, 2024 and $300.0 million notional amount at December 31, 2022.2023. Interest rate swaps of certain available-for-sale investment securities were designated as fair value hedges totaling $910.0$998.1 million notional amount at both June 30, 2023March 31, 2024 and December 31, 2022.2023. The hedges were determined to be effective during all periods presented and we expect them to remain effective during the remaining terms.
38


The following table summarizes Old National’s derivatives designated as hedges:
June 30, 2023December 31, 2022
Fair ValueFair Value
March 31, 2024March 31, 2024December 31, 2023
Fair ValueFair Value
(dollars in thousands)(dollars in thousands)Notional
Assets (1)
Liabilities (2)
Notional
Assets (1)
Liabilities (2)
(dollars in thousands)Notional
Assets (1)
Liabilities (2)
Notional
Assets (1)
Liabilities (2)
Cash flow hedgesCash flow hedges
Interest rate collars and floors on loan pools$1,400,000 $2,169 $15,563 $1,900,000 $11,764 $47,859 
Interest rate swaps on borrowings (3)(4)
250,000   150,000 — — 
Interest rate swaps, collars, and floors on loan
pools
Interest rate swaps, collars, and floors on loan
pools
Interest rate swaps, collars, and floors on loan
pools
Interest rate swaps on borrowings (3)
Fair value hedgesFair value hedges
Interest rate swaps on investment securities (3)
Interest rate swaps on investment securities (3)
Interest rate swaps on investment securities (3)
Interest rate swaps on investment securities (3)
909,957   909,957 — — 
Interest rate swaps on borrowings (3)
Interest rate swaps on borrowings (3)
700,000   300,000 — — 
TotalTotal$2,169 $15,563 $11,764 $47,859 
(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.
35

(4)
Gross totals include maturing LIBOR and replacement SOFR interest rate swaps executed as part of reference rate reform.
The effect of derivative instruments in fair value hedging relationships on the consolidated statements of income were as follows:
(dollars in thousands)Gain (Loss)
Recognized
in Income on
Related
Hedged
Items
Derivatives in
Fair Value Hedging
Relationships
Location of Gain or
(Loss) Recognized in
Income on Derivative
Gain (Loss)
Recognized
in Income on
Derivative
Hedged Items
in Fair Value
Hedging
Relationships
Location of Gain or
(Loss) Recognized in
in Income on Related
Hedged Item
Three Months Ended
June 30, 2023
Interest rate contractsInterest income/(expense)$(11,101)Fixed-rate debtInterest income/(expense)$10,956 
Interest rate contractsInterest income/(expense)24,846 Fixed-rate
investment
securities
Interest income/(expense)(24,867)
Total$13,745 $(13,911)
Three Months Ended
June 30, 2022
Interest rate contractsInterest income/(expense)$(2,524)Fixed-rate debtInterest income/(expense)$2,600 
Interest rate contractsInterest income/(expense)53,779 Fixed-rate
investment
securities
Interest income/(expense)(53,762)
Total$51,255 $(51,162)
Six Months Ended
June 30, 2023
Interest rate contractsInterest income/(expense)$(8,948)Fixed-rate debtInterest income/(expense)$8,738 
Interest rate contractsInterest income/(expense)(38,269)Fixed-rate
investment
securities
Interest income/(expense)38,384 
Total$(47,217)$47,122 
Six Months Ended
June 30, 2022
Interest rate contractsInterest income/(expense)$(7,357)Fixed-rate debtInterest income/(expense)$7,555 
Interest rate contractsInterest income/(expense)111,433 Fixed-rate
investment
securities
Interest income/(expense)(111,791)
Total$104,076 $(104,236)
39


(dollars in thousands)Gain (Loss)
Recognized
in Income on
Related
Hedged
Items
Derivatives in
Fair Value Hedging
Relationships
Location of Gain or
(Loss) Recognized in
Income on Derivative
Gain (Loss)
Recognized
in Income on
Derivative
Hedged Items
in Fair Value
Hedging
Relationships
Location of Gain or
(Loss) Recognized in
in Income on Related
Hedged Item
Three Months Ended
March 31, 2024
Interest rate contractsInterest income/(expense)$(13,970)Fixed-rate debtInterest income/(expense)$14,127 
Interest rate contractsInterest income/(expense)25,848 Fixed-rate
investment
securities
Interest income/(expense)(25,903)
Total$11,878 $(11,776)
Three Months Ended
March 31, 2023
Interest rate contractsInterest income/(expense)$2,153 Fixed-rate debtInterest income/(expense)$(2,218)
Interest rate contractsInterest income/(expense)(63,115)Fixed-rate
investment
securities
Interest income/(expense)63,251 
Total$(60,962)$61,033 
The effect of derivative instruments in cash flow hedging relationships on the consolidated statements of income were as follows:
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
(dollars in thousands)(dollars in thousands) 2024202320242023
Three Months Ended
June 30,
(dollars in thousands) 2023202220232022
Derivatives in
Cash Flow Hedging
Relationships
Derivatives in
Cash Flow Hedging
Relationships
Location of Gain or
(Loss) Reclassified
from AOCI into Income
Gain (Loss)
Recognized in Other
Comprehensive
Income on Derivative
Gain (Loss)
Reclassified from
AOCI into
Income
Interest rate contractsInterest income/(expense)$13,272 $(3,418)$31,078 $219 
Derivatives in
Cash Flow Hedging
Relationships
 Six Months Ended
June 30,
 2023202220232022
Derivatives in
Cash Flow Hedging
Relationships
Derivatives in
Cash Flow Hedging
Relationships
Location of Gain or
(Loss) Reclassified
from AOCI into Income
Gain (Loss)
Recognized in Other
Comprehensive
Income on Derivative
Gain (Loss)
Reclassified from
AOCI into
Income
Location of Gain or
(Loss) Reclassified
from AOCI into Income
Gain (Loss)
Recognized in Other
Comprehensive
Income on Derivative
Gain (Loss)
Reclassified from
AOCI into
Income
Interest rate contractsInterest rate contractsInterest income/(expense)$19,875 $(12,924)$23,441 $888 
Amounts reported in AOCI related to cash flow hedges will be reclassified to interest income or interest expense as interest payments are received or paid on Old National’s derivative instruments. During the next 12 months, we estimate that $5.6$23.3 million will be reclassified to interest income and $8.9$4.5 million will be reclassified to interest expense.
Derivatives Not Designated as Hedges
Commitments to fund certain mortgage loans (interest rate lock commitments) and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. These derivative contracts do not qualify for hedge accounting. At June 30,March 31, 2024, the notional amounts of the interest rate lock commitments were $68.0 million and forward commitments were $77.6 million. At December 31, 2023, the notional amounts of the interest rate lock commitments were $45.2$25.2 million and forward commitments were $61.1 million.  At December 31, 2022, the notional amounts of the interest rate lock commitments were $21.4 million and forward commitments were $30.3$39.5 million. It is our practice to enter into forward commitments for the future delivery of residential mortgage loans to third party investors when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from our commitment to fund the loans.
Old National also enters into derivative instruments for the benefit of its clients. At June 30, 2023, theThe notional amounts of these customer derivative instruments and the offsetting counterparty derivative instruments were $5.6$5.9 billion at March 31, 2024 and $8.2$6.0 billion respectively. Derivative instruments as of June 30, 2023 include maturing LIBOR derivative instruments as well as replacement derivative instruments tied to SOFR executed as part of the reference rate reform. The total notional amounts of these replacement derivative instruments were $2.6 billion as of June 30, 2023. Remaining derivative instruments referencing LIBOR will mature after June 30, 2023. Atat December 31, 2022, customer derivative instruments and offsetting counterparty derivative instruments were $5.2 billion.2023. These derivative contracts do not qualify for hedge accounting. These instruments include interest rate swaps, caps, and collars. Commonly, Old National will economically hedge significant exposures related to these derivative contracts entered into for the benefit of clients by entering into offsetting contracts with approved, reputable, independent counterparties with substantially matching terms.
Old National enters into derivative financial instruments as part of its foreign currency risk management strategies. These derivative instruments consist of foreign currency forward contracts to accommodate the business
36


needs of its clients. Old National does not designate these foreign currency forward contracts for hedge accounting treatment.
40


The following table summarizes Old National’s derivatives not designated as hedges:
June 30, 2023December 31, 2022
Fair ValueFair Value
March 31, 2024March 31, 2024December 31, 2023
Fair ValueFair Value
(dollars in thousands)(dollars in thousands)Notional
Assets (1)
Liabilities (2)
Notional
Assets (1)
Liabilities (2)
(dollars in thousands)Notional
Assets (1)
Liabilities (2)
Notional
Assets (1)
Liabilities (2)
Interest rate lock commitmentsInterest rate lock commitments$45,216 $330 $ $21,401 $93 $— 
Forward mortgage loan contractsForward mortgage loan contracts61,084 164  30,330 32 — 
Customer interest rate swaps (4)
5,589,059 5,621 318,890 5,220,363 5,676 326,924 
Counterparty interest rate swaps (3)(4)
8,206,655 175,581 5,662 5,220,363 151,111 5,711 
Customer foreign currency forward contracts12,851 441 22 8,341 253 42 
Counterparty foreign currency forward contracts12,894 18 262 8,297 72 168 
Customer interest rate swaps
Counterparty interest rate swaps (3)
Customer foreign currency contracts
Counterparty foreign currency contracts
TotalTotal$182,155 $324,836 $157,237 $332,845 
(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.
(4)Gross totals include maturing LIBOR and replacement SOFR interest rate swaps executed as part of reference rate reform.
The effect of derivatives not designated as hedging instruments on the consolidated statements of income were as follows:
Three Months Ended
March 31,
Three Months Ended
March 31,
(dollars in thousands)(dollars in thousands) 20242023
Three Months Ended
June 30,
(dollars in thousands) 20232022
Derivatives Not Designated as
Hedging Instruments
Location of Gain or (Loss)
Recognized in Income on
Derivative
Gain (Loss)
Recognized in Income on
Derivative
Interest rate contracts (1)
Interest rate contracts (1)
Interest rate contracts (1)
Interest rate contracts (1)
Other income/(expense)$837 $449 
Mortgage contractsMortgage contractsMortgage banking revenue262 (1,503)
Foreign currency contractsForeign currency contractsOther income/(expense)(12)65 
TotalTotal $1,087 $(989)
 Six Months Ended
June 30,
 20232022
Derivatives Not Designated as
Hedging Instruments
Location of Gain or (Loss)
Recognized in Income on
Derivative
Gain (Loss)
Recognized in Income on
Derivative
Interest rate contracts (1)
Other income/(expense)$699 $950 
Mortgage contractsMortgage banking revenue369 (1,374)
Foreign currency contractsOther income/(expense)(13)38 
Total $1,055 $(386)
(1)Includes the valuation differences between the customer and offsetting swaps.
Fair Value of Offsetting Derivatives
Certain derivative instruments are subject to master netting agreements with counterparties that provide rights of setoff. The Company records these transactions at their gross fair values and does not offset derivative assets and liabilities in the Consolidated Balance Sheet. The following table presents the fair value of the Company’s derivatives and offsetting positions:
March 31, 2024December 31, 2023
(dollars in thousands)AssetsLiabilitiesAssetsLiabilities
Gross amounts recognized$167,479 $297,403 $166,302 $268,916 
Less: amounts offset in the Consolidated Balance Sheet  — — 
Net amount presented in the Consolidated Balance Sheet167,479 297,403 166,302 268,916 
Gross amounts not offset in the Consolidated Balance Sheet
Offsetting derivative positions(26,443)(26,443)(39,360)(39,360)
Cash collateral pledged (134,459)— (97,840)
Net credit exposure$141,036 $136,501 $126,942 $131,716 
37


NOTE 16 – COMMITMENTS, CONTINGENCIES, AND FINANCIAL GUARANTEES
Litigation
At June 30, 2023,March 31, 2024, there were certain legal proceedings pending against the Company and its subsidiaries in the ordinary course of business. While the outcome of any legal proceeding is inherently uncertain, based on information currently available, the Company’s management does not expect that any potential liabilities arising from pending legal matterslitigation will have a material adverse effect on the Company’s business, financial position, or results of operations.
Credit-Related Financial Instruments
Old National holds instruments, in the normal course of business with clients, that are considered financial guarantees and are recorded at fair value. Standby letters of credit guarantees are issued in connection with
41


agreements made by clients to counterparties. Standby letters of credit are contingent upon failure of the client to perform the terms of the underlying contract. Credit risk associated with standby letters of credit is essentially the same as that associated with extending loans to clients and is subject to normal credit policies. The term of these standby letters of credit is typically one year or less. These commitments are not recorded in the consolidated financial statements.
The following table summarizes Old National Bank’s unfunded loan commitments and standby letters of credit:
(dollars in thousands)(dollars in thousands)June 30,
2023
December 31,
2022
(dollars in thousands)March 31,
2024
December 31,
2023
Unfunded loan commitmentsUnfunded loan commitments$9,380,354 $8,979,334 
Standby letters of credit (1)
Standby letters of credit (1)
182,418 174,070 
(1)Notional amount, which represents the maximum amount of future funding requirements. The carrying value was $0.9$1.4 million at June 30, 2023March 31, 2024 and $0.8$1.3 million at December 31, 2022.2023.
At June 30, 2023,March 31, 2024, approximately 4% of the unfunded loan commitments had fixed rates, with the remainder having floating rates ranging from 0%2.10% to 22%22.49%. The allowance for unfunded loan commitments totaled $37.0$26.3 million at June 30, 2023March 31, 2024 and $32.2$31.2 million at December 31, 2022.2023.
Old National is a party in risk participation transactions of interest rate swaps, which had total notional amounts of $441.9$589.2 million at June 30, 2023March 31, 2024 and $398.9$557.8 million at December 31, 2022.
Visa Class B Restricted Shares
In 2008, Old National received Visa Class B restricted shares as part of Visa’s initial public offering.  These shares are transferable only under limited circumstances until they can be converted into the publicly traded Class A common shares.  This conversion will not occur until the final settlement of certain litigation for which Visa is indemnified by the holders of Visa’s Class B shares, including Old National.  Visa funded an escrow account from its initial public offering to settle these litigation claims.  Increases in litigation claims requiring Visa to fund the escrow account due to insufficient funds will result in a reduction of the conversion ratio of each Visa Class B share to unrestricted Class A shares.  As of June 30, 2023, the conversion ratio was 1.5902.  Based on the existing transfer restriction and the uncertainty of the outcome of the Visa litigation, the 65,466 Class B shares that Old National owns at June 30, 2023 are carried at a zero cost basis and are included in other assets with our equity securities that have no readily determinable fair value.2023.
NOTE 17 – FAIR VALUE
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
4238


Old National used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:
Investment securities and equity securities: The fair values for investment securities and equity securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Discounted cash flows are calculated using swap and LIBORSOFR curves plus spreads that adjust for loss severities, volatility, credit risk, and optionality. During times when trading is more liquid, broker quotes are used (if available) to validate the model. Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.
Loans held for saleheld-for-sale: The fair value of loans held for saleheld-for-sale is determined using quoted prices for a similar asset, adjusted for specific attributes of that loan (Level 2).
Derivative financial instruments: The fair values of derivative financial instruments are based on derivative valuation modelsmarket quotes developed using market dataobservable inputs as of the valuation date (Level 2).
4339


Recurring Basis
Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which we have elected the fair value option, are summarized below: 
Fair Value Measurements at June 30, 2023 Using
Fair Value Measurements at March 31, 2024 UsingFair Value Measurements at March 31, 2024 Using
(dollars in thousands)(dollars in thousands)Carrying ValueQuoted Prices in
Active Markets for
Identical Assets (Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(dollars in thousands)Carrying ValueQuoted Prices in
Active Markets for
Identical Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs
(Level 3)
Financial AssetsFinancial Assets    Financial Assets   
Equity securitiesEquity securities$71,953 $71,953 $ $ 
Investment securities available-for-sale:Investment securities available-for-sale:
U.S. Treasury
U.S. Treasury
U.S. TreasuryU.S. Treasury312,412 312,412   
U.S. government-sponsored entities and agenciesU.S. government-sponsored entities and agencies1,174,356  1,174,356  
Mortgage-backed securities - AgencyMortgage-backed securities - Agency4,097,771  4,097,771  
States and political subdivisionsStates and political subdivisions598,782  598,782  
Pooled trust preferred securitiesPooled trust preferred securities10,994  10,994  
Other securitiesOther securities306,200  306,200  
Loans held for sale114,369  114,369  
Loans held-for-sale
Derivative assetsDerivative assets184,324  184,324  
Financial LiabilitiesFinancial Liabilities
Derivative liabilitiesDerivative liabilities340,399  340,399  
Derivative liabilities
Derivative liabilities
 Fair Value Measurements at December 31, 2022 Using  Fair Value Measurements at December 31, 2023 Using
(dollars in thousands)(dollars in thousands)Carrying ValueQuoted Prices in
Active Markets for
Identical Assets (Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(dollars in thousands)Carrying ValueQuoted Prices in
Active Markets for
Identical Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs
(Level 3)
Financial AssetsFinancial Assets    Financial Assets  
Equity securitiesEquity securities$52,507 $52,507 $— $— 
Investment securities available-for-sale:Investment securities available-for-sale:
U.S. TreasuryU.S. Treasury200,927 200,927 — — 
U.S. Treasury
U.S. Treasury
U.S. government-sponsored entities and agenciesU.S. government-sponsored entities and agencies1,175,080 — 1,175,080 — 
Mortgage-backed securities - AgencyMortgage-backed securities - Agency4,369,902 — 4,369,902 — 
States and political subdivisionsStates and political subdivisions663,852 — 663,852 — 
Pooled trust preferred securitiesPooled trust preferred securities10,811 — 10,811 — 
Other securitiesOther securities353,140 — 353,140 — 
Loans held for sale11,926 — 11,926 — 
Loans held-for-sale
Derivative assetsDerivative assets169,001 — 169,001 — 
Financial LiabilitiesFinancial Liabilities
Derivative liabilitiesDerivative liabilities380,704 — 380,704 — 
Derivative liabilities
Derivative liabilities
Non-Recurring Basis
Assets measured at fair value at June 30, 2023March 31, 2024 on a non-recurring basis are summarized below:
 Fair Value Measurements at June 30, 2023 Using  Fair Value Measurements at March 31, 2024 Using
(dollars in thousands)(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)
(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)
Collateral Dependent Loans:Collateral Dependent Loans:    Collateral Dependent Loans:   
Commercial loansCommercial loans$12,615 $ $ $12,615 
Commercial real estate loansCommercial real estate loans85,891   85,891 
Foreclosed Assets:Foreclosed Assets:
CommercialCommercial1,560   1,560 
Commercial
Commercial
4440


Commercial and commercial real estate loans that are deemed collateral dependent are valued using the discounted cash flows. The liquidation amounts are based on the fair value of the underlying collateral using the most recently available appraisals with certain adjustments made based on the type of property, age of appraisal, current status of the property, and other related factors to estimate the current value of the collateral. These commercial and commercial real estate loans had a principal amount of $127.9$142.2 million, with a valuation allowance of $29.4$32.7 million at June 30, 2023.March 31, 2024. Old National recorded provision expense associated with these loans totaling $7.9 million and $19.8$9.6 million for the three and six months ended June 30, 2023, respectively.  Old National recorded provision expense associated with commercial and commercial real estate loans that were deemed collateral dependent totaling $12.8 million and $28.6March 31, 2024, compared to $11.9 million for the three and six months ended June 30, 2022, respectively.March 31, 2023.
Other real estate owned and other repossessed property is measured at fair value less costs to sell on a non-recurring basis. Old National did not have any other real estate owned or other repossessed property measured at fair value on a non-recurring basis and had a net carrying amount of $1.6 million at June 30, 2023.March 31, 2024. There were $0.1 million ofno write-downs on other real estate owned for the three and six months ended June 30, 2023. There were write-downs totaling $0.1 million and $0.3 millionMarch 31, 2024, compared to $27 thousand for the three and six months ended June 30, 2022, respectively.
Loan servicing rights are evaluated for impairment based upon the fair value of the rights as compared to the carrying amount.  If the carrying amount of an individual tranche exceeds fair value, impairment is recorded on that tranche so that the servicing asset is carried at fair value.  Fair value is determined at a tranche level, based on market prices for comparable mortgage servicing contracts when available, or alternatively based on a valuation model that calculates the present value of estimated future net servicing income.  The valuation model utilizes a discount rate, weighted average prepayment speed, and other economic factors that market participants would use in estimating future net servicing income and that can be validated against available market data (Level 2).  There was no valuation allowance for loan servicing rights with impairments at June 30, 2023 and no impairments or recoveries recorded during the three or six months ended June 30,March 31, 2023. Old National recorded immaterial recoveries associated with loan servicing rights during the three and six months ended June 30, 2022.
Assets measured at fair value at December 31, 20222023 on a non-recurring basis are summarized below:
 Fair Value Measurements at December 31, 2022 Using  Fair Value Measurements at December 31, 2023 Using
(dollars in thousands)(dollars in thousands)Carrying ValueQuoted Prices in
Active Markets for
Identical Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
(dollars in thousands)Carrying ValueQuoted Prices in
Active Markets for
Identical Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Collateral Dependent Loans:Collateral Dependent Loans:    Collateral Dependent Loans:   
Commercial loansCommercial loans$22,562 $— $— $22,562 
Commercial real estate loansCommercial real estate loans48,026 — — 48,026 
Foreclosed Assets:
Commercial real estate
Commercial real estate
Commercial real estate
At December 31, 2022,2023, commercial and commercial real estate loans that are deemed collateral dependent had a principal amount of $92.0$134.3 million, with a valuation allowance of $21.5$27.9 million.
45


The table below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy:
(dollars in thousands)Fair ValueValuation TechniquesUnobservable Input
Range (Weighted Average) (1)
June 30, 2023March 31, 2024    
Collateral Dependent Loans    
Commercial loans$12,61526,057 DiscountedDiscount for type of property,9%2% - 50% (35%38% (29%)
 cash flowage of appraisal, and current status
Commercial real estate loans85,89183,492 DiscountedDiscount for type of property,0%1% - 45%34% (13%)
cash flowage of appraisal, and current status
Foreclosed Assets
Commercial real estate1,5601,669 Fair value ofDiscount for type of property,4% - 17% (6%8% (4%)
collateralage of appraisal, and current status
December 31, 20222023  
Collateral Dependent Loans  
Commercial loans$22,56211,017 DiscountedDiscount for type of property,10%5% - 47% (28%37% (27%)
 cash flowage of appraisal, and current status
Commercial real estate loans48,02695,457 DiscountedDiscount for type of property,1%2% - 26% (11%38% (16%)
 cash flowage of appraisal, and current status
Foreclosed Assets
Commercial real estate1,669 Fair value ofDiscount for type of property,4% - 8% (4%)
collateralage of appraisal, and current status
(1)Unobservable inputs were weighted by the relative fair value of the instruments.
Fair Value Option
Old National may elect to report most financial instruments and certain other items at fair value on an instrument-by-instrument basis with changes in fair value reported in net income. After the initial adoption, the election is made at the acquisition of an eligible financial asset, financial liability, or firm commitment or when certain specified reconsideration events occur. The fair value election may not be revoked once an election is made.
41


Loans Held For SaleHeld-For-Sale
Old National has elected the fair value option for loans held for sale.held-for-sale. For these loans, interest income is recorded in the consolidated statements of income based on the contractual amount of interest income earned on the financial assets (except any that are on nonaccrual status). None of these loans are 90 days or more past due, nor are any on nonaccrual status. Interest income for loans held for saleheld-for-sale is included in the income statement totaling $0.3 million and $0.5for the three months ended March 31, 2024, compared to $0.2 million for the three and six months ended June 30, 2023, respectively, compared to $0.7 million and $1.2 million for the three and six months ended June 30, 2022, respectively.March 31, 2023.
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.
The difference between the aggregate fair value and the aggregate remaining principal balance for loans for which the fair value option has been elected was as follows: 
(dollars in thousands)Aggregate Fair ValueDifference Contractual Principal
June 30, 2023   
Loans held for sale$114,369 $387 $113,982 
December 31, 2022
Loans held for sale$11,926 $221 $11,705 
(dollars in thousands)Aggregate
Fair Value
Difference Contractual Principal
March 31, 2024   
Loans held-for-sale$19,418 $414 $19,004 
December 31, 2023
Loans held-for-sale$32,006 $621 $31,385 
Accrued interest at period end is included in the fair value of the instruments.
46


The following table presents the amount of gains and losses from fair value changes included in income before income taxes for financial assets carried at fair value:
(dollars in thousands)Other
Gains and (Losses)
Interest IncomeInterest (Expense)Total Changes
in Fair Values
Included in
Current Period Earnings
Three Months Ended June 30, 2023    
Loans held for sale$229 $ $(7)$222 
Three Months Ended June 30, 2022
Loans held for sale$278 $$— $287 
Six Months Ended June 30, 2023
Loans held for sale$176 $ $(10)$166 
Six Months Ended June 30, 2022
Loans held for sale$(1,065)$$(3)$(1,059)
(dollars in thousands)Other
Gains and (Losses)
Interest IncomeInterest (Expense)Total Changes
in Fair Values
Included in
Current Period Earnings
Three Months Ended March 31, 2024
Loans held-for-sale$(202)$ $(5)$(207)
Three Months Ended March 31, 2023
Loans held-for-sale$(53)$— $(3)$(56)
4742


Financial Instruments Not Carried at Fair Value
The carrying amounts and estimated exit price fair values of financial instruments not carried at fair value were as follows: 
 Fair Value Measurements at June 30, 2023 Using  Fair Value Measurements at March 31, 2024 Using
(dollars in thousands)(dollars in thousands)Carrying ValueQuoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
(dollars in thousands)Carrying ValueQuoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Financial AssetsFinancial Assets    Financial Assets   
Cash, due from banks, money market,
and other interest-earning investments
Cash, due from banks, money market,
and other interest-earning investments
$1,197,886 $1,197,886 $ $ 
Investment securities held-to-maturity:Investment securities held-to-maturity:
U.S. government-sponsored entities and agenciesU.S. government-sponsored entities and agencies822,517  655,446  
U.S. government-sponsored entities and agencies
U.S. government-sponsored entities and agencies
Mortgage-backed securities - AgencyMortgage-backed securities - Agency1,070,687  928,496  
State and political subdivisionsState and political subdivisions1,161,793  1,019,116  
Loans, net:Loans, net:
Loans, net:
Loans, net:
Commercial
Commercial
CommercialCommercial9,569,141   9,330,160 
Commercial real estateCommercial real estate13,312,233   12,907,098 
Residential real estateResidential real estate6,664,059   5,831,513 
Consumer creditConsumer credit2,586,485   2,537,633 
Accrued interest receivableAccrued interest receivable205,198 801 54,449 149,948 
Financial LiabilitiesFinancial Liabilities
Deposits:Deposits:
Deposits:
Deposits:
Noninterest-bearing demand deposits
Noninterest-bearing demand deposits
Noninterest-bearing demand depositsNoninterest-bearing demand deposits$10,532,838 $10,532,838 $ $ 
Checking, NOW, savings, and money market
interest-bearing deposits
Checking, NOW, savings, and money market
interest-bearing deposits
20,432,813 20,432,813   
Time depositsTime deposits5,265,664  5,209,887  
Federal funds purchased and interbank borrowingsFederal funds purchased and interbank borrowings136,060 136,060   
Securities sold under agreements to repurchaseSecurities sold under agreements to repurchase311,447 311,447   
FHLB advancesFHLB advances4,771,183  4,526,920  
Other borrowingsOther borrowings815,318  781,468  
Accrued interest payableAccrued interest payable42,897  42,897  
Standby letters of creditStandby letters of credit949   949 
Off-Balance Sheet Financial InstrumentsOff-Balance Sheet Financial Instruments
Off-Balance Sheet Financial Instruments
Off-Balance Sheet Financial Instruments
Commitments to extend creditCommitments to extend credit$ $ $ $3,621 
Commitments to extend credit
Commitments to extend credit
4843


 Fair Value Measurements at December 31, 2022 Using  Fair Value Measurements at December 31, 2023 Using
(dollars in thousands)(dollars in thousands)Carrying ValueQuoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
(dollars in thousands)Carrying ValueQuoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Financial AssetsFinancial Assets    Financial Assets   
Cash, due from banks, money market,
and other interest-earning investments
Cash, due from banks, money market,
and other interest-earning investments
$728,412 $728,412 $— $— 
Investment securities held-to-maturity:Investment securities held-to-maturity:
U.S. government-sponsored entities and agenciesU.S. government-sponsored entities and agencies819,168 — 656,358 — 
U.S. government-sponsored entities and agencies
U.S. government-sponsored entities and agencies
Mortgage-backed securities - AgencyMortgage-backed securities - Agency1,106,817 — 982,963 — 
State and political subdivisionsState and political subdivisions1,163,162 — 1,004,361 — 
Loans, net:Loans, net:
Commercial
Commercial
CommercialCommercial9,386,862 — — 9,066,583 
Commercial real estateCommercial real estate12,317,825 — — 11,867,851 
Residential real estateResidential real estate6,438,525 — — 5,372,491 
Consumer creditConsumer credit2,676,758 — — 2,557,115 
Accrued interest receivableAccrued interest receivable190,521 758 52,081 137,682 
Financial LiabilitiesFinancial Liabilities
Deposits:Deposits:
Deposits:
Deposits:
Noninterest-bearing demand deposits
Noninterest-bearing demand deposits
Noninterest-bearing demand depositsNoninterest-bearing demand deposits$11,930,798 $11,930,798 $— $— 
Checking, NOW, savings, and money market
interest-bearing deposits
Checking, NOW, savings, and money market
interest-bearing deposits
20,056,252 20,056,252 — — 
Time depositsTime deposits3,013,780 — 2,976,389 — 
Federal funds purchased and interbank borrowingsFederal funds purchased and interbank borrowings581,489 581,489 — — 
Securities sold under agreements to repurchaseSecurities sold under agreements to repurchase432,804 432,804 — — 
FHLB advancesFHLB advances3,829,018 — 3,739,780 — 
Other borrowingsOther borrowings743,003 — 703,156 — 
Accrued interest payableAccrued interest payable19,547 — 19,547 — 
Standby letters of creditStandby letters of credit755 — — 755 
Off-Balance Sheet Financial InstrumentsOff-Balance Sheet Financial Instruments
Off-Balance Sheet Financial Instruments
Off-Balance Sheet Financial Instruments
Commitments to extend creditCommitments to extend credit$— $— $— $3,666 
Commitments to extend credit
Commitments to extend credit
The methods utilized to measure the fair value of financial instruments at June 30, 2023March 31, 2024 and December 31, 20222023 represent an approximation of exit price, however, an actual exit price may differ.
4944


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is an analysis and discussion of our results of operations for the three and six months ended June 30,March 31, 2024 compared to the three months ended March 31, 2023, and 2022, and financial condition as of June 30, 2023,March 31, 2024 compared to December 31, 2022.2023. This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes, as well as our 20222023 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 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 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. Factors that might cause such a difference include,statements, including, 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 useexpected 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 LIBOR and the transition to an alternative rate;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. WeOld National does not undertake noan obligation to publicly update anythese forward-looking statements whether as a result of new information, futureto reflect events or otherwiseconditions 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.
5045


FINANCIAL HIGHLIGHTS
The following table sets forth certain financial highlights of Old National for the previous five quarters:
Three Months Ended
Three Months EndedThree Months Ended
(dollars and shares in thousands,
except per share data)
(dollars and shares in thousands,
except per share data)
June 30,March 31,December 31,September 30,June 30,(dollars and shares in thousands,
except per share data)
March 31,December 31,September 30,June 30,March 31,
2023202220242023
Income Statement:Income Statement:
Net interest incomeNet interest income$382,171 $381,488 $391,090 $376,589 $337,472 
Taxable equivalent adjustment (1) (4)
5,825 5,666 5,378 4,950 4,314 
Net interest income - taxable equivalent basis (4)
387,996 387,154 396,468 381,539 341,786 
Provision for credit losses (2)
14,787 13,437 11,408 15,490 9,165 
Net interest income
Net interest income
Taxable equivalent adjustment (1) (3)
Net interest income - taxable equivalent basis (3)
Provision for credit losses
Noninterest incomeNoninterest income81,629 70,681 165,037 80,385 89,117 
Noninterest expense (2)
246,584 250,711 282,675 262,444 277,475 
Noninterest expense
Net income available to common shareholdersNet income available to common shareholders$151,003 $142,566 $196,701 $136,119 $110,952 
Per Common Share Data:Per Common Share Data:
Weighted average diluted common sharesWeighted average diluted common shares291,266 292,756 293,131 292,483 291,881 
Weighted average diluted common shares
Weighted average diluted common shares
Net income (diluted)Net income (diluted)$0.52 $0.49 $0.67 $0.47 $0.38 
Cash dividendsCash dividends0.14 0.14 0.14 $0.14 $0.14 
Common dividend payout ratio (3)
27 %29 %21 %30 %37 %
Common dividend payout ratio (2)
Common dividend payout ratio (2)
35 %32 %29 %27 %29 %
Book valueBook value$17.25 $17.24 $16.68 $16.05 $16.51 
Stock priceStock price13.94 14.42 17.98 16.47 14.79 
Tangible common book value (4)
10.03 9.98 9.42 8.75 9.23 
Tangible common book value (3)
Performance Ratios:Performance Ratios:
Return on average assetsReturn on average assets1.29 %1.25 %1.74 %1.22 %1.01 %
Return on average assets
Return on average assets0.98 %1.09 %1.22 %1.29 %1.25 %
Return on average common equityReturn on average common equity12.01 11.58 16.77 11.13 9.08 
Return on tangible common equity (4)
21.20 20.20 29.25 22.07 17.21 
Return on average tangible common equity (4)
21.35 21.03 31.53 20.49 16.93 
Net interest margin (4)
3.60 3.69 3.85 3.71 3.33 
Efficiency ratio (4)
51.22 52.81 49.12 55.26 62.72 
Efficiency ratio (prior presentation) (5)
N/A     N/A     56.17 62.70 
Return on average tangible common equity (3)
Return on average tangible common equity (3)
Return on average tangible common equity (3)
Net interest margin (3)
Efficiency ratio (3)
Net charge-offs (recoveries) to average loansNet charge-offs (recoveries) to average loans0.13 0.21 0.05 0.10 0.02 
Allowance for credit losses on loans to ending loansAllowance for credit losses on loans to ending loans0.93 0.94 0.98 0.99 0.97 
Allowance for credit losses (6) to ending loans
1.04 1.05 1.08 1.08 1.05 
Allowance for credit losses (4) to ending loans
Non-performing loans to ending loansNon-performing loans to ending loans0.91 0.74 0.81 0.81 0.78 
Balance Sheet:Balance Sheet:
Total loans
Total loans
Total loansTotal loans$32,432,473 $31,822,374 $31,123,641 $30,528,933 $29,553,648 
Total assetsTotal assets48,496,755 47,842,644 46,763,372 46,215,526 45,748,355 
Total depositsTotal deposits36,231,315 34,917,792 35,000,830 36,053,663 35,538,975 
Total borrowed fundsTotal borrowed funds6,034,008 6,740,454 5,586,314 4,264,750 4,384,411 
Total shareholders' equity5,292,095 5,277,426 5,128,595 4,943,383 5,078,783 
Total shareholders’ equity
Capital Ratios:Capital Ratios:
Risk-based capital ratios:Risk-based capital ratios:
Risk-based capital ratios:
Risk-based capital ratios:
Tier 1 common equity
Tier 1 common equity
Tier 1 common equityTier 1 common equity10.14 %9.98 %10.03 %9.88 %9.90 %10.76 %10.70 %10.41 %10.14 %9.98 %
Tier 1Tier 110.79 10.64 10.71 10.58 10.63 
TotalTotal12.14 11.96 12.02 11.84 12.03 
Leverage ratio (to average assets)Leverage ratio (to average assets)8.59 8.53 8.52 8.26 8.19 
Total equity to assets (averages)Total equity to assets (averages)10.96 11.00 10.70 11.18 11.22 
Tangible common equity to tangible assets (4)
6.33 6.37 6.18 5.82 6.20 
Tangible common equity to tangible assets (3)
Nonfinancial Data:Nonfinancial Data:
Full-time equivalent employeesFull-time equivalent employees4,021 4,023 3,967 4,008 4,196 
Full-time equivalent employees
Full-time equivalent employees
Banking centersBanking centers256 256 263 263 266 
(1)Calculated using the federal statutory tax rate in effect of 21% for all periods.
(2)Provision for unfunded loan commitments is included in the provision for credit losses. The reclassification of the provision for unfunded loan 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)(3)Represents a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for reconciliations to GAAP financial measures.
(5)Presented as calculated prior to December 31, 2022, which included the provision for unfunded loan commitments in noninterest expense. Management believes that removing the provision for unfunded loan commitments from this metric enhances comparability for peer comparison purposes.
(6)(4)Includes the allowance for credit losses on loans and unfunded loan commitments.
51


The following table sets forth certain financial highlights of Old National for the year-to-date periods:
Six Months Ended June 30,
(dollars and shares in thousands, except per share data)20232022
Income Statement:
Net interest income$763,659 $560,257 
Taxable equivalent adjustment (1) (4)
11,491 8,086 
Net interest income - taxable equivalent basis (4)
775,150 568,343 
Provision for credit losses (2)
28,224 117,901 
Noninterest income152,310 154,357 
Noninterest expense (2)
497,295 493,064 
Net income available to common shareholders$293,569 $81,349 
Per Common Share Data:
Weighted average diluted common shares291,870 260,253 
Net income (diluted)$1.01 $0.31 
Cash dividends0.28 $0.28 
Common dividend payout ratio (3)
28 %90 %
Book value$17.25 $16.51 
Stock price13.94 14.79 
Tangible common book value (4)
10.03 9.23 
Performance Ratios:
Return on average assets1.27 %0.43 %
Return on average common equity11.80 3.62 
Return on tangible common equity (4)
20.63 6.71 
Return on average tangible common equity (4)
21.19 6.84 
Net interest margin (4)
3.65 3.13 
Efficiency ratio (4)
52.01 66.59 
Efficiency ratio (prior presentation) (5)
N/A     68.13 
Net charge-offs (recoveries) to average loans0.17 0.04 
Allowance for credit losses on loans to ending loans0.93 0.97 
Allowance for credit losses (6) to ending loans
1.04 1.05 
Non-performing loans to ending loans0.91 0.78 
Balance Sheet:
Total loans$32,432,473 $29,553,648 
Total assets48,496,755 45,748,355 
Total deposits36,231,315 35,538,975 
Total borrowed funds6,034,008 4,384,411 
Total shareholders' equity5,292,095 5,078,783 
Capital Ratios:
Risk-based capital ratios:
Tier 1 common equity10.14 %9.90 %
Tier 110.79 10.63 
Total12.14 12.03 
Leverage ratio (to average assets)8.59 8.19 
Total equity to assets (averages)10.98 11.57 
Tangible common equity to tangible assets (4)
6.33 6.20 
Nonfinancial Data:
Full-time equivalent employees4,021 4,196 
Banking centers256 266 
(1)Calculated using the federal statutory tax rate in effect of 21% for all periods.
(2)Provision for unfunded loan commitments is included in the provision for credit losses. The reclassification of the provision for unfunded loan 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 to the “Non-GAAP Financial Measures” section for reconciliations to GAAP financial measures.
(5)Presented as calculated prior to December 31, 2022, which included the provision for unfunded loan commitments in noninterest expense. Management believes that removing the provision for unfunded loan commitments from this metric enhances comparability for peer comparison purposes.
(6)Includes the allowance for credit losses on loans and unfunded loan commitments.
5246


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 investorsusers 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 gain on sale of Visa Class B restricted shares, the expense associated with the distribution of excess pension assets, FDIC special assessment expense, contract termination charges, merger-related charges associated with completed and pending acquisitions, debt securities gains/losses, 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 analysts and investors,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 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.
5347


The following table presents GAAP to non-GAAP reconciliations for the previous five quarters:
Three Months Ended
Three Months EndedThree Months Ended
(dollars and shares in thousands,
except per share data)
(dollars and shares in thousands,
except per share data)
June 30,March 31,December 31,September 30,June 30,(dollars and shares in thousands,
except per share data)
March 31,December 31,September 30,June 30,March 31,
2023202320222022202220242023
Net income per common share:
Net income applicable to common shares
Net income applicable to common shares
Net income applicable to common shares
Adjustments:
Distribution of excess pension assets expense
Distribution of excess pension assets expense
Distribution of excess pension assets expense
FDIC special assessment
Merger-related charges
Debt securities (gains) losses
Gain on sale of Visa Class B restricted shares
Contract termination charge
Louisville expenses
Property optimization charges
Less: tax effect on net total adjustments (2)
Net income applicable to common shares, adjusted (1)
Weighted average diluted common shares outstanding
Net income per common share, diluted
Adjusted net income per common share, diluted (1)
Tangible common book value:Tangible common book value:
Shareholders' common equity$5,048,376 $5,033,707 $4,884,876 $4,699,664 $4,835,064 
Shareholders’ common equity
Shareholders’ common equity
Shareholders’ common equity
Deduct: Goodwill and intangible assetsDeduct: Goodwill and intangible assets2,112,875 2,118,935 2,125,121 2,135,792 2,131,815 
Tangible shareholders' common equity (1)
$2,935,501 $2,914,772 $2,759,755 $2,563,872 $2,703,249 
Tangible shareholders’ common equity (1)
Tangible shareholders’ common equity (1)
Tangible shareholders’ common equity (1)
Period end common sharesPeriod end common shares292,597 291,922 292,903 292,880 292,893 
Tangible common book value (1)
Tangible common book value (1)
10.03 9.98 9.42 8.75 9.23 
Return on tangible common equity:
Return on average tangible common equity:
Net income applicable to common shares
Net income applicable to common shares
Net income applicable to common sharesNet income applicable to common shares$151,003 $142,566 $196,701 $136,119 $110,952 
Add: Intangible amortization (net of tax) (2)
Add: Intangible amortization (net of tax) (2)
4,545 4,639 5,090 5,317 5,378 
Tangible net income (1)
Tangible net income (1)
$155,548 $147,205 $201,791 $141,436 $116,330 
Tangible shareholders' common equity (1)
(see above)
$2,935,501 $2,914,772 $2,759,755 $2,563,872 $2,703,249 
Return on tangible common equity (1)
21.20 %20.20 %29.25 %22.07 %17.21 %
Return on average tangible common equity:
Tangible net income (1) (see above)
$155,548 $147,205 $201,791 $141,436 $116,330 
Average shareholders' common equity$5,030,083 $4,922,469 $4,692,863 $4,890,434 $4,886,181 
Average shareholders’ common equity
Average shareholders’ common equity
Average shareholders’ common equity
Deduct: Average goodwill and intangible assetsDeduct: Average goodwill and intangible assets2,115,894 2,122,157 2,132,480 2,129,858 2,136,964 
Average tangible shareholders' common equity (1)
$2,914,189 $2,800,312 $2,560,383 $2,760,576 $2,749,217 
Average tangible shareholders’ common equity (1)
Average tangible shareholders’ common equity (1)
Average tangible shareholders’ common equity (1)
Return on average tangible common equity (1)
Return on average tangible common equity (1)
21.35 %21.03 %31.53 %20.49 %16.93 %
Return on average tangible common equity (1)
14.93 %18.11 %20.18 %21.35 %21.03 %
Net interest margin:Net interest margin:
Net interest income
Net interest income
Net interest incomeNet interest income$382,171 $381,488 $391,090 $376,589 $337,472 
Taxable equivalent adjustmentTaxable equivalent adjustment5,825 5,666 5,378 4,950 4,314 
Net interest income - taxable equivalent basis (1)
Net interest income - taxable equivalent basis (1)
$387,996 $387,154 $396,468 $381,539 $341,786 
Average earning assetsAverage earning assets$43,097,198 $41,941,913 $41,206,695 $41,180,026 $41,003,338 
Net interest margin (1)
Net interest margin (1)
3.60 %3.69 %3.85 %3.71 %3.33 %
Net interest margin (1)
3.28 %3.39 %3.49 %3.60 %3.69 %
Efficiency ratio:Efficiency ratio:
Noninterest expense
Noninterest expense
Noninterest expenseNoninterest expense$246,584 $250,711 $282,675 $262,444 $277,475 
Deduct: Intangible amortization expenseDeduct: Intangible amortization expense6,060 6,186 6,787 7,089 7,170 
Adjusted noninterest expense (1)
Adjusted noninterest expense (1)
$240,524 $244,525 $275,888 $255,355 $270,305 
Net interest income - taxable equivalent basis (1)
(see above)
Net interest income - taxable equivalent basis (1)
(see above)
$387,996 $387,154 $396,468 $381,539 $341,786 
Noninterest incomeNoninterest income81,629 70,681 165,037 80,385 89,117 
Deduct: Debt securities gains (losses), netDeduct: Debt securities gains (losses), net17 (5,216)(173)(172)(85)
Adjusted total revenue (1)
Adjusted total revenue (1)
$469,608 $463,051 $561,678 $462,096 $430,988 
Efficiency ratio (1)
Efficiency ratio (1)
51.22 %52.81 %49.12 %55.26 %62.72 %
Efficiency ratio (1)
58.34 %59.05 %51.66 %51.22 %52.81 %
Tangible common equity to tangible assets:Tangible common equity to tangible assets:
Tangible shareholders' equity (1) (see above)
$2,935,501 $2,914,772 $2,759,755 $2,563,872 $2,703,249 
Tangible shareholders’ equity (1) (see above)
Tangible shareholders’ equity (1) (see above)
Tangible shareholders’ equity (1) (see above)
AssetsAssets$48,496,755 $47,842,644 $46,763,372 $46,215,526 $45,748,355 
Deduct: Goodwill and intangible assetsDeduct: Goodwill and intangible assets2,112,875 2,118,935 2,125,121 2,135,792 2,131,815 
Deduct: Goodwill and intangible assets
Deduct: Goodwill and intangible assets
Tangible assets (1)
Tangible assets (1)
$46,383,880 $45,723,709 $44,638,251 $44,079,734 $43,616,540 
Tangible assets (1)
Tangible assets (1)
Tangible common equity to tangible assets (1)
Tangible common equity to tangible assets (1)
6.33 %6.37 %6.18 %5.82 %6.20 %
Tangible common equity to tangible assets (1)
6.86 %6.85 %6.15 %6.33 %6.37 %
(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).
54


The following table presents GAAP to non-GAAP reconciliations for the year-to-date periods:
Six Months Ended June 30,
(dollars and shares in thousands, except per share data)20232022
Tangible common book value:
Shareholders' common equity$5,048,376 $4,835,064 
Deduct: Goodwill and intangible assets2,112,875 2,131,815 
Tangible shareholders' common equity (1)
$2,935,501 $2,703,249 
Period end common shares292,597 292,893 
Tangible common book value (1)
10.03 9.23 
Return on tangible common equity:
Net income applicable to common shares$293,569 $81,349 
Add:  Intangible amortization (net of tax) (2)
9,184 9,311 
Tangible net income (1)
$302,753 $90,660 
Tangible shareholders' common equity (1) (see above)
$2,935,501 $2,703,249 
Return on tangible common equity (1)
20.63 %6.71 %
Return on average tangible common equity:
Tangible net income (1) (see above)
$302,753 $90,660 
Average shareholders' common equity$4,976,573 $4,495,862 
Deduct: Average goodwill and intangible assets2,119,008 1,845,422 
Average tangible shareholders' common equity (1)
$2,857,565 $2,650,440 
Return on average tangible common equity (1)
21.19 %6.84 %
Net interest margin:
Net interest income$763,659 $560,257 
Taxable equivalent adjustment11,491 8,086 
Net interest income - taxable equivalent basis (1)
$775,150 $568,343 
Average earning assets$42,522,747 $36,269,744 
Net interest margin (1)
3.65 %3.13 %
Efficiency ratio:
Noninterest expense$497,295 $493,064 
Deduct:  Intangible amortization expense12,246 11,981 
Adjusted noninterest expense (1)
$485,049 $481,083 
Net interest income - taxable equivalent basis (1) (see above)
$775,150 $568,343 
Noninterest income152,310 154,357 
Deduct:  Debt securities gains (losses), net(5,199)257 
Adjusted total revenue (1)
$932,659 $722,443 
Efficiency ratio (1)
52.01 %66.59 %
Tangible common equity to tangible assets:
Tangible shareholders' equity (1) (see above)
$2,935,501 $2,703,249 
Assets$48,496,755 $45,748,355 
Deduct: Goodwill and intangible assets2,112,875 2,131,815 
Tangible assets (1)
$46,383,880 $43,616,540 
Tangible common equity to tangible assets (1)
6.33 %6.20 %
(1)Represents a non-GAAP financial measure.
(2)Calculated using management’s estimate of the annual fully taxable equivalent rates (federal and state).
5548


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 $48$50 billion at June 30, 2023. March 31, 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. Old National, through Old National Bank, providesThrough our wholly-owned banking subsidiary and non-bank affiliates, we provide a wide range of banking services primarily throughout the Midwest region of the United States and elsewhere, including commercial and consumer loan and depository services, as well as private banking, capital markets, brokerage, wealth management, trust, investment advisory, and other traditional banking services.  Old National also provides services to supplement its traditional banking business including fiduciary and wealth management services, investment and brokerage services, investment consulting, and other financial services.
Net income applicable to common shareholdersshares for the secondfirst quarter of 20232024 was $151.0$116.3 million, or $0.52$0.40 per diluted common share, compared to $142.6$128.4 million, or $0.49$0.44 per diluted common share, for the firstfourth quarter of 2023.
Results for the secondfirst quarter of 2024 were impacted by a $13.3 million non-cash, pre-tax expense associated with the distribution of excess pension plan assets with the resolution of the legacy First Midwest defined benefit pension plan, as well as pre-tax charges of $3.0 million for an FDIC special assessment and $2.9 million of merger-related charges. Results for the fourth quarter of 2023 were impacted by $3.4the $21.6 million pre-tax gain on sale of expenses related to the tragic April 10 event at our downtown Louisville location (“Louisville expenses”), $2.4Visa Class B restricted shares, $19.1 million for an FDIC special assessment, and $9.9 million of merger-related charges, and pre-tax charges of $0.2 millionother expenses. Excluding these items, net income applicable to common shares for property optimization. Thethe first quarter of 20232024 was impacted by merger-related charges$130.8 million, or $0.45 per diluted common share on an adjusted basis1, compared to $134.6 million, or $0.46 per diluted common share on an adjusted basis1, for the fourth quarter of $14.6 million, $5.2 million of debt securities losses, and $1.3 million of property optimization costs.2023.
We achieved strong results during the secondfirst quarter of 2023,2024, including growth in total loans and deposits, and loans, increased revenue, stablemodest compression of net interest income reflective of the rate environment, strong credit quality, and disciplined expense management.
Deposits:  Period-end total deposits increased $1.3 billion, or 4%,$464.2 million to $36.2$37.7 billion, reflecting continued efforts to compete for new client relationships as well as seasonalnormal seasonally lower patterns in business checking and public funds compared to MarchDecember 31, 2023.
Loans:  Our loan balances, excluding loans held for sale,held-for-sale, increased $610.1$631.4 million to $32.4$33.6 billion at June 30, 2023March 31, 2024 compared to MarchDecember 31, 2023. This was primarily driven by broad-based, disciplined commercial and commercial real estate loan growth.
Net Interest Income: Net interest income increased $0.7decreased $8.0 million to $382.2$356.5 million compared to the firstfourth quarter of 2023 driven by loan growth, the higher rate environment,funding costs and morefewer days in the quarter, which were partly offset by higher funding costs and lower accretion income on loans.loan growth.
Provision for Credit Losses:  Provision for credit losses increased $1.4$7.3 million to $14.8$18.9 million compared to the firstfourth quarter of 2023 reflecting loannet charge-offs and unfunded commitmentloan growth, as well as economic factors.
Noninterest Income:  Noninterest income increased $10.9decreased $22.6 million to $81.6$77.5 million compared to the firstfourth quarter of 2023 reflecting $5.2the $21.6 million pre-tax gain on sale of net debt securities lossesVisa Class B restricted shares in the firstfourth quarter of 2023. The remaining change wasExcluding this gain, noninterest income decreased slightly driven by higher service charges on deposit accounts, debit card and ATMlower capital markets income, partially offset by increases in mortgage fees, mortgage banking revenue, company-owned life insurance income,wealth fees, and other income.
Noninterest Expense:  Noninterest expense decreased $4.1$21.9 million compared to the fourth quarter of 2023.  For the first quarter of 2023. Noninterest2024, noninterest expense included $2.4a $13.3 million non-cash, pre-tax expense associated with the distribution of excess pension assets with the resolution of the legacy First Midwest plan, as well as pre-tax charges of $3.0 million for the FDIC special assessment, and $2.9 million of merger-related expenses compared to pre-tax charges of $19.1 million for the FDIC special assessment and $0.2$9.9 million of property optimizationmerger-related and other expenses compared to $14.6 million and $1.3 million, respectively, in the firstfourth quarter of 2023. In addition, the second quarter of 2023 was impacted by $3.4 million of Louisville expenses. Excluding these expenses, noninterest expense increased $5.8decreased $12.1 million compared to the firstfourth quarter of 2023 primarily due to higher salary and employee benefits resulting fromelevated performance-driven incentive accruals.accruals and higher amortization of tax credit investments for the fourth quarter of 2023, as well as lower professional fees and other expense for the first quarter of 2024, partially offset by higher payroll taxes due to timing.

(1)Represents a non-GAAP financial measure. Refer to “Non-GAAP Financial Measures” section for reconciliations to GAAP financial measures.
5649


RESULTS OF OPERATIONS
The following table sets forth certain income statement information of Old National:
(dollars in thousands, except
per share data)
(dollars in thousands, except
per share data)
Three Months Ended
June 30,
%
Change
Six Months Ended
June 30,
%
Change
2023202220232022
(dollars in thousands, except
per share data)
2024
2024
Income Statement Summary:Income Statement Summary:
Income Statement Summary:
Income Statement Summary:
Net interest income
Net interest income
Net interest incomeNet interest income$382,171 $337,472 13.2 %$763,659 $560,257 36.3 %$356,458 $$381,488 (6.6)(6.6)%%
Provision for credit lossesProvision for credit losses14,787 9,165 61.3 28,224 117,901 (76.1)
Noninterest incomeNoninterest income81,629 89,117 (8.4)152,310 154,357 (1.3)
Noninterest income
Noninterest income
Noninterest expense
Noninterest expense
Noninterest expenseNoninterest expense246,584 277,475 (11.1)497,295 493,064 0.9 
Net income applicable to common
shareholders
Net income applicable to common
shareholders
151,003 110,952 36.1 293,569 81,349 260.9 
Net income applicable to common shareholders
Net income applicable to common shareholders
Net income per common share - diluted
Net income per common share - diluted
Net income per common share -
diluted
Net income per common share -
diluted
0.52 0.38 36.8 1.01 0.31 225.8 
Other Data:Other Data:
Other Data:
Other Data:
Return on average common equityReturn on average common equity12.01 %9.08 %11.80 %3.62 %
Return on tangible common equity (1)
21.20 17.21 20.63 6.71 
Return on average common equity
Return on average common equity
Return on average tangible common equity (1)
Return on average tangible common equity (1)
Return on average tangible common
equity (1)
Return on average tangible common
equity (1)
21.35 16.93 21.19 6.84 
Efficiency ratio (1)
Efficiency ratio (1)
51.22 62.72 52.01 66.59 
Efficiency ratio (prior presentation) (2)
N/A   62.70 N/A   68.13 
Efficiency ratio (1)
Efficiency ratio (1)
Tier 1 leverage ratio
Tier 1 leverage ratio
Tier 1 leverage ratioTier 1 leverage ratio8.59 8.19 8.59 8.19 
Net charge-offs (recoveries) to
average loans
Net charge-offs (recoveries) to
average loans
0.13 0.02 0.17 0.04 
Net charge-offs (recoveries) to average loans
Net charge-offs (recoveries) to average loans
(1)Represents a non-GAAP financial measure. Refer to “Non-GAAP Financial Measures” section for reconciliations to GAAP financial measures.
(2)Presented as calculated prior to December 31, 2022, which included the provision for unfunded loan commitments in noninterest expense. Management believes that removing the provision for unfunded loan commitments from this metric enhances comparability for peer comparison purposes.
Net Interest Income
Net interest income is the most significant component of our earnings, comprising 83%82% of revenues for the sixthree months ended June 30, 2023.March 31, 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.
InterestThe Federal Reserve held its interest rates increasedsteady during the secondfirst quarter of 2024 and increased interest rates compared to March 31, 2023. The Federal Reserve’s Federal Funds Rate is currently in a target range of 5.00%5.25% to 5.25%5.50%, with the Effective Federal Funds Rate increasing 25 basis points fromof 5.33% at March 31, 2023 to 5.08% at June 30, 2023.2024. 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.
5750


The following tables presenttable presents the average balance sheet for each major asset and liability category, its related interest income and yield, or its expense and rate.
(Tax equivalent basis,
dollars in thousands)
(Tax equivalent basis,
dollars in thousands)
Three Months Ended
June 30, 2023
Three Months Ended
June 30, 2022
(Tax equivalent basis,
dollars in thousands)
Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2023
Earning AssetsEarning AssetsAverage
Balance
Income (1)/
Expense
Yield/
Rate
Average
Balance
Income (1)/
Expense
Yield/
Rate
Earning AssetsAverage
Balance
Income (1)/
Expense
Yield/
Rate
Average
Balance
Income (1)/
Expense
Yield/
Rate
Money market and other interest-earning
investments
Money market and other interest-earning
investments
$724,601 $8,966 4.96 %$1,088,005 $1,830 0.67 %Money market and other interest-earning
investments
$757,244 $$9,985 5.30 5.30 %$497,953 $$3,098 2.52 2.52 %
Investment securities:Investment securities:
Treasury and government sponsored agenciesTreasury and government sponsored agencies2,222,269 19,355 3.48 %2,487,717 11,818 1.90 %
Treasury and government sponsored agencies
Treasury and government sponsored agencies2,362,477 23,266 3.94 %2,197,426 16,531 3.01 %
Mortgage-backed securitiesMortgage-backed securities5,301,084 34,291 2.59 %6,008,470 33,534 2.23 %Mortgage-backed securities5,357,085 38,888 38,888 2.90 2.90 %5,429,200 35,090 35,090 2.59 2.59 %
States and political subdivisionsStates and political subdivisions1,768,897 14,396 3.26 %1,834,189 14,571 3.18 %States and political subdivisions1,680,175 13,976 13,976 3.33 3.33 %1,808,316 14,690 14,690 3.25 3.25 %
Other securitiesOther securities824,482 9,995 4.85 %723,279 5,467 3.02 %Other securities770,438 12,173 12,173 6.32 6.32 %738,139 8,604 8,604 4.66 4.66 %
Total investment securitiesTotal investment securities10,116,732 78,037 3.09 %11,053,655 65,390 2.37 %Total investment securities10,170,175 88,303 88,303 3.47 3.47 %10,173,081 74,915 74,915 2.95 2.95 %
Loans: (2)
Loans: (2)
Commercial
Commercial
CommercialCommercial9,862,728 163,721 6.64 %8,692,646 95,743 4.36 %9,540,385 167,263 167,263 7.01 7.01 %9,457,089 147,620 147,620 6.24 6.24 %
Commercial real estateCommercial real estate13,164,390 199,287 6.06 %11,547,958 113,545 3.89 %Commercial real estate14,368,370 230,086 230,086 6.41 6.41 %12,654,366 179,475 179,475 5.67 5.67 %
Residential real estate loansResidential real estate loans6,643,254 60,717 3.66 %5,905,151 51,686 3.50 %Residential real estate loans6,693,814 63,003 63,003 3.76 3.76 %6,523,074 58,099 58,099 3.56 3.56 %
ConsumerConsumer2,585,493 39,999 6.21 %2,715,923 30,478 4.50 %Consumer2,645,091 43,594 43,594 6.63 6.63 %2,636,350 38,108 38,108 5.86 5.86 %
Total loansTotal loans32,255,865 463,724 5.75 %28,861,678 291,452 4.01 %Total loans33,247,660 503,946 503,946 6.07 6.07 %31,270,879 423,302 423,302 5.42 5.42 %
Total earning assetsTotal earning assets43,097,198 $550,727 5.11 %41,003,338 $358,672 3.48 %Total earning assets44,175,079 $$602,234 5.46 5.46 %41,941,913 $$501,315 4.79 4.79 %
Deduct: Allowance for credit losses on loansDeduct: Allowance for credit losses on loans(301,311)(282,943)
Non-Earning AssetsNon-Earning Assets
Non-Earning Assets
Non-Earning Assets
Cash and due from banks
Cash and due from banks
Cash and due from banksCash and due from banks418,972 277,283 
Other assetsOther assets4,884,694 4,735,701 
Other assets
Other assets
Total assets
Total assets
Total assetsTotal assets$48,099,553 $45,733,379 
Interest-Bearing LiabilitiesInterest-Bearing Liabilities
Interest-Bearing Liabilities
Interest-Bearing Liabilities
Checking and NOW
Checking and NOW
Checking and NOWChecking and NOW$7,881,863 $24,358 1.24 %$8,445,683 $1,786 0.08 %$7,141,201 $$25,252 1.42 1.42 %$7,988,579 $$19,359 0.98 0.98 %
SavingsSavings5,785,603 3,247 0.23 %6,835,675 673 0.04 %Savings5,025,400 5,017 5,017 0.40 0.40 %6,183,409 2,230 2,230 0.15 0.15 %
Money marketMoney market6,084,963 35,357 2.33 %5,317,300 1,027 0.08 %Money market9,917,572 94,213 94,213 3.82 3.82 %5,641,288 20,010 20,010 1.44 1.44 %
Time deposits4,628,426 38,012 3.29 %2,499,445 1,701 0.27 %
Time deposits, excluding brokered depositsTime deposits, excluding brokered deposits4,689,136 47,432 4.07 %3,057,870 15,289 2.03 %
Brokered depositsBrokered deposits1,047,140 13,525 5.19 %500,530 5,705 4.62 %
Total interest-bearing depositsTotal interest-bearing deposits24,380,855 100,974 1.66 %23,098,103 5,187 0.09 %Total interest-bearing deposits27,820,449 185,439 185,439 2.68 2.68 %23,371,676 62,593 62,593 1.09 1.09 %
Federal funds purchased and interbank
borrowings
Federal funds purchased and interbank
borrowings
441,145 5,655 5.14 %1,222 0.47 %Federal funds purchased and interbank
borrowings
69,090 961 961 5.59 5.59 %419,291 4,839 4,839 4.68 4.68 %
Securities sold under agreements to repurchaseSecurities sold under agreements to repurchase340,178 900 1.06 %466,885 85 0.07 %Securities sold under agreements to repurchase296,236 917 917 1.25 1.25 %412,819 779 779 0.77 0.77 %
FHLB advancesFHLB advances5,283,728 45,088 3.42 %3,053,423 6,925 0.91 %FHLB advances4,386,492 41,167 41,167 3.77 3.77 %4,273,343 37,996 37,996 3.61 3.61 %
Other borrowingsOther borrowings796,536 10,114 5.09 %611,772 4,687 3.06 %Other borrowings825,846 11,039 11,039 5.38 5.38 %781,221 7,954 7,954 4.13 4.13 %
Total borrowed fundsTotal borrowed funds6,861,587 61,757 3.61 %4,133,302 11,699 1.14 %Total borrowed funds5,577,664 54,084 54,084 3.90 3.90 %5,886,674 51,568 51,568 3.55 3.55 %
Total interest-bearing liabilitiesTotal interest-bearing liabilities$31,242,442 $162,731 2.09 %$27,231,405 $16,886 0.25 %Total interest-bearing liabilities$33,398,113 $$239,523 2.88 2.88 %$29,258,350 $$114,161 1.58 1.58 %
Noninterest-Bearing Liabilities and
Shareholders' Equity
Noninterest-Bearing Liabilities and
Shareholders’ Equity
Noninterest-Bearing Liabilities and
Shareholders’ Equity
Noninterest-Bearing Liabilities and
Shareholders’ Equity
Demand deposits
Demand deposits
Demand depositsDemand deposits$10,741,646 $12,714,946 
Other liabilitiesOther liabilities841,663 657,128 
Shareholders' equity5,273,802 5,129,900 
Total liabilities and shareholders' equity$48,099,553 $45,733,379 
Other liabilities
Other liabilities
Shareholders’ equity
Shareholders’ equity
Shareholders’ equity
Total liabilities and shareholders’ equity
Total liabilities and shareholders’ equity
Total liabilities and shareholders’ equity
Net interest income - taxable equivalent basis
Net interest income - taxable equivalent basis
Net interest income - taxable equivalent basisNet interest income - taxable equivalent basis$387,996 3.60 %$341,786 3.33 %$362,711 3.28 3.28 %$387,154 3.69 3.69 %
Taxable equivalent adjustmentTaxable equivalent adjustment(5,825)(4,314)
Net interest income (GAAP)Net interest income (GAAP)$382,171 3.55 %$337,472 3.29 %
Net interest income (GAAP)
Net interest income (GAAP)$356,458 3.23 %$381,488 3.64 %
(1)Interest income is reflected on a fully taxable equivalent basis.
(2)Includes loans held for sale.held-for-sale.
58


(Tax equivalent basis,
dollars in thousands)
Six Months Ended
June 30, 2023
Six Months Ended
June 30, 2022
Earning AssetsAverage
Balance
Income (1)/
Expense
Yield/
Rate
Average
Balance
Income (1)/
Expense
Yield/
Rate
Money market and other interest-earning
   investments
$611,903 $12,064 3.98 %$1,211,518 $2,138 0.36 %
Investment securities:
Treasury and government sponsored agencies2,209,916 35,886 3.25 %2,342,401 20,038 1.71 %
Mortgage-backed securities5,364,788 69,381 2.59 %5,441,902 57,910 2.13 %
States and political subdivisions1,788,498 29,086 3.25 %1,786,684 28,208 3.16 %
Other securities781,549 18,599 4.76 %664,741 9,611 2.89 %
Total investment securities10,144,751 152,952 3.02 %10,235,728 115,767 2.26 %
Loans: (2)
Commercial9,661,029 311,341 6.45 %7,301,008 151,026 4.11 %
Commercial real estate12,910,787 378,762 5.87 %10,156,292 190,952 3.74 %
Residential real estate loans6,582,982 118,817 3.61 %4,953,222 85,673 3.46 %
Consumer2,611,295 78,106 6.03 %2,411,976 52,393 4.38 %
Total loans31,766,093 887,026 5.59 %24,822,498 480,044 3.86 %
Total earning assets42,522,747 $1,052,042 4.95 %36,269,744 $597,949 3.29 %
Deduct: Allowance for credit losses on loans(302,844)(225,876)
Non-Earning Assets
Cash and due from banks428,370 273,083 
Other assets4,895,843 4,111,637 
Total assets$47,544,116 $40,428,588 
Interest-Bearing Liabilities
Checking and NOW$7,934,927 $43,717 1.11 %$7,619,757 $2,381 0.06 %
Savings5,983,407 5,477 0.18 %6,073,081 1,262 0.04 %
Money market5,864,351 55,368 1.90 %4,552,241 1,719 0.08 %
Time deposits4,096,369 59,005 2.90 %2,124,382 3,019 0.29 %
Total interest-bearing deposits23,879,054 163,567 1.38 %20,369,461 8,381 0.08 %
Federal funds purchased and interbank
   borrowings
430,278 10,494 4.92 %1,168 0.25 %
Securities sold under agreements to repurchase376,298 1,679 0.90 %458,459 181 0.08 %
FHLB advances4,781,326 83,084 3.50 %2,822,984 12,888 0.92 %
Other borrowings788,921 18,068 4.62 %522,599 8,154 3.12 %
Total borrowed funds6,376,823 113,325 3.58 %3,805,210 21,225 1.12 %
Total interest-bearing liabilities$30,255,877 $276,892 1.85 %$24,174,671 $29,606 0.25 %
Noninterest-Bearing Liabilities and
   Shareholders' Equity
Demand deposits$11,131,789 $11,014,359 
Other liabilities936,158 562,882 
Shareholders' equity5,220,292 4,676,676 
Total liabilities and shareholders' equity$47,544,116 $40,428,588 
Net interest income - taxable equivalent basis$775,150 3.65 %$568,343 3.13 %
Taxable equivalent adjustment(11,491)(8,086)
Net interest income (GAAP)$763,659 3.59 %$560,257 3.09 %
(1)Interest income is reflected on a fully taxable equivalent basis.
(2)Includes loans held for sale.

5951


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
March 31, 2023 to Three
Months Ended March 31, 2024
From Three Months Ended
March 31, 2023 to Three
Months Ended March 31, 2024
From Three Months Ended
March 31, 2023 to Three
Months Ended March 31, 2024
From Three Months Ended
June 30, 2022 to Three
Months Ended June 30, 2023
From Six Months Ended
June 30, 2022 to Six
Months Ended June 30, 2023
Total
Change (1)
Attributed to
Total
Change (1)
Attributed to
(dollars in thousands)(dollars in thousands)VolumeRateVolumeRate
(dollars in thousands)
(dollars in thousands)
Interest Income
Interest Income
Interest IncomeInterest Income
Money market and other interest-earning
investments
Money market and other interest-earning
investments
$7,136 $(2,571)$9,707 $9,926 $(6,535)$16,461 
Money market and other interest-earning investments
Money market and other interest-earning investments
Investment securities (2)
Investment securities (2)
Investment securities (2)
Investment securities (2)
12,647 (6,385)19,032 37,185 (1,201)38,386 
Loans (3)
Loans (3)
172,272 40,306 131,966 406,982 163,213 243,769 
Loans (3)
Loans (3)
Total interest income
Total interest income
Total interest incomeTotal interest income192,055 31,350 160,705 454,093 155,477 298,616 
Interest ExpenseInterest Expense
Interest Expense
Interest Expense
Checking and NOW deposits
Checking and NOW deposits
Checking and NOW depositsChecking and NOW deposits22,572 (1,017)23,589 41,336 713 40,623 
Savings depositsSavings deposits2,574 (351)2,925 4,215 (97)4,312 
Savings deposits
Savings deposits
Money market depositsMoney market deposits34,330 2,287 32,043 53,649 6,375 47,274 
Time deposits36,311 9,439 26,872 55,986 15,561 40,425 
Money market deposits
Money market deposits
Time deposits, excluding brokered deposits
Time deposits, excluding brokered deposits
Time deposits, excluding brokered deposits
Brokered deposits
Brokered deposits
Brokered deposits
Federal funds purchased and interbank borrowings
Federal funds purchased and interbank borrowings
Federal funds purchased and interbank
borrowings
Federal funds purchased and interbank
borrowings
5,653 3,078 2,575 10,492 5,496 4,996 
Securities sold under agreements to
repurchase
Securities sold under agreements to
repurchase
815 (181)996 1,498 (208)1,706 
Securities sold under agreements to repurchase
Securities sold under agreements to repurchase
FHLB advances
FHLB advances
FHLB advancesFHLB advances38,163 12,026 26,137 70,196 21,373 48,823 
Other borrowingsOther borrowings5,427 1,866 3,561 9,914 5,070 4,844 
Other borrowings
Other borrowings
Total interest expense
Total interest expense
Total interest expenseTotal interest expense145,845 27,147 118,698 247,286 54,283 193,003 
Net interest incomeNet interest income$46,210 $4,203 $42,007 $206,807 $101,194 $105,613 
Net interest income
Net interest income
(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 $2.9 million and $5.9$2.8 million during the three and six months ended June 30, 2023, respectively,March 31, 2024 using the federal statutory rate in effect of 21%.
(3)Interest income on loans includes taxable equivalent adjustments of $2.9 million and $5.6$3.5 million during the three and six months ended June 30, 2023, respectively,March 31, 2024 using the federal statutory rate in effect of 21%.
The increasedecrease in net interest income for the three and six months ended June 30, 2023March 31, 2024 when compared to the same periodsperiod in 20222023 was primarily due to higher ratescosts and loan growth. Partially offsetting these increases were higher costsbalances of average interest-bearing liabilities, partially offset by higher average interest-bearing liabilities, and lower accretion income.rates on loans as well as loan growth. Accretion income associated with acquired loans and borrowings totaled $6.6 million and $14.5$5.1 million in the three and six months ended June 30, 2023, respectively,March 31, 2024 compared to $35.0 million and $50.8$7.9 million in the three and six months ended June 30, 2022, respectively.March 31, 2023.
The increasedecrease in the net interest margin on a fully taxable equivalent basis for the three and six months ended June 30, 2023 whenMarch 31, 2024 compared to the same periodsperiod in 20222023 was primarily due to higher costs of interest-bearing liabilities, partially offset by higher yields on interest earning assets, partially offset by higher costs of interest-bearing liabilities.assets. The yield on interest earning assets increased 16367 basis points and the cost of interest-bearing liabilities increased 184130 basis points in the quarterly year-over-year comparison.  The yield on interest earning assets increased 166 basis points and the cost of interest-bearing liabilities increased 160 basis points in the sixthree months ended June 30, 2023 whenMarch 31, 2024 compared to the six months ended June 30, 2022.same quarter a year ago. Accretion income represented 6 basis points and 75 basis points of the net interest margin in the three and six months ended June 30, 2023, respectively,March 31, 2024, compared to 34 basis points and 288 basis points in the three and six months ended June 30, 2022, respectively.March 31, 2023.
Average earning assets were $43.1$44.2 billion and $41.0$41.9 billion for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, an increase of $2.1$2.2 billion, or 5%. The increase in average earning assets for the three months ended June 30, 2023 when compared to the three months ended June 30, 2022 was, primarily due to strong commercial and commercial real estate loan growth. Average earning assets were $42.5 billion and $36.3 billion for the six months ended June 30, 2023 and 2022, respectively, an increase of $6.3 billion, or 17%. The increase in average earning assets for the six months ended June 30, 2023 when compared to the six months ended June 30, 2022 was primarily due to the merger with First Midwest and strong loan growth.
60


Average loans, including loans held for saleheld-for-sale, increased $3.4 billion and $6.9 billion for the three and six months ended June 30, 2023, respectively, when compared to the same periods in 2022. The increase in average loans for the three months ended June 30, 2023 when compared to the three months ended June 30, 2022 was primarily due to strong commercial and commercial real estate loan growth. The increase in average loans for the six months ended June 30, 2023 when compared to the six months ended June 30, 2022 was primarily due to the merger with First Midwest and strong loan growth.
Average investments decreased $936.9 million and $91.0 million for the three and six months ended June 30, 2023, respectively, when compared to the same periods in 2022. The decrease in average investments for the three months ended June 30, 2023 when compared to the three months ended June 30, 2022 reflected the utilization of securities cash flows to fund loan growth.
Average noninterest-bearing deposits decreased $2.0 billion while average interest-bearing deposits increased $1.3 billion for the three months ended June 30, 2023March 31, 2024 when compared to the same period in 20222023 primarily due to strong commercial real estate loan growth.
Average noninterest-bearing deposits decreased $2.3 billion while average interest-bearing deposits increased $4.4 billion for the three months ended March 31, 2024 when compared to the same period in 2023 reflecting growth and a mix shift as a result of the current rate environment. Average noninterest-bearingenvironment and interest-bearing deposits increased $117.4 million and $3.5 billion, respectively, for the six months ended June 30, 2023 when compared to the six months ended June 30, 2022 primarily due to the First Midwest merger.organic growth.
Average borrowed funds increased $2.7 billion and $2.6 billion for the three and six months ended June 30, 2023, respectively, when compared to the same periods in 2022.
52


Provision for Credit Losses
The following table details the components of the provision for credit losses:
Three Months Ended
June 30,
%Six Months Ended
June 30,
%
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
(dollars in thousands)
(dollars in thousands)
(dollars in thousands)(dollars in thousands)20232022Change20232022Change
Provision for credit losses on loansProvision for credit losses on loans$11,936 $9,254 29.0 %$23,405 $106,663 (78.1)%
Provision for credit losses on loans
Provision for credit losses on loans
Provision (release) for credit losses on
unfunded loan commitments
Provision (release) for credit losses on
unfunded loan commitments
2,851 (80)N/M4,819 11,087 (56.5)
Provision for credit losses on held-to-
maturity securities
 (9)(100.0) 151 (100.0)
Provision (release) for credit losses on
unfunded loan commitments
Provision (release) for credit losses on
unfunded loan commitments
Total provision for credit losses
Total provision for credit losses
Total provision for credit lossesTotal provision for credit losses$14,787 $9,165 61.3 %$28,224 $117,901 (76.1)%
Net (charge-offs) recoveries on non-PCD
loans
Net (charge-offs) recoveries on non-PCD
loans
$(4,689)$(111)N/M%$(8,727)$19 N/M%
Net (charge-offs) recoveries on non-PCD
loans
Net (charge-offs) recoveries on non-PCD
loans
Net (charge-offs) recoveries on PCD
loans
Net (charge-offs) recoveries on PCD
loans
Net (charge-offs) recoveries on PCD
loans
Net (charge-offs) recoveries on PCD
loans
(5,403)(1,647)228.1 (17,794)(4,551)291.0 
Total net (charge-offs) recoveries on
loans
Total net (charge-offs) recoveries on
loans
$(10,092)$(1,758)474.1 %$(26,521)$(4,532)485.2 %
Total net (charge-offs) recoveries on
loans
Total net (charge-offs) recoveries on
loans
Net charge-offs (recoveries) to average loans
Net charge-offs (recoveries) to average loans
Net charge-offs (recoveries) to average loans
TheTotal provision for credit losses on loans increased in the sixthree months ended June 30, 2022 included $96.3 million to establish an allowance for credit losses on non-PCD loans acquired in the First Midwest merger. The provision for credit losses on unfundedMarch 31, 2024 reflecting loan commitments in the six months ended June 30, 2022 included $11.0 million for unfunded loan commitments acquired in the First Midwest merger.growth and macroeconomic factors. 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.
61


Noninterest Income
We generate revenues in the form of noninterest income through client fees, sales commissions, and gains and losses from our core banking franchise and other related businesses, such as wealth management, investment consulting, and investment products. The following table details the components in noninterest income:
Three Months Ended
June 30,
%Six Months Ended
June 30,
%
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
(dollars in thousands)(dollars in thousands)20232022Change20232022Change
(dollars in thousands)
(dollars in thousands)
Wealth and investment services fees
Wealth and investment services fees
Wealth and investment services feesWealth and investment services fees$26,521 $27,872 (4.8)%$53,441 $49,824 7.3 %$28,304 $$26,920 5.1 5.1 %%
Service charges on deposit accountsService charges on deposit accounts17,751 20,324 (12.7)34,754 34,350 1.2 
Debit card and ATM feesDebit card and ATM fees10,653 11,222 (5.1)20,635 18,821 9.6 
Debit card and ATM fees
Debit card and ATM fees
Mortgage banking revenueMortgage banking revenue4,165 6,522 (36.1)7,565 13,767 (45.0)
Mortgage banking revenue
Mortgage banking revenue
Capital markets income
Capital markets income
Capital markets incomeCapital markets income6,173 7,261 (15.0)13,112 11,703 12.0 
Company-owned life insuranceCompany-owned life insurance4,698 4,571 2.8 7,884 8,095 (2.6)
Company-owned life insurance
Company-owned life insurance
Debt securities gains (losses), net
Debt securities gains (losses), net
Debt securities gains (losses), netDebt securities gains (losses), net17 (85)(120.0)(5,199)257 N/M
Other incomeOther income11,651 11,430 1.9 20,118 17,540 14.7 
Other income
Other income
Total noninterest incomeTotal noninterest income$81,629 $89,117 (8.4)%$152,310 $154,357 (1.3)%
Total noninterest income
Total noninterest income$77,522 $70,681 9.7 %
Noninterest income decreased $7.5increased $6.8 million for the three months ended June 30, 2023March 31, 2024 compared to the same period in 2022 primarily due to lower service charges on deposit accounts, mortgage banking revenue, wealth and investment services fees, and capital markets income. Noninterest income decreased $2.0 million for the six months ended June 30, 2023 compared to the same period in 2022 primarily due to $5.2 million of net losses on sales of debt securities in the six months ended June 30, 2023 and lower mortgage banking revenue, partially offset by the full-period 2023 impact of the First Midwest merger which occurred in February of 2022.
Wealth and investment services fees decreased $1.4 million for the three months ended June 30, 2023 compared to the same period in 2022 primarily due to lower market conditions and product fees. Wealth and investment services fees increased $3.6 million for the six months ended June 30, 2023 compared to the same period in 2022 primarily due to the full-period 2023 impact of the First Midwest merger which occurred in February of 2022.
Service charges on deposit accounts for the three and six months ended June 30, 2023 were impacted by several enhancements to overdraft protection programs implemented in late 2022 to provide clients with more flexibility. The changes included the elimination of the non-sufficient fund (“NSF”) fee when an item is returned, among other modifications that benefit consumers. The impact of these enhancements for the six months ended June 30, 2023 compared to the same period in 2022 was more than offset by increased service charges on deposit accounts due to the full-period 2023 impact of the First Midwest merger which occurred in February of 2022.March 31, 2023.
Mortgage banking revenue decreased $2.4 million and $6.2 million for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022 primarily due to the higher rate environment and lower gain on sale margins.
Capital markets income decreasedincreased $1.1 million for the three months ended June 30, 2023March 31, 2024 compared to the same period in 20222023 primarily due to higher mortgage originations and increased loan sales.
Capital markets income decreased $4.0 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily due to lower levels of commercial real estate client interest rate swap fees, partially offset by higher foreign currency exchange fees. Capital markets
Other income increased $1.4$2.0 million for the sixthree months ended June 30, 2023March 31, 2024 compared to the same period in 20222023 primarily due to the full-period 2023 impact of the First Midwest merger which occurred in February of 2022.higher commercial loan fees.
6253


Noninterest Expense
The following table details the components in noninterest expense:
Three Months Ended
June 30,
%Six Months Ended
June 30,
%
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
(dollars in thousands)(dollars in thousands)20232022Change20232022Change
(dollars in thousands)
(dollars in thousands)
Salaries and employee benefits
Salaries and employee benefits
Salaries and employee benefitsSalaries and employee benefits$135,810 $161,817 (16.1)%$273,174 $285,964 (4.5)%$149,803 $$137,364 9.1 9.1 %%
OccupancyOccupancy26,085 26,496 (1.6)54,367 47,515 14.4 
EquipmentEquipment7,721 7,550 2.3 15,110 12,718 18.8 
Equipment
Equipment
Marketing
Marketing
MarketingMarketing9,833 9,119 7.8 19,250 13,395 43.7 
TechnologyTechnology20,056 25,883 (22.5)39,258 44,645 (12.1)
Technology
Technology
Communication
Communication
CommunicationCommunication4,232 5,878 (28.0)8,693 9,295 (6.5)
Professional feesProfessional fees6,397 6,336 1.0 13,129 26,127 (49.7)
Professional fees
Professional fees
FDIC assessment
FDIC assessment
FDIC assessmentFDIC assessment9,624 4,699 104.8 20,028 7,274 175.3 
Amortization of intangiblesAmortization of intangibles6,060 7,170 (15.5)12,246 11,981 2.2 
Amortization of intangibles
Amortization of intangibles
Amortization of tax credit investmentsAmortization of tax credit investments2,762 1,525 81.1 5,523 3,041 81.6 
Property optimization242 — N/A  1,559 — N/A
Amortization of tax credit investments
Amortization of tax credit investments
Other expense
Other expense
Other expenseOther expense17,762 21,002 (15.4)34,958 31,109 12.4 
Total noninterest expenseTotal noninterest expense$246,584 $277,475 (11.1)%$497,295 $493,064 0.9 %
Total noninterest expense
Total noninterest expense$262,317 $250,711 4.6 %
Noninterest expense decreased $30.9increased $11.6 million for the three months ended June 30, 2023March 31, 2024 compared to the same period in 2022. Noninterest2023 primarily due to a $13.3 million non-cash, pre-tax expense included $2.4 millionassociated with the distribution of merger-related expenses forexcess pension assets with the resolution of the legacy First Midwest plan in the three months ended June 30, 2023,March 31, 2024. Merger-related expenses totaled $2.9 million in the three months ended March 31, 2024, compared to $36.6$14.6 million in the three months ended March 31, 2023. In addition, the three months ended March 31, 2024 were impacted by $3.0 million for the FDIC special assessment and the three months ended March 31, 2023 were impacted by $1.3 million of property optimization charges. Excluding these items, total noninterest expense was $243.1 million and $234.8 million for the three months ended June 30, 2022. In addition,March 31, 2024 and 2023, respectively. The resulting $8.3 million increase in noninterest expense for the three months ended June 30, 2023 included $3.4 million of Louisville expenseswas driven by higher salary and $0.2 million for property optimization. Excluding these expenses, noninterest expense for the three months ended June 30, 2023 was stable compared to the same period in 2022 as fully achieved merger related costs were substantially offset by marketing campaignsemployee benefits reflecting merit and higher FDIC assessment expense.
Noninterest expense increased $4.2 million for the six months ended June 30, 2023 compared to the same period in 2022. Noninterest expense included merger-related expenses totaled $16.9 million for the six months ended June 30, 2023, compared to $77.9 million for the six months ended June 30, 2022. In addition, noninterest expense for the six months ended June 30, 2023 included $3.4 million of Louisville expenses and $1.6 million for property optimization. Excluding these expenses, noninterest expense for the six months ended June 30, 2023 increased $60.3 million, reflective of the additional operating costs associated with the full-period 2023 impact of the First Midwest merger which occurred in February of 2022, marketing campaigns, and higher FDIC assessment expense.
FDIC assessment expense increased $4.9 million and $12.8 million for the three and six months ended June 30, 2023, respectively, when compared to the same periods in 2022 primarily due to higher assessment rates and deposit balances.
Amortization of tax credit investments increased $1.2 million and $2.5 million for the three and six months ended June 30, 2023, respectively, when compared to the same periods in 2022. The recognition of tax credit amortization expense is contingent upon the successful completion of the rehabilitation of a historic building or completion of a solar project within the reporting period. Many factors including weather, labor availability, building regulations, inspections, and other unexpected construction delays related to a rehabilitation project can cause a project to exceed its estimated completion date.  See Note 9 to the consolidated financial statements for additional information on our tax credit investments.
FDIC Special Assessment Proposed Rule
On May 11, 2023, the Federal Deposit Insurance Corporation (“FDIC”) released a proposed rule that would impose special assessments to recover the losses to the deposit insurance fund (“DIF”) resulting from the FDIC’s use, in March 2023, of the systemic risk exception to the least-cost resolution test under the Federal Deposit Insurance Act in connection with the receiverships of Silicon Valley Bank and Signature Bank. The FDIC stated that it currently estimates those assessed losses to total $15.8 billion and that the amount of the special assessments would be adjusted as the loss estimate changes. Under the proposed rule, the assessment base would be an insured depository institution’s (“IDI”) estimated uninsured deposits, as reported in the IDI’s December 31, 2022 Call Report, excluding the first $5 billion in estimated uninsured deposits. The special assessments would be collected at an
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annual rate of approximately 12.5 basis points per year (3.13 basis points per quarter) over eight quarters in 2024 and 2025, with the first assessment period beginning January 1, 2024 (with the first assessment payment due by June 28, 2024). Under the proposed rule, the estimated loss pursuant to the systemic risk determination would be periodically adjusted, and the FDIC would retain the ability to cease collection early, extend the special assessment collection period and impose a final shortfall special assessment on a one-time basis. In its December 31, 2022 Call Report, Old National Bank reported estimated uninsured deposits of approximately $12.0 billion. Old National expects the special assessments would be tax deductible. Although the proposal could be changed and the timing of accounting recognition is still under consideration, if the assessments, as proposed, were recorded as an expense in a single quarter, the estimated $17 million expense would significantly affect noninterest expense and results of operations for that quarter.performance-driven incentive accruals.
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 23.4%21.3% for the three months ended June 30, 2023,March 31, 2024, compared to 17.8%22.0% for the same period in 2022.  The effective2023 reflecting decreases in pre-tax book income and state income taxes combined with an increase in tax rate was 22.8%credits. See Note 14 to the consolidated financial statements for the six months ended June 30, 2023, compared to 15.7% for the same period in 2022.additional information.. In accordance with ASC 740-270, Accounting for Interim Reporting, the provision for income taxes was recorded at June 30, 2023March 31, 2024 based on the current estimate of the effective annual rate.  The higher effective tax rate during the three and six months ended June 30, 2023 compared to the same periods in 2022 was primarily the result of an increase in pre-tax book income combined with smaller increases in tax-exempt income and tax credits. Other contributing factors were increases in non-deductible officer compensation and non-deductible FDIC premiums as well as the First Midwest merger in February 2022. See Note 14 to the consolidated financial statements for additional information.
FINANCIAL CONDITION
Overview
At June 30, 2023,March 31, 2024, our assets were $48.5$49.5 billion, a $1.7 billion$445.1 million increase compared to assets of $46.8$49.1 billion at December 31, 2022.2023. The increase was driven by disciplined loan growth, and higherpartially offset by lower cash balances funded through higher deposits and borrowings.balances.
Earning Assets
Our earning assets are comprised of investment securities, portfolio loans, loans held for sale,held-for-sale, money market investments, interest earninginterest-earning accounts with the Federal Reserve, and equity securities. Earning assets were $43.3$44.5 billion at June 30, 2023,March 31, 2024, a $1.7 billion$534.2 million increase compared to earning assets of $41.6$43.9 billion at December 31, 20222023 driven primarily by loan growth.
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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 if needed, based on fluctuating interest rates or changes in our funding requirements. During 2022, we transferred $3.0 billion of securities available-for-sale to held-to-maturity due to rising interest rates and related effects on the value of our investment securities.
Equity securities are recorded at fair value and totaled $72.0 million at June 30, 2023 compared to $52.5 million at December 31, 2022.
The investment securities portfolio, including equity securities, was $10.0 billion at June 30, 2023 compared to $10.2 billion at December 31, 2022.  Investment securitiesand represented 23% of earning assets at June 30, 2023, compared to 25% atboth March 31, 2024 and December 31, 2022.2023. At June 30, 2023,March 31, 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 $934.7$914.2 million and $869.5 million at June 30, 2023, compared to net unrealized losses of $844.4 million atMarch 31, 2024 and December 31, 2022.2023, respectively. The investment securities held-to-maturity portfolio had net unrealized losses of $451.9$453.8 million and $412.3 million at June 30, 2023, compared to net unrealized losses of
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$445.5 million atMarch 31, 2024 and December 31, 2022. Net unrealized losses increased from December 31, 2022 to June 30, 2023, primarily due to higher market interest rates.respectively.
The investment securities available-for-sale portfolio including securities hedges had an effective duration of 4.434.35 at June 30, 2023,March 31, 2024, compared to 4.574.24 at December 31, 2022.2023. The total investment securities portfolio had an effective duration of 5.525.42 at June 30, 2023,March 31, 2024, compared to 6.455.35 at December 31, 2022.2023. 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 3.09% and 3.02%3.47% for the three and six months ended June 30, 2023, respectively,March 31, 2024, compared to 2.37% and 2.26%2.95% for the three and six months ended June 30, 2022, respectively.March 31, 2023.
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)(dollars in thousands)June 30,
2023
December 31,
2022
$ Change% Change(dollars in thousands)March 31,
2024
December 31,
2023
$ Change% Change
CommercialCommercial$9,698,241 $9,508,904 $189,337 %Commercial$9,648,269 $$9,512,230 $$136,039 1.4 1.4 %
Commercial real estateCommercial real estate13,450,209 12,457,070 993,139 
Residential real estateResidential real estate6,684,480 6,460,441 224,039 
ConsumerConsumer2,599,543 2,697,226 (97,683)(4)
Total loansTotal loans$32,432,473 $31,123,641 $1,308,832 %Total loans$33,623,319 $$32,991,927 $$631,392 1.9 1.9 %
Commercial and Commercial Real Estate Loans
Commercial and commercial real estate loans are the largest classifications within earning assets, representing 53%55% of earning assets at both June 30, 2023 andMarch 31, 2024, compared to 54% at December 31, 2022.2023. The increase in commercial and commercial real estate loans at June 30, 2023 compared toMarch 31, 2024 from December 31, 20222023 was driven by disciplined loan production that was well balanced across our market footprint and product lines.
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The following table provides detail on commercial loans by industry classification (as defined by the North American Industry Classification System) and by loan size.
June 30, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
(dollars in thousands)(dollars in thousands)Outstanding
Exposure(1)
NonaccrualOutstanding
Exposure(1)
Nonaccrual(dollars in thousands)Outstanding
Exposure(1)
NonaccrualOutstanding
Exposure(1)
Nonaccrual
By Industry:By Industry:
Manufacturing
Manufacturing
ManufacturingManufacturing$1,803,303 $2,970,373 $6,901 $1,757,907 $2,803,883 $2,464 
Health care and social assistanceHealth care and social assistance1,360,925 1,776,461 7,523 1,588,392 2,043,105 11,806 
Wholesale tradeWholesale trade806,904 1,519,782 4,860 857,400 1,552,985 2,895 
Real estate rental and leasingReal estate rental and leasing670,100 1,010,194 1,107 642,511 962,549 1,135 
Finance and insurance
ConstructionConstruction630,504 1,441,527 4,386 556,913 1,307,582 1,517 
Finance and insurance576,081 934,986 8 484,532 858,391 17 
Professional, scientific, and
technical services
Professional, scientific, and
technical services
538,952 866,853 4,571 507,940 832,407 4,735 
Transportation and warehousingTransportation and warehousing439,015 681,702 3,831 422,643 633,267 3,496 
Accommodation and food services
Retail tradeRetail trade406,320 699,800 7,394 332,367 538,135 7,386 
Accommodation and food services388,810 510,089 479 399,915 512,025 596 
Administrative and support and
waste management and
remediation services
Administrative and support and
waste management and
remediation services
307,563 476,445 186 315,785 446,655 13,860 
Educational servicesEducational services240,653 406,915 8 210,850 378,955 3,750 
Agriculture, forestry, fishing,
and hunting
Other servicesOther services218,305 395,272 13,090 194,998 356,743 2,656 
Public administrationPublic administration208,512 301,200  231,453 325,834 846 
Agriculture, forestry, fishing,
and hunting
205,740 359,958 418 261,355 382,376 996 
OtherOther896,554 1,197,440 473 743,943 1,122,409 739 
TotalTotal$9,698,241 $15,548,997 $55,235 $9,508,904 $15,057,301 $58,894 
By Loan Size:By Loan Size:
By Loan Size:
By Loan Size:
Less than $200,000
Less than $200,000
Less than $200,000Less than $200,0003 %3 %3 %%%%3 %3 %3 %%%%
$200,000 to $1,000,000$200,000 to $1,000,00011 11 19 11 11 20 
$1,000,000 to $5,000,000$1,000,000 to $5,000,00024 25 49 25 26 36 
$5,000,000 to $10,000,000$5,000,000 to $10,000,00014 15 6 15 15 24 
$10,000,000 to $25,000,000$10,000,000 to $25,000,00032 28 23 31 27 17 
Greater than $25,000,000Greater than $25,000,00016 18  15 18 — 
TotalTotal100 %100 %100 %100 %100 %100 %Total100 %100 %100 %100 %100 %100 %
(1)    Includes unfunded loan commitments.
The following table provides detail on commercial real estate loans classified by property type.
June 30, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
(dollars in thousands)(dollars in thousands)Outstanding
Exposure(1)
NonaccrualOutstanding
Exposure(1)
Nonaccrual(dollars in thousands)Outstanding
Exposure(1)
NonaccrualOutstanding
Exposure(1)
Nonaccrual
By Property Type:By Property Type:
MultifamilyMultifamily$4,455,077 $6,420,032 $11,942 $4,188,137 $5,920,414 $13,749 
Multifamily
Multifamily
Warehouse / IndustrialWarehouse / Industrial2,378,739 3,124,270 5,807 1,976,804 2,533,892 9,090 
Retail
OfficeOffice1,927,184 2,160,627 29,315 1,813,007 1,979,272 13,728 
Retail1,912,285 2,003,162 32,109 1,808,041 1,895,345 18,155 
Senior housing
Single familySingle family425,926 457,895 5,176 515,390 615,216 7,022 
Other (2)
Other (2)
2,350,998 2,663,938 90,388 2,155,691 2,667,780 61,977 
Other (2)
Other (2)
TotalTotal$13,450,209 $16,829,924 $174,737 $12,457,070 $15,611,919 $123,721 
(1)    Includes unfunded loan commitments.
(2)    Other includes commercial development, agriculture real estate, hotels, self-storage, senior housing, 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
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Company’s primary market area. Approximately 28% of the commercial real estate portfolio is owner-occupied as of March 31, 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 March 31, 2024, the Company held $430.2 million of non-owner-occupied commercial real estate loans, or 1.3% of total loans, that mature within 18 months with an interest rate below 4%.
Residential Real Estate Loans
At June 30, 2023,March 31, 2024, residential real estate loans held in our loan portfolio were $6.7 billion, an increasea decrease of $224.0$38.1 million compared to December 31, 2022.  Future2023. 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 couldmay result in a decline in the level of refinancings and new originations of residential real estate loans.
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Consumer Loans
Consumer loans, including automobile loans, personal, and home equity loans and lines of credit, decreased $97.7increased $20.1 million to $2.6$2.7 billion at June 30, 2023March 31, 2024 compared to December 31, 20222023 reflecting lower directhigher indirect loans.
Funding
The following table summarizes Old National’s total funding, comprised of deposits and wholesale borrowings:
(dollars in thousands)(dollars in thousands)June 30,
2023
December 31,
2022
$ Change% Change(dollars in thousands)March 31,
2024
December 31,
2023
$ Change% Change
Deposits:Deposits:
Noninterest-bearing demandNoninterest-bearing demand$10,532,838 $11,930,798 $(1,397,960)(12)%
Noninterest-bearing demand
Noninterest-bearing demand$9,257,709 $9,664,247 $(406,538)(4.2)%
Interest-bearing:Interest-bearing:
Checking and NOW
Checking and NOW
Checking and NOWChecking and NOW7,654,202 8,340,955 (686,753)(8)%7,236,667 7,331,487 7,331,487 (94,820)(94,820)(1.3)(1.3)%
SavingsSavings5,578,323 6,326,158 (747,835)(12)%Savings5,020,095 5,099,186 5,099,186 (79,091)(79,091)(1.6)(1.6)%
Money marketMoney market7,200,288 5,389,139 1,811,149 34 %Money market10,234,113 9,561,116 9,561,116 672,997 672,997 7.0 7.0 %
Time depositsTime deposits5,265,664 3,013,780 2,251,884 75 %Time deposits5,950,834 5,579,144 5,579,144 371,690 371,690 6.7 6.7 %
Total depositsTotal deposits36,231,315 35,000,830 1,230,485 %Total deposits37,699,418 37,235,180 37,235,180 464,238 464,238 1.2 1.2 %
Wholesale borrowings:Wholesale borrowings:
Federal funds purchased and interbank borrowingsFederal funds purchased and interbank borrowings136,060 581,489 (445,429)(77)%
Federal funds purchased and interbank borrowings
Federal funds purchased and interbank borrowings50,416 390 50,026 N/M  
Securities sold under agreements to repurchaseSecurities sold under agreements to repurchase311,447 432,804 (121,357)(28)%Securities sold under agreements to repurchase274,493 285,206 285,206 (10,713)(10,713)(3.8)(3.8)%
Federal Home Loan Bank advancesFederal Home Loan Bank advances4,771,183 3,829,018 942,165 25 %Federal Home Loan Bank advances4,193,039 4,280,681 4,280,681 (87,642)(87,642)(2.0)(2.0)%
Other borrowingsOther borrowings815,318 743,003 72,315 10 %Other borrowings813,213 764,870 764,870 48,343 48,343 6.3 6.3 %
Total wholesale borrowingsTotal wholesale borrowings6,034,008 5,586,314 447,694 %Total wholesale borrowings5,331,161 5,331,147 5,331,147 14 14 — — %
Total fundingTotal funding$42,265,323 $40,587,144 $1,678,179 %Total funding$43,030,579 $$42,566,327 $$464,252 1.1 1.1 %
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 14%12% at both June 30, 2023 andMarch 31, 2024, compared to 13% at December 31, 2022.
Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities at June 30, 2023 decreased $102.5 million from December 31, 2022 primarily due to incentive compensation payments during the six months ended June 30, 2023 and lower derivative liabilities.2023.
Capital 
Shareholders’ equity totaled $5.3$5.6 billion at June 30, 2023, compared to $5.1 billion atboth March 31, 2024 and December 31, 2022.  This increase was driven by retained2023. Retained earnings along with changes in unrealized gains (losses) on derivatives. These increases were partially offset by dividends and changes in unrealized gains (losses) on available-for-sale investment securities and derivatives during the repurchase of 1.8 million shares of Common Stock in the sixthree months ended June 30, 2023 (all of which were repurchased in the first quarter of 2023) under a stock repurchase plan that was approved by the Company’s Board of Directors, which reduced equity by $29.5 million.March 31, 2024.
Capital Adequacy
Old National and the banking industry are subject to various regulatory capital requirements administered by the federal banking agencies. At June 30, 2023,March 31, 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.
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Old National’s consolidated capital position remains strong as evidenced by the following key industry ratios. 
Regulatory
Guidelines
Minimum
Regulatory
Guidelines
Minimum
Prompt
Corrective
Action "Well
Capitalized"
Guidelines
June 30,
2023
December 31,
2022
Risk-based capital:
Tier 1 capital to total average assets (leverage
ratio)
Tier 1 capital to total average assets (leverage
ratio)
Tier 1 capital to total average assets (leverage
ratio)
Tier 1 capital to total average assets (leverage
ratio)
4.00 %N/A%8.59 %8.52 %4.00 %%N/A%8.96 %%8.83 %%
Common equity Tier 1 capital to risk-weighted
total assets
Common equity Tier 1 capital to risk-weighted
total assets
7.00 N/A10.14 10.03 
Tier 1 capital to risk-weighted total assetsTier 1 capital to risk-weighted total assets8.50 6.00 10.79 10.71 
Tier 1 capital to risk-weighted total assets
Tier 1 capital to risk-weighted total assets
Total capital to risk-weighted total assetsTotal capital to risk-weighted total assets10.50 10.00 12.14 12.02 
Shareholders' equity to assetsN/AN/A10.91 10.97 
Total capital to risk-weighted total assets
Total capital to risk-weighted total assets
Shareholders’ equity to assets
Shareholders’ equity to assets
Shareholders’ equity to assets
Old National Bank, Old National’s bank subsidiary, maintained a strong capital position as evidenced by the following key industry ratios.
Regulatory
Guidelines
Minimum
Regulatory
Guidelines
Minimum
Prompt
Corrective
Action "Well
Capitalized"
Guidelines
June 30,
2023
December 31,
2022
Risk-based capital:
Tier 1 capital to total average assets (leverage
ratio)
Tier 1 capital to total average assets (leverage
ratio)
Tier 1 capital to total average assets (leverage
ratio)
Tier 1 capital to total average assets (leverage
ratio)
4.00 %5.00 %8.73 %8.47 %4.00 %%5.00 %%9.04 %%8.99 %%
Common equity Tier 1 capital to risk-weighted
total assets
Common equity Tier 1 capital to risk-weighted
total assets
7.00 6.50 10.98 10.66 
Tier 1 capital to risk-weighted total assetsTier 1 capital to risk-weighted total assets8.50 8.00 10.98 10.66 
Tier 1 capital to risk-weighted total assets
Tier 1 capital to risk-weighted total assets
Total capital to risk-weighted total assetsTotal capital to risk-weighted total assets10.50 10.00 11.73 11.35 
Total capital to risk-weighted total assets
Total capital to risk-weighted total assets
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, 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 20222023 Annual Report on Form 10-K.
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Credit Risk
Credit risk represents the risk of loss arising from an obligor’s inability or failure to meet contractual payment or performance terms. Our primary credit risks result from our investment and lending activities.
Asset Quality
We lend to commercial and commercial real estate clients in many diverse industries including, among others, real estate rental and leasing, manufacturing, healthcare, wholesale trade, construction, and agriculture. Old National manages concentrations of credit exposure by industry, product, geography, client relationship, and loan size. At June 30, 2023,March 31, 2024, our average commercial loan size was approximately $680,000$720,000 and our average commercial real estate loan size was approximately $1,350,000.$1,530,000. In addition, while loans to lessors of residential and non-residential real estate exceed 10% of total loans, no individual sub-segment category within those broader categories reaches the 10% threshold. At June 30, 2023,March 31, 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 region.region of the United States.
The following table presents a summary of under-performing, criticized, and classified assets:
(dollars in thousands)(dollars in thousands)June 30,
2023
December 31,
2022
Total nonaccrual loansTotal nonaccrual loans$295,509 $238,178 
TDRs still accruing (1)
N/A     15,313 
Loans 90 days or more past due and still accruing303 2,650 
Total nonaccrual loans
Total nonaccrual loans
Total past due loans (90 days or more and still accruing)
Total past due loans (90 days or more and still accruing)
Total past due loans (90 days or more and still accruing)
Foreclosed assets
Foreclosed assets
Foreclosed assetsForeclosed assets9,824 10,845 
Total under-performing assetsTotal under-performing assets$305,636 $266,986 
Classified loans (includes nonaccrual, TDRs still accruing,
past due 90 days, and other problem loans) (1)
$820,521 $745,485 
Other classified assets (2)
40,942 24,735 
Total under-performing assets
Total under-performing assets
Classified loans (includes nonaccrual, past due 90 days,
and other problem loans)
Classified loans (includes nonaccrual, past due 90 days,
and other problem loans)
Classified loans (includes nonaccrual, past due 90 days,
and other problem loans)
Other classified assets (1)
Other classified assets (1)
Other classified assets (1)
Criticized loans
Criticized loans
Criticized loansCriticized loans614,547 636,069 
Total criticized and classified assetsTotal criticized and classified assets$1,476,010 $1,406,289 
Total criticized and classified assets
Total criticized and classified assets
Asset Quality Ratios:Asset Quality Ratios:
Nonaccrual loans/total loans (3)
0.91 %0.77 %
Non-performing loans/total loans (3) (4)
0.91 0.81 
Under-performing assets/total loans (3)
0.94 0.86 
Asset Quality Ratios:
Asset Quality Ratios:
Nonaccrual loans/total loans (2)
Nonaccrual loans/total loans (2)
Nonaccrual loans/total loans (2)
0.98 %0.83 %
Under-performing assets/total loans (2)
Under-performing assets/total loans (2)
Under-performing assets/total loans (2)
Under-performing assets/total assets
Under-performing assets/total assets
Under-performing assets/total assetsUnder-performing assets/total assets0.63 0.57 
Allowance for credit losses on loans/under-performing assetsAllowance for credit losses on loans/under-performing assets98.34 113.74 
Allowance for credit losses on loans/under-performing assets
Allowance for credit losses on loans/under-performing assets
Allowance for credit losses on loans/nonaccrual loansAllowance for credit losses on loans/nonaccrual loans101.71 127.50 
Allowance for credit losses on loans/nonaccrual loans
Allowance for credit losses on loans/nonaccrual loans
(1)As a result of the adoption of ASU 2022-02 on January 1, 2023, the TDR classification is no longer applicable.
(2)Includes investment securities that fell below investment grade rating.
(3)(2)Loans exclude loans held for sale.
(4)Non-performing loans include nonaccrual loans and TDRs still accruing for periods prior to January 1, 2023.held-for-sale.
Under-performing assets increased to $305.6$340.2 million at June 30, 2023,March 31, 2024, compared to $267.0$285.2 million at December 31, 2022 primarily due to an increase in nonaccrual loans.2023. Under-performing assets as a percentage of total loans at June 30, 2023March 31, 2024 were 0.94%1.01%, an 8a 15 basis point increase from 0.86% at December 31, 2022.2023.
Nonaccrual loans increased $57.3$53.8 million from December 31, 20222023 to June 30, 2023March 31, 2024 reflecting PCD loanthe migration in theof certain commercial real estate portfolio.credits as they progress to resolution. As a percentage of nonaccrual loans, the allowance for credit losses on loans was 101.71%97.28% at June 30, 2023,March 31, 2024, compared to 127.50%111.93% at December 31, 2022.2023.
Total criticized and classified assets were $1.5$1.8 billion at June 30, 2023,March 31, 2024, an increase of $69.7$70.8 million from December 31, 2022.2023 primarily due to higher criticized and classified commercial real estate loans. Other classified assets include investment securities that fell below investment grade rating totaling $40.9$54.4 million at June 30, 2023,March 31, 2024, compared to $24.7$48.9 million at December 31, 2022.
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2023.
Allowance for Credit Losses on Loans and Unfunded Commitments
Net charge-offs on loans totaled $10.1$11.8 million during the three months ended June 30, 2023,March 31, 2024, compared to $1.8$16.4 million for the same period in 2022.2023. Annualized, net charge-offs to average loans were 0.13%0.14% for the three months ended June 30, 2023,March 31, 2024, compared to 0.02%0.21% for the same period in 2022.2023. The three months ended June 30, 2023March 31, 2024 included net charge-offs on PCD loans totaling $5.4$5.7 million, or 0.07% on an annualized basis of average loans. Net charge-offs on loans, totaled $26.5 million during the six months ended June 30, 2023,
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compared to $4.5 million for the same period in 2022. Annualized, net charge-offs to average loans were 0.17% for the six months ended June 30, 2023, compared to 0.04% for the same period in 2022. The six months ended June 30, 2023 included net charge-offs on PCD loans totaling $17.8$12.4 million, or 0.11%0.16% on an annualized basis of average loans. Management will continue its efforts to reduceloans for the level of non-performing loans and may consider the possibility of sales of troubled and non-performing loans, which could resultsame period in additional charge-offs to the allowance for credit losses on loans.2023.
Credit quality within the loans held for investment portfolio is continuously monitored by management and is reflected within the allowance for credit losses on loans. The allowance for credit losses is an estimate of expected losses inherent within the Company’s loans held for investment portfolio. Credit quality is assessed and monitored by evaluating various attributes and the results of those evaluations are utilized in underwriting new loans and in our process for estimating expected credit losses. Expected credit loss inherent in non-cancelable off-balance-sheet credit exposures is accounted for as a separate liability included in other liabilities on the balance sheet. The allowance for credit losses on loans held for investment and unfunded loan commitments is adjusted by a credit loss expense, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries. Accrued interest receivable is excluded from the estimate of credit losses.
The allowance for credit loss estimation process involves procedures to consider the unique characteristics of our loan portfolio segments. These segments are further disaggregated into loan classes based on the level at which credit risk of the loan is monitored. When computing the level of expected credit losses, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status, and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense in those future periods.
The allowance level is influenced by loan volumes, loan AQR migration or delinquency status, changes in historical loss experience, and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions. The methodology for estimating the amount of expected credit losses reported in the allowance for credit losses on loans has two basic components: first, an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans; and second, a pooled component for estimated expected credit losses for pools of loans that share similar risk characteristics.
The allowance for credit losses on loans was $300.6$319.7 million at June 30, 2023,March 31, 2024, compared to $303.7$307.6 million at December 31, 2022.2023. Continued loan growth in future periods, a decline in our current level of recoveries, or an increase in charge-offs could result in an increase in provision expense. Additionally, provision expense may be volatile due to changes in CECL model assumptions of credit quality, macroeconomic factors and conditions, and loan composition, which drive the allowance for credit losses balance.
We maintain an allowance for credit losses on unfunded loan commitments to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the allowance for credit losses on loans, modified to take into account the probability of a drawdown on the commitment. The allowance for credit losses on unfunded loan commitments is classified as a liability account on the balance sheet within accrued expenses and other liabilities, while the corresponding provision for unfunded loan commitments is included in the provision for credit losses. The allowance for credit losses on unfunded loan commitments totaled $37.0$26.3 million at June 30, 2023,March 31, 2024, compared to $32.2$31.2 million at December 31, 2022.2023.
See the section entitled “Risk Factors” in the Company’s 20222023 Annual Report on Form 10-K for further discussion of our credit risk.
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Market Risk
Market risk is the risk that the estimated fair value of our assets, liabilities, and derivative financial instruments will decline as a result of changes in interest rates or financial market volatility, or that our net income will be significantly reduced by interest rate changes.
The objective of our interest rate management process is to maximize net interest income while operating within acceptable limits established for interest rate risk and maintaining adequate levels of funding and liquidity.
Potential cash flows, sales, or replacement value of many of our assets and liabilities, especially those that earn or pay interest, are sensitive to changes in the general level of interest rates. This interest rate risk arises primarily from our normal business activities of gathering deposits and extending loans. Many factors affect our exposure to
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changes in interest rates, such as general economic and financial conditions, client preferences, historical pricing relationships, and re-pricing characteristics of financial instruments. Our earnings can also be affected by the monetary and fiscal policies of the U.S. Government and its agencies, particularly the Federal Reserve.
In managing interest rate risk, we establish guidelines for asset and liability management, including measurement of short and long-term sensitivities to changes in interest rates, which are reviewed with the Enterprise Risk Committee of our Board of Directors. Based on the results of our analysis, we may use different techniques to manage changing trends in interest rates including:
adjusting balance sheet mix or altering interest rate characteristics of assets and liabilities;
changing product pricing strategies;
modifying characteristics of the investment securities portfolio; or
using derivative financial instruments, to a limited degree.

A key element in our ongoing process is to measure and monitor interest rate risk using a model to quantify the likely impact of changing interest rates on Old National’s results of operations. The model quantifies the effects of various possible interest rate scenarios on projected net interest income. The model measures the impact on net interest income relative to a base case scenario.scenario over a two-year cumulative horizon resulting from an immediate change in interest rates using multiple rate scenarios. The base case scenario assumes that the balance sheet and interest rates are held at current levels. The model shows our projected net interest income sensitivity based on interest rate changes only and does not consider other forecast assumptions. Due to the dynamics of future interest rate expectations, we also measure and monitor interest rate risk using the forward curve, which may be a more probable scenario of our interest rate exposure. The forward curve represents the relationship between the price of forward contracts and the time to maturity of the forward contracts at a point in time. Presentation of the forward curve model is included in the following table as of March 31, 2024.
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The following table illustrates our projected net interest income sensitivity over a two-year cumulative horizon based on the asset/liability model at June 30, 2023March 31, 2024 and 2022:2023:
Immediate Rate DecreaseImmediate Rate Increase
Immediate Rate DecreaseImmediate Rate Decrease
March 31, 2024
Forward
Curve
Immediate Rate Increase
(dollars in thousands)(dollars in thousands)-300
Basis Points
-200
Basis Points
-100
Basis Points
Base+100
Basis Points
+200
Basis Points
+300
Basis Points
(dollars in thousands)-300
Basis Points
-200
Basis Points
-100
Basis Points
Base+100
Basis Points
+200
Basis Points
+300
Basis Points
June 30, 2023
March 31, 2024
Projected interest income:Projected interest income:
Projected interest income:
Projected interest income:
Money market, other
interest earning
investments, and
investment securities
Money market, other
interest earning
investments, and
investment securities
Money market, other interest
earning investments, and
investment securities
Money market, other interest
earning investments, and
investment securities
$703,760 $700,039 $751,180 $805,138 $858,682 $912,190 $966,037 
LoansLoans2,812,913 3,179,212 3,546,919 3,910,105 4,266,532 4,623,023 4,979,447 
Total interest incomeTotal interest income3,516,673 3,879,251 4,298,099 4,715,243 5,125,214 5,535,213 5,945,484 
Projected interest expense:Projected interest expense:
Deposits
Deposits
DepositsDeposits358,077 570,196 785,031 1,012,889 1,259,985 1,507,077 1,754,162 
BorrowingsBorrowings373,267 415,553 513,309 600,910 683,328 765,754 848,179 
Total interest expenseTotal interest expense731,344 985,749 1,298,340 1,613,799 1,943,313 2,272,831 2,602,341 
Net interest incomeNet interest income$2,785,329 $2,893,502 $2,999,759 $3,101,444 $3,181,901 $3,262,382 $3,343,143 
Change from baseChange from base$(316,115)$(207,942)$(101,685)$80,457 $160,938 $241,699 
% change from base% change from base(10.19)%(6.70)%(3.28)%2.59 %5.19 %7.79 %% change from base(4.47)%(3.12)%(1.61)%0.28 %1.07 %1.66 %2.37 %
Immediate
Rate
Decrease
Immediate Rate Increase
-50
Basis Points
Base+100
Basis Points
+200
Basis Points
+300
Basis Points
June 30, 2022
Immediate Rate Decrease
Immediate Rate Decrease
Immediate Rate Decrease
-300
Basis Points
-300
Basis Points
-300
Basis Points
March 31, 2023
March 31, 2023
March 31, 2023
Projected interest income:
Projected interest income:
Projected interest income:Projected interest income:
Money market, other interest
earning investments, and
investment securities
Money market, other interest
earning investments, and
investment securities
$617,680 $639,428 $683,561 $726,946 $770,079 
Money market, other
interest earning
investments, and
investment securities
Money market, other
interest earning
investments, and
investment securities
Loans
Loans
LoansLoans2,151,455 2,308,609 2,618,757 2,931,908 3,242,547 
Total interest incomeTotal interest income2,769,135 2,948,037 3,302,318 3,658,854 4,012,626 
Total interest
income
Total interest
income
Projected interest expense:
Projected interest expense:
Projected interest expense:Projected interest expense:
DepositsDeposits44,713 72,114 274,985 484,116 693,243 
Deposits
Deposits
Borrowings
Borrowings
BorrowingsBorrowings210,225 238,638 299,725 360,822 421,923 
Total interest expenseTotal interest expense254,938 310,752 574,710 844,938 1,115,166 
Total interest
expense
Total interest
expense
Net interest
income
Net interest
income
Net interest incomeNet interest income$2,514,197 $2,637,285 $2,727,608 $2,813,916 $2,897,460 
Change from baseChange from base$(123,088)$90,323 $176,631 $260,175 
Change from base
Change from base
% change from base% change from base(4.67)%3.42 %6.70 %9.87 %
% change from base
% change from base
Our projected net interest income increased year over year due to loan growth and rising interest rates.
A key element in the measurement and modeling of interest rate risk is the re-pricing assumptions of our transaction deposit accounts, which have no contractual maturity dates. Because the models are driven by expected behavior in various interest rate scenarios and many factors besides market interest rates affect our net interest income, we recognize that model outputs are not guarantees of actual results. For this reason, we model many different combinations of interest rates and balance sheet assumptions to understand our overall sensitivity to market interest rate changes, including shocks, ramps, yield curve flattening, yield curve steepening, as well as forecasts of likely interest rate scenarios tested.
We use cash flow and fair value hedges, primarily interest rate swaps, collars, and floors, to mitigate interest rate risk. Derivatives designated as hedging instruments were in a net liability position with a fair value loss of $13.4$12.4 million at June 30, 2023,March 31, 2024, compared to a net liabilityasset position with a fair value lossgain of $36.1$4.5 million at
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December 31, 2022.2023. See Note 15 to the consolidated financial statements for further discussion of derivative financial instruments.
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Liquidity Risk
Liquidity risk arises from the possibility that we may not be able to satisfy current or future financial commitments or may become unduly reliant on alternative funding sources. We establish liquidity risk guidelines that we review with the Enterprise Risk Committee of our Board of Directors and monitor through our Asset/Liability Executive Management Committee. The objective of liquidity management is to ensure we have the ability to fund balance sheet growth and meet deposit and debt obligations in a timely and cost-effective manner. Management monitors liquidity through a regular review of asset and liability maturities, funding sources, and loan and deposit forecasts. We maintain strategic and contingency liquidity plans to ensure sufficient available funding to satisfy requirements for balance sheet growth, to properly manage capital markets’ funding sources, and to address unexpected liquidity requirements. On May 31, 2023, we filed an automatic shelf registration statement with the SEC that permits us to issue an unspecified amount of debt or equity securities.
Loan repayments and maturing investment securities are a relatively predictable source of funds. However, deposit flows, calls of investment securities, and prepayments of loans and mortgage-related securities are not as predictable as they are strongly influenced by interest rates, events at other banking organizations, the housing market, general and local economic conditions, and competition in the marketplace. We continually monitor marketplace trends to identify patterns that might improve the predictability of the timing of deposit flows or asset prepayments.
A maturity schedule for Old National Bank’s time deposits is shown in the following table at June 30, 2023.March 31, 2024.
(dollars in thousands)(dollars in thousands)
Maturity BucketMaturity BucketAmountRate
2023$2,197,384 3.32 %
Maturity Bucket
Maturity Bucket
2024
2024
202420242,819,858 4.17 $4,898,915 4.54 4.54 %%
20252025135,211 1.47 
2026202665,092 0.82 
2026
2026
2027202735,551 0.66 
2027
2027
2028
2028
2028
2027 and beyond
2027 and beyond
2027 and beyond2027 and beyond12,568 1.17 
TotalTotal$5,265,664 3.67 %
Total
Total$5,950,834 4.35 %
Our ability to acquire funding at competitive prices is influenced by rating agencies’ views of our credit quality, liquidity, capital, and earnings.  Moody’s Investors Service places us in an investment grade that indicates a low risk of default.  On April 21, 2023, Moody’s Investors Service affirmed the long-term debt, deposit ratings, and assessments of Old National Bancorp (Old National, long-term senior unsecured debt “A3”) and its subsidiaries, including the Baseline Credit Assessment (“BCA”) of its banking subsidiary, Old National Bank (long-term deposits “Aa3 negative,” BCA “a2”). The outlooks on the senior unsecured debt rating and long-term issuer ratings of Old National and on the long-term deposit rating and issuer ratings of Old National Bank are “negative.”
The credit ratings of Old National and Old National Bank at June 30, 2023March 31, 2024 are shown in the following table.
 Moody'sMoody’s Investors Service
 Long-termShort-term
Old NationalA3Baa1N/A
Old National BankAa3A1P-1
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Old National Bank maintains relationships in capital markets with brokers and dealers to issue certificates of deposit and short-term and medium-term bank notes as well. At June 30, 2023,March 31, 2024, Old National and its subsidiaries had the following availability of liquid funds and borrowings:
(dollars in thousands)(dollars in thousands)Parent CompanySubsidiaries(dollars in thousands)Parent CompanySubsidiaries
Available liquid funds:Available liquid funds:
Cash and due from banksCash and due from banks$882,164 $315,722 
Cash and due from banks
Cash and due from banks
Unencumbered government-issued debt securitiesUnencumbered government-issued debt securities— 725,107 
Unencumbered investment grade municipal securitiesUnencumbered investment grade municipal securities— 53,245 
Unencumbered corporate securitiesUnencumbered corporate securities— 137,754 
Availability of borrowings:
Amount available from Federal Reserve discount window*— 963,723 
Amount available from Federal Reserve Bank Term Funding Program— 2,392,528 
Amount available from Federal Home Loan Bank*— 6,040,931 
Availability of borrowings*:
Amount available from Federal Reserve discount window
Amount available from Federal Reserve discount window
Amount available from Federal Reserve discount window
Amount available from Federal Home Loan Bank
Amount available from Federal Home Loan Bank
Amount available from Federal Home Loan Bank
Total available fundsTotal available funds$882,164 $10,629,010 
* Based on collateral pledged
Old National Bancorp has routine funding requirements consisting primarily of operating expenses, dividends to shareholders, debt service, net derivative cash flows, and funds used for acquisitions. Old National Bancorp can obtain funding to meet its obligations from dividends and management fees collected from its subsidiaries, operating line of credit, and through the issuance of debt securities. Additionally, Old National Bancorp has a shelf registration in place with the SEC permitting ready access to the public debt and equity markets. At June 30, 2023,March 31, 2024, Old National Bancorp’s other borrowings outstanding were $482.3$478.5 million. Management believes the Company has the ability to generate and obtain adequate amounts of liquidity to meet its requirements in the short-term and the long-term.
Federal banking laws regulate the amount of dividends that may be paid by Old National Bank to Old National Bancorp on an unconsolidated basis without obtaining prior regulatory approval. Prior regulatory approval is required if dividends to be declared in any year would exceed net earnings of the current year plus retained net profits for the preceding two years. Prior regulatory approval to pay dividends was not required in 20222023 and is not currently required.
CRITICAL ACCOUNTING ESTIMATES
Our most significant accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.2023. Certain of these accounting policies require management to use significant judgment and estimates, which can have a material impact on the carrying value of certain assets and liabilities. We consider these policies to be our critical accounting estimates. The judgment and assumptions made are based upon historical experience, future forecasts, or other factors that management believes to be reasonable under the circumstances. Because of the nature of the judgment and assumptions, actual results could differ from estimates, which could have a material effect on our financial condition and results of operations.
For additional information regarding critical accounting estimates, see the section titled “Critical Accounting Estimates” included in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022.2023. There have been no material changes in the Company’s application of critical accounting estimates since December 31, 2022.2023.
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk and Liquidity Risk.
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ITEM 4.  CONTROLS AND PROCEDURES
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Evaluation of Disclosure Controls and Procedures. Old National’s principal executive officer and principal financial officer have concluded that Old National’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended), based on their evaluation of these controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q, are effective at the reasonable assurance level as discussed below to ensure that information required to be disclosed by Old National in the reports it files under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to Old National’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Limitations on the Effectiveness of Controls. Management, including ourthe principal executive officer and principal financial officer, does not expect that Old National’s disclosure controls and internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be only reasonable assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, the system of controls may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Control over Financial Reporting. There were no changes in Old National’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, Old National’s internal control over financial reporting.
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PART II
OTHER INFORMATION
ITEM 1A.  RISK FACTORS
There have been no material changes from the risk factors disclosed in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.2023.
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c)ISSUER PURCHASES OF EQUITY SECURITIES
Period
Total
Number
of Shares
Purchased (1)
Average
Price
Paid Per
Share
Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans
or Programs (2)
Maximum
Dollar Value of
Shares that
May Yet
Be Purchased
Under the Plans
or Programs (2)
04/01/23 - 04/30/231,242 $14.20 — $170,476,849 
05/01/23 - 05/31/234,922 $13.28 — $170,476,849 
06/01/23 - 06/30/231,673 $12.72 — $170,476,849 
Total7,837 $13.31 — $170,476,849 
Period
Total
Number
of Shares
Purchased (1)
Average
Price
Paid Per
Share
Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans
or Programs (2)
Maximum
Dollar Value of
Shares that
May Yet
Be Purchased
Under the Plans
or Programs (2)
01/01/24 - 01/31/241,208 $16.91 — $170,476,849 
02/01/24 - 02/29/24229,379 $16.53 — $200,000,000 
03/01/24 - 03/31/24203,382 $16.56 — $200,000,000 
Total433,969 $16.55 — $200,000,000 
(1)Consists of shares acquired pursuant to the Company’s share-based incentive programs. Under the terms of the Company’s share-based incentive programs, the Company accepts previously owned shares of common stock surrendered to satisfy tax withholding obligations associated with the vesting of restricted stock.stock or performance shares earned.
(2)On February 22, 2023,21, 2024, the Company issued a press release announcing that itsCompany’s Board of Directors approved a stock repurchase program, that authorizesunder which the Company is authorized to repurchase up to $200 million of the Company’sits outstanding shares of common stock as conditions warrant, through February 28, 2025. This stock repurchase program replaced the prior $200 million program that expired on February 29, 2024.
ITEM 5.  OTHER INFORMATION
(a)None
(b)There have been no material changes in the procedure by which security holders recommend nominees to the Company’s board of directors.
(c)During the three months ended June 30, 2023,March 31, 2024, no director or Section 16 officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.
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ITEM 6.  EXHIBITS
Exhibit No.
 Description
2.1 
3.1 
3.2 
3.3 
3.4 
3.5  
3.6 
31.1  
31.2  
32.1  
32.2  
101  The following materials from Old National’s Form 10-Q Report for the quarterly period ended June 30, 2023,March 31, 2024, formatted in inline XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (Loss), (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.
104  The cover page from Old National’s Form 10-Q Report for the quarterly period ended June 30, 2023,March 31, 2024, formatted in inline XBRL and contained in Exhibit 101.
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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/  Brendon B. FalconerJohn V. Moran, IV
  Brendon B. FalconerJohn V. Moran, IV
  Senior Executive Vice President, Interim Chief Financial Officer,
and Chief FinancialStrategy Officer
  Duly Authorized Officer and Principal Financial Officer
   
  Date:  August 2, 2023May 1, 2024

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