Old National Bancorp (ONB) 10-Q 2024 Q2 Quarterly report

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, 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)

 

Indiana		35-1539838
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
One Main Street		47708
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	NASDAQ	Global Select Market
Depositary Shares, each representing a 1/40th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series A	ONBPP	NASDAQ	Global Select Market
Depositary Shares, each representing a 1/40th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series C	ONBPO	NASDAQ	Global Select Market

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 318,970,000 shares outstanding at July 31, 2024.

OLD NATIONAL BANCORP

FORM 10-Q

TABLE OF CONTENTS

			Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets (unaudited)		4
	Consolidated Statements of Income (unaudited)		5
	Consolidated Statements of Comprehensive Income (Loss) (unaudited)		6
	Consolidated Statements of Changes in Shareholders’ Equity (unaudited)		7
	Consolidated Statements of Cash Flows (unaudited)		8
	Notes to Consolidated Financial Statements (unaudited)		10
	Note 1.	Basis of Presentation	10
	Note 2.	Recent Accounting Pronouncements	10
	Note 3.	Acquisition and Divestiture Activity	11
	Note 4.	Net Income Per Common Share	13
	Note 5.	Investment Securities	14
	Note 6.	Loans and Allowance for Credit Losses	17
	Note 7.	Leases	28
	Note 8.	Goodwill and Other Intangible Assets	30
	Note 9.	Qualified Affordable Housing Projects and Other Tax Credit Investments	31
	Note 10.	Securities Sold Under Agreements to Repurchase	33
	Note 11.	Federal Home Loan Bank Advances	33
	Note 12.	Other Borrowings	34
	Note 13.	Accumulated Other Comprehensive Income (Loss)	36
	Note 14.	Income Taxes	38
	Note 15.	Derivative Financial Instruments	39
	Note 16.	Commitments, Contingencies, and Financial Guarantees	43
	Note 17.	Fair Value	44
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		50
	Forward-Looking Statements		50
	Financial Highlights		51
	Non-GAAP Financial Measures		53
	Executive Summary		56
	Results of Operations		57
	Financial Condition		63
	Risk Management		67
	Critical Accounting Estimates		73
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		73
Item 4.	Controls and Procedures		74
PART II.	OTHER INFORMATION		75
Item 1A.	Risk Factors		75
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		75
Item 5.	Other Information		75
Item 6.	Exhibits		76
SIGNATURE			77

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

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: NASDAQ Global Select Market

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

SOFR: Secured Overnight Financing Rate

3

OLD NATIONAL BANCORP

CONSOLIDATED BALANCE SHEETS

(dollars and shares in thousands, except per share data)	June 30, 2024		December 31, 2023
	(unaudited)
Assets
Cash and due from banks	$	428,665	$	430,866
Money market and other interest-earning investments	804,381		744,192
Total cash and cash equivalents	1,233,046		1,175,058
Equity securities, at fair value	85,521		80,372
Investment securities - available-for-sale, at fair value (amortized cost    $8,168,508 and $7,684,889, respectively)	7,105,478		6,713,055
Investment securities - held-to-maturity, at amortized cost (fair value    $2,512,502 and $2,601,188, respectively)	2,986,449		3,013,493
Federal Home Loan Bank/Federal Reserve Bank stock, at cost	374,147		365,588
Loans held-for-sale, at fair value	66,126		32,006
Loans:
Commercial	10,332,631		9,512,230
Commercial real estate	16,016,958		14,140,629
Residential real estate	6,894,957		6,699,443
Consumer	2,905,967		2,639,625
Total loans, net of unearned income	36,150,513		32,991,927
Allowance for credit losses on loans	(366,335)		(307,610)
Net loans	35,784,178		32,684,317
Premises and equipment, net	601,945		565,396
Goodwill	2,170,709		1,998,716
Other intangible assets	135,495		102,250
Company-owned life insurance	862,032		767,902
Accrued interest receivable and other assets	1,714,519		1,591,683
Total assets	$	53,119,645	$	49,089,836
Liabilities
Deposits:
Noninterest-bearing demand	$	9,336,042	$	9,664,247
Interest-bearing:
Checking and NOW	8,081,218		7,331,487
Savings	4,983,811		5,099,186
Money market	10,549,944		9,561,116
Time deposits	7,048,213		5,579,144
Total deposits	39,999,228		37,235,180
Federal funds purchased and interbank borrowings	250,154		390
Securities sold under agreements to repurchase	240,713		285,206
Federal Home Loan Bank advances	4,744,560		4,280,681
Other borrowings	849,777		764,870
Accrued expenses and other liabilities	960,141		960,609
Total liabilities	47,044,573		43,526,936
Shareholders’ Equity
Preferred stock, 2,000 shares authorized, 231 shares issued and outstanding	230,500		230,500
Common stock, no par value, $1.00 per share stated value, 600,000 shares authorized,    318,969 and 292,655 shares issued and outstanding, respectively	318,969		292,655
Capital surplus	4,550,965		4,159,924
Retained earnings	1,766,046		1,618,630
Accumulated other comprehensive income (loss), net of tax	(791,408)		(738,809)
Total shareholders’ equity	6,075,072		5,562,900
Total liabilities and shareholders’ equity	$	53,119,645	$	49,089,836

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,
(dollars and shares in thousands, except per share data)	2024		2023		2024		2023
Interest Income
Loans including fees:
Taxable	$	545,622	$	449,896	$	1,032,983	$	860,271
Nontaxable	13,243		10,925		26,345		21,137
Investment securities:
Taxable	82,755		64,072		157,782		124,873
Nontaxable	10,732		11,043		21,238		22,206
Money market and other interest-earning investments	11,311		8,966		21,296		12,064
Total interest income	663,663		544,902		1,259,644		1,040,551
Interest Expense
Deposits	215,806		100,974		401,245		163,567
Federal funds purchased and interbank borrowings	1,986		5,655		2,947		10,494
Securities sold under agreements to repurchase	639		900		1,556		1,679
Federal Home Loan Bank advances	44,643		45,088		85,810		83,084
Other borrowings	12,168		10,114		23,207		18,068
Total interest expense	275,242		162,731		514,765		276,892
Net interest income	388,421		382,171		744,879		763,659
Provision for credit losses	36,214		14,787		55,105		28,224
Net interest income after provision for credit losses	352,207		367,384		689,774		735,435
Noninterest Income
Wealth and investment services fees	29,358		26,521		57,662		53,441
Service charges on deposit accounts	19,350		17,751		37,248		34,754
Debit card and ATM fees	10,993		10,653		21,047		20,635
Mortgage banking revenue	7,064		4,165		11,542		7,565
Capital markets income	4,729		6,173		7,629		13,112
Company-owned life insurance	5,739		4,698		9,173		7,884
Debt securities gains (losses), net	2		17		(14)		(5,199)
Other income	10,036		11,651		20,506		20,118
Total noninterest income	87,271		81,629		164,793		152,310
Noninterest Expense
Salaries and employee benefits	159,193		135,810		308,996		273,174
Occupancy	26,547		26,085		53,566		54,367
Equipment	8,704		7,721		17,375		15,110
Marketing	11,284		9,833		21,918		19,250
Technology	24,002		20,056		44,025		39,258
Communication	4,480		4,232		8,480		8,693
Professional fees	10,552		6,397		16,958		13,129
FDIC assessment	9,676		9,624		20,989		20,028
Amortization of intangibles	7,425		6,060		12,880		12,246
Amortization of tax credit investments	2,747		2,762		5,496		5,523
Other expense	18,389		18,004		34,633		36,517
Total noninterest expense	282,999		246,584		545,316		497,295
Income before income taxes	156,479		202,429		309,251		390,450
Income tax expense	35,250		47,393		67,738		88,814
Net income	121,229		155,036		241,513		301,636
Preferred dividends	(4,033)		(4,033)		(8,067)		(8,067)
Net income applicable to common shareholders	$	117,196	$	151,003	$	233,446	$	293,569
Net income per common share - basic	$	0.37	$	0.52	$	0.77	$	1.01
Net income per common share - diluted	0.37		0.52		0.77		1.01
Weighted average number of common shares outstanding - basic	315,585		290,559		303,283		290,822
Weighted average number of common shares outstanding - diluted	316,461		291,266		304,207		291,870
Dividends 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,
(dollars in thousands)	2024		2023		2024		2023
Net income	$	121,229	$	155,036	$	241,513	$	301,636
Other comprehensive income (loss):
Change in debt securities available-for-sale:
Unrealized holding gains (losses) for the period	(17,788)		(120,159)		(62,497)		(95,435)
Reclassification adjustment for securities (gains) losses    realized in income	(2)		(17)		14		5,199
Income tax effect	4,441		30,043		15,683		31,189
Unrealized gains (losses) on available-for-sale securities	(13,349)		(90,133)		(46,800)		(59,047)
Change in securities held-to-maturity:
Amortization of unrealized losses on securities transferred     from available-for-sale	4,376		5,122		8,694		10,951
Income tax effect	(1,111)		(1,300)		(2,208)		(1,431)
Changes from securities held-to-maturity	3,265		3,822		6,486		9,520
Change in hedges:
Net unrealized derivative gains (losses) on hedges	(7,035)		13,272		(26,194)		61,121
Reclassification adjustment for (gains) losses realized in net    income	4,747		(32,112)		9,624		(24,820)
Income tax effect	592		4,872		4,285		(8,848)
Changes from hedges	(1,696)		(13,968)		(12,285)		27,453
Change in defined benefit pension plans:
Amortization of net (gains) losses recognized in income	—		6		—		(182)
Income tax effect	—		(2)		—		45
Changes from defined benefit pension plans	—		4		—		(137)
Other comprehensive income (loss), net of tax	(11,780)		(100,275)		(52,599)		(22,211)
Comprehensive income (loss)	$	109,449	$	54,761	$	188,914	$	279,425

The accompanying notes to consolidated financial statements are an integral part of these statements.

6

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)

(dollars in thousands, except per    share data)	Preferred Stock		Common Stock		Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
Balance, December 31, 2022	$	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 ($17.50 per share)	—		—		—		(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, 2023	230,500		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 ($17.50 per share)	—		—		—		(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	$	230,500	$	292,655	$	4,159,924	$	1,618,630	$	(738,809)	$	5,562,900
Net income	—		—		—		120,284		—		120,284
Other comprehensive income (loss)	—		—		—		—		(40,819)		(40,819)
Cash dividends:
Common ($0.14 per share)	—		—		—		(41,060)		—		(41,060)
Preferred ($17.50 per share)	—		—		—		(4,034)		—		(4,034)
Common stock issued	—		17		248		—		—		265
Common stock repurchased	—		(434)		(6,748)		—		—		(7,182)
Share-based compensation expense	—		—		5,491		—		—		5,491
Stock activity under incentive    compensation plans	—		1,092		(1,373)		(156)		—		(437)
Balance, March 31, 2024	230,500		293,330		4,157,542		1,693,664		(779,628)		5,595,408
Net income	—		—		—		121,229		—		121,229
Other comprehensive income (loss)	—		—		—		—		(11,780)		(11,780)
Acquisition of CapStar Financial    Holdings, Inc.	—		24,014		393,584		—		—		417,598
Cash dividends:
Common ($0.14 per share)	—		—		—		(44,656)		—		(44,656)
Preferred ($17.50 per share)	—		—		—		(4,033)		—		(4,033)
Common stock issued	—		16		249		—		—		265
Common stock repurchased	—		(77)		(1,199)		—		—		(1,276)
Share-based compensation expense	—		—		9,062		—		—		9,062
Stock activity under incentive    compensation plans	—		1,686		(8,273)		(158)		—		(6,745)
Balance, June 30, 2024	$	230,500	$	318,969	$	4,550,965	$	1,766,046	$	(791,408)	$	6,075,072

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,
(dollars in thousands)	2024		2023
Cash Flows From Operating Activities
Net income	$	241,513	$	301,636
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation	18,947		18,386
Amortization of other intangible assets	12,880		12,246
Amortization of tax credit investments	5,496		5,523
Net premium amortization on investment securities	3,493		7,061
Accretion income related to acquired loans	(13,083)		(11,485)
Share-based compensation expense	14,553		17,989
Provision for credit losses	55,105		28,224
Debt securities (gains) losses, net	14		5,199
Net (gains) losses on sales of loans and other assets	(3,898)		(45)
Increase in cash surrender value of company-owned life insurance	(9,173)		(7,884)
Residential real estate loans originated for sale	(363,341)		(225,753)
Proceeds from sales of residential real estate loans	349,486		218,253
(Increase) decrease in interest receivable	(3,734)		(14,677)
(Increase) decrease in other assets	17,335		(38,540)
Increase (decrease) in accrued expenses and other liabilities	(60,380)		(101,417)
Net cash flows provided by (used in) operating activities	265,213		214,716
Cash Flows From Investing Activities
Cash received from merger, net	177,791		—
Purchases of investment securities available-for-sale	(939,533)		(174,657)
Purchases of investment securities held-to-maturity	—		(1,941)
Purchases of Federal Home Loan Bank/Federal Reserve Bank stock	(8,559)		(99,159)
Purchases of equity securities	(4,782)		(20,820)
Proceeds from maturities, prepayments, and calls of investment securities available-for-sale	503,319		333,937
Proceeds from sales of investment securities available-for-sale	293,240		51,654
Proceeds from maturities, prepayments, and calls of investment securities held-to-maturity	34,076		45,193
Proceeds from sales of Federal Home Loan Bank/Federal Reserve Bank stock	14,426		1
Proceeds from sales of equity securities	2,417		1,726
Loan originations and payments, net	(1,063,661)		(1,708,291)
Proceeds from sales of commercial loans	45,881		291,368
Proceeds from company-owned life insurance death benefits	6,589		4,888
Proceeds from sales of premises and equipment and other assets	—		2,369
Purchases of premises and equipment and other assets	(17,847)		(17,410)
Net cash flows provided by (used in) investing activities	(956,643)		(1,291,142)
Cash Flows From Financing Activities
Net increase (decrease) in:
Deposits	203,584		1,230,485
Federal funds purchased and interbank borrowings	249,764		(445,429)
Securities sold under agreements to repurchase	(44,493)		(121,357)
Other borrowings	42,274		65,719
Payments for maturities of Federal Home Loan Bank advances	(1,300,000)		(1,650,150)
Proceeds from Federal Home Loan Bank advances	1,700,000		2,600,000
Cash dividends paid	(93,783)		(90,087)
Common stock repurchased	(8,458)		(43,815)
Common stock issued	530		534
Net cash flows provided by (used in) financing activities	749,418		1,545,900
Net increase (decrease) in cash and cash equivalents	57,988		469,474
Cash and cash equivalents at beginning of period	1,175,058		728,412
Cash and cash equivalents at end of period	$	1,233,046	$	1,197,886

8

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) – (Continued)

	Six Months Ended June 30,
(dollars in thousands)	2024		2023
Supplemental Cash Flow Information:
Total interest paid	$	512,514	$	253,542
Total income taxes paid (net of refunds)	38,806		87,668
Noncash Investing and Financing Activities:
Common stock issued for merger, net	417,598		—
Operating lease right-of-use assets obtained in exchange for lease obligations	21,488		7,542
Finance lease right-of-use assets obtained in exchange for lease obligations	15,178		9,141

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, 2024 and December 31, 2023, and the results of its operations for the three and six months ended June 30, 2024 and 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, 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.

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Guidance Adopted in 2024

FASB ASC 820 – In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, to clarify 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 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. The adoption of this guidance on January 1, 2024 did not have a material impact 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. The adoption of this guidance on a modified retrospective basis on January 1, 2024 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 June 30, 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, 2024 will not have a material impact on the consolidated financial statements.

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Accounting Guidance Pending Adoption 

FASB ASC 280 – In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements 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 profit 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 enable investors to better 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 significant segment expense categories identified and disclosed in the period of adoption. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal 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 740 – In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Among other things, these amendments require that public business entities on an annual basis disclose additional information in specified categories with respect to the reconciliation 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 requires 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 annual periods 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.

NOTE 3 – ACQUISITION AND DIVESTITURE ACTIVITY

Acquisition

CapStar Financial Holdings, Inc.

On April 1, 2024, Old National completed its acquisition of CapStar Financial Holdings, Inc. (“CapStar”) and its wholly-owned subsidiary, CapStar Bank, in an all-stock transaction. This partnership strengthens Old National’s Nashville, Tennessee presence and adds several new high-growth markets. Pursuant to the terms of the merger agreement, each outstanding share of CapStar common stock was converted into the right to receive 1.155 shares of Old National common stock plus cash in lieu of fractional shares. All system conversions related to the transaction were completed in early July of 2024.

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The assets acquired and liabilities assumed, both intangible and tangible, were recorded at their estimated fair values as of the merger date and have been accounted for under the acquisition method of accounting. The following table presents the preliminary valuation of the assets acquired and liabilities assumed and the fair value of consideration as of the merger date:

(dollars and shares in thousands)	April 1, 2024
Assets
Cash and cash equivalents	$	177,791
Investment securities	342,490
FHLB/Federal Reserve Bank stock	14,426
Loans held-for-sale	21,159
Loans, net of allowance for credit losses	2,124,695
Premises and equipment	22,481
Goodwill	171,993
Other intangible assets	46,125
Company-owned life insurance	91,475
Other assets	95,530
Total assets	$	3,108,165
Liabilities
Deposits	$	2,560,464
Federal Home Loan Bank advances	75,000
Other borrowings	30,000
Accrued expenses and other liabilities	25,103
Total liabilities	$	2,690,567
Fair value of consideration
Common stock (24,014 shares issued at $17.41 per share)	$	417,598
Total consideration	$	417,598

Goodwill related to this merger will not be deductible for tax purposes.

Other intangible assets acquired included core deposit intangibles. The estimated fair value of the core deposit intangible was $46.1 million and is being amortized over an estimated useful life of 10 years.

The fair value of PCD assets was $613.5 million on the date of merger. The gross contractual amounts receivable relating to the PCD assets was $679.3 million. Old National estimates, on the date of the merger, that $23.9 million of the contractual cash flows specific to the PCD assets will not be collected.

Transaction costs primarily associated with the CapStar merger have been expensed for the three and six months ended June 30, 2024 totaling $19.4 million and $22.3 million, respectively, and additional transaction and integration costs will be expensed in future periods as incurred.

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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-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,
(dollars and shares in thousands, except per share data)	2024		2023		2024		2023
Net income	$	121,229	$	155,036	$	241,513	$	301,636
Preferred dividends	(4,033)		(4,033)		(8,067)		(8,067)
Net income applicable to common shares	$	117,196	$	151,003	$	233,446	$	293,569
Weighted average common shares outstanding:
Weighted average common shares outstanding (basic)	315,585		290,559		303,283		290,822
Effect of dilutive securities:
Restricted stock	876		707		924		1,047
Stock appreciation rights	—		—		—		1
Weighted average diluted shares outstanding	316,461		291,266		304,207		291,870
Basic Net Income Per Common Share	$	0.37	$	0.52	$	0.77	$	1.01
Diluted Net Income Per Common Share	$	0.37	$	0.52	$	0.77	$	1.01

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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)	Amortized Cost		Unrealized Gains		Unrealized Losses		Basis Adjustments (1)		Fair Value
June 30, 2024
Available-for-Sale
U.S. Treasury	$	265,745	$	8	$	(10,940)	$	(49,505)	$	205,308
U.S. government-sponsored entities and agencies	1,442,132		—		(187,768)		(82,070)		1,172,294
Mortgage-backed securities - Agency	5,571,763		2,244		(685,551)		—		4,888,456
States and political subdivisions	550,897		121		(28,267)		564		523,315
Pooled trust preferred securities	13,802		—		(2,504)		—		11,298
Other securities	324,169		216		(19,578)		—		304,807
Total available-for-sale securities	$	8,168,508	$	2,589	$	(934,608)	$	(131,011)	$	7,105,478
Held-to-Maturity
U.S. government-sponsored entities and agencies	$	829,402	$	—	$	(167,071)	$	—	$	662,331
Mortgage-backed securities - Agency	1,001,915		—		(163,626)		—		838,289
States and political subdivisions	1,155,282		469		(143,719)		—		1,012,032
Allowance for securities held-to-maturity	(150)		—		—		—		(150)
Total held-to-maturity securities	$	2,986,449	$	469	$	(474,416)	$	—	$	2,512,502
December 31, 2023
Available-for-Sale
U.S. Treasury	$	449,817	$	154	$	(11,941)	$	(41,297)	$	396,733
U.S. government-sponsored entities and agencies	1,487,879		33		(192,717)		(63,931)		1,231,264
Mortgage-backed securities - Agency	4,835,319		3,093		(621,852)		—		4,216,560
States and political subdivisions	554,509		878		(23,057)		2,930		535,260
Pooled trust preferred securities	13,797		—		(2,460)		—		11,337
Other securities	343,568		449		(22,116)		—		321,901
Total available-for-sale securities	$	7,684,889	$	4,607	$	(874,143)	$	(102,298)	$	6,713,055
Held-to-Maturity
U.S. government-sponsored entities and agencies	$	825,953	$	—	$	(154,827)	$	—	$	671,126
Mortgage-backed securities - Agency	1,029,131		—		(147,137)		—		881,994
States and political subdivisions	1,158,559		1,800		(112,141)		—		1,048,218
Allowance for securities held-to-maturity	(150)		—		—		—		(150)
Total held-to-maturity securities	$	3,013,493	$	1,800	$	(414,105)	$	—	$	2,601,188

(1)    Basis adjustments represent the amount of fair value hedging adjustments included in the carrying amounts of fixed-rate investment securities assets designated in fair value hedging arrangements. See Note 15 to the consolidated financial statements for additional information regarding these derivative financial instruments.

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,
(dollars in thousands)	2024		2023		2024		2023
Proceeds	$	287,075	$	24,933	$	348,325	$	82,888
Realized gains	4		39		8		948
Realized losses	(2)		(22)		(22)		(6,147)

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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, 2024
(dollars in thousands)	Amortized Cost		Fair Value		Weighted Average Yield
Maturity
Available-for-Sale
Within one year	$	201,863	$	199,144	3.31	%
One to five years	2,465,325		2,302,561		3.73
Five to ten years	4,194,624		3,585,179		2.63
Beyond ten years	1,306,696		1,018,594		2.65
Total	$	8,168,508	$	7,105,478	2.98	%
Held-to-Maturity
Within one year	$	158	$	148	2.19	%
One to five years	164,614		134,416		2.59
Five to ten years	1,179,654		1,015,361		2.63
Beyond ten years	1,642,023		1,362,577		2.72
Total	$	2,986,449	$	2,512,502	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 months				12 months or longer				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
June 30, 2024
Available-for-Sale
U.S. Treasury	$	7,944	$	(32)	$	187,270	$	(10,908)	$	195,214	$	(10,940)
U.S. government-sponsored entities    and agencies	4,010		(67)		1,168,284		(187,701)		1,172,294		(187,768)
Mortgage-backed securities - Agency	933,388		(6,678)		3,625,425		(678,873)		4,558,813		(685,551)
States and political subdivisions	150,978		(1,977)		317,112		(26,290)		468,090		(28,267)
Pooled trust preferred securities	—		—		11,298		(2,504)		11,298		(2,504)
Other securities	26,624		(132)		216,148		(19,446)		242,772		(19,578)
Total available-for-sale	$	1,122,944	$	(8,886)	$	5,525,537	$	(925,722)	$	6,648,481	$	(934,608)
December 31, 2023
Available-for-Sale
U.S. Treasury	$	8,937	$	(42)	$	191,027	$	(11,899)	$	199,964	$	(11,941)
U.S. government-sponsored entities    and agencies	—		—		1,189,314		(192,717)		1,189,314		(192,717)
Mortgage-backed securities - Agency	90,145		(710)		3,835,552		(621,142)		3,925,697		(621,852)
States and political subdivisions	86,865		(495)		259,767		(22,562)		346,632		(23,057)
Pooled trust preferred securities	—		—		11,337		(2,460)		11,337		(2,460)
Other securities	39,032		(229)		255,888		(21,887)		294,920		(22,116)
Total available-for-sale	$	224,979	$	(1,476)	$	5,742,885	$	(872,667)	$	5,967,864	$	(874,143)

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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 months				12 months or longer				Total
(dollars in thousands)	Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses
June 30, 2024
Held-to-Maturity
U.S. government-sponsored entities    and agencies	$	—	$	—	$	662,331	$	(167,071)	$	662,331	$	(167,071)
Mortgage-backed securities - Agency	—		—		838,289		(163,626)		838,289		(163,626)
States and political subdivisions	25,998		(231)		942,639		(143,488)		968,637		(143,719)
Total held-to-maturity	$	25,998	$	(231)	$	2,443,259	$	(474,185)	$	2,469,257	$	(474,416)
December 31, 2023
Held-to-Maturity
U.S. government-sponsored entities    and agencies	$	—	$	—	$	671,126	$	(154,827)	$	671,126	$	(154,827)
Mortgage-backed securities - Agency	—		—		881,994		(147,137)		881,994		(147,137)
States and political subdivisions	—		—		977,154		(112,141)		977,154		(112,141)
Total held-to-maturity	$	—	$	—	$	2,530,274	$	(414,105)	$	2,530,274	$	(414,105)

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 $118.9 million at June 30, 2024 and $127.6 million at December 31, 2023. These unrecognized losses are included as a separate component of shareholders’ equity and are being amortized over the remaining term of the securities.

No allowance for credit losses on available-for-sale debt securities was needed at June 30, 2024 or December 31, 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, 2024 and December 31, 2023. Accrued interest receivable on the securities portfolio is excluded from the estimate of credit losses and totaled $53.0 million at June 30, 2024 and $50.3 million at December 31, 2023.

At June 30, 2024, Old National’s securities portfolio consisted of 3,039 securities, 2,792 of which were in an unrealized loss position. The unrealized losses attributable to our U.S. Treasury, U.S. government-sponsored entities and agencies, agency mortgage-backed securities, states and political subdivisions, and other securities are the result of fluctuations in interest rates and market movements. Old National’s pooled trust preferred securities are evaluated using collateral-specific assumptions to estimate the expected future interest and principal cash flows. At June 30, 2024, we had no intent to sell any securities that were in an unrealized loss position nor is it expected that we would be required to sell the securities prior to their anticipated recovery.

Old National’s pooled trust preferred securities have experienced credit defaults. However, we believe that the value of the instruments lies in the full and timely interest payments that will be received through maturity, the steady amortization that will be experienced until maturity, and the full return of principal by the final maturity of the collateralized debt obligations. Old National did not recognize any losses on these securities for the six months ended June 30, 2024 or 2023.

Equity Securities

Equity securities consist of mutual funds for Community Reinvestment Act qualified investments and diversified investment securities held in a grantor trust for participants in the Company’s nonqualified deferred compensation plan. Old National’s equity securities with readily determinable fair values totaled $85.5 million at June 30, 2024 and $80.4 million at December 31, 2023. There were losses on equity securities of $0.4 million during the three months ended June 30, 2024 and $0.1 million during the six months ended June 30, 2024, compared to gains of $0.1

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million during the three months ended June 30, 2023 and losses of $0.7 million during the six months ended June 30, 2023.

Alternative Investments

Old National has alternative investments without readily determinable fair values that are included in other assets totaling $514.8 million at June 30, 2024, consisting of $274.9 million of illiquid investments in partnerships, limited liability companies, and other ownership interests that support affordable housing and $239.9 million of economic development and community revitalization initiatives in low-to-moderate income neighborhoods. These alternative investments totaled $449.3 million at December 31, 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 six months ended June 30, 2024 and 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 and Southeast regions 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 June 30, 2024, these loans totaled $3.5 billion, of which $1.6 billion had been sold to other financial institutions and $1.9 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		Portfolio Segment After Reclassifications
(dollars in thousands)
June 30, 2024
Commercial (1)	$	10,332,631	$	(230,404)	$	10,102,227
Commercial real estate	16,016,958		(175,614)		15,841,344
BBCC	N/A		406,018		406,018
Residential real estate	6,894,957		—		6,894,957
Consumer	2,905,967		(2,905,967)		N/A
Indirect	N/A		1,101,585		1,101,585
Direct	N/A		429,426		429,426
Home equity	N/A		1,374,956		1,374,956
Total loans (2)	$	36,150,513	$	—	$	36,150,513
Allowance for credit losses on loans	(366,335)		—		(366,335)
Net loans	$	35,784,178	$	—	$	35,784,178
December 31, 2023
Commercial (1)	$	9,512,230	$	(232,764)	$	9,279,466
Commercial real estate	14,140,629		(169,058)		13,971,571
BBCC	N/A		401,822		401,822
Residential real estate	6,699,443		—		6,699,443
Consumer	2,639,625		(2,639,625)		N/A
Indirect	N/A		1,050,982		1,050,982
Direct	N/A		523,172		523,172
Home equity	N/A		1,065,471		1,065,471
Total loans (2)	$	32,991,927	$	—	$	32,991,927
Allowance for credit losses on loans	(307,610)		—		(307,610)
Net loans	$	32,684,317	$	—	$	32,684,317

(1)Includes direct finance leases of $157.2 million at June 30, 2024 and $169.7 million at December 31, 2023.

(2)    Includes unearned income of $199.7 million at June 30, 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-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 256%, Old National Bank’s applicable investor commercial real estate loans as a percentage of its Tier 1 capital plus the allowance for credit losses attributable to loans and leases remained below the regulatory guideline limit of 300% at June 30, 2024.

BBCC

BBCC loans are typically granted to small businesses with gross revenues of less than $5 million and aggregate debt of less than $1 million. Old National has established minimum debt service coverage ratios, minimum FICO scores for owners and guarantors, and the ability to show relatively stable earnings as criteria to help mitigate risk. Repayment of these loans depends on the personal income of the borrowers and the cash flows of the business. These factors can be affected by such changes as economic conditions and unemployment levels.

Residential

With respect to residential loans that are secured by 1 - 4 family residences and are generally owner occupied, Old National typically establishes a maximum loan-to-value ratio and generally requires private mortgage insurance if that ratio is exceeded. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in residential property values. Portfolio risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Indirect

Indirect loans are secured by automobile collateral, generally new and used cars and trucks from auto dealers that operate within our footprint. Old National typically mitigates the risk of indirect loans by establishing minimum FICO scores, maximum loan-to-value ratios, and maximum debt-to-income ratios. Repayment of these loans depends largely on the personal income of the borrowers, which can be affected by changes in economic conditions such as unemployment levels. Portfolio risk is mitigated by the fact that the loans are of smaller amounts spread over many borrowers and ongoing reviews of dealer relationships.

Direct

Direct loans are typically secured by collateral such as auto or real estate or are unsecured. Old National has established underwriting standards such as minimum FICO scores, maximum loan-to-value ratios, and maximum debt-to-income ratios. Repayment of these loans depends largely on the personal income of the borrowers, which can be affected by changes in economic conditions such as unemployment levels. Portfolio risk is mitigated by the fact that the loans are of smaller amounts spread over many borrowers.

Home Equity

Home equity loans are generally secured by 1-4 family residences that are owner-occupied. Old National has established underwriting standards such as minimum FICO scores, maximum loan-to-value ratios, and maximum debt-to-income ratios. Repayment of these loans depends largely on the personal income of the borrowers, which can be affected by changes in economic conditions such as unemployment levels. Portfolio risk is mitigated by the

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fact that the loans are of smaller amounts spread over many borrowers, along with monitoring of updated borrower credit scores.

Allowance for Credit Losses

Loans

Credit loss assumptions used when computing the level of expected credit losses 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. 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, 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)	Balance at Beginning of Period		Allowance Established for Acquired PCD Loans		Charge-offs		Recoveries		Provision for Loan Losses		Balance at End of Period
Three Months Ended June 30, 2024
Commercial	$	123,437	$	14,593	$	(9,927)	$	462	$	9,895	$	138,460
Commercial real estate	160,640		8,483		(3,101)		542		23,347		189,911
BBCC	3,163		—		(935)		230		439		2,897
Residential real estate	21,899		134		—		762		340		23,135
Indirect	1,218		—		(1,084)		335		764		1,233
Direct	2,952		59		(1,884)		565		1,439		3,131
Home equity	6,404		653		(110)		100		521		7,568
Total	$	319,713	$	23,922	$	(17,041)	$	2,996	$	36,745	$	366,335
Three Months Ended June 30, 2023
Commercial	$	125,768	$	—	$	(8,331)	$	1,814	$	8,152	$	127,403
Commercial real estate	135,348		—		(2,458)		1,029		2,978		136,897
BBCC	2,316		—		(94)		31		523		2,776
Residential real estate	20,207		—		(218)		53		379		20,421
Indirect	1,434		—		(402)		612		(237)		1,407
Direct	6,766		—		(2,600)		637		(48)		4,755
Home equity	6,872		—		(228)		63		189		6,896
Total	$	298,711	$	—	$	(14,331)	$	4,239	$	11,936	$	300,555
Six Months Ended June 30, 2024
Commercial	$	118,333	$	14,593	$	(13,586)	$	796	$	18,324	$	138,460
Commercial real estate	155,099		8,483		(9,742)		1,577		34,494		189,911
BBCC	2,887		—		(1,011)		248		773		2,897
Residential real estate	20,837		134		—		781		1,383		23,135
Indirect	1,236		—		(2,222)		667		1,552		1,233
Direct	3,169		59		(4,312)		1,052		3,163		3,131
Home equity	6,049		653		(188)		145		909		7,568
Total	$	307,610	$	23,922	$	(31,061)	$	5,266	$	60,598	$	366,335
Six Months Ended June 30, 2023
Commercial	$	120,612	$	—	$	(20,754)	$	2,097	$	25,448	$	127,403
Commercial real estate	138,244		—		(3,647)		1,292		1,008		136,897
BBCC	2,431		—		(122)		104		363		2,776
Residential real estate	21,916		—		(241)		125		(1,379)		20,421
Indirect	1,532		—		(1,599)		1,024		450		1,407
Direct	12,116		—		(5,838)		1,218		(2,741)		4,755
Home equity	6,820		—		(310)		130		256		6,896
Total	$	303,671	$	—	$	(32,511)	$	5,990	$	23,405	$	300,555

The allowance for credit losses on loans at June 30, 2024 included $23.9 million of allowance for credit losses on acquired PCD loans established through acquisition accounting adjustments on or after the CapStar acquisition date.

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In addition, the provision for credit losses on loans in the three and six months ended June 30, 2024 included $15.3 million to establish an allowance for credit losses on non-PCD loans acquired in the CapStar transaction. Accrued interest receivable on loans is excluded from the estimate of credit losses and totaled $181.9 million at June 30, 2024, compared to $169.8 million at December 31, 2023.

Unfunded Loan Commitments

Old National maintains an allowance for credit losses on unfunded loan commitments to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the allowance for credit losses on loans, modified to take into account the probability of a drawdown on the commitment. The allowance for credit losses on unfunded loan commitments is classified as a liability account on the balance sheet within accrued expenses and other liabilities, while the corresponding provision for unfunded loan commitments is included in the provision for credit losses. 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,
(dollars in thousands)	2024		2023		2024		2023
Allowance for credit losses on unfunded loan commitments:
Balance at beginning of period	$	26,264	$	34,156	$	31,226	$	32,188
Provision for credit losses on unfunded loan commitments    acquired during the period	1,763		—		1,763		—
Provision (release) for credit losses on unfunded loan    commitments	(2,294)		2,851		(7,256)		4,819
Balance at end of period	$	25,733	$	37,007	$	25,733	$	37,007

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:

Special Mention. Loans categorized as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Classified – Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Classified – Nonaccrual. Loans classified as nonaccrual have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection in full, on the basis of currently existing facts, conditions, and values, in doubt.

Classified – Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as nonaccrual, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Pass rated loans are those loans that are other than special mention, classified – substandard, classified – nonaccrual, or classified – doubtful.

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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:

(dollars in thousands)	Origination Year														Revolving to Term
	2024		2023		2022		2021		2020		Prior		Revolving				Total
June 30, 2024
Commercial:
Pass	$	961,949	$	1,737,949	$	1,427,702	$	846,164	$	498,959	$	723,629	$	2,575,617	$	535,146	$	9,307,115
Special Mention	29,482		48,989		63,401		14,828		31,286		37,827		123,628		26,188		375,629
Classified:
Substandard	33		42,972		61,074		51,522		44,581		25,824		77,158		37,828		340,992
Nonaccrual	—		746		5,390		2,211		2,068		3,724		1,717		6,229		22,085
Doubtful	—		14,074		12,549		5,394		621		565		13,679		9,524		56,406
Total	$	991,464	$	1,844,730	$	1,570,116	$	920,119	$	577,515	$	791,569	$	2,791,799	$	614,915	$	10,102,227
Commercial real estate:
Pass	$	1,104,612	$	2,470,220	$	4,029,061	$	2,380,569	$	1,428,952	$	2,201,489	$	157,382	$	813,468	$	14,585,753
Special Mention	43,020		37,176		126,490		121,150		32,022		85,827		29,199		102,141		577,025
Classified:
Substandard	13,274		17,657		128,097		71,232		52,180		161,256		—		53,886		497,582
Nonaccrual	—		833		3,685		6,627		4,353		33,077		—		1,063		49,638
Doubtful	—		5,365		714		35,473		25,491		42,037		—		22,266		131,346
Total	$	1,160,906	$	2,531,251	$	4,288,047	$	2,615,051	$	1,542,998	$	2,523,686	$	186,581	$	992,824	$	15,841,344
BBCC:
Pass	$	43,798	$	85,992	$	60,883	$	38,834	$	34,221	$	36,947	$	65,745	$	17,236	$	383,656
Special Mention	332		3,357		2,675		1,127		733		845		2,473		3,459		15,001
Classified:
Substandard	110		481		295		473		35		657		315		146		2,512
Nonaccrual	—		85		726		454		108		983		—		825		3,181
Doubtful	—		437		262		194		15		222		—		538		1,668
Total	$	44,240	$	90,352	$	64,841	$	41,082	$	35,112	$	39,654	$	68,533	$	22,204	$	406,018

	Origination Year														Revolving to Term
	2023		2022		2021		2020		2019		Prior		Revolving				Total
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
Special Mention	20,038		90,031		19,953		36,906		25,756		47,357		89,765		44,348		374,154
Classified:
Substandard	27,271		41,164		27,990		37,618		10,461		29,981		72,703		56,716		303,904
Nonaccrual	32		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
Special Mention	69,648		69,946		68,708		27,059		52,107		95,896		3,893		64,730		451,987
Classified:
Substandard	26,638		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
Doubtful	5,360		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
Special Mention	—		—		857		700		1,001		349		2,144		12,728		17,779
Classified:
Substandard	436		193		252		—		—		604		15		1,006		2,506
Nonaccrual	—		—		482		—		4		1,105		—		1,402		2,993
Doubtful	302		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

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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 Year														Revolving to Term
(dollars in thousands)	2024		2023		2022		2021		2020		Prior		Revolving				Total
June 30, 2024
Residential real estate:
Risk Rating:
Performing	$	211,657	$	496,415	$	1,502,442	$	1,879,448	$	1,642,226	$	1,114,416	$	67	$	282	$	6,846,953
Nonperforming	—		1,924		8,019		5,535		3,797		28,729		—		—		48,004
Total	$	211,657	$	498,339	$	1,510,461	$	1,884,983	$	1,646,023	$	1,143,145	$	67	$	282	$	6,894,957
Indirect:
Risk Rating:
Performing	$	252,797	$	341,949	$	289,675	$	125,544	$	58,368	$	28,872	$	—	$	—	$	1,097,205
Nonperforming	33		720		1,451		1,342		407		427		—		—		4,380
Total	$	252,830	$	342,669	$	291,126	$	126,886	$	58,775	$	29,299	$	—	$	—	$	1,101,585
Direct:
Risk Rating:
Performing	$	25,512	$	84,213	$	66,009	$	62,213	$	24,375	$	63,076	$	96,462	$	1,878	$	423,738
Nonperforming	20		68		811		2,209		599		1,939		30		12		5,688
Total	$	25,532	$	84,281	$	66,820	$	64,422	$	24,974	$	65,015	$	96,492	$	1,890	$	429,426
Home equity:
Risk Rating:
Performing	$	—	$	—	$	265	$	271	$	36	$	5,637	$	1,323,339	$	27,623	$	1,357,171
Nonperforming	—		—		—		124		249		5,989		1,935		9,488		17,785
Total	$	—	$	—	$	265	$	395	$	285	$	11,626	$	1,325,274	$	37,111	$	1,374,956

	Origination Year														Revolving to Term
	2023		2022		2021		2020		2019		Prior		Revolving				Total
December 31, 2023
Residential real estate:
Risk Rating:
Performing	$	453,743	$	1,508,671	$	1,836,078	$	1,705,131	$	430,783	$	722,987	$	—	$	279	$	6,657,672
Nonperforming	116		4,563		4,004		3,375		4,078		25,635		—		—		41,771
Total	$	453,859	$	1,513,234	$	1,840,082	$	1,708,506	$	434,861	$	748,622	$	—	$	279	$	6,699,443
Indirect:
Risk Rating:
Performing	$	393,369	$	355,822	$	162,735	$	82,871	$	37,967	$	13,815	$	—	$	196	$	1,046,775
Nonperforming	372		1,472		1,207		547		318		291		—		—		4,207
Total	$	393,741	$	357,294	$	163,942	$	83,418	$	38,285	$	14,106	$	—	$	196	$	1,050,982
Direct:
Risk Rating:
Performing	$	109,372	$	90,310	$	92,491	$	48,387	$	29,659	$	67,129	$	75,080	$	4,852	$	517,280
Nonperforming	67		531		517		560		210		3,872		124		11		5,892
Total	$	109,439	$	90,841	$	93,008	$	48,947	$	29,869	$	71,001	$	75,204	$	4,863	$	523,172
Home equity:
Risk Rating:
Performing	$	290	$	164	$	160	$	140	$	679	$	4,483	$	1,019,389	$	23,918	$	1,049,223
Nonperforming	—		310		328		404		741		4,327		2,844		7,294		16,248
Total	$	290	$	474	$	488	$	544	$	1,420	$	8,810	$	1,022,233	$	31,212	$	1,065,471

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The following table summarizes the gross charge-offs of loans by loan portfolio segment and origination year:

	Origination Year
(dollars in thousands)	2024		2023		2022		2021		2020		Prior		Revolving		Total
Three Months Ended June 30, 2024
Commercial	$	—	$	2,358	$	6,149	$	389	$	43	$	566	$	422		$	9,927
Commercial real estate	—		—		23		468		—		2,610		—			3,101
BBCC	—		605		153		35		112		30		—			935
Residential real estate	—		—		—		—		—		—		—			—
Indirect	54		531		377		96		6		20		—			1,084
Direct	75		79		394		347		173		172		644			1,884
Home equity	—		—		—		—		—		110		—			110
Total gross charge-offs	$	129	$	3,573	$	7,096	$	1,335	$	334	$	3,508	$	1,066		$	17,041
	Origination Year
	2023		2022		2021		2020		2019		Prior		Revolving		Total
Three Months Ended June 30, 2023
Commercial	$	—	$	2,100	$	5,931	$	120	$	—	$	—	$	180		$	8,331
Commercial real estate	—		—		—		—		—		2,458		—			2,458
BBCC	—		47		—		47		—		—		—			94
Residential real estate	—		—		—		—		—		218		—			218
Indirect	10		164		124		48		16		40		—			402
Direct	—		430		588		172		414		195		801			2,600
Home equity	—		—		—		—		—		228		—			228
Total gross charge-offs	$	10	$	2,741	$	6,643	$	387	$	430	$	3,139	$	981		$	14,331
	Origination Year
	2024		2023		2022		2021		2020		Prior		Revolving		Total
Six Months Ended June 30, 2024
Commercial	$	—	$	2,358	$	9,630	$	422	$	51	$	570	$	555		$	13,586
Commercial real estate	—		—		23		2,644		—		7,075		—			9,742
BBCC	—		605		229		35		112		30		—			1,011
Residential real estate	—		—		—		—		—		—		—			—
Indirect	54		901		849		321		39		58		—			2,222
Direct	75		195		970		876		286		395		1,515			4,312
Home equity	—		—		—		34		—		154		—			188
Total gross charge-offs	$	129	$	4,059	$	11,701	$	4,332	$	488	$	8,282	$	2,070		$	31,061
	Origination Year
	2023		2022		2021		2020		2019		Prior		Revolving		Total
Six Months Ended June 30, 2023
Commercial	$	—	$	2,100	$	11,161	$	120	$	6,789	$	239	$	345		$	20,754
Commercial real estate	—		54		735		400		—		2,458		—			3,647
BBCC	—		47		28		47		—		—		—			122
Residential real estate	—		—		—		—		—		241		—			241
Indirect	10		678		554		141		127		89		—			1,599
Direct	—		901		1,382		458		741		390		1,966			5,838
Home equity	—		—		—		—		—		310		—			310
Total 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

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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.

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		Current		Total Loans
June 30, 2024
Commercial	$	14,191	$	6,151	$	17,030	$	37,372	$	10,064,855	$	10,102,227
Commercial real estate	9,442		16,022		41,146		66,610		15,774,734		15,841,344
BBCC	2,155		54		1,474		3,683		402,335		406,018
Residential	10,558		3,189		16,680		30,427		6,864,530		6,894,957
Indirect	6,550		1,928		846		9,324		1,092,261		1,101,585
Direct	4,578		1,341		3,238		9,157		420,269		429,426
Home equity	5,180		2,655		7,739		15,574		1,359,382		1,374,956
Total	$	52,654	$	31,340	$	88,153	$	172,147	$	35,978,366	$	36,150,513
December 31, 2023
Commercial	$	16,128	$	1,332	$	4,861	$	22,321	$	9,257,145	$	9,279,466
Commercial real estate	9,081		5,254		30,660		44,995		13,926,576		13,971,571
BBCC	1,368		134		977		2,479		399,343		401,822
Residential	12,358		367		15,249		27,974		6,671,469		6,699,443
Indirect	7,025		1,854		1,342		10,221		1,040,761		1,050,982
Direct	5,436		1,455		1,787		8,678		514,494		523,172
Home equity	7,791		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, 2024						December 31, 2023
(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
Commercial	$	78,491	$	27,448	$	40	$	43,775	$	13,143	$	242
Commercial real estate	180,984		29,225		744		158,222		24,507		585
BBCC	4,849		—		—		4,706		—		95
Residential	48,004		—		3,901		41,771		—		—
Indirect	4,380		—		17		4,207		—		8
Direct	5,688		—		2		5,892		—		31
Home equity	17,785		—		547		16,248		—		—
Total	$	340,181	$	56,673	$	5,251	$	274,821	$	37,650	$	961

Interest income recognized on nonaccrual loans was insignificant during the three and six months ended June 30, 2024 and 2023.

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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		Auto		Other
June 30, 2024
Commercial	$	16,620	$	32,984	$	4,892	$	11,429	$	7,736
Commercial real estate	159,868		1,559		2,178		—		6,209
BBCC	3,411		1,129		100		208		—
Residential	48,004		—		—		—		—
Indirect	—		—		—		4,380		—
Direct	2,903		—		6		384		30
Home equity	17,785		—		—		—		—
Total loans	$	248,591	$	35,672	$	7,176	$	16,401	$	13,975
December 31, 2023
Commercial	$	14,303	$	24,729	$	2,577	$	280	$	328
Commercial real estate	146,425		—		1,167		—		6,107
BBCC	3,522		794		—		390		—
Residential	41,771		—		—		—		—
Indirect	—		—		—		4,207		—
Direct	4,727		1		3		366		29
Home equity	16,248		—		—		—		—
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.

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The following table presents the amortized cost basis of financial difficulty modifications that were modified for borrowers experiencing financial difficulty, by class of loans and type of modification:

(dollars in thousands)	Term Extension		Total Class of Loans
Three Months Ended June 30, 2024
Commercial	$	3,859	0.0	%
Commercial real estate	58,232		0.4	%
Total	$	62,091	0.2	%
Three Months Ended June 30, 2023
Commercial	$	1,231	0.0	%
Commercial real estate	12,449		0.1	%
Total	$	13,680	0.0	%
Six Months Ended June 30, 2024
Commercial	$	14,867	0.1	%
Commercial real estate	73,406		0.5	%
Total	$	88,273	0.2	%
Six Months Ended June 30, 2023
Commercial	$	18,517	0.2	%
Commercial real estate	19,280		0.1	%
Total	$	37,797	0.1	%

Old National closely monitors the performance of financial difficulty modifications to understand the effectiveness of its efforts. The following table presents the performance of financial difficulty modifications in the twelve months following modification:

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Past Due 90 Days or More		Total Past Due		Current		Total Loans
June 30, 2024
Commercial	$	1,077	$	2,813	$	980	$	4,870	$	14,866	$	19,736
Commercial real estate	8,854		5,077		27,017		40,948		72,083		113,031
Total	$	9,931	$	7,890	$	27,997	$	45,818	$	86,949	$	132,767
June 30, 2023
Commercial	$	—	$	—	$	2,600	$	2,600	$	15,917	$	18,517
Commercial real estate	—		5,537		—		5,537		13,743		19,280
Total	$	—	$	5,537	$	2,600	$	8,137	$	29,660	$	37,797

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The following table summarizes the nature of the financial difficulty modifications by class of loans:

(dollars in thousands)	Weighted- Average Term Extension (in months)
Three Months Ended June 30, 2024
Commercial	10.0
Commercial real estate	10.6
Total	10.6
Three Months Ended June 30, 2023
Commercial	7.0
Commercial real estate	6.0
Total	6.1
Six Months Ended June 30, 2024
Commercial	9.9
Commercial real estate	9.2
Total	9.3
Six Months Ended June 30, 2023
Commercial	6.8
Commercial real estate	5.8
Total	6.3

During the three and six months ended June 30, 2024, there were payment defaults on $27.0 million of loans to borrowers whose loans were modified due to financial difficulties within the previous twelve months. The payment defaults did not materially impact the allowance for credit losses on loans. There were no payment defaults during the three and six months ended June 30, 2023 on loans that had been modified within the previous twelve months.

Old National had not committed to lend any material additional funds to the borrowers whose loans were modified due to financial difficulties at June 30, 2024 or December 31, 2023.

Purchased Credit Deteriorated Loans

Old National has purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The carrying amount of those loans is as follows:

(dollars in thousands)	CapStar (1)
Purchase price of loans at acquisition	$	613,494
Allowance for credit losses at acquisition	23,922
Non-credit discount/(premium) at acquisition	41,886
Par value of acquired loans at acquisition	$	679,302

(1)Old National acquired CapStar effective April 1, 2024.

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.

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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.

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,
(dollars in thousands)		2024		2023		2024		2023
Operating lease cost	Occupancy/Equipment expense	$	8,268	$	7,469	$	16,094	$	16,107
Finance lease cost:
Amortization of right-of-use assets	Occupancy expense	1,488		737		2,239		1,428
Interest on lease liabilities	Interest expense	253		184		434		353
Sub-lease income	Occupancy expense	(123)		(102)		(248)		(162)
Total		$	9,886	$	8,288	$	18,519	$	17,726

Supplemental balance sheet information related to leases was as follows:

(dollars in thousands)	June 30, 2024			December 31, 2023
Operating Leases
Operating lease right-of-use assets	$	194,591		$	185,506
Operating lease liabilities	213,119			204,960
Finance Leases
Premises and equipment, net	32,759			19,820
Other borrowings	34,114			20,955
Weighted-Average Remaining Lease Term (in Years)
Operating leases	8.2			8.5
Finance leases	7.2			10.5
Weighted-Average Discount Rate
Operating leases	3.12		%	3.04		%
Finance leases	3.97		%	3.90		%

Supplemental cash flow information related to leases was as follows:

	Six Months Ended June 30,
(dollars in thousands)	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	16,439	$	15,752
Operating cash flows from finance leases	434		353
Financing cash flows from finance leases	2,020		1,265

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The following table presents a maturity analysis of the Company’s lease liability by lease classification at June 30, 2024:

(dollars in thousands)	Operating Leases		Finance Leases
2024	$	16,861	$	4,649
2025	34,330		8,787
2026	33,583		6,048
2027	31,857		4,388
2028	27,940		2,996
Thereafter	98,385		12,611
Total undiscounted lease payments	242,956		39,479
Amounts representing interest	(29,837)		(5,365)
Lease liability	$	213,119	$	34,114

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)	2024		2023		2024		2023
Balance at beginning of period	$	1,998,716	$	1,998,716	$	1,998,716	$	1,998,716
Acquisitions and adjustments	171,993		—		171,993		—
Balance at end of period	$	2,170,709	$	1,998,716	$	2,170,709	$	1,998,716

During the three months ended June 30, 2024, Old National recorded $172.0 million of goodwill associated with the acquisition of CapStar. See Note 2 to the consolidated financial statements for additional detail regarding this transaction.

Old National performed the required annual goodwill impairment test as of August 31, 2023 and there was no impairment. No events or circumstances since the August 31, 2023 annual impairment test were noted that would indicate it was more likely than not a goodwill impairment exists.

The gross carrying amounts and accumulated amortization of other intangible assets were as follows: 

(dollars in thousands)	Gross Carrying Amount		Accumulated Amortization and Impairment		Net Carrying Amount
June 30, 2024
Core deposit	$	189,636	$	(83,537)	$	106,099
Customer trust relationships	52,621		(23,225)		29,396
Total other intangible assets	$	242,257	$	(106,762)	$	135,495
December 31, 2023
Core deposit	$	143,511	$	(72,940)	$	70,571
Customer trust relationships	52,621		(20,942)		31,679
Total other intangible assets	$	196,132	$	(93,882)	$	102,250

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. During the three months ended June 30, 2024, Old National recorded $46.1 million of core deposit intangibles associated with the acquisition of CapStar. See Note 2 to the consolidated financial statements for additional detail regarding this transaction.

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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 six months ended June 30, 2024 or 2023. Total amortization expense associated with intangible assets was $7.4 million and $12.9 million for the three and six months ended June 30, 2024, respectively, compared to $6.1 million and $12.2 million for the three and six months ended June 30, 2023, respectively.

Estimated amortization expense for future years is as follows:

(dollars in thousands)
2024 remaining	$	14,648
2025	26,116
2026	22,474
2027	18,947
2028	15,598
Thereafter	37,712
Total	$	135,495

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, 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)		June 30, 2024				December 31, 2023
Investment	Accounting Method	Investment		Unfunded Commitment (1)		Investment		Unfunded Commitment
LIHTC	Proportional amortization	$	158,955	$	90,134	$	114,991	$	75,981
FHTC	Proportional amortization (2)	32,030		26,345		34,220		27,421
NMTC	Consolidation	48,875		—		47,727		—
Renewable Energy	Equity	4		—		201		—
Total		$	239,864	$	116,479	$	197,139	$	103,402

(1)All commitments will be paid by Old National by December 31, 2036.

(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.

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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)	Amortization Expense (1)		Tax Expense (Benefit) Recognized (2)
Three Months Ended June 30, 2024
LIHTC	$	2,780	$	(3,743)
FHTC	728		(690)
NMTC	2,546		(3,175)
Renewable Energy	11		—
Total	$	6,065	$	(7,608)
Three Months Ended June 30, 2023
LIHTC	$	1,463	$	(1,908)
FHTC	424		(512)
NMTC	2,092		(2,611)
Renewable Energy	246		—
Total	$	4,225	$	(5,031)
Six Months Ended June 30, 2024
LIHTC	$	5,265	$	(7,074)
FHTC	1,262		(1,353)
NMTC	5,092		(6,350)
Renewable Energy	197		—
Total	$	11,816	$	(14,777)
Six Months Ended June 30, 2023
LIHTC	$	2,927	$	(3,817)
FHTC	848		(1,024)
NMTC	4,183		(5,222)
Renewable Energy	492		—
Total	$	8,450	$	(10,063)

(1)The amortization expense for the LIHTC and FHTC investments is included in our income tax expense. Prior to the adoption of ASU 2023-02 on January 1, 2024, 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 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 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).

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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,
(dollars in thousands)	2024			2023
Outstanding at period end	$	240,713		$	311,447
Average amount outstanding during the period	273,088			376,298
Maximum amount outstanding at any month-end during the period	319,423			430,537
Weighted-average interest rate:
During the period	1.15		%	0.90		%
At period end	3.41		%	1.14		%

At December 31, 2023, securities sold under agreements to repurchase totaled $285.2 million with a weighted-average interest rate of 3.64%.

The following table presents the contractual maturity of our secured borrowings and class of collateral pledged:

	At June 30, 2024
	Remaining Contractual Maturity of the Agreements
(dollars in thousands)	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 days		Total
Repurchase Agreements:
U.S. Treasury and agency securities	$	240,713	$	—	$	—	$	—	$	240,713
Total	$	240,713	$	—	$	—	$	—	$	240,713

NOTE 11 – FEDERAL HOME LOAN BANK ADVANCES

The following table summarizes Old National Bank’s FHLB advances:

(dollars in thousands)	June 30, 2024		December 31, 2023
FHLB advances (fixed rates 2.19% to 5.55%    and variable rates 5.33% to 5.48%) maturing    September 2024 to March 2044	$	4,775,528	$	4,300,528
Fair value hedge basis adjustments and unamortized    prepayment fees	(30,968)		(19,847)
Total	$	4,744,560	$	4,280,681

FHLB advances had weighted-average rates of 3.84% at June 30, 2024 and 3.45% at December 31, 2023. FHLB advances are collateralized by designated assets that may include qualifying commercial real estate loans, residential and multifamily mortgages, home equity loans, and certain investment securities.

At June 30, 2024, total unamortized prepayment fees related to all FHLB advance debt modifications completed in prior years totaled $11.2 million, compared to $14.2 million at December 31, 2023.

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Contractual maturities of FHLB advances at June 30, 2024 were as follows:

(dollars in thousands)
Due in 2024	$	450,243
Due in 2025	550,285
Due in 2026	100,000
Due in 2028	650,000
Thereafter	3,025,000
Fair value hedge basis adjustments and unamortized prepayment fees	(30,968)
Total	$	4,744,560

NOTE 12 – OTHER BORROWINGS

The following table summarizes Old National’s other borrowings:

(dollars in thousands)	June 30, 2024		December 31, 2023
Old National Bancorp:
Senior unsecured notes (fixed rate 4.13%) maturing August 2024	$	175,000	$	175,000
Unamortized debt issuance costs related to senior unsecured notes	(13)		(91)
Subordinated debentures (fixed rate 5.88%) maturing September 2026	150,000		150,000
Subordinated debentures (fixed rate 5.25%) maturing June 2030	30,000		—
Junior subordinated debentures (rates of 6.95% to 9.17%) maturing    July 2031 to September 2037	136,643		136,643
Other basis adjustments	15,627		18,207
Old National Bank:
Finance lease liabilities	34,114		20,955
Subordinated debentures (3-month SOFR plus 4.618%; variable rate 9.95%)    maturing October 2025	12,000		12,000
Leveraged loans for NMTC (fixed rates of 1.00% to 1.43%)    maturing December 2046 to June 2060	168,228		154,284
Other (1)	128,178		97,872
Total other borrowings	$	849,777	$	764,870

(1)Includes overnight borrowings to collateralize certain derivative positions totaling $128.1 million at June 30, 2024 and $97.6 million at December 31, 2023.

Contractual maturities of other borrowings at June 30, 2024 were as follows:

(dollars in thousands)
Due in 2024	$	307,099
Due in 2025	19,784
Due in 2026	155,280
Due in 2027	3,795
Due in 2028	2,518
Thereafter	345,568
Unamortized debt issuance costs and other basis adjustments	15,733
Total	$	849,777

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.

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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, 2024:

(dollars in thousands)					Rate at June 30, 2024
Name of Trust	Issuance Date	Issuance Amount		Rate		Maturity Date
Bridgeview Statutory Trust I	July 2001	$	15,464	3-month SOFR plus 3.58%	9.17%	July 31, 2031
Bridgeview Capital Trust II	December 2002	15,464		3-month SOFR plus 3.35%	8.94%	January 7, 2033
First Midwest Capital Trust I	November 2003	37,825		6.95% fixed	6.95%	December 1, 2033
St. Joseph Capital Trust II	March 2005	5,155		3-month SOFR plus 1.75%	7.35%	March 17, 2035
Northern States Statutory Trust I	September 2005	10,310		3-month SOFR plus 1.80%	7.40%	September 15, 2035
Anchor Capital Trust III	August 2005	5,000		3-month SOFR plus 1.55%	7.14%	September 30, 2035
Great Lakes Statutory Trust II	December 2005	6,186		3-month SOFR plus 1.40%	7.00%	December 15, 2035
Home Federal Statutory    Trust I	September 2006	15,464		3-month SOFR plus 1.65%	7.25%	September 15, 2036
Monroe Bancorp Capital    Trust I	July 2006	3,093		3-month SOFR plus 1.60%	7.19%	October 7, 2036
Tower Capital Trust 3	December 2006	9,279		3-month SOFR plus 1.69%	7.30%	March 1, 2037
Monroe Bancorp Statutory    Trust II	March 2007	5,155		3-month SOFR plus 1.60%	7.20%	June 15, 2037
Great Lakes Statutory Trust III	June 2007	8,248		3-month SOFR plus 1.70%	7.30%	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 $34.1 million at June 30, 2024. See Note 7 to the consolidated financial statements for a maturity analysis of the Company’s finance lease liabilities.

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NOTE 13 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes within each classification of AOCI, net of tax:

(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, 2024
Balance at beginning of period	$	(685,969)	$	(92,251)	$	(1,408)	$	—	$	(779,628)
Other comprehensive income (loss) before    reclassifications	(13,347)		—		(5,215)		—		(18,562)
Amounts reclassified from AOCI to income (1)	(2)		3,265		3,519		—		6,782
Balance at end of period	$	(699,318)	$	(88,986)	$	(3,104)	$	—	$	(791,408)
Three Months Ended June 30, 2023
Balance at beginning of period	$	(611,260)	$	(106,966)	$	9,872	$	(4)	$	(708,358)
Other comprehensive income (loss) before    reclassifications	(90,121)		—		9,840		—		(80,281)
Amounts reclassified from AOCI to income (1)	(12)		3,822		(23,808)		4		(19,994)
Balance at end of period	$	(701,393)	$	(103,144)	$	(4,096)	$	—	$	(808,633)
Six Months Ended June 30, 2024
Balance at beginning of period	$	(652,518)	$	(95,472)	$	9,181	$	—	$	(738,809)
Other comprehensive income (loss) before    reclassifications	(46,810)		—		(19,420)		—		(66,230)
Amounts reclassified from AOCI to income (1)	10		6,486		7,135		—		13,631
Balance at end of period	$	(699,318)	$	(88,986)	$	(3,104)	$	—	$	(791,408)
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)

(1)See table below for details about reclassifications to income.

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

	Three Months Ended June 30,
(dollars in thousands)	2024		2023
Details about AOCI Components	Amount Reclassified from AOCI				Affected Line Item in the Statement of Income
Unrealized gains and losses on    available-for-sale securities	$	2	$	17	Debt securities gains (losses), net
	—		(5)		Income tax (expense) benefit
	$	2	$	12	Net income
Amortization of unrealized losses on    held-to-maturity securities transferred    from available-for-sale	$	(4,376)	$	(5,122)	Interest income (expense)
	1,111		1,300		Income tax (expense) benefit
	$	(3,265)	$	(3,822)	Net income
Gains and losses on hedges    Interest rate contracts	$	(4,747)	$	32,112	Interest income (expense)
	1,228		(8,304)		Income tax (expense) benefit
	$	(3,519)	$	23,808	Net income
Amortization of defined benefit    pension items
Actuarial gains (losses)	$	—	$	(6)	Salaries and employee benefits
	—		2		Income tax (expense) benefit
	$	—	$	(4)	Net income
Total reclassifications for the period	$	(6,782)	$	19,994	Net income

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

	Six Months Ended June 30,
(dollars in thousands)	2024		2023
Details about AOCI Components	Amount Reclassified from AOCI				Affected Line Item in the Statement of Income
Unrealized gains and losses on    available-for-sale securities	$	(14)	$	(5,199)	Debt securities gains (losses), net
	4		1,344		Income tax (expense) benefit
	$	(10)	$	(3,855)	Net income
Amortization of unrealized losses on    held-to-maturity securities transferred    from available-for-sale	$	(8,694)	$	(10,951)	Interest income (expense)
	2,208		2,756		Income tax (expense) benefit
	$	(6,486)	$	(8,195)	Net income
Gains and losses on hedges    Interest rate contracts	$	(9,624)	$	24,820	Interest income (expense)
	2,489		(6,448)		Income tax (expense) benefit
	$	(7,135)	$	18,372	Net income
Amortization of defined benefit    pension items
Actuarial gains (losses)	$	—	$	182	Salaries and employee benefits
	—		(45)		Income tax (expense) benefit
	$	—	$	137	Net income
Total reclassifications for the period	$	(13,631)	$	6,459	Net income

NOTE 14 – INCOME TAXES

The 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)	2024			2023			2024			2023
Provision at statutory rate of 21%	$	32,861		$	42,510		$	64,943		$	81,995
Tax-exempt income:
Tax-exempt interest	(5,027)			(4,605)			(9,985)			(9,091)
Section 291/265 interest disallowance	957			532			1,841			918
Company-owned life insurance income	(1,178)			(945)			(1,872)			(1,572)
Tax-exempt income	(5,248)			(5,018)			(10,016)			(9,745)
State income taxes	6,333			8,552			11,480			16,693
Interim period effective rate adjustment	(70)			993			873			(723)
Tax credit investments - federal	(3,106)			(2,526)			(6,160)			(5,051)
Officer compensation limitation	1,491			1,040			2,256			2,080
Non-deductible FDIC premiums	2,032			2,037			3,779			4,147
Other, net	957			(195)			583			(582)
Income tax expense	$	35,250		$	47,393		$	67,738		$	88,814
Effective tax rate	22.5		%	23.4		%	21.9		%	22.8		%

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Net Deferred Tax Assets

Net deferred tax assets are included in other assets on the balance sheet. At June 30, 2024, net deferred tax assets totaled $456.4 million, compared to $423.3 million at December 31, 2023. No valuation allowance was required on the Company’s deferred tax assets at June 30, 2024 or December 31, 2023.

The Company’s retained earnings at June 30, 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.

Old National has federal net operating loss carryforwards totaling $75.3 million at June 30, 2024 and $63.6 million at December 31, 2023. This federal net operating loss was acquired from the acquisition of Anchor BanCorp Wisconsin Inc. in 2016, First Midwest Bancorp, Inc. in 2022, and CapStar Financial Holdings, Inc. in 2024. If not used, the federal net operating loss carryforwards will begin expiring in 2032 and later. Old National has recorded state net operating loss carryforwards totaling $111.2 million at June 30, 2024 and $116.9 million at December 31, 2023. If not used, the state net operating loss carryforwards will expire from 2027 to 2036.

The federal and recorded state net operating loss carryforwards are subject to an annual limitation under Internal Revenue Code section 382. Old National believes that all of the federal and recorded state net operating loss carryforwards will be used prior to expiration.

NOTE 15 – 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.

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 $150.0 million notional amount at both June 30, 2024 and December 31, 2023. Interest rate swaps, collars, and floors related to variable-rate commercial loan pools were designated as cash flow hedges totaling $1.8 billion notional amount at June 30, 2024 and $1.6 billion notional amount at December 31, 2023. The hedges were determined to be effective during all periods presented and we expect them to remain effective during the remaining terms.

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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 $1.1 billion notional amount at June 30, 2024 and $900.0 million notional amount at December 31, 2023. Interest rate swaps of certain available-for-sale investment securities were designated as fair value hedges totaling $998.1 million notional amount at both June 30, 2024 and December 31, 2023. The hedges were determined to be effective during all periods presented and we expect them to remain effective during the remaining terms.

The following table summarizes Old National’s derivatives designated as hedges:

	June 30, 2024						December 31, 2023
			Fair Value						Fair Value
(dollars in thousands)	Notional		Assets (1)		Liabilities (2)		Notional		Assets (1)		Liabilities (2)
Cash flow hedges
Interest rate swaps, collars, and floors on loan    pools	$	1,800,000	$	2,276	$	17,662	$	1,600,000	$	10,472	$	6,014
Interest rate swaps on borrowings (3)	150,000		—		—		150,000		—		—
Fair value hedges
Interest rate swaps on investment securities (3)	998,107		—		—		998,107		—		—
Interest rate swaps on borrowings (3)	1,100,000		1,777		—		900,000		—		—
Total			$	4,053	$	17,662			$	10,472	$	6,014

(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.

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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, 2024
Interest rate contracts	Interest income/(expense)	$	(317)	Fixed-rate debt	Interest income/(expense)	$	272
Interest rate contracts	Interest income/(expense)	2,836		Fixed-rate investment securities	Interest income/(expense)	(2,809)
Total		$	2,519			$	(2,537)
Three Months Ended June 30, 2023
Interest rate contracts	Interest income/(expense)	$	(11,101)	Fixed-rate debt	Interest income/(expense)	$	10,956
Interest rate contracts	Interest income/(expense)	24,846		Fixed-rate investment securities	Interest income/(expense)	(24,867)
Total		$	13,745			$	(13,911)
Six Months Ended June 30, 2024
Interest rate contracts	Interest income/(expense)	$	(14,288)	Fixed-rate debt	Interest income/(expense)	$	14,399
Interest rate contracts	Interest income/(expense)	28,684		Fixed-rate investment securities	Interest income/(expense)	(28,714)
Total		$	14,396			$	(14,315)
Six Months Ended June 30, 2023
Interest rate contracts	Interest income/(expense)	$	(8,948)	Fixed-rate debt	Interest income/(expense)	$	8,738
Interest rate contracts	Interest income/(expense)	(38,269)		Fixed-rate investment securities	Interest income/(expense)	38,384
Total		$	(47,217)			$	47,122

The effect of derivative instruments in cash flow hedging relationships on the consolidated statements of income were as follows:

		Three Months Ended June 30,				Three Months Ended June 30,
(dollars in thousands)		2024		2023		2024		2023
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 contracts	Interest income/(expense)	$	(7,035)	$	13,272	$	(5,781)	$	31,078
		Six Months Ended June 30,				Six Months Ended June 30,
		2024		2023		2024		2023
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 contracts	Interest income/(expense)	$	(26,194)	$	19,875	$	(11,692)	$	23,441

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

41

estimate that $6.6 million will be reclassified to interest income and $26.5 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, 2024, the notional amounts of the interest rate lock commitments were $99.1 million and forward commitments were $125.4 million. At December 31, 2023, the notional amounts of the interest rate lock commitments were $25.2 million and forward commitments were $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. The notional amounts of these customer derivative instruments and the offsetting counterparty derivative instruments were $6.0 billion at both June 30, 2024 and December 31, 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 needs of its clients. Old National does not designate these foreign currency forward contracts for hedge accounting treatment.

The following table summarizes Old National’s derivatives not designated as hedges:

	June 30, 2024						December 31, 2023
			Fair Value						Fair Value
(dollars in thousands)	Notional		Assets (1)		Liabilities (2)		Notional		Assets (1)		Liabilities (2)
Interest rate lock commitments	$	99,131	$	—	$	172	$	25,151	$	291	$	—
Forward mortgage loan contracts	125,414		398		—		39,529		—		566
Customer interest rate swaps	6,022,198		11,351		265,548		5,954,216		33,182		228,750
Counterparty interest rate swaps (3)	6,022,198		152,679		11,409		5,954,216		121,969		33,346
Customer foreign currency contracts	7,904		33		49		12,455		320		59
Counterparty foreign currency contracts	7,786		90		6		12,308		68		181
Total			$	164,551	$	277,184			$	155,830	$	262,902

(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.

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The effect of derivatives not designated as hedging instruments on the consolidated statements of income were as follows:

		Three Months Ended June 30,
(dollars in thousands)		2024		2023
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)	$	(160)	$	837
Mortgage contracts	Mortgage banking revenue	(693)		262
Foreign currency contracts	Other income/(expense)	(47)		(12)
Total		$	(900)	$	1,087
		Six Months Ended June 30,
		2024		2023
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)	$	408	$	699
Mortgage contracts	Mortgage banking revenue	44		369
Foreign currency contracts	Other income/(expense)	(81)		(13)
Total		$	371	$	1,055

(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:

	June 30, 2024				December 31, 2023
(dollars in thousands)	Assets		Liabilities		Assets		Liabilities
Gross amounts recognized	$	168,604	$	294,846	$	166,302	$	268,916
Less: amounts offset in the Consolidated Balance Sheet	—		—		—		—
Net amount presented in the Consolidated Balance Sheet	168,604		294,846		166,302		268,916
Gross amounts not offset in the Consolidated Balance Sheet
Offsetting derivative positions	(29,071)		(29,071)		(39,360)		(39,360)
Cash collateral pledged	—		(128,289)		—		(97,840)
Net credit exposure	$	139,533	$	137,486	$	126,942	$	131,716

NOTE 16 – COMMITMENTS, CONTINGENCIES, AND FINANCIAL GUARANTEES

Litigation

At June 30, 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 litigation 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 agreements made by clients to counterparties. Standby letters of credit are contingent upon failure of the client to

43

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)	June 30, 2024		December 31, 2023
Unfunded loan commitments	$	8,789,910	$	8,912,587
Standby letters of credit (1)	184,482		192,237

(1)Notional amount, which represents the maximum amount of future funding requirements. The carrying value was $1.5 million at June 30, 2024 and $1.3 million at December 31, 2023.

At June 30, 2024, approximately 3% of the unfunded loan commitments had fixed rates, with the remainder having floating rates ranging from 0.00% to 22.49%. The allowance for unfunded loan commitments totaled $25.7 million at June 30, 2024 and $31.2 million at December 31, 2023.

Old National is a party in risk participation transactions of interest rate swaps, which had total notional amounts of $634.9 million at June 30, 2024 and $557.8 million at December 31, 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.

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 SOFR 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-sale: The fair value of loans held-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 market quotes developed using observable inputs as of the valuation date (Level 2).

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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, 2024 Using
(dollars in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Equity securities	$	85,521	$	85,521	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury	205,308		205,308		—		—
U.S. government-sponsored entities and agencies	1,172,294		—		1,172,294		—
Mortgage-backed securities - Agency	4,888,456		—		4,888,456		—
States and political subdivisions	523,315		—		523,315		—
Pooled trust preferred securities	11,298		—		11,298		—
Other securities	304,807		—		304,807		—
Loans held-for-sale	66,126		—		66,126		—
Derivative assets	168,604		—		168,604		—
Financial Liabilities
Derivative liabilities	294,846		—		294,846		—

			Fair Value Measurements at December 31, 2023 Using
(dollars in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Equity securities	$	80,372	$	80,372	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury	396,733		396,733		—		—
U.S. government-sponsored entities and agencies	1,231,264		—		1,231,264		—
Mortgage-backed securities - Agency	4,216,560		—		4,216,560		—
States and political subdivisions	535,260		—		535,260		—
Pooled trust preferred securities	11,337		—		11,337		—
Other securities	321,901		—		321,901		—
Loans held-for-sale	32,006		—		32,006		—
Derivative assets	166,302		—		166,302		—
Financial Liabilities
Derivative liabilities	268,916		—		268,916		—

Non-Recurring Basis

Assets measured at fair value at June 30, 2024 on a non-recurring basis are summarized below:

			Fair Value Measurements at June 30, 2024 Using
(dollars in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral Dependent Loans:
Commercial loans	$	20,587	$	—	$	—	$	20,587
Commercial real estate loans	111,159		—		—		111,159
Foreclosed Assets:
Commercial	975		—		—		975
Residential	65		—		—		65

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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 $163.2 million, with a valuation allowance of $31.4 million at June 30, 2024. Old National recorded provision expense associated with these loans totaling $7.4 million and $17.0 million for the three and six months ended June 30, 2024, respectively, compared to $7.9 million and $19.8 million for the three and six months ended June 30, 2023, respectively.

Other real estate owned and other repossessed property is measured at fair value less costs to sell on a non-recurring basis. Old National did not have any other real estate owned or other repossessed property measured at fair value on a non-recurring basis at June 30, 2024. There were $0.4 million write-downs on other real estate owned for the three and six months ended June 30, 2024, compared to $0.1 million of write-downs for the three and six months ended June 30, 2023.

Assets measured at fair value at December 31, 2023 on a non-recurring basis are summarized below:

			Fair Value Measurements at December 31, 2023 Using
(dollars in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral Dependent Loans:
Commercial loans	$	11,017	$	—	$	—	$	11,017
Commercial real estate loans	95,457		—		—		95,457
Foreclosed Assets:
Commercial real estate	1,669		—		—		1,669

At December 31, 2023, commercial and commercial real estate loans that are deemed collateral dependent had a principal amount of $134.3 million, with a valuation allowance of $27.9 million.

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 Value		Valuation Techniques	Unobservable Input	Range (Weighted Average) (1)
June 30, 2024
Collateral Dependent Loans
Commercial loans	$	20,587	Discounted	Discount for type of property,	5% - 54% (31%)
			cash flow	age of appraisal, and current status
Commercial real estate loans	111,159		Discounted	Discount for type of property,	0% - 34% (11%)
			cash flow	age of appraisal, and current status
Foreclosed Assets
Commercial real estate (2)	975		Fair value of	Discount for type of property,	28%
			collateral	age of appraisal, and current status
Residential (2)	65		Fair value of	Discount for type of property,	11%
			collateral	age of appraisal, and current status
December 31, 2023
Collateral Dependent Loans
Commercial loans	$	11,017	Discounted	Discount for type of property,	5% - 37% (27%)
			cash flow	age of appraisal, and current status
Commercial real estate loans	95,457		Discounted	Discount for type of property,	2% - 38% (16%)
			cash flow	age of appraisal, and current status
Foreclosed Assets
Commercial real estate	1,669		Fair value of	Discount for type of property,	4% - 8% (4%)
			collateral	age of appraisal, and current status

(1)Unobservable inputs were weighted by the relative fair value of the instruments.

(2)There was only one foreclosed commercial real estate property and one foreclosed residential real estate property at June 30, 2024 with write-downs during the six months ended June 30, 2024, so no range or weighted average is reported.

46

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.

Loans Held-For-Sale

Old National has elected the fair value option for loans 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-sale is included in the income statement totaling $0.5 million for three months ended June 30, 2024 and $0.8 million for the six months ended June 30, 2024, compared to $0.3 million and $0.5 million for the three and six months ended June 30, 2023, respectively.

Newly originated conforming fixed-rate and adjustable-rate first mortgage loans are intended for sale and are hedged with derivative instruments. Old National has elected the fair value option to mitigate accounting mismatches in cases where hedge accounting is complex and to achieve operational simplification. The fair value option was not elected for loans held for investment.

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 Value		Difference		Contractual Principal
June 30, 2024
Loans held-for-sale	$	66,126	$	525	$	65,601
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.

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 Income		Interest (Expense)		Total Changes in Fair Values Included in Current Period Earnings
Three Months Ended June 30, 2024
Loans held-for-sale	$	105	$	6	$	—	$	111
Three Months Ended June 30, 2023
Loans held-for-sale	$	229	$	—	$	(7)	$	222
Six Months Ended June 30, 2024
Loans held-for-sale	$	(97)	$	6	$	(5)	$	(96)
Six Months Ended June 30, 2023
Loans held-for-sale	$	176	$	—	$	(10)	$	166

47

Financial Instruments Not Carried at Fair Value

The carrying amounts and estimated fair values of financial instruments not carried at fair value were as follows: 

			Fair Value Measurements at June 30, 2024 Using
(dollars in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Cash, due from banks, money market,    and other interest-earning investments	$	1,233,046	$	1,233,046	$	—	$	—
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies	829,402		—		662,331		—
Mortgage-backed securities - Agency	1,001,915		—		838,289		—
State and political subdivisions	1,155,132		—		1,011,882		—
Loans, net:
Commercial	10,192,534		—		—		10,043,917
Commercial real estate	15,825,787		—		—		15,331,416
Residential real estate	6,871,822		—		—		5,964,205
Consumer credit	2,894,035		—		—		2,861,352
Accrued interest receivable	240,806		882		57,984		181,940
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits	$	9,336,042	$	9,336,042	$	—	$	—
Checking, NOW, savings, and money market    interest-bearing deposits	23,614,973		23,614,973		—		—
Time deposits	7,048,213		—		7,013,100		—
Federal funds purchased and interbank borrowings	250,154		250,154		—		—
Securities sold under agreements to repurchase	240,713		240,713		—		—
FHLB advances	4,744,560		—		4,536,762		—
Other borrowings	849,777		—		839,834		—
Accrued interest payable	63,049		—		63,049		—
Standby letters of credit	1,504		—		—		1,504
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	3,300

48

			Fair Value Measurements at December 31, 2023 Using
(dollars in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Cash, due from banks, money market,    and other interest-earning investments	$	1,175,058	$	1,175,058	$	—	$	—
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies	825,953		—		671,126		—
Mortgage-backed securities - Agency	1,029,131		—		881,994		—
State and political subdivisions	1,158,409		—		1,048,068		—
Loans, net:
Commercial	9,392,267		—		—		9,258,193
Commercial real estate	13,984,273		—		—		13,640,868
Residential real estate	6,678,606		—		—		5,579,999
Consumer credit	2,629,171		—		—		2,555,121
Accrued interest receivable	225,159		859		54,465		169,835
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits	$	9,664,247	$	9,664,247	$	—	$	—
Checking, NOW, savings, and money market    interest-bearing deposits	21,991,789		21,991,789		—		—
Time deposits	5,579,144		—		5,552,538		—
Federal funds purchased and interbank borrowings	390		390		—		—
Securities sold under agreements to repurchase	285,206		285,206		—		—
FHLB advances	4,280,681		—		4,090,954		—
Other borrowings	764,870		—		755,592		—
Accrued interest payable	57,094		—		57,094		—
Standby letters of credit	1,318		—		—		1,318
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	3,839

The methods utilized to measure the fair value of financial instruments at June 30, 2024 and December 31, 2023 represent an approximation of exit price, however, an actual exit price may differ.

49

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is an analysis and discussion of our results of operations for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, and financial condition as of June 30, 2024 compared to December 31, 2023. This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes, as well as our 2023 Annual Report on Form 10-K.

FORWARD-LOOKING STATEMENTS

This report contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”), notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be contained in our future filings with the SEC, in press releases, and in oral and written statements made by us that are not statements of historical fact and constitute forward‐looking statements within the meaning of the Act. These statements include, but are not limited to, descriptions of Old National’s financial condition, results of operations, asset and credit quality trends, profitability and business plans or opportunities. Forward-looking statements can be identified by the use of words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “should,” “would,” and “will,” and other words of similar meaning. These forward-looking statements express management’s current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those in such statements, including, but not limited to: competition; government legislation, regulations and policies; the ability of Old National to execute its business plan; unanticipated changes in our liquidity position, including but not limited to changes in our access to sources of liquidity and capital to address our liquidity needs; changes in economic conditions and economic and business uncertainty which could materially impact credit quality trends and the ability to generate loans and gather deposits; inflation and governmental responses to inflation, including increasing interest rates; market, economic, operational, liquidity, credit, and interest rate risks associated with our business; our ability to successfully manage our credit risk and the sufficiency of our allowance for credit losses; the expected cost savings, synergies, and other financial benefits from the merger (the “Merger”) between Old National and CapStar not being realized within the expected time frames and costs or difficulties relating to integration matters being greater than expected; potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the Merger; the potential impact of future business combinations on our performance and financial condition, including our ability to successfully integrate the businesses and the success of revenue-generating and cost reduction initiatives; failure or circumvention of our internal controls; operational risks or risk management failures by us or critical third parties, including without limitation with respect to data processing, information systems, cybersecurity, technological changes, vendor issues, business interruption, and fraud risks; significant changes in accounting, tax or regulatory practices or requirements; new legal obligations or liabilities; disruptive technologies in payment systems and other services traditionally provided by banks; failure or disruption of our information systems; computer hacking and other cybersecurity threats; the effects of climate change on Old National and its customers, borrowers, or service providers; political and economic uncertainty and instability; the impacts of pandemics, epidemics, and other infectious disease outbreaks; other matters discussed in this report; and other factors identified in filings with the SEC. These forward-looking statements are made only as of the date of this report and are not guarantees of future results, performance, or outcomes.

Such forward-looking statements are based on assumptions and estimates, which although believed to be reasonable, may turn out to be incorrect. Therefore, undue reliance should not be placed upon these estimates and statements. We cannot assure that any of these statements, estimates, or beliefs will be realized and actual results or outcomes may differ from those contemplated in these forward-looking statements. Old National does not undertake an obligation to update these forward-looking statements to reflect events or conditions after the date of this report. You are advised to consult further disclosures we may make on related subjects in our filings with the SEC.

Investors should consider these risks, uncertainties, and other factors in addition to the factors under the heading “Risk Factors” included in our other filings with the SEC.

50

FINANCIAL HIGHLIGHTS

The following table sets forth certain financial highlights of Old National for the previous five quarters:

	Three Months Ended
(dollars and shares in thousands, except per share data)	June 30,			March 31,			December 31,			September 30,			June 30,
	2024			2024			2023			2023			2023
Income Statement:
Net interest income	$	388,421		$	356,458		$	364,408		$	375,086		$	382,171
Taxable equivalent adjustment (1) (3)	6,340			6,253			6,100			5,837			5,825
Net interest income - taxable equivalent basis (3)	394,761			362,711			370,508			380,923			387,996
Provision for credit losses	36,214			18,891			11,595			19,068			14,787
Noninterest income	87,271			77,522			100,094			80,938			81,629
Noninterest expense	282,999			262,317			284,235			244,776			246,584
Net income available to common shareholders	117,196			116,250			128,446			143,842			151,003
Per Common Share Data:
Weighted average diluted common shares	316,461			292,207			292,029			291,717			291,266
Net income (diluted)	$	0.37		$	0.40		$	0.44		$	0.49		$	0.52
Cash dividends	0.14			0.14			0.14			0.14			0.14
Common dividend payout ratio (2)	38		%	35		%	32		%	29		%	27		%
Book value	$	18.28		$	18.24		$	18.18		$	17.07		$	17.25
Stock price	17.19			17.41			16.89			14.54			13.94
Tangible common book value (3)	11.05			11.10			11.00			9.87			10.03
Performance Ratios:
Return on average assets	0.92		%	0.98		%	1.09		%	1.22		%	1.29		%
Return on average common equity	8.17			8.74			10.20			11.39			12.01
Return on average tangible common equity (3)	14.07			14.93			18.11			20.18			21.35
Net interest margin (3)	3.33			3.28			3.39			3.49			3.60
Efficiency ratio (3)	57.17			58.34			59.05			51.66			51.22
Net charge-offs (recoveries) to average loans	0.16			0.14			0.12			0.24			0.13
Allowance for credit losses on loans to ending loans	1.01			0.95			0.93			0.93			0.93
Allowance for credit losses (4) to ending loans	1.08			1.03			1.03			1.03			1.04
Non-performing loans to ending loans	0.94			0.98			0.83			0.80			0.91
Balance Sheet:
Total loans	$	36,150,513		$	33,623,319		$	32,991,927		$	32,577,834		$	32,432,473
Total assets	53,119,645			49,534,918			49,089,836			49,059,448			48,496,755
Total deposits	39,999,228			37,699,418			37,235,180			37,252,676			36,231,315
Total borrowed funds	6,085,204			5,331,161			5,331,147			5,556,010			6,034,008
Total shareholders’ equity	6,075,072			5,595,408			5,562,900			5,239,537			5,292,095
Capital Ratios:
Risk-based capital ratios:
Tier 1 common equity	10.73		%	10.76		%	10.70		%	10.41		%	10.14		%
Tier 1	11.33			11.40			11.35			11.06			10.79
Total	12.71			12.74			12.64			12.32			12.14
Leverage ratio (to average assets)	8.90			8.96			8.83			8.70			8.59
Total equity to assets (averages)	11.31			11.32			10.81			10.88			10.96
Tangible common equity to tangible assets (3)	6.94			6.86			6.85			6.15			6.33
Nonfinancial Data:
Full-time equivalent employees	4,267			3,955			3,940			3,981			4,021
Banking centers	280			258			258			257			256

(1)Calculated using the federal statutory tax rate in effect of 21% for all periods.

(2)Cash dividends per common share divided by net income per common share (basic).

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

(4)Includes the allowance for credit losses on loans and unfunded loan commitments.

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)	2024			2023
Income Statement:
Net interest income	$	744,879		$	763,659
Taxable equivalent adjustment (1) (3)	12,593			11,491
Net interest income - taxable equivalent basis (3)	757,472			775,150
Provision for credit losses	55,105			28,224
Noninterest income	164,793			152,310
Noninterest expense	545,316			497,295
Net income available to common shareholders	233,446			293,569
Per Common Share Data:
Weighted average diluted common shares	304,207			291,870
Net income (diluted)	$	0.77		$	1.01
Cash dividends	0.28			0.28
Common dividend payout ratio (2)	36		%	28		%
Book value	$	18.28		$	17.25
Stock price	17.19			13.94
Tangible common book value (3)	11.05			10.03
Performance Ratios:
Return on average assets	0.95		%	1.27		%
Return on average common equity	8.45			11.80
Return on average tangible common equity (3)	14.48			21.19
Net interest margin (3)	3.31			3.65
Efficiency ratio (3)	57.73			52.01
Net charge-offs (recoveries) to average loans	0.15			0.17
Allowance for credit losses on loans to ending loans	1.01			0.93
Allowance for credit losses (4) to ending loans	1.08			1.04
Non-performing loans to ending loans	0.94			0.91
Balance Sheet:
Total loans	$	36,150,513		$	32,432,473
Total assets	53,119,645			48,496,755
Total deposits	39,999,228			36,231,315
Total borrowed funds	6,085,204			6,034,008
Total shareholders’ equity	6,075,072			5,292,095
Capital Ratios:
Risk-based capital ratios:
Tier 1 common equity	10.73		%	10.14		%
Tier 1	11.33			10.79
Total	12.71			12.14
Leverage ratio (to average assets)	8.90			8.59
Total equity to assets (averages)	11.31			10.98
Tangible common equity to tangible assets (3)	6.94			6.33
Nonfinancial Data:
Full-time equivalent employees	4,267			4,021
Banking centers	280			256

(1)Calculated using the federal statutory tax rate in effect of 21% for all periods.

(2)Cash dividends per common share divided by net income per common share (basic).

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

(4)Includes the allowance for credit losses on loans and unfunded loan commitments.

52

NON-GAAP FINANCIAL MEASURES

The Company’s accounting and reporting policies conform to GAAP and general practices within the banking industry. As a supplement to GAAP, the Company provides non-GAAP performance results, which the Company believes are useful because they assist users of the financial information in assessing the Company’s operating performance. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the following table.

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

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

In management’s view, tangible common equity measures are capital adequacy metrics that may be meaningful to the Company, as well as users of the financial information, in assessing the Company’s use of equity and in facilitating comparisons with peers. These non-GAAP measures are valuable indicators of a financial institution’s capital strength since they eliminate intangible assets from shareholders’ equity and retain the effect of AOCI in shareholders’ equity.

Although intended to enhance understanding of the Company’s business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. In addition, these non-GAAP financial measures may differ from those used by other financial institutions to assess their business and performance. See the previously provided tables and the following reconciliations in the “Non-GAAP Reconciliations” section for details on the calculation of these measures to the extent presented herein.

53

The following table presents GAAP to non-GAAP reconciliations for the previous five quarters:

	Three Months Ended
(dollars and shares in thousands, except per share data)	June 30,			March 31,			December 31,			September 30,			June 30,
	2024			2024			2023			2023			2023
Net income per common share:
Net income applicable to common shares	$	117,196		$	116,250		$	128,446		$	143,842		$	151,003
Adjustments:
Merger-related charges	19,440			2,908			5,529			6,257			2,372
CECL Day 1 non-PCD provision expense	15,312			—			—			—			—
Debt securities (gains) losses	(2)			16			825			241			(17)
Distribution of excess pension assets expense	—			13,318			—			—			—
FDIC special assessment	—			2,994			19,052			—			—
Gain on sale of Visa Class B restricted shares	—			—			(21,635)			—			—
Contract termination charge	—			—			4,413			—			—
Louisville expenses	—			—			—			—			3,361
Property optimization charges	—			—			—			—			242
Less: tax effect on net total adjustments (2)	(7,888)			(4,695)			(1,988)			(1,082)			(695)
Net income applicable to common shares, adjusted (1)	$	144,058		$	130,791		$	134,642		$	149,258		$	156,266
Weighted average diluted common shares outstanding	316,461			292,207			292,029			291,717			291,266
Net income per common share, diluted	$	0.37		$	0.40		$	0.44		$	0.49		$	0.52
Adjusted net income per common share, diluted (1)	$	0.46		$	0.45		$	0.46		$	0.51		$	0.54
Tangible common book value:
Shareholders’ common equity	$	5,831,353		$	5,351,689		$	5,319,181		$	4,995,818		$	5,048,376
Deduct: Goodwill and intangible assets	2,306,204			2,095,511			2,100,966			2,106,835			2,112,875
Tangible shareholders’ common equity (1)	$	3,525,149		$	3,256,178		$	3,218,215		$	2,888,983		$	2,935,501
Period end common shares	318,969			293,330			292,655			292,586			292,597
Tangible common book value (1)	11.05			11.10			11.00			9.87			10.03
Return on average tangible common equity:
Net income applicable to common shares	$	117,196		$	116,250		$	128,446		$	143,842		$	151,003
Add:  Intangible amortization (net of tax) (2)	5,569			4,091			4,402			4,530			4,545
Tangible net income (1)	$	122,765		$	120,341		$	132,848		$	148,372		$	155,548
Average shareholders’ common equity	$	5,735,257		$	5,321,823		$	5,037,768		$	5,050,353		$	5,030,083
Deduct: Average goodwill and intangible assets	2,245,405			2,098,338			2,103,935			2,109,944			2,115,894
Average tangible shareholders’ common equity (1)	$	3,489,852		$	3,223,485		$	2,933,833		$	2,940,409		$	2,914,189
Return on average tangible common equity (1)	14.07		%	14.93		%	18.11		%	20.18		%	21.35		%
Net interest margin:
Net interest income	$	388,421		$	356,458		$	364,408		$	375,086		$	382,171
Taxable equivalent adjustment	6,340			6,253			6,100			5,837			5,825
Net interest income - taxable equivalent basis (1)	$	394,761		$	362,711		$	370,508		$	380,923		$	387,996
Average earning assets	$	47,406,849		$	44,175,079		$	43,701,283		$	43,617,456		$	43,097,198
Net interest margin (1)	3.33		%	3.28		%	3.39		%	3.49		%	3.60		%
Efficiency ratio:
Noninterest expense	$	282,999		$	262,317		$	284,235		$	244,776		$	246,584
Deduct:  Intangible amortization expense	7,425			5,455			5,869			6,040			6,060
Adjusted noninterest expense (1)	$	275,574		$	256,862		$	278,366		$	238,736		$	240,524
Net interest income - taxable equivalent basis (1)    (see above)	$	394,761		$	362,711		$	370,508		$	380,923		$	387,996
Noninterest income	87,271			77,522			100,094			80,938			81,629
Deduct:  Debt securities gains (losses), net	2			(16)			(825)			(241)			17
Adjusted total revenue (1)	$	482,030		$	440,249		$	471,427		$	462,102		$	469,608
Efficiency ratio (1)	57.17		%	58.34		%	59.05		%	51.66		%	51.22		%
Tangible common equity to tangible assets:
Tangible shareholders’ equity (1) (see above)	$	3,525,149		$	3,256,178		$	3,218,215		$	2,888,983		$	2,935,501
Assets	$	53,119,645		$	49,534,918		$	49,089,836		$	49,059,448		$	48,496,755
Deduct: Goodwill and intangible assets	2,306,204			2,095,511			2,100,966			2,106,835			2,112,875
Tangible assets (1)	$	50,813,441		$	47,439,407		$	46,988,870		$	46,952,613		$	46,383,880
Tangible common equity to tangible assets (1)	6.94		%	6.86		%	6.85		%	6.15		%	6.33		%

(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).

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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)	2024			2023
Net income per common share:
Net income applicable to common shares	$	233,446		$	293,569
Adjustments:
Merger-related charges	22,348			16,930
CECL Day 1 non-PCD provision expense	15,312			—
Distribution of excess pension assets expense	13,318			—
FDIC special assessment	2,994			—
Debt securities (gains) losses	14			5,199
Louisville expenses	—			3,361
Property optimization charges	—			1,559
Less: tax effect on net total adjustments (2)	(12,583)			(5,291)
Net income applicable to common shares, adjusted (1)	$	274,849		$	315,327
Weighted average diluted common shares outstanding	304,207			291,870
Net income per common share, diluted	$	0.77		$	1.01
Adjusted net income per common share, diluted (1)	$	0.90		$	1.08
Tangible common book value:
Shareholders’ common equity	$	5,831,353		$	5,048,376
Deduct: Goodwill and intangible assets	2,306,204			2,112,875
Tangible shareholders’ common equity (1)	$	3,525,149		$	2,935,501
Period end common shares	318,969			292,597
Tangible common book value (1)	11.05			10.03
Return on average tangible common equity:
Net income applicable to common shares	$	233,446		$	293,569
Add:  Intangible amortization (net of tax) (2)	9,660			9,184
Tangible net income (1)	$	243,106		$	302,753
Average shareholders’ common equity	$	5,528,540		$	4,976,573
Deduct: Average goodwill and intangible assets	2,171,872			2,119,008
Average tangible shareholders’ common equity (1)	$	3,356,668		$	2,857,565
Return on average tangible common equity (1)	14.48		%	21.19		%
Net interest margin:
Net interest income	$	744,879		$	763,659
Taxable equivalent adjustment	12,593			11,491
Net interest income - taxable equivalent basis (1)	$	757,472		$	775,150
Average earning assets	$	45,790,964		$	42,522,747
Net interest margin (1)	3.31		%	3.65		%
Efficiency ratio:
Noninterest expense	$	545,316		$	497,295
Deduct:  Intangible amortization expense	12,880			12,246
Adjusted noninterest expense (1)	$	532,436		$	485,049
Net interest income - taxable equivalent basis (1)    (see above)	$	757,472		$	775,150
Noninterest income	164,793			152,310
Deduct:  Debt securities gains (losses), net	(14)			(5,199)
Adjusted total revenue (1)	$	922,279		$	932,659
Efficiency ratio (1)	57.73		%	52.01		%
Tangible common equity to tangible assets:
Tangible shareholders’ equity (1) (see above)	$	3,525,149		$	2,935,501
Assets	$	53,119,645		$	48,496,755
Deduct: Goodwill and intangible assets	2,306,204			2,112,875
Tangible assets (1)	$	50,813,441		$	46,383,880
Tangible common equity to tangible assets (1)	6.94		%	6.33		%

(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).

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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 $53 billion at June 30, 2024. The Company’s corporate headquarters and principal executive office is located in Evansville, Indiana with commercial and consumer banking operations headquartered in Chicago, Illinois. Through our wholly-owned banking subsidiary and non-bank affiliates, we provide a wide range of services primarily throughout the Midwest and Southeast regions of the United States. In addition to providing extensive services in consumer and commercial banking, Old National offers comprehensive wealth management and capital markets services.

Net income applicable to common shares for the second quarter of 2024 was $117.2 million, or $0.37 per diluted common share, compared to $116.3 million, or $0.40 per diluted common share, for the first quarter of 2024.

Results for the second quarter of 2024 were impacted by $19.4 million in pre-tax merger-related expenses primarily related to the April 1, 2024 acquisition of CapStar and $15.3 million of CECL Day 1 non-PCD provision expense related to the allowance for credit losses established on acquired non-PCD loans. Results for the first 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, $3.0 million for an FDIC special assessment, and $2.9 million of merger-related expenses. Excluding these items, net income applicable to common shares for the second quarter of 2024 was $144.1 million, or $0.46 per diluted common share on an adjusted basis1, compared to $130.8 million, or $0.45 per diluted common share on an adjusted basis1, for the first quarter of 2024.

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

Deposits:  Period-end total deposits increased $2.3 billion to $40.0 billion at June 30, 2024 compared to March 31, 2024, including $2.1 billion of end of period deposits assumed in the CapStar transaction. Excluding deposits assumed in the CapStar transaction, period-end total deposits were up 2.4% annualized.

Loans:  Our loan balances, excluding loans held-for-sale, increased $2.5 billion to $36.2 billion at June 30, 2024 compared to March 31, 2024, including $2.1 billion of period end loans acquired in the CapStar transaction. Excluding loans acquired in the CapStar transaction, period-end total loans were up 5.9% annualized.

Net Interest Income: Net interest income increased $32.0 million to $388.4 million compared to the first quarter of 2024 driven by CapStar, loan growth, and higher asset yields, partly offset by higher funding costs.

Provision for Credit Losses:  Provision for credit losses was $36.2 million; $20.9 million excluding $15.3 million of CECL Day 1 non-PCD provision expense related to the allowance for credit losses established on acquired non-PCD loans in the CapStar transaction, compared to $18.9 million for the first quarter of 2024, reflecting net charge-offs and loan growth, as well as economic factors.

Noninterest Income:  Noninterest income increased $9.7 million to $87.3 million compared to the first quarter of 2024 reflecting $6.5 million of CapStar revenue as well as higher wealth fees, mortgage fees, and capital markets income.

Noninterest Expense:  Noninterest expense increased $20.7 million compared to the first quarter of 2024.  For the second quarter of 2024, noninterest expense included $19.4 million of pre-tax merger-related expenses compared to a $13.3 million non-cash, pre-tax expense associated with the distribution of excess pension assets with the resolution of the legacy First Midwest plan, as well as pre-tax charges of $3.0 million for the FDIC special assessment and $2.9 million of merger-related and other expenses in the first quarter of 2024. Excluding these expenses, noninterest expense was $263.6 million for the second quarter of 2024, compared to $243.1 million for the first quarter of 2024, due primarily to operating costs associated with CapStar.

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

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CAPSTAR TRANSACTION

On April 1, 2024, Old National completed its acquisition of CapStar, and its wholly-owned subsidiary, CapStar Bank. This partnership strengthens Old National’s Nashville, Tennessee presence and adds several new high-growth markets. At closing, CapStar had approximately $3.1 billion of total assets, $2.1 billion of total loans, and $2.6 billion of deposits. The consideration paid totaled $417.6 million and consisted of 24.0 million shares of Old National common stock. All system conversions related to the transaction were completed in early July of 2024.

RESULTS OF OPERATIONS

The following table sets forth certain income statement information of Old National:

(dollars in thousands, except    per share data)	Three Months Ended June 30,						% Change		Six Months Ended June 30,						% Change
	2024			2023					2024			2023
Income Statement Summary:
Net interest income	$	388,421		$	382,171		1.6	%	$	744,879		$	763,659		(2.5)	%
Provision for credit losses	36,214			14,787			144.9		55,105			28,224			95.2
Noninterest income	87,271			81,629			6.9		164,793			152,310			8.2
Noninterest expense	282,999			246,584			14.8		545,316			497,295			9.7
Net income applicable to common    shareholders	117,196			151,003			(22.4)		233,446			293,569			(20.5)
Net income per common share -    diluted	0.37			0.52			(28.8)		0.77			1.01			(23.8)
Other Data:
Return on average common equity	8.17		%	12.01		%			8.45		%	11.80		%
Return on average tangible common    equity (1)	14.07			21.35					14.48			21.19
Efficiency ratio (1)	57.17			51.22					57.73			52.01
Tier 1 leverage ratio	8.90			8.59					8.90			8.59
Net charge-offs (recoveries) to    average loans	0.16			0.13					0.15			0.17

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

Net Interest Income

Net interest income is the most significant component of our earnings, comprising 82% of revenues for the six months ended June 30, 2024. Net interest income and net interest margin are influenced by many factors, primarily the volume and mix of earning assets, funding sources, and interest rate fluctuations. Other factors include the level of accretion income on purchased loans, prepayment risk on mortgage and investment-related assets, and the composition and maturity of interest-earning assets and interest-bearing liabilities.

The Federal Reserve held its interest rates steady during the second quarter of 2024 and increased interest rates compared to June 30, 2023. The Federal Reserve’s Federal Funds Rate is currently in a target range of 5.25% to 5.50%, with the Effective Federal Funds Rate of 5.33% at June 30, 2024 compared to 5.08% at June 30, 2023. Management actively takes balance sheet restructuring, derivative, and deposit pricing actions to help mitigate interest rate risk. See the section of this Item 7 titled “Market Risk” for additional information regarding this risk.

Loans typically generate more interest income than investment securities with similar maturities. Funding from client deposits generally costs less than wholesale funding sources. Factors such as general economic activity, Federal Reserve monetary policy, and price volatility of competing alternative investments can also exert significant influence on our ability to optimize our mix of assets and funding, net interest income, and net interest margin.

Net interest income is the excess of interest received from interest-earning assets over interest paid on interest-bearing liabilities. For analytical purposes, net interest income is presented in the table that follows, adjusted to a taxable equivalent basis to reflect what our tax-exempt assets would need to yield in order to achieve the same after-tax yield as a taxable asset. We used the current federal statutory tax rate in effect of 21% for all periods. This

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analysis portrays the income tax benefits related to tax-exempt assets and helps to facilitate a comparison between taxable and tax-exempt assets. Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully taxable equivalent basis and that it may enhance comparability for peer comparison purposes for both management and investors.

The following tables 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)	Three Months Ended June 30, 2024						Three Months Ended June 30, 2023
Earning Assets	Average Balance		Income (1)/ Expense		Yield/ Rate		Average Balance		Income (1)/ Expense		Yield/ Rate
Money market and other interest-earning    investments	$	814,944	$	11,311	5.58	%	$	724,601	$	8,966	4.96	%
Investment securities:
Treasury and government sponsored agencies	2,208,935		21,531		3.90	%	2,222,269		19,355		3.48	%
Mortgage-backed securities	5,828,225		47,904		3.29	%	5,301,084		34,291		2.59	%
States and political subdivisions	1,686,994		14,290		3.39	%	1,768,897		14,396		3.26	%
Other securities	788,571		12,583		6.38	%	824,482		9,995		4.85	%
Total investment securities	10,512,725		96,308		3.66	%	10,116,732		78,037		3.09	%
Loans: (2)
Commercial	10,345,098		183,425		7.09	%	9,862,728		163,721		6.64	%
Commercial real estate	15,870,809		260,407		6.56	%	13,164,390		199,287		6.06	%
Residential real estate loans	6,952,942		67,683		3.89	%	6,643,254		60,717		3.66	%
Consumer	2,910,331		50,869		7.03	%	2,585,493		39,999		6.21	%
Total loans	36,079,180		562,384		6.24	%	32,255,865		463,724		5.75	%
Total earning assets	47,406,849		$	670,003	5.66	%	43,097,198		$	550,727	5.11	%
Deduct: Allowance for credit losses on loans	(331,043)						(301,311)
Non-Earning Assets
Cash and due from banks	430,256						418,972
Other assets	5,341,022						4,884,694
Total assets	$	52,847,084					$	48,099,553
Interest-Bearing Liabilities
Checking and NOW	$	8,189,454	$	34,398	1.69	%	$	7,881,863	$	24,358	1.24	%
Savings	5,044,800		5,254		0.42	%	5,785,603		3,247		0.23	%
Money market	10,728,156		102,560		3.84	%	6,084,963		35,358		2.33	%
Time deposits, excluding brokered deposits	5,358,103		56,586		4.25	%	3,680,029		26,633		2.90	%
Brokered deposits	1,244,237		17,008		5.50	%	948,397		11,378		4.81	%
Total interest-bearing deposits	30,564,750		215,806		2.84	%	24,380,855		100,974		1.66	%
Federal funds purchased and interbank    borrowings	148,835		1,986		5.37	%	441,145		5,655		5.14	%
Securities sold under agreements to repurchase	249,939		639		1.03	%	340,178		900		1.06	%
FHLB advances	4,473,978		44,643		4.01	%	5,283,728		45,088		3.42	%
Other borrowings	891,609		12,168		5.49	%	796,536		10,114		5.09	%
Total borrowed funds	5,764,361		59,436		4.15	%	6,861,587		61,757		3.61	%
Total interest-bearing liabilities	$	36,329,111	$	275,242	3.05	%	$	31,242,442	$	162,731	2.09	%
Noninterest-Bearing Liabilities and    Shareholders’ Equity
Demand deposits	$	9,558,675					$	10,741,646
Other liabilities	980,322						841,663
Shareholders’ equity	5,978,976						5,273,802
Total liabilities and shareholders’ equity	$	52,847,084					$	48,099,553
Net interest income - taxable equivalent basis			$	394,761	3.33	%			$	387,996	3.60	%
Taxable equivalent adjustment			(6,340)						(5,825)
Net interest income (GAAP)			$	388,421	3.28	%			$	382,171	3.55	%

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

(2)Includes loans held-for-sale.

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(Tax equivalent basis, dollars in thousands)	Six Months Ended June 30, 2024						Six Months Ended June 30, 2023
Earning Assets	Average Balance		Income (1)/ Expense		Yield/ Rate		Average Balance		Income (1)/ Expense		Yield/ Rate
Money market and other interest-earning    investments	$	786,094	$	21,296	5.45	%	$	611,903	$	12,064	3.98	%
Investment securities:
Treasury and government sponsored agencies	2,285,706		44,797		3.92	%	2,209,916		35,886		3.25	%
Mortgage-backed securities	5,592,655		86,792		3.10	%	5,364,788		69,381		2.59	%
States and political subdivisions	1,683,585		28,266		3.36	%	1,788,498		29,086		3.25	%
Other securities	779,504		24,756		6.35	%	781,549		18,599		4.76	%
Total investment securities	10,341,450		184,611		3.57	%	10,144,751		152,952		3.02	%
Loans: (2)
Commercial	9,942,741		350,688		7.05	%	9,661,029		311,341		6.45	%
Commercial real estate	15,119,590		490,493		6.49	%	12,910,787		378,762		5.87	%
Residential real estate loans	6,823,378		130,686		3.83	%	6,582,982		118,817		3.61	%
Consumer	2,777,711		94,463		6.84	%	2,611,295		78,106		6.03	%
Total loans	34,663,420		1,066,330		6.16	%	31,766,093		887,026		5.59	%
Total earning assets	45,790,964		$	1,272,237	5.56	%	42,522,747		$	1,052,042	4.95	%
Deduct: Allowance for credit losses on loans	(322,256)						(302,844)
Non-Earning Assets
Cash and due from banks	396,466						428,370
Other assets	5,151,308						4,895,843
Total assets	$	51,016,482					$	47,544,116
Interest-Bearing Liabilities
Checking and NOW	$	7,665,327	$	59,650	1.56	%	$	7,934,927	$	43,717	1.11	%
Savings	5,035,100		10,271		0.41	%	5,983,407		5,477		0.18	%
Money market	10,322,808		196,773		3.83	%	5,864,351		55,368		1.90	%
Time deposits, excluding brokered deposits	5,023,620		104,018		4.16	%	3,370,668		41,922		2.51	%
Brokered deposits	1,145,744		30,533		5.36	%	725,701		17,083		4.75	%
Total interest-bearing deposits	29,192,599		401,245		2.76	%	23,879,054		163,567		1.38	%
Federal funds purchased and interbank    borrowings	108,962		2,947		5.44	%	430,278		10,494		4.92	%
Securities sold under agreements to repurchase	273,088		1,556		1.15	%	376,298		1,679		0.90	%
FHLB advances	4,430,236		85,810		3.90	%	4,781,326		83,084		3.50	%
Other borrowings	858,727		23,207		5.43	%	788,921		18,068		4.62	%
Total borrowed funds	5,671,013		113,520		4.03	%	6,376,823		113,325		3.58	%
Total interest-bearing liabilities	$	34,863,612	$	514,765	2.97	%	$	30,255,877	$	276,892	1.85	%
Noninterest-Bearing Liabilities and    Shareholders’ Equity
Demand deposits	$	9,408,406					$	11,131,789
Other liabilities	972,205						936,158
Shareholders’ equity	5,772,259						5,220,292
Total liabilities and shareholders’ equity	$	51,016,482					$	47,544,116
Net interest income - taxable equivalent basis			$	757,472	3.31	%			$	775,150	3.65	%
Taxable equivalent adjustment			(12,593)						(11,491)
Net interest income (GAAP)			$	744,879	3.25	%			$	763,659	3.59	%

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

(2)Includes loans held-for-sale.

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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 June 30, 2023 to Three Months Ended June 30, 2024						From Six Months Ended June 30, 2023 to Six Months Ended June 30, 2024
	Total Change (1)		Attributed to				Total Change (1)		Attributed to
(dollars in thousands)			Volume		Rate				Volume		Rate
Interest Income
Money market and other interest-earning    investments	$	2,345	$	1,172	$	1,173	$	9,232	$	4,096	$	5,136
Investment securities (2)	18,271		3,342		14,929		31,659		3,239		28,420
Loans (3)	98,660		57,130		41,530		179,304		85,235		94,069
Total interest income	119,276		61,644		57,632		220,195		92,570		127,625
Interest Expense
Checking and NOW deposits	10,040		1,065		8,975		15,933		(1,787)		17,720
Savings deposits	2,007		(606)		2,613		4,794		(1,416)		6,210
Money market deposits	67,202		35,610		31,592		141,405		63,637		77,768
Time deposits, excluding brokered    deposits	29,953		14,880		15,073		62,096		27,460		34,636
Brokered deposits	5,630		3,782		1,848		13,450		10,600		2,850
Federal funds purchased and interbank    borrowings	(3,669)		(3,838)		169		(7,547)		(8,286)		739
Securities sold under agreements to    repurchase	(261)		(235)		(26)		(123)		(525)		402
FHLB advances	(445)		(7,588)		7,143		2,726		(6,387)		9,113
Other borrowings	2,054		1,239		815		5,139		1,766		3,373
Total interest expense	112,511		44,309		68,202		237,873		85,062		152,811
Net interest income	$	6,765	$	17,335	$	(10,570)	$	(17,678)	$	7,508	$	(25,186)

(1)The variance not solely due to rate or volume is allocated equally between the rate and volume variances.

(2)Interest income on investment securities includes taxable equivalent adjustments of $2.8 million and $5.6 million during the three and six months ended June 30, 2024, respectively, using the federal statutory rate in effect of 21%.

(3)Interest income on loans includes taxable equivalent adjustments of $3.5 million and $7.0 million during the three and six months ended June 30, 2024, respectively, using the federal statutory rate in effect of 21%.

The increase in net interest income for the three months ended June 30, 2024 when compared to the same period in 2023 was driven by the acquisition of CapStar and loan growth as well as higher rates on loans, partially offset by higher costs and balances of average interest-bearing liabilities. The decrease in net interest income for the six months ended June 30, 2024 when compared to the same period in 2023 was primarily due to higher costs and balances of average interest-bearing liabilities, partially offset by higher rates on loans as well as loan growth. Accretion income associated with acquired loans and borrowings totaled $11.6 million and $16.7 million for the three and six months ended June 30, 2024, respectively, compared to $6.6 million and $14.5 million for the same periods in 2023.

The decrease in the net interest margin on a fully taxable equivalent basis for the three and six months ended June 30, 2024 compared to the same periods in 2023 was primarily due to higher costs of interest-bearing liabilities, partially offset by higher yields on interest earning assets. The yield on interest earning assets increased 55 basis points and the cost of interest-bearing liabilities increased 96 basis points in the three months ended June 30, 2024 compared to the same quarter a year ago. The yield on interest earning assets increased 61 basis points and the cost of interest-bearing liabilities increased 112 basis points in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Accretion income represented 10 basis points and 7 basis points of the net interest margin in the three and six months ended June 30, 2024, respectively, compared to 6 basis points and 7 basis points in the three and six months ended June 30, 2023, respectively.

Average earning assets were $47.4 billion and $43.1 billion for the three months ended June 30, 2024 and 2023, respectively, an increase of $4.3 billion, or 10%, primarily due to loans and securities acquired in the CapStar transaction as well as strong loan growth. Average earning assets were $45.8 billion and $42.5 billion for the six months ended June 30, 2024 and 2023, respectively, an increase of $3.3 billion, or 8%, primarily due to loans and securities acquired in the CapStar transaction as well as strong loan growth.

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Average loans, including loans held-for-sale, increased $3.8 billion and $2.9 billion for the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023 primarily due to loans acquired in the CapStar transaction as well as strong commercial real estate loan growth. Loans acquired in the CapStar transaction totaled $2.1 billion.

Average noninterest-bearing deposits decreased $1.2 billion while average interest-bearing deposits increased $6.2 billion for the three months ended June 30, 2024 when compared to the same period in 2023 reflecting a mix shift as a result of the current rate environment, deposits assumed in the CapStar transaction, and organic growth. Average noninterest-bearing deposits decreased $1.7 billion while average interest-bearing deposits increased $5.3 billion for the six months ended June 30, 2024 when compared to the same period in 2023 reflecting a mix shift as a result of the current rate environment, deposits assumed in the CapStar transaction, and organic growth. Deposits assumed in the CapStar transaction totaled $2.6 billion.

Provision for Credit Losses

The following table details the components of the provision for credit losses:

	Three Months Ended June 30,						%		Six Months Ended June 30,						%
(dollars in thousands)	2024			2023			Change		2024			2023			Change
Provision for credit losses on loans	$	36,745		$	11,936		207.9	%	$	60,598		$	23,405		158.9	%
Provision (release) for credit losses on    unfunded loan commitments	(531)			2,851			(118.6)		(5,493)			4,819			(214.0)
Total provision for credit losses	$	36,214		$	14,787		144.9	%	$	55,105		$	28,224		95.2	%
Net (charge-offs) recoveries on non-PCD    loans	$	(9,821)		$	(4,689)		109.4	%	$	(15,882)		$	(8,727)		82.0	%
Net (charge-offs) recoveries on PCD    loans	(4,224)			(5,403)			(21.8)		(9,913)			(17,794)			(44.3)
Total net (charge-offs) recoveries on    loans	$	(14,045)		$	(10,092)		39.2	%	$	(25,795)		$	(26,521)		(2.7)	%
Net charge-offs (recoveries) to average    loans	0.16		%	0.13		%	24.5	%	0.15		%	0.17		%	(10.8)

Total provision for credit losses on loans increased in the three and six months ended June 30, 2024 compared to the same periods in 2023 reflecting loan growth and macroeconomic factors. In addition, the provision for credit losses on loans in the three and six months ended June 30, 2024 included $15.3 million to establish an allowance for credit losses on non-PCD loans acquired in the CapStar transaction. Continued loan growth in future periods, a decline in our current level of recoveries, or an increase in charge-offs could result in an increase in provision expense. Additionally, provision expense may be volatile due to changes in CECL model assumptions of credit quality, macroeconomic factors and conditions, and loan composition, which drive the allowance for credit losses balance.

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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,				%
(dollars in thousands)	2024		2023		Change		2024		2023		Change
Wealth and investment services fees	$	29,358	$	26,521	10.7	%	$	57,662	$	53,441	7.9	%
Service charges on deposit accounts	19,350		17,751		9.0		37,248		34,754		7.2
Debit card and ATM fees	10,993		10,653		3.2		21,047		20,635		2.0
Mortgage banking revenue	7,064		4,165		69.6		11,542		7,565		52.6
Capital markets income	4,729		6,173		(23.4)		7,629		13,112		(41.8)
Company-owned life insurance	5,739		4,698		22.2		9,173		7,884		16.3
Debt securities gains (losses), net	2		17		(88.2)		(14)		(5,199)		(99.7)
Other income	10,036		11,651		(13.9)		20,506		20,118		1.9
Total noninterest income	$	87,271	$	81,629	6.9	%	$	164,793	$	152,310	8.2	%

Noninterest income increased $5.6 million and $12.5 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023 primarily due to the acquisition of CapStar on April 1, 2024. In addition, noninterest income for the six months ended June 30, 2023 was impacted by $5.2 million of net losses on sales of debt securities.

Mortgage banking revenue increased $2.9 million and $4.0 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023 primarily due to higher mortgage originations and increased loan sales.

Capital markets income decreased $1.4 million and $5.5 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023 primarily due to lower levels of commercial real estate client interest rate swap fees.

Other income decreased $1.6 million for the three months ended June 30, 2024 compared to the same period in 2023 primarily due to lower gains on sales of other assets, partially offset by additional other income associated with the acquisition of CapStar.

Noninterest Expense

The following table details the components in noninterest expense:

	Three Months Ended June 30,				%		Six Months Ended June 30,				%
(dollars in thousands)	2024		2023		Change		2024		2023		Change
Salaries and employee benefits	$	159,193	$	135,810	17.2	%	$	308,996	$	273,174	13.1	%
Occupancy	26,547		26,085		1.8		53,566		54,367		(1.5)
Equipment	8,704		7,721		12.7		17,375		15,110		15.0
Marketing	11,284		9,833		14.8		21,918		19,250		13.9
Technology	24,002		20,056		19.7		44,025		39,258		12.1
Communication	4,480		4,232		5.9		8,480		8,693		(2.5)
Professional fees	10,552		6,397		65.0		16,958		13,129		29.2
FDIC assessment	9,676		9,624		0.5		20,989		20,028		4.8
Amortization of intangibles	7,425		6,060		22.5		12,880		12,246		5.2
Amortization of tax credit investments	2,747		2,762		(0.5)		5,496		5,523		(0.5)
Other expense	18,389		18,004		2.1		34,633		36,517		(5.2)
Total noninterest expense	$	282,999	$	246,584	14.8	%	$	545,316	$	497,295	9.7	%

Noninterest expense included $19.4 million and $2.4 million of merger-related expenses for the three months ended June 30, 2024 and 2023, respectively. In addition the three months ended June 30, 2023 included $3.4 million of expenses related to the Louisville tragedy and $0.2 million for property optimization charges. Excluding these

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expenses, noninterest expense increased to $263.6 million for the three months ended June 30, 2024, compared to $240.6 million for the three months ended June 30, 2023. This increase was driven by the additional operating costs associated with the acquisition of CapStar, as well as higher salary and employee benefits reflective of merit increases.

Noninterest expense for the six months ended June 30, 2024 included $22.3 million of merger-related expenses, a $13.3 million non-cash, pre-tax expense associated with the distribution of excess pension assets with the resolution of the legacy First Midwest plan, and $3.0 million for the FDIC special assessment. Noninterest expense for the six months ended June 30, 2023 included $16.9 million of merger-related expenses, $3.4 million of expenses related to the Louisville tragedy, and $1.6 million for property optimization charges. Excluding these expenses, noninterest expense increased to $506.7 million for the six months ended June 30, 2024, compared to $475.4 million for the six months ended June 30, 2023. This increase was driven by the additional operating costs associated with the acquisition of CapStar, as well as higher salary and employee benefits reflective of merit increases.

Provision for Income Taxes

We record a provision for income taxes currently payable and for income taxes payable or benefits to be received in the future, which arise due to timing differences in the recognition of certain items for financial statement and income tax purposes. The major difference between the effective tax rate applied to our financial statement income and the federal statutory tax rate is caused by a tax benefit from our tax credit investments and interest on tax-exempt securities and loans. The effective tax rate was 22.5% and 21.9% for the three and six months ended June 30, 2024, respectively, compared to 23.4% and 22.8% for the three and six months ended June 30, 2023, respectively. The decreases in the effective tax rates for the three and six months ended June 30, 2024 when compared to the three and six months ended June 30, 2023 reflected decreases in pre-tax book income and state income taxes combined with an increase in tax credits. See Note 14 to the consolidated financial statements for additional information.. In accordance with ASC 740-270, Accounting for Interim Reporting, the provision for income taxes was recorded at June 30, 2024 based on the current estimate of the effective annual rate.

FINANCIAL CONDITION

Overview

At June 30, 2024, our assets were $53.1 billion, a $4.0 billion increase compared to assets of $49.1 billion at December 31, 2023. The increase was driven primarily by the acquisition of CapStar, as well as disciplined loan growth.

Earning Assets

Our earning assets are comprised of investment securities, portfolio loans, loans held-for-sale, money market investments, interest-earning accounts with the Federal Reserve, and equity securities. Earning assets were $47.6 billion at June 30, 2024, a $3.6 billion increase compared to earning assets of $43.9 billion at December 31, 2023.

Investment Securities

We classify the majority of our investment securities as available-for-sale to give management the flexibility to sell the securities prior to maturity based on fluctuating interest rates or changes in our funding requirements.

The investment securities portfolio, including equity securities, was $10.6 billion at June 30, 2024, compared to $10.2 billion at December 31, 2023. The increase was driven primarily by the acquisition of CapStar. Investment securities represented 22% of earning assets at June 30, 2024, compared to 23% at December 31, 2023. At June 30, 2024, we had no intent to sell any securities that were in an unrealized loss position nor is it expected that we would be required to sell the securities prior to their anticipated recovery.

The investment securities available-for-sale portfolio had net unrealized losses of $932.0 million and $869.5 million at June 30, 2024 and December 31, 2023, respectively. The investment securities held-to-maturity portfolio had net unrealized losses of $473.9 million and $412.3 million at June 30, 2024 and December 31, 2023, respectively.

The investment securities available-for-sale portfolio including securities hedges had an effective duration of 4.18 at June 30, 2024, compared to 4.24 at December 31, 2023. The total investment securities portfolio had an effective duration of 5.23 at June 30, 2024, compared to 5.35 at December 31, 2023. Effective duration represents the

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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 3.66% and 3.57% for the three and six months ended June 30, 2024, respectively, compared to 3.09% and 3.02% for the three and six months ended June 30, 2023, respectively.

Loan Portfolio

We lend to commercial and commercial real estate clients in many diverse industries including real estate rental and leasing, manufacturing, healthcare, wholesale trade, construction, and agriculture, among others. Old National manages concentrations of credit exposure by industry, product, geography, client relationship, and loan size. The following table presents the composition of the loan portfolio:

(dollars in thousands)	June 30, 2024		December 31, 2023		$ Change		% Change
Commercial	$	10,332,631	$	9,512,230	$	820,401	8.6	%
Commercial real estate	16,016,958		14,140,629		1,876,329		13.3
Residential real estate	6,894,957		6,699,443		195,514		2.9
Consumer	2,905,967		2,639,625		266,342		10.1
Total loans	$	36,150,513	$	32,991,927	$	3,158,586	9.6	%

Commercial and Commercial Real Estate Loans

Commercial and commercial real estate loans are the largest classifications within earning assets, representing 55% of earning assets at both June 30, 2024, compared to 54% at December 31, 2023. The increase in commercial and commercial real estate loans at June 30, 2024 from December 31, 2023 was driven primarily by the acquisition of CapStar, as well as disciplined loan production that was well balanced across our market footprint and product lines.

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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, 2024									December 31, 2023
(dollars in thousands)	Outstanding			Exposure(1)			Nonaccrual			Outstanding			Exposure(1)			Nonaccrual
By Industry:
Health care and social assistance	$	1,699,428		$	2,034,742		$	1,105		$	1,567,286		$	1,949,250		$	7,390
Manufacturing	1,698,087			2,764,161			19,573			1,589,727			2,734,935			7,408
Wholesale trade	879,982			1,684,226			2,285			748,058			1,541,951			3,789
Construction	755,914			1,587,470			2,478			554,312			1,437,025			2,040
Real estate rental and leasing	722,903			1,103,496			13,584			686,008			1,035,073			700
Finance and insurance	696,351			1,038,128			151			637,630			966,842			1
Professional, scientific, and   technical services	541,489			960,129			5,848			458,133			821,738			3,825
Transportation and warehousing	539,579			715,776			7,514			453,630			703,976			1,746
Accommodation and food services	439,124			517,001			2,511			389,591			503,990			705
Administrative and support and   waste management and   remediation services	399,175			599,449			1,324			321,018			487,359			347
Retail trade	370,758			653,040			5,361			345,944			620,308			5,273
Educational services	270,487			403,267			6			263,539			406,867			7
Agriculture, forestry, fishing,   and hunting	260,631			396,167			1,329			255,811			392,098			415
Other services	225,167			399,363			16,306			208,012			400,195			9,328
Public administration	206,816			263,039			—			216,939			285,963			—
Other	626,740			925,894			1,515			816,592			1,111,030			1,537
Total	$	10,332,631		$	16,045,348		$	80,890		$	9,512,230		$	15,398,600		$	44,511
By Loan Size:
Less than $200,000	3		%	3		%	4		%	3		%	3		%	5		%
$200,000 to $1,000,000	12			12			21			11			10			20
$1,000,000 to $5,000,000	24			25			43			24			25			48
$5,000,000 to $10,000,000	16			15			—			16			16			7
$10,000,000 to $25,000,000	29			27			32			31			28			20
Greater than $25,000,000	16			18			—			15			18			—
Total	100		%	100		%	100		%	100		%	100		%	100		%

(1)    Includes unfunded loan commitments.

The following table provides detail on commercial real estate loans classified by property type.

	June 30, 2024						December 31, 2023
(dollars in thousands)	Outstanding		Exposure(1)		Nonaccrual		Outstanding		Exposure(1)		Nonaccrual
By Property Type:
Multifamily	$	5,543,433	$	6,900,297	$	49,236	$	4,794,605	$	6,422,311	$	6,050
Warehouse / Industrial	2,927,878		3,318,702		9,510		2,704,656		3,308,273		6,459
Retail	2,248,607		2,386,802		24,413		1,886,233		1,958,254		29,823
Office	2,131,421		2,290,094		33,639		1,948,430		2,112,157		58,111
Senior housing	887,502		955,344		32,445		848,903		947,168		41,632
Single family	539,113		566,327		4,625		450,560		476,946		3,187
Other (2)	1,739,004		2,110,433		29,587		1,507,242		1,824,177		15,530
Total	$	16,016,958	$	18,527,999	$	183,455	$	14,140,629	$	17,049,286	$	160,792

(1)    Includes unfunded loan commitments.

(2)    Other includes commercial development, agriculture real estate, hotels, self-storage, land development, religion, and mixed-use properties.

The mix of properties securing the loans in our commercial real estate portfolio is balanced between owner-occupied and non-owner-occupied categories and is diverse in terms of type and geographic location, generally within the

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Company’s primary market area. Approximately 27% of the commercial real estate portfolio is owner-occupied as of June 30, 2024, compared to 25% at December 31, 2023.

The Company actively reviews its broader loan portfolio in the normal course of business and has performed a targeted review of contractual maturities in its non-owner-occupied commercial real estate portfolio as part of its response to current market conditions to identify exposure to credit risk associated with renewals. At June 30, 2024, the Company held $372.3 million of non-owner-occupied commercial real estate loans, or 1% of total loans, that mature within 18 months with an interest rate below 4%.

Residential Real Estate Loans

At June 30, 2024, residential real estate loans held in our loan portfolio were $6.9 billion, an increase of $195.5 million compared to December 31, 2023 driven primarily by the acquisition of CapStar. Changes in interest rates may impact the number of refinancings and new originations of residential real estate loans. If interest rates decrease in the future, there may be an increase in refinancings and new originations of residential real estate loans. Conversely, future increases in interest rates may result in a decline in the level of refinancings and new originations of residential real estate loans.

Consumer Loans

Consumer loans, including automobile loans, personal, and home equity loans and lines of credit, increased $266.3 million to $2.9 billion at June 30, 2024 compared to December 31, 2023 driven primarily by the acquisition of CapStar.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets at June 30, 2024 totaled $2.3 billion, an increase of $205.2 million compared to December 31, 2023 as a result of goodwill and other intangible assets recorded with the acquisition of CapStar.

Funding

The following table summarizes Old National’s total funding, comprised of deposits and wholesale borrowings:

(dollars in thousands)	June 30, 2024		December 31, 2023		$ Change		% Change
Deposits:
Noninterest-bearing demand	$	9,336,042	$	9,664,247	$	(328,205)	(3.4)	%
Interest-bearing:
Checking and NOW	8,081,218		7,331,487		749,731		10.2	%
Savings	4,983,811		5,099,186		(115,375)		(2.3)	%
Money market	10,549,944		9,561,116		988,828		10.3	%
Time deposits	7,048,213		5,579,144		1,469,069		26.3	%
Total deposits	39,999,228		37,235,180		2,764,048		7.4	%
Wholesale borrowings:
Federal funds purchased and interbank borrowings	250,154		390		249,764		N/M
Securities sold under agreements to repurchase	240,713		285,206		(44,493)		(15.6)	%
Federal Home Loan Bank advances	4,744,560		4,280,681		463,879		10.8	%
Other borrowings	849,777		764,870		84,907		11.1	%
Total wholesale borrowings	6,085,204		5,331,147		754,057		14.1	%
Total funding	$	46,084,432	$	42,566,327	$	3,518,105	8.3	%

The increase in total deposits was primarily due to deposits assumed in the CapStar transaction. 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 13% at both June 30, 2024 and December 31, 2023.

Capital 

Shareholders’ equity totaled $6.1 billion at June 30, 2024 and $5.6 billion at December 31, 2023. Old National issued 24.0 million shares of Common Stock in conjunction with the acquisition of CapStar on April 1, 2024 totaling $417.6 million in shareholders’ equity. Retained earnings were partially offset by dividends and changes in unrealized gains (losses) on available-for-sale investment securities during the six months ended June 30, 2024.

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Capital Adequacy

Old National and the banking industry are subject to various regulatory capital requirements administered by the federal banking agencies. At June 30, 2024, Old National and its bank subsidiary exceeded the regulatory minimums and Old National Bank met the regulatory definition of “well-capitalized” based on the most recent regulatory definition.

Old National’s consolidated capital position remains strong as evidenced by the following key industry ratios. 

	Regulatory Guidelines Minimum		Prompt Corrective Action "Well Capitalized" Guidelines		June 30, 2024		December 31, 2023
Tier 1 capital to total average assets (leverage    ratio)	4.00	%	N/A	%	8.90	%	8.83	%
Common equity Tier 1 capital to risk-weighted    total assets	7.00		N/A		10.73		10.70
Tier 1 capital to risk-weighted total assets	8.50		6.00		11.33		11.35
Total capital to risk-weighted total assets	10.50		10.00		12.71		12.64
Shareholders’ equity to assets	N/A		N/A		11.44		11.33

Old National Bank, Old National’s bank subsidiary, maintained a strong capital position as evidenced by the following key industry ratios.

	Regulatory Guidelines Minimum		Prompt Corrective Action "Well Capitalized" Guidelines		June 30, 2024		December 31, 2023
Tier 1 capital to total average assets (leverage    ratio)	4.00	%	5.00	%	8.85	%	8.99	%
Common equity Tier 1 capital to risk-weighted    total assets	7.00		6.50		11.26		11.57
Tier 1 capital to risk-weighted total assets	8.50		8.00		11.26		11.57
Total capital to risk-weighted total assets	10.50		10.00		12.08		12.33

During 2020, the OCC, the Board of Governors of the Federal Reserve System, and the FDIC issued final rules to delay the estimated impact on regulatory capital stemming from the implementation of CECL. The final rules provide banking organizations the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period (five-year transition option). Old National adopted the capital transition relief over the permissible five-year period.

Management views stress testing as an integral part of the Company’s risk management and strategic planning activities. Old National performs stress testing periodically throughout the year. The primary objective of the stress test is to ensure that Old National has a robust, forward-looking stress testing process and maintains sufficient capital to continue operations throughout times of economic and financial stress. Management also uses the stress testing framework to evaluate decisions relating to pricing, loan concentrations, capital deployment, and mergers and acquisitions to ensure that strategic decisions align with Old National’s risk appetite statement. Old National’s stress testing process incorporates key risks that include strategic, market, liquidity, credit, operational, regulatory, compliance, legal, and reputational risks. Old National’s stress testing policy outlines steps that will be taken if stress test results do not meet internal thresholds under severely adverse economic scenarios.

RISK MANAGEMENT

Overview

Old National has adopted a Risk Appetite Statement to enable our Board of Directors, Enterprise Risk Committee of our Board, Executive Leadership Team, and Senior Management to better assess, understand, monitor, and mitigate Old National’s risks. The Risk Appetite Statement addresses the following major risks: strategic, market, liquidity, credit, operational, talent management, compliance and regulatory, legal, and reputational. Our Chief Risk Officer

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provides quarterly reports to the Board’s Enterprise Risk Committee on various risk topics. The following discussion addresses certain of these major risks including credit, market, and liquidity. Discussion of operational, compliance and regulatory, legal, strategic, talent management, and reputational risks is provided in the section entitled “Risk Factors” in the Company’s 2023 Annual Report on Form 10-K.

Credit Risk

Credit risk represents the risk of loss arising from an obligor’s inability or failure to meet contractual payment or performance terms. Our primary credit risks result from our investment and lending activities.

Asset Quality

We lend to commercial and commercial real estate clients in many diverse industries including, among others, real estate rental and leasing, manufacturing, healthcare, wholesale trade, construction, and agriculture. Old National manages concentrations of credit exposure by industry, product, geography, client relationship, and loan size. At June 30, 2024, our average commercial loan size was approximately $610,000 and our average commercial real estate loan size was approximately $1,330,000. 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, 2024, we had minimal exposure to foreign borrowers and no sovereign debt. Our policy is to concentrate our lending activity in the geographic market areas we serve, primarily in the Midwest and Southeast regions of the United States.

The following table presents a summary of under-performing, special mention, and classified assets:

(dollars in thousands)	June 30, 2024			December 31, 2023
Total nonaccrual loans	$	340,181		$	274,821
Total past due loans (90 days or more and still accruing)	5,251			961
Foreclosed assets	8,290			9,434
Total under-performing assets	$	353,722		$	285,216
Classified loans (includes nonaccrual, past due 90 days,     and other problem loans)	$	1,186,519		$	875,140
Other classified assets (1)	60,772			48,930
Special mention loans	967,655			843,920
Total criticized and classified assets	$	2,214,946		$	1,767,990
Asset Quality Ratios:
Nonaccrual loans/total loans (2)	0.94		%	0.83		%
Under-performing assets/total loans (2)	0.98			0.86
Under-performing assets/total assets	0.67			0.58
Allowance for credit losses on loans/under-performing assets	103.57			107.85
Allowance for credit losses on loans/nonaccrual loans	107.69			111.93

(1)Includes investment securities that fell below investment grade rating.

(2)Loans exclude loans held-for-sale.

Under-performing assets increased to $353.7 million at June 30, 2024, compared to $285.2 million at December 31, 2023. Under-performing assets as a percentage of total loans at June 30, 2024 were 0.98%, a 12 basis point increase from 0.86% at December 31, 2023.

Nonaccrual loans increased $65.4 million from December 31, 2023 to June 30, 2024 reflecting the migration of certain non-owner-occupied commercial real estate loans as they progress to resolution as well as $17.2 million of nonaccrual loans acquired in the CapStar acquisition. As a percentage of nonaccrual loans, the allowance for credit losses on loans was 107.69% at June 30, 2024, compared to 111.93% at December 31, 2023.

Total criticized and classified assets were $2.2 billion at June 30, 2024, an increase of $447.0 million from December 31, 2023 primarily due to higher criticized and classified commercial real estate loans as well as $73.1 million of criticized and classified loans related to the CapStar acquisition. Other classified assets include investment securities that fell below investment grade rating totaling $60.8 million at June 30, 2024, compared to $48.9 million at December 31, 2023.

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Allowance for Credit Losses on Loans and Unfunded Commitments

Net charge-offs on loans totaled $14.0 million during the three months ended June 30, 2024, compared to $10.1 million for the same period in 2023. Annualized, net charge-offs to average loans were 0.16% for the three months ended June 30, 2024, compared to 0.13% for the same period in 2023. The three months ended June 30, 2024 included net charge-offs on PCD loans totaling $4.2 million, or 0.05% on an annualized basis of average loans, compared to net charge-offs on PCD loans totaling $5.4 million, or 0.07% on an annualized basis of average loans for the three months ended June 30, 2023. Net charge-offs on loans totaled $25.8 million during the six months ended June 30, 2024, compared to $26.5 million for the same period in 2023. Annualized, net charge-offs to average loans were 0.15% for the six months ended June 30, 2024, compared to 0.17% for the same period in 2023. The six months ended June 30, 2024 included net charge-offs on PCD loans totaling $9.9 million, or 0.06% on an annualized basis of average loans, compared to net charge-offs on PCD loans totaling $17.8 million, or 0.11% on an annualized basis of average loans for the six months ended June 30, 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 $366.3 million at June 30, 2024, compared to $307.6 million at December 31, 2023. The increase reflects $23.9 million of allowance for credit losses on acquired PCD loans established through acquisition accounting adjustments on or after the CapStar acquisition date. In addition, the provision for credit losses on loans in the three and six months ended June 30, 2024 included $15.3 million to establish an allowance for credit losses on non-PCD loans acquired in the CapStar transaction. Continued loan growth in future periods, a decline in our current level of recoveries, or an increase in charge-offs could result in an increase in provision expense. Additionally, provision expense may be volatile due to changes in CECL model assumptions of credit quality, macroeconomic factors and conditions, and loan composition, which drive the allowance for credit losses balance.

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 $25.7 million at June 30, 2024, compared to $31.2 million at December 31, 2023. We increased the allowance for

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credit losses on unfunded loans commitments by $1.8 million in the three and six months ended June 30, 2024 as a result of the CapStar transaction.

See the section entitled “Risk Factors” in the Company’s 2023 Annual Report on Form 10-K for further discussion of our credit risk.

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 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 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 June 30, 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, 2024 and 2023:

	Immediate Rate Decrease									June 30, 2024 Forward Curve						Immediate Rate Increase
(dollars in thousands)	-300 Basis Points			-200 Basis Points			-100 Basis Points						Base			+100 Basis Points			+200 Basis Points			+300 Basis Points
June 30, 2024
Projected interest income:
Money market, other   interest earning   investments, and   investment securities	$	855,249		$	839,638		$	885,050		$	894,175		$	932,986		$	990,743		$	1,047,039		$	1,102,619
Loans	3,417,630			3,822,978			4,230,649			4,363,917			4,629,910			5,026,272			5,422,326			5,817,978
Total interest    income	4,272,879			4,662,616			5,115,699			5,258,092			5,562,896			6,017,015			6,469,365			6,920,597
Projected interest expense:
Deposits	678,766			993,235			1,310,490			1,373,925			1,626,368			1,967,119			2,319,244			2,664,273
Borrowings	496,153			573,485			665,844			682,410			757,854			849,959			942,053			1,034,021
Total interest    expense	1,174,919			1,566,720			1,976,334			2,056,335			2,384,222			2,817,078			3,261,297			3,698,294
Net interest    income	$	3,097,960		$	3,095,896		$	3,139,365		$	3,201,757		$	3,178,674		$	3,199,937		$	3,208,068		$	3,222,303
Change from base	$	(80,714)		$	(82,778)		$	(39,309)		$	23,083					$	21,263		$	29,394		$	43,629
% change from base	(2.54)		%	(2.60)		%	(1.24)		%	0.73		%				0.67		%	0.92		%	1.37		%
	Immediate Rate Decrease												Immediate Rate Increase
	-300 Basis Points			-200 Basis Points			-100 Basis Points			Base			+100 Basis Points			+200 Basis Points			+300 Basis Points
June 30, 2023
Projected interest income:
Money market, other   interest earning   investments, and   investment securities	$	703,760		$	700,039		$	751,180		$	805,138		$	858,682		$	912,190		$	966,037
Loans	2,812,913			3,179,212			3,546,919			3,910,105			4,266,532			4,623,023			4,979,447
Total interest    income	3,516,673			3,879,251			4,298,099			4,715,243			5,125,214			5,535,213			5,945,484
Projected interest expense:
Deposits	358,077			570,196			785,031			1,012,889			1,259,985			1,507,077			1,754,162
Borrowings	373,267			415,553			513,309			600,910			683,328			765,754			848,179
Total interest    expense	731,344			985,749			1,298,340			1,613,799			1,943,313			2,272,831			2,602,341
Net 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 base	$	(316,115)		$	(207,942)		$	(101,685)					$	80,457		$	160,938		$	241,699
% change from base	(10.19)		%	(6.70)		%	(3.28)		%				2.59		%	5.19		%	7.79		%

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 $13.6 million at June 30, 2024, compared to a net asset position with a fair value gain of $4.5 million at

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December 31, 2023. See Note 15 to the consolidated financial statements for further discussion of derivative financial instruments.

Liquidity Risk

Liquidity risk arises from the possibility that we may not be able to satisfy current or future financial commitments or may become unduly reliant on alternative funding sources. We establish liquidity risk guidelines that we review with the Enterprise Risk Committee of our Board of Directors and monitor through our Asset/Liability Executive Management Committee. The objective of liquidity management is to ensure we have the ability to fund balance sheet growth and meet deposit and debt obligations in a timely and cost-effective manner. Management monitors liquidity through a regular review of asset and liability maturities, funding sources, and loan and deposit forecasts. We maintain strategic and contingency liquidity plans to ensure sufficient available funding to satisfy requirements for balance sheet growth, to properly manage capital markets’ funding sources, and to address unexpected liquidity requirements. On May 31, 2023, we filed an automatic shelf registration statement with the SEC that permits us to issue an unspecified amount of debt or equity securities.

Loan repayments and maturing investment securities are a relatively predictable source of funds. However, deposit flows, calls of investment securities, and prepayments of loans and mortgage-related securities are not as predictable as they are strongly influenced by interest rates, events at other banking organizations, the housing market, general and local economic conditions, and competition in the marketplace. We continually monitor marketplace trends to identify patterns that might improve the predictability of the timing of deposit flows or asset prepayments.

A maturity schedule for Old National Bank’s time deposits is shown in the following table at June 30, 2024.

(dollars in thousands)
Maturity Bucket	Amount		Rate
2024	$	4,696,839	4.78	%
2025	2,122,569		4.38
2026	147,181		1.29
2027	46,249		1.28
2028	17,624		1.51
2027 and beyond	17,751		1.74
Total	$	7,048,213	4.55	%

Our ability to acquire funding at competitive prices is influenced by rating agencies’ views of our credit quality, liquidity, capital, and earnings.

The credit ratings of Old National and Old National Bank at June 30, 2024 are shown in the following table.

	Moody’s Investors Service
	Long-term	Short-term
Old National	Baa1	N/A
Old National Bank	A1	P-1

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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, 2024, Old National and its subsidiaries had the following availability of liquid funds and borrowings:

(dollars in thousands)	Parent Company		Subsidiaries
Available liquid funds:
Cash and due from banks	$	436,277	$	796,769
Unencumbered government-issued debt securities	—		1,654,342
Unencumbered investment grade municipal securities	—		101,611
Unencumbered corporate securities	—		43,761
Availability of borrowings*:
Amount available from Federal Reserve discount window	—		4,178,105
Amount available from Federal Home Loan Bank	—		6,476,625
Total available funds	$	436,277	$	13,251,213

* 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, 2024, Old National Bancorp’s other borrowings outstanding were $507.3 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 2023 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, 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, 2023. There have been no material changes in the Company’s application of critical accounting estimates since December 31, 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 the 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, 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)
04/01/24 - 04/30/24	69,517	$	16.65	—	$	200,000,000
05/01/24 - 05/31/24	5,312	$	16.77	—	$	200,000,000
06/01/24 - 06/30/24	1,743	$	17.09	—	$	200,000,000
Total	76,572	$	16.67	—	$	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 or performance shares earned.

(2)On February 21, 2024, the Company’s Board of Directors approved a stock repurchase program, under which the Company is authorized to repurchase up to $200 million of its outstanding common stock 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, 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	Agreement and Plan of Merger dated as of October 26, 2023 by and between Old National and CapStar Financial Holdings, Inc. (the schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K) (incorporated by reference to Exhibit 2.1 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 31, 2023).
3.1	Fifth Amended and Restated Articles of Incorporation of Old National, amended April 30, 2020 (incorporated by reference to Exhibit 3.1 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 18, 2020).
3.2	Articles of Amendment to the Fifth Amended and Restated Articles of Incorporation of Old National authorizing additional shares of Old National capital stock (incorporated by reference to Exhibit 3.2 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 16, 2022).
3.3	Articles of Amendment to the Fifth Amended and Restated Articles of Incorporation of Old National designating the New Old National Series A Preferred Stock (incorporated by reference to Exhibit 3.3 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 16, 2022).
3.4	Articles of Amendment to the Fifth Amended and Restated Articles of Incorporation of Old National designating the New Old National Series C Preferred Stock (incorporated by reference to Exhibit 3.4 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 16, 2022).
3.5	Amended and Restated By-Laws of Old National, amended February 21, 2024 (incorporated by reference to Exhibit 3.1 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 27, 2024).
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from Old National’s Form 10-Q Report for the quarterly period ended June 30, 2024, formatted in inline XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.
104	The cover page from Old National’s Form 10-Q Report for the quarterly period ended June 30, 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/  John V. Moran, IV
	John V. Moran, IV
	Executive Vice President, Interim Chief Financial Officer, and Chief Strategy Officer
	Duly Authorized Officer and Principal Financial Officer
	Date:  July 31, 2024

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