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Old National Reports 43% EPS Growth from 3Q22, 10% on an Adjusted Basis¹, Driven by Commercial Loan Growth, Net Interest Margin Expansion and Expense Discipline

EVANSVILLE, Ind., Jan. 24, 2023 (GLOBE NEWSWIRE) --

Old National Bancorp (NASDAQ: ONB) reports 4Q22 net income applicable to common shares of $196.7 million, diluted EPS of $0.67; $164.3 million and $0.56 on an adjusted1 basis, respectively. Full-year net income applicable to common shares of $414.2 million, diluted EPS of $1.50; $540.9 million and $1.96 on an adjusted1 basis, respectively.

CEO COMMENTARY:

“Old National's strong 4th quarter puts the finishing touches on a transformational year of growth marked by disciplined, consistent execution,” said CEO Jim Ryan. “We capped off 2022 with robust loan growth, impressive net interest margin expansion, peer leading return on average tangible common equity, excellent credit metrics and a record efficiency ratio."

FOURTH QUARTER HIGHLIGHTS2:

Net Income
  • Net income applicable to common shares of $196.7 million; adjusted net income applicable to common shares1 of $164.3 million
  • Earnings per diluted common share ("EPS") of $0.67; adjusted EPS1 of $0.56
   
Net Interest
Income/NIM

  • Net interest income on a fully taxable equivalent basis1 of $396.5 million
  • Net interest margin on a fully taxable equivalent basis1 ("NIM") of 3.85%, up 14 basis points ("bps")
   
Operating
Performance

  • Pre-provision net revenue1 (“PPNR”) of $278.8 million; adjusted PPNR1 of $240.7 million
  • Noninterest expense of $282.7 million; adjusted noninterest expense1 of $230.3 million
  • Efficiency ratio1 of 49.1%; adjusted efficiency ratio1 of 47.5%
   
Loans and
Credit Quality

  • End-of-period total loans3 of $31.1 billion, up 7.7% annualized compared to September 30, 2022
 
  • Total commercial loans increased 7.9% annualized
 
  • Total consumer loans4 increased 7.5% annualized
  • Total commercial production of $2.7 billion
  • Commercial loan pipeline of $4.6 billion
  • Provision for credit losses5 ("provision") of $11.4 million
  • Net charge-offs of $4.0 million, or 5 bps of average loans
  • Non-performing loans of 0.81% of total loans
  
Return Profile
& Capital
  • Return on average tangible common equity1 of 31.5%; adjusted return on average tangible common equity1 of 26.5%
   
Notable
Items

  • $90.7 million gain on sale of health savings accounts
  • $26.8 million of property optimization charges
  • $20.3 million of merger-related charges
  • $5.3 million of amortization of tax credit investments

Non-GAAP financial measure that management believes is useful in evaluating the financial results of the Company – refer to the Non-GAAP reconciliations contained in this release Comparisons are on a linked-quarter basis, unless otherwise noted Includes loans held for sale Includes consumer and residential real estate loans 5 Includes the provision for unfunded commitments

RESULTS OF OPERATIONS
Old National Bancorp ("Old National") reported fourth quarter 2022 net income applicable to common shares of $196.7 million, or $0.67 per diluted common share.

Included in the fourth quarter was a $90.7 million pre-tax gain on the November 18, 2022 sale of health savings accounts, as well as pre-tax charges of $26.8 million for property optimization and $20.3 million related to the February 15, 2022 merger with First Midwest. Excluding these transactions and realized debt securities losses from the current quarter, adjusted net income was $164.3 million, or $0.56 per diluted common share.

LOANS
Robust broad-based commercial and consumer loan growth.

  • Period-end total loans3 were $31.1 billion at December 31, 2022, up 7.7% annualized from $30.5 billion at September 30, 2022, driven by strong commercial loan growth of 7.9%.
  • Total commercial loan production in the fourth quarter was $2.7 billion; period-end commercial pipeline totaled $4.6 billion.
  • Total consumer loans4 were $9.2 billion at December 31, 2022, up 7.5% annualized from September 30, 2022.
    • Consumer loans decreased $25.4 million, or 3.7% annualized, and residential mortgage loans grew $193.1 million, or 12.3% annualized, driven by strong production.
  • Average total loans in the fourth quarter were $30.7 billion, an increase of $838.0 million from the third quarter of 2022.

DEPOSITS
Strong deposit franchise impacted by the sale of health savings accounts and seasonal deposit outflows late in the quarter.

  • On average, total deposits for the fourth quarter were $35.4 billion, a decrease of 0.9% excluding $382 million of health savings accounts sold in November.
  • Period-end total deposits were $35.0 billion at December 31, 2022, compared to $36.1 billion at September 30, 2022, down due to the sale of health savings accounts, client deployment of excess liquidity and seasonal deposit outflows.

NET INTEREST INCOME AND MARGIN
Strong loan growth and the higher rate environment favorably impact net interest income and margin.

  • Net interest income on a fully taxable equivalent basis increased to $396.5 million in the fourth quarter of 2022 compared to $381.5 million in the third quarter of 2022, driven by higher interest rates and loan growth, partially offset by lower accretion income on loans.
  • Net interest margin on a fully taxable equivalent basis increased 14 bps to 3.85% compared to 3.71% for the third quarter of 2022.
  • Accretion income on loans and borrowings was $10.4 million, or 10 bps of net interest margin, in the fourth quarter of 2022 compared to $25.4 million, or 25 bps of net interest margin, in the third quarter of 2022.
  • Cost of total deposits was 0.34%, increasing 22 bps and the cost of total interest-bearing deposits increased 34 bps to 0.52% in the fourth quarter of 2022.

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

  • Provision5 expense in the fourth quarter of 2022 was $11.4 million, compared to $15.5 million in the third quarter of 2022, reflecting strong loan and unfunded commitment growth.
  • Net charge-offs in the fourth quarter were $4.0 million, or 5 bps of average loans compared to net charge-offs of $7.6 million in the third quarter of 2022, or 10 bps of average loans.
    • Excluding purchased credit deteriorated ("PCD") loans that had an allowance for credit losses established at acquisition, net charge-offs to average loans were 5 bps and 2 bps for the fourth and third quarters of 2022, respectively.
  • 30+ day delinquencies were 0.19% at the end of the fourth quarter, compared to 0.22% at the end of the third quarter.
  • Non-performing loans as a percentage of total loans were 0.81% consistent with the third quarter of 2022.
  • Loans acquired from previous acquisitions were recorded at fair value at the acquisition date. As of December 31, 2022, the remaining discount on these acquired loans was $102 million.
  • The allowance for credit losses, including the allowance for credit losses on unfunded commitments, stood at $335.9 million, or 1.08% of total loans at December 31, 2022, consistent with September 30, 2022.

NONINTEREST INCOME
Decrease driven by lower capital markets, mortgage fees and service charges.

  • Total noninterest income for the fourth quarter of 2022 was $165.0 million and included a $90.7 million pre-tax gain on the sale of health savings accounts.
  • Excluding this item and realized debt securities losses, adjusted noninterest income for the fourth quarter was $74.5 million, compared to $80.6 million for the third quarter of 2022, down due primarily to lower capital markets income, service charge program enhancements and the sale of health savings accounts. In addition, mortgage banking revenue continues to be impacted by the higher rate environment, as well as lower production and gain on sale margins.

NONINTEREST EXPENSE
Disciplined expense management; merger cost savings fully achieved in the fourth quarter of 2022 (annualized).

  • Noninterest expense for the fourth quarter of 2022 was $282.7 million and included $26.8 million for property optimization, $20.3 million of merger-related charges, and $5.3 million of tax credit amortization.
  • Excluding these items, adjusted noninterest expense for the fourth quarter was $230.3 million, compared to $237.0 million for the third quarter of 2022, down due primarily to fully achieved merger cost saves in the fourth quarter of 2022 annualized, partly offset by performance-driven incentive accrual true-up.
  • The fourth quarter efficiency ratio1 was 49.1%, while the adjusted efficiency ratio1 was 47.5% for the fourth quarter of 2022 compared to 55.3% and 49.8%, respectively, for the third quarter of 2022.

INCOME TAXES

  • Income tax expense in the fourth quarter of 2022 was $61.3 million, resulting in an effective tax rate of 23.4% compared to 21.7% in the third quarter of 2022. On an adjusted fully taxable equivalent ("FTE") basis, the effective tax rate was 24.8% in the fourth quarter compared to 25.3% in the third quarter.
  • Income tax expense included $6.1 million of tax credit benefit.

CAPITAL AND LIQUIDITY
Capital ratios remain strong.

  • Preliminary total risk-based capital was 12.02% and preliminary regulatory Tier 1 capital was 10.71%, impacted by retained earnings including the $90.7 million pre-tax gain on the sale of health savings accounts, partly offset by strong loan growth. In addition, total risk-based capital was impacted by the phase-out of $2.4 million of Tier 2 subordinated debt.
  • Tangible common equity to tangible assets was 6.18% at the end of the fourth quarter compared to 5.82% in the third quarter of 2022, impacted by the $90.7 million pre-tax gain on the sale of health savings accounts.
  • The Company did not repurchase any shares of common stock during the quarter.
  • A loan to deposit ratio of 89.0%, combined with existing funding sources plus available unencumbered, high-quality collateral, provides strong liquidity.

HEALTH SAVINGS ACCOUNTS SALE
On November 18, 2022, Old National Bank, a wholly-owned subsidiary of Old National Bancorp, completed its previously announced transaction with UMB Bank, n.a. (“UMB”), pursuant to which UMB acquired Old National Bank’s business of acting as a qualified custodian for, and administering, health savings accounts, which totaled $382 million. Upon completion, Old National Bank recorded a pre-tax gain of $90.7 million that is recorded in noninterest income.

PROPERTY OPTIMIZATION
During the fourth quarter of 2022, Old National initiated certain property optimization actions that included the closure and consolidation of certain branches as well as other real estate repositioning across our footprint. These actions resulted in pre-tax charges of $26.8 million for the fourth quarter of 2022 that are associated with valuation adjustments related to these locations and are recorded in noninterest expense.

SERVICE CHARGE PROGRAM ENHANCEMENTS
In early December, Old National implemented several enhancements to its overdraft protection programs to provide clients with more flexibility. The changes included the elimination of the non-sufficient fund ("NSF") fee when an item is returned, among other modifications that benefit consumers.

CONFERENCE CALL AND WEBCAST
Old National will host a conference call and live webcast at 9:00 a.m. Central Time on Tuesday, January 24, 2023, to review fourth quarter and full year 2022 financial results. The live audio webcast link and corresponding presentation slides will be available on the Company’s Investor Relations web page at oldnational.com and will be archived there for 12 months. To listen to the live conference call, dial U.S. (844) 200-6205 or International (929) 526-1599, Access code 379396. A replay of the call will also be available from noon Central Time on January 24, 2023 through February 7, 2023. To access the replay, dial U.S. (866) 813-9403 or international +44 (204) 525-0658, Access code 104806.

ABOUT OLD NATIONAL
Old National Bancorp (NASDAQ: ONB) is the holding company of Old National Bank which is the sixth largest commercial bank headquartered in the Midwest. With approximately $47 billion of assets and $28 billion of assets under management, Old National ranks among the top 35 banking companies headquartered in the U.S. and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for 11 consecutive years. Since its founding, Old National Bank has focused on community banking by building long-term, highly valued partnerships with clients and in the communities it serves. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investment, and capital market services. For more information and financial data, please visit Investor Relations at oldnational.com.

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

The Company presents EPS, the efficiency ratio, return on average common equity, and return on average tangible common equity, all adjusted for certain notable items. These items include the current expected credit loss ("CECL") Day 1 non-PCD provision expense, merger related charges associated with completed acquisitions, gain on sale of health savings accounts, property optimization charges, net securities gains and ONB Way charges. Management believes excluding these items from EPS, the efficiency ratio, return on average common equity, and return on average tangible common equity may be useful in assessing the Company's underlying operational performance since these items do not pertain to its core business operations and their exclusion may facilitate better comparability between periods. Management believes that excluding merger related charges and the CECL Day 1 non-PCD provision expense from these metrics may be useful to the Company, as well as analysts and investors, since these expenses can vary significantly based on the size, type, and structure of each acquisition. Additionally, management believes excluding these items from these metrics may enhance comparability for peer comparison purposes.

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

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

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

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

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

FORWARD-LOOKING STATEMENTS
This communication contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, descriptions of Old National’s financial condition, results of operations, asset and credit quality trends, profitability and business plans or opportunities. Forward-looking statements can be identified by the use of the words "anticipate," "believe," "contemplate," "could," "estimate," "expect," "intend," "may," "outlook," "plan," "should," and "will," and other words of similar meaning. These forward-looking statements express management’s current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those in such statements. Factors that might cause such a difference include, but are not limited to: the continued impact of the COVID-19 pandemic on our business as well as the business of our customers; competition; government legislation, regulations and policies; the ability of Old National to execute its business plan, including the completion of the integration related to the merger between Old National and First Midwest and the achievement of the synergies and other benefits from the merger; changes in economic conditions which could materially impact credit quality trends and the ability to generate loans and gather deposits; failure or circumvention of our internal controls; significant changes in accounting, tax or regulatory practices or requirements; new legal obligations; 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; other matters discussed in this communication; and other factors identified in our Annual Report on Form 10-K for the year ended December 31, 2021 and other filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date of this communication and are not guarantees of future results or performance, and Old National does not undertake an obligation to update these forward-looking statements to reflect events or conditions after the date of this communication.

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


         
Financial Highlights (unaudited)
($ and shares in thousands, except per share data)
         
 Three Months Ended Twelve Months Ended
 December 31,September 30,June 30,March 31,December 31, December 31,December 31,
  2022  2022  2022  2022  2021   2022  2021 
Income Statement        
Net interest income$391,090 $376,589 $337,472 $222,785 $146,781  $1,327,936 $596,400 
FTE adjustment1 5,378  4,950  4,314  3,772  3,442   18,414  13,913 
Net interest income - tax equivalent basis 396,468  381,539  341,786  226,557  150,223   1,346,350  610,313 
Provision for credit losses2 11,408  15,490  9,165  108,736  (1,332)  144,799  (29,622)
Noninterest income 165,037  80,385  89,117  65,240  51,484   399,779  214,219 
Noninterest expense2 282,675  262,444  277,475  215,589  131,355   1,038,183  501,379 
Net income (loss) available to common shareholders$196,701 $136,119 $110,952 $(29,603)$56,188  $414,169 $277,538 
Per Common Share Data        
Weighted average diluted shares 293,131  292,483  291,881  227,002  166,128   276,688  165,929 
EPS, diluted$0.67 $0.47 $0.38 $(0.13)$0.34  $1.50 $1.67 
Cash dividends 0.14  0.14  0.14  0.14  0.14   0.56  0.56 
Dividend payout ratio3 21% 30% 37%(108)% 41%  37% 33%
Book value$16.68 $16.05 $16.51 $17.03 $18.16  $16.68 $18.16 
Stock price 17.98  16.47  14.79  16.38  18.12   17.98  18.12 
Tangible book value4 9.42  8.75  9.23  9.71  11.70   9.42  11.70 
Performance Ratios        
ROAA 1.74% 1.22% 1.01%(0.31)% 0.93%  0.99% 1.17%
ROAE 16.8% 11.1% 9.1%(2.9)% 7.5%  8.9% 9.3%
ROATCE4 31.5% 20.5% 16.9%(4.0)% 12.1%  16.3% 14.9%
NIM (FTE) 3.85% 3.71% 3.33% 2.88% 2.77%  3.47% 2.89%
Efficiency ratio4 49.1% 55.3% 62.7% 72.3% 64.0%  58.0% 59.7%
Efficiency ratio (prior presentation)5N/A 56.2% 62.7% 76.2% 64.3% N/A 59.6%
NCOs (recoveries) to average loans 0.05% 0.10% 0.02% 0.05%(0.04)%  0.06%(0.03)%
ACL on loans to EOP loans 0.98% 0.99% 0.97% 0.99% 0.79%  0.98% 0.79%
ACL6 to EOP loans 1.08% 1.08% 1.05% 1.07% 0.87%  1.08% 0.87%
NPLs to EOP loans 0.81% 0.81% 0.78% 0.88% 0.92%  0.81% 0.92%
Balance Sheet (EOP)        
Total loans$31,123,641 $30,528,933 $29,553,648 $28,336,244 $13,601,846  $31,123,641 $13,601,846 
Total assets 46,763,372  46,215,526  45,748,355  45,834,648  24,453,564   46,763,372  24,453,564 
Total deposits 35,000,830  36,053,663  35,538,975  35,607,390  18,569,195   35,000,830  18,569,195 
Total borrowed funds 5,586,314  4,264,750  4,384,411  4,347,560  2,575,240   5,586,314  2,575,240 
Total shareholders' equity 5,128,595  4,943,383  5,078,783  5,232,114  3,012,018   5,128,595  3,012,018 
Capital Ratios4        
Risk-based capital ratios (EOP):        
Tier 1 common equity 10.03% 9.88% 9.90% 10.04% 12.04%  10.03% 12.04%
Tier 1 capital 10.71% 10.58% 10.63% 10.79% 12.04%  10.71% 12.04%
Total capital 12.02% 11.84% 12.03% 12.19% 12.77%  12.02% 12.77%
Leverage ratio (average assets) 8.52% 8.26% 8.19% 10.58% 8.59%  8.52% 8.59%
Equity to assets (averages) 10.70% 11.18% 11.22% 12.03% 12.35%  11.23% 12.60%
TCE to TA 6.18% 5.82% 6.20% 6.51% 8.30%  6.18% 8.30%
Nonfinancial Data        
Full-time equivalent employees 3,967  4,008  4,196  4,333  2,374   3,967  2,374 
Banking centers 263  263  266  267  162   263  162 
1 Calculated using the federal statutory tax rate in effect of 21% for all periods.
2 Provision for unfunded commitments is included in the provision for credit losses. The reclassification of the provision for unfunded commitments out of other expense as a component of noninterest expense was made to prior period amounts to conform to the current period presentation.
3 Cash dividends per common share divided by net income per common share (basic).
4 Represents a non-GAAP financial measure. Refer the "Non-GAAP Measures" table for reconciliations to GAAP financial measures.
December 31, 2022 capital ratios are preliminary.
5 Presented as calculated prior to December 31, 2022, which included the provision for unfunded commitments in noninterest expense. Management believes that removing the provision for unfunded commitments from this metric enhances comparability for peer comparison purposes.
6 Includes the allowance for credit losses on loans and unfunded commitments.
         
FTE - Fully taxable equivalent basis ROAA - Return on average assets ROAE - Return on average equity
ROATCE - Return on average tangible common equity NCOs - Net Charge-offs ALL - Allowance for loan losses ACL - Allowance for Credit Losses
EOP - End of period actual balances NPLs - Non-performing Loans TCE - Tangible common equity TA - Tangible assets


         
Income Statement (unaudited)
($ and shares in thousands, except per share data)
 Three Months Ended Twelve Months Ended
 December 31,September 30,June 30,March 31,December 31, December 31,December 31,
  2022  2022  2022  2022  2021   2022  2021 
Interest income$457,821 $406,518 $354,358 $235,505 $156,928  $1,454,202 $638,649 
Less: interest expense 66,731  29,929  16,886  12,720  10,147   126,266  42,249 
Net interest income 391,090  376,589  337,472  222,785  146,781   1,327,936  596,400 
Provision for credit losses1 11,408  15,490  9,165  108,736  (1,332)  144,799  (29,622)
Net interest income
after provision
 379,682  361,099  328,307  114,049  148,113   1,183,137  626,022 
Wealth management fees 17,851  17,317  19,304  14,630  9,833   69,102  40,409 
Service charges on deposit accounts 18,109  20,042  20,324  14,026  8,388   72,501  31,658 
Debit card and ATM fees 10,798  10,608  11,222  7,599  5,804   40,227  23,766 
Mortgage banking revenue 3,888  5,360  6,522  7,245  7,336   23,015  42,558 
Investment product fees 7,817  8,042  8,568  7,322  6,258   31,749  24,639 
Capital markets income 5,377  8,906  7,261  4,442  6,394   25,986  21,997 
Company-owned life insurance 3,108  3,361  4,571  3,524  2,737   14,564  10,589 
Gain on sale of health savings accounts 90,673           90,673   
Other income 7,589  6,921  11,430  6,110  4,299   32,050  14,276 
Gains (losses) on sales of debt securities (173) (172) (85) 342  435   (88) 4,327 
Total noninterest income 165,037  80,385  89,117  65,240  51,484   399,779  214,219 
Salaries and employee benefits 142,459  147,203  161,817  124,147  72,336   575,626  284,098 
Occupancy 26,488  26,418  26,496  21,019  13,151   100,421  54,834 
Equipment 7,591  7,328  7,550  5,168  4,473   27,637  16,704 
Marketing 8,508  10,361  9,119  4,276  4,723   32,264  12,684 
Data processing 19,951  20,269  25,883  18,762  11,489   84,865  47,047 
Communication 4,159  5,392  5,878  3,417  2,412   18,846  10,073 
Professional fees 6,360  6,559  6,336  19,791  5,409   39,046  20,077 
FDIC assessment 5,809  6,249  4,699  2,575  1,598   19,332  6,059 
Amortization of intangibles 6,787  7,089  7,170  4,811  2,573   25,857  11,336 
Amortization of tax credit investments 5,258  2,662  1,525  1,516  2,019   10,961  6,770 
Property optimization 26,818           26,818   
Other expense1 22,487  22,914  21,002  10,107  11,172   76,510  31,697 
Total noninterest expense 282,675  262,444  277,475  215,589  131,355   1,038,183  501,379 
Income (loss) before income
taxes
 262,044  179,040  139,949  (36,300) 68,242   544,733  338,862 
Income tax expense (benefit) 61,309  38,887  24,964  (8,714) 12,054   116,446  61,324 
Net income (loss)$200,735 $140,153 $114,985 $(27,586)$56,188  $428,287 $277,538 
Preferred dividends (4,034) (4,034) (4,033) (2,017)    (14,118)  
Net income (loss) applicable to common shares$196,701 $136,119 $110,952 $(29,603)$56,188  $414,169 $277,538 
         
EPS$0.67 $0.47 $0.38 $(0.13)$0.34  $1.50 $1.67 
Weighted Average Common Shares Outstanding        
Basic 291,012  290,961  290,862  227,002  165,278   275,179  165,178 
Diluted 293,131  292,483  291,881  227,002  166,128   276,688  165,929 
Common shares outstanding (EOP) 292,903  292,880  292,893  292,959  165,838   292,903  165,838 
         
1 Provision for unfunded commitments is included in the provision for credit losses. The reclassification of the provision for unfunded commitments out of other expense as a component of noninterest expense was made to prior period amounts to conform to the current period presentation.
         


 
End of Period Balance Sheet (unaudited)
($ in thousands)
 December 31,September 30,June 30,March 31,December 31,
  2022  2022  2022  2022  2021 
Earning Assets     
Federal Reserve Bank account$269,374 $328,391 $334,570 $1,545,389 $627,354 
Money market investments 5,606  6,374  7,774  12,419  22,002 
Investments:     
Treasury and government-sponsored agencies 2,195,175  2,186,551  2,461,173  2,527,568  1,778,357 
Mortgage-backed securities 5,476,718  5,584,241  5,976,921  6,086,853  3,698,831 
States and political subdivisions 1,827,164  1,829,561  1,839,333  1,840,823  1,654,986 
Other securities 730,476  693,303  719,223  735,550  432,478 
Total investments 10,229,533  10,293,656  10,996,650  11,190,794  7,564,652 
Loans held for sale, at fair value 11,926  19,748  26,217  39,376  35,458 
Loans:     
Commercial 9,508,904  9,311,148  8,923,983  8,624,253  3,391,769 
Commercial and agriculture real estate 12,457,070  12,227,888  11,796,503  11,337,735  6,380,674 
Consumer:     
Home equity 1,033,783  1,043,594  1,097,852  1,080,885  560,590 
Other consumer loans 1,663,443  1,678,997  1,656,253  1,587,216  1,013,524 
Subtotal of commercial and consumer loans 24,663,200  24,261,627  23,474,591  22,630,089  11,346,557 
Residential real estate 6,460,441  6,267,306  6,079,057  5,706,155  2,255,289 
Total loans 31,123,641  30,528,933  29,553,648  28,336,244  13,601,846 
Total earning assets 41,640,080  41,177,102  40,918,859  41,124,222  21,851,312 
      
Allowance for credit losses on loans (303,671) (302,254) (288,003) (280,507) (107,341)
Non-earning Assets:     
Cash and due from banks 453,432  466,846  455,620  418,744  172,663 
Premises and equipment, net 557,307  588,021  586,031  584,113  476,186 
Operating lease right-of-use assets 189,714  187,626  192,196  201,802  69,560 
Goodwill and other intangible assets 2,125,121  2,135,792  2,131,815  2,144,609  1,071,672 
Company-owned life insurance 768,552  767,089  769,595  766,291  463,324 
Other assets 1,332,837  1,195,304  982,242  875,374  456,188 
Total non-earning assets 5,426,963  5,340,678  5,117,499  4,990,933  2,709,593 
Total assets$46,763,372 $46,215,526 $45,748,355 $45,834,648 $24,453,564 
      
Liabilities and Equity     
Noninterest-bearing demand deposits$11,930,798 $12,400,077 $12,388,379 $12,463,136 $6,303,106 
Interest-bearing:     
Checking and NOW accounts 8,340,955  8,963,014  8,473,510  8,296,337  5,338,022 
Savings accounts 6,326,158  6,616,512  6,796,152  6,871,767  3,798,494 
Money market accounts 5,389,139  5,602,729  5,373,318  5,432,139  2,169,160 
Other time deposits 2,775,991  2,393,083  2,479,304  2,544,011  960,413 
Total core deposits 34,763,041  35,975,415  35,510,663  35,607,390  18,569,195 
Brokered deposits 237,789  78,248  28,312     
Total deposits 35,000,830  36,053,663  35,538,975  35,607,390  18,569,195 
      
Federal funds purchased and interbank borrowings 581,489  301,031  1,561  1,721  276 
Securities sold under agreements to repurchase 432,804  438,053  476,173  509,275  392,275 
Federal Home Loan Bank advances 3,829,018  2,804,617  3,283,963  3,239,357  1,886,019 
Other borrowings 743,003  721,049  622,714  597,207  296,670 
Total borrowed funds 5,586,314  4,264,750  4,384,411  4,347,560  2,575,240 
Operating lease liabilities 211,964  207,725  215,188  234,049  76,236 
Accrued expenses and other liabilities 835,669  746,005  530,998  413,535  220,875 
Total liabilities 41,634,777  41,272,143  40,669,572  40,602,534  21,441,546 
Preferred stock, common stock, surplus, and retained earnings 5,915,017  5,751,833  5,647,916  5,570,313  3,014,393 
Accumulated other comprehensive income (loss), net of tax (786,422) (808,450) (569,133) (338,199) (2,375)
Total shareholders' equity 5,128,595  4,943,383  5,078,783  5,232,114  3,012,018 
Total liabilities and shareholders' equity$46,763,372 $46,215,526 $45,748,355 $45,834,648 $24,453,564 
 


            
Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
            
            
 Three Months Ended Three Months Ended Three Months Ended
 December 31, 2022 September 30, 2022 December 31, 2021
 AverageIncome1/Yield/ AverageIncome1/Yield/ AverageIncome1/Yield/
Earning Assets:BalanceExpenseRate BalanceExpenseRate BalanceExpenseRate
Money market and other interest-earning investments$324,801 $(259)(0.32)% $514,362 $9350.72% $726,144 $2760.15%
Investments:           
Treasury and government-sponsored agencies 2,151,746  14,683 2.73%  2,326,070  13,2122.27%  1,763,544  6,3901.45%
Mortgage-backed securities 5,470,753  35,344 2.58%  5,891,283  36,1572.45%  3,513,482  15,0711.72%
States and political subdivisions 1,818,431  14,849 3.27%  1,829,322  14,6313.20%  1,625,390  12,9413.18%
Other securities 702,730  7,741 4.41%  718,735  6,7813.77%  438,583  2,6082.38%
Total investments 10,143,660  72,617 2.86%  10,765,410  70,7812.63%  7,340,999  37,0102.02%
Loans:2           
Commercial 9,330,906  132,711 5.69%  9,045,009  113,4915.02%  3,420,274  31,6413.62%
Commercial and agriculture real estate 12,317,057  161,766 5.25%  11,929,892  136,7804.59%  6,341,296  57,3473.54%
Consumer:           
Home equity 949,925  16,926 7.07%  947,921  14,3976.03%  556,851  4,3803.12%
Other consumer loans 1,766,527  19,906 4.47%  1,787,929  18,6524.14%  1,009,690  9,4883.73%
Subtotal commercial and consumer loans 24,364,415  331,309 5.43%  23,710,751  283,3204.78%  11,328,111  102,8563.60%
Residential real estate loans 6,373,819  59,532 3.74%  6,189,503  56,4323.65%  2,275,469  20,2283.56%
            
Total loans 30,738,234  390,841 5.08%  29,900,254  339,7524.54%  13,603,580  123,0843.56%
            
Total earning assets$41,206,695 $463,199 4.49% $41,180,026 $411,4683.99% $21,670,723 $160,3702.93%
            
Less: Allowance for credit losses on loans (303,009)    (290,215)    (107,990)  
            
Non-earning Assets:           
Cash and due from banks$368,874    $503,841    $228,126   
Other assets 4,861,247     4,522,171     2,481,792   
            
Total assets$46,133,807    $45,915,823    $24,272,651   
            
Interest-Bearing Liabilities:           
Checking and NOW accounts$8,482,651 $13,189 0.62% $8,681,392 $5,7510.26% $5,093,496 $4580.04%
Savings accounts 6,482,369  1,558 0.10%  6,733,465  5470.03%  3,766,543  5240.06%
Money market accounts 5,382,254  8,091 0.60%  5,344,567  2,0720.15%  2,139,702  4560.08%
Other time deposits 2,540,619  5,688 0.89%  2,463,573  2,1680.35%  978,723  1,0470.42%
Total interest-bearing core deposits 22,887,893  28,526 0.49%  23,222,997  10,5380.18%  11,978,464  2,4850.08%
Brokered deposits 129,745  1,366 4.18%  44,579  2822.51%    0.00%
Total interest-bearing deposits 23,017,638  29,892 0.52%  23,267,576  10,8200.18%  11,978,464  2,4850.08%
            
Federal funds purchased and interbank borrowings 475,431  4,299 3.59%  122,311  7202.34%  1,162  0.00%
Securities sold under agreements to repurchase 409,916  556 0.54%  436,225  1060.10%  381,744  920.10%
Federal Home Loan Bank advances 3,266,896  25,609 3.11%  3,025,844  13,0271.71%  1,887,821  5,1221.08%
Other borrowings 753,401  6,375 3.36%  676,874  5,2563.08%  274,926  2,4483.56%
Total borrowed funds 4,905,644  36,839 2.98%  4,261,254  19,1091.78%  2,545,653  7,6621.19%
            
Total interest-bearing liabilities$27,923,282 $66,731 0.95% $27,528,830 $29,9290.43% $14,524,117 $10,1470.28%
            
Noninterest-Bearing Liabilities and Shareholders' Equity           
Demand deposits$12,373,495    $12,575,011    $6,435,829   
Other liabilities 900,448     677,829     313,880   
Shareholders' equity 4,936,582     5,134,153     2,998,825   
            
Total liabilities and shareholders' equity$46,133,807    $45,915,823    $24,272,651   
            
Net interest rate spread  3.54%   3.56%   2.65%
            
Net interest margin (FTE)  3.85%   3.71%   2.77%
            
FTE adjustment $5,378    $4,950   $3,442 
            
1 Interest income is reflected on a FTE. 
2 Includes loans held for sale. 
 


        
Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
        
        
 Twelve Months Ended Twelve Months Ended
 December 31, 2022 December 31, 2021
 AverageIncome1/Yield/ AverageIncome1/Yield/
Earning Assets:BalanceExpenseRate BalanceExpenseRate
Money market and other interest-earning investments$812,296 $2,8140.35% $450,158 $5890.13%
Investments:       
Treasury and government-sponsored agencies 2,290,229  47,9322.09%  1,573,855  24,2091.54%
Mortgage-backed securities 5,562,442  129,4112.33%  3,356,950  60,4791.80%
States and political subdivisions 1,805,433  57,6883.20%  1,548,939  50,1153.24%
Other securities 687,926  24,1333.51%  443,606  10,6802.41%
Total investments$10,346,030 $259,1642.50% $6,923,350 $145,4832.10%
Loans:2       
Commercial 8,252,237  397,2284.81%  3,763,099  138,0633.67%
Commercial and agriculture real estate 11,147,967  489,4994.39%  6,168,146  228,5683.71%
Consumer:       
Home equity 921,018  49,9345.42%  547,322  17,1813.14%
Other consumer loans 1,649,337  72,3404.39%  1,030,145  39,1003.80%
Subtotal commercial and consumer loans 21,970,559  1,009,0014.59%  11,508,712  422,9123.67%
Residential real estate loans 5,622,901  201,6373.59%  2,269,989  83,5783.68%
        
Total loans 27,593,460  1,210,6384.39%  13,778,701  506,4903.68%
        
Total earning assets$38,751,786 $1,472,6163.80% $21,152,209 $652,5623.09%
        
Less: Allowance for credit losses on loans (261,534)    (117,436)  
        
Non-earning Assets:       
Cash and due from banks$355,391    $256,860   
Other assets 4,404,057     2,492,054   
        
Total assets$43,249,700    $23,783,687   
        
Interest-Bearing Liabilities:       
Checking and NOW accounts$8,104,844 $21,3210.26% $4,945,435 $2,0650.04%
Savings accounts 6,342,697  3,3670.05%  3,648,019  2,0030.05%
Money market accounts 4,961,159  11,8820.24%  2,080,332  1,7500.08%
Other time deposits 2,312,935  10,8010.47%  1,020,359  5,1050.50%
Total interest-bearing core deposits 21,721,635  47,3710.22%  11,694,145  10,9230.09%
Brokered deposits 45,796  1,7223.76%  41,371  310.08%
Total interest-bearing deposits 21,767,431  49,0930.23%  11,735,516  10,9540.09%
        
Federal funds purchased and interbank borrowings 151,243  5,0213.32%  1,113  0.00%
Securities sold under agreements to repurchase 440,619  8430.19%  392,777  3970.10%
Federal Home Loan Bank advances 2,986,006  51,5241.73%  1,902,407  21,0751.11%
Other borrowings 619,659  19,7853.19%  269,484  9,8233.65%
Total borrowed funds 4,197,527  77,1731.84%  2,565,781  31,2951.22%
        
Total interest-bearing liabilities 25,964,958  126,2660.49%  14,301,297  42,2490.30%
        
Noninterest-Bearing Liabilities and Shareholders' Equity       
Demand deposits$11,750,306    $6,163,937   
Other liabilities 676,940     320,933   
Shareholders' equity 4,857,496     2,997,520   
        
Total liabilities and shareholders' equity$43,249,700    $23,783,687   
        
Net interest rate spread  3.31%   2.79%
        
Net interest margin (FTE)  3.47%   2.89%
        
FTE adjustment $18,414   $13,913 
        
1 Interest income is reflected on a FTE.
2 Includes loans held for sale.       
 


         
Asset Quality (EOP) (unaudited)
($ in thousands)
         
 Three Months Ended Twelve Months Ended
 December 31,September 30,June 30,March 31,December 31, December 31,December 31,
  2022  2022  2022  2022  2021   2022  2021 
Allowance for credit losses:        
Beginning allowance for credit losses on loans$302,254 $288,003 $280,507 $107,341 $107,868  $107,341 $131,388 
Allowance established for acquired PCD loans   10,558    78,531     89,089   
Provision for credit losses on loans 5,389  11,288  9,254  97,409  (1,914)  123,340  (28,812)
Gross charge-offs (7,081) (11,440) (4,096) (4,664) (545)  (27,281) (4,310)
Gross recoveries 3,109  3,845  2,338  1,890  1,932   11,182  9,075 
(NCOs) recoveries (3,972) (7,595) (1,758) (2,774) 1,387   (16,099) 4,765 
Ending allowance for credit losses on loans$303,671 $302,254 $288,003 $280,507 $107,341  $303,671 $107,341 
Beginning allowance for credit losses on unfunded commitments$26,169 $21,966 $22,046 $10,879 $10,297  $10,879 $11,689 
Provision for credit losses on
unfunded commitments
 6,019  4,203  (80) 11,167  582   21,309  (810)
Ending allowance for credit losses on unfunded commitments$32,188 $26,169 $21,966 $22,046 $10,879  $32,188 $10,879 
Allowance for credit losses$335,859 $328,423 $309,969 $302,553 $118,220  $335,859 $118,220 
Provision for credit losses on loans$5,389 $11,288 $9,254 $97,409 $(1,914) $123,340 $(28,812)
Provision for credit losses on unfunded commitments1 6,019  4,203  (80) 11,167  582   21,309  (810)
Provision for credit losses1$11,408 $15,491 $9,174 $108,576 $(1,332) $144,649 $(29,622)
NCOs (recoveries) / average loans2 0.05% 0.10% 0.02% 0.05%(0.04)%  0.06%(0.03)%
Average loans2$30,737,698 $29,890,008 $28,847,003 $20,725,313 $13,594,543  $27,589,442 $13,766,590 
EOP loans2 31,123,641  30,528,933  29,553,648  28,336,244  13,601,846   31,123,641  13,601,846 
ACL on loans / EOP loans2 0.98% 0.99% 0.97% 0.99% 0.79%  0.98% 0.79%
ACL / EOP loans2 1.08% 1.08% 1.05% 1.07% 0.87%  1.08% 0.87%
Underperforming Assets:        
Loans 90 days and over (still
accruing)
$2,650 $767 $882 $1,646 $7  $2,650 $7 
NPLs:        
Nonaccrual loans3 238,178  233,659  214,924  227,925  106,691   238,178  106,691 
TDRs still accruing 15,313  13,674  15,665  20,999  18,378   15,313  18,378 
Total NPLs 253,491  247,333  230,589  248,924  125,069   253,491  125,069 
Foreclosed assets 10,845  11,967  12,618  19,713  2,030   10,845  2,030 
Total underperforming assets$266,986 $260,067 $244,089 $270,283 $127,106  $266,986 $127,106 
Classified and Criticized Assets:        
Nonaccrual loans3$238,178 $233,659 $214,924 $227,925 $106,691  $238,178 $106,691 
Substandard loans (still accruing) 504,657  476,724  490,566  518,341  162,572   504,657  162,572 
Loans 90 days and over (still accruing) 2,650  767  882  1,646  7   2,650  7 
Total classified loans - "problem loans" 745,485  711,150  706,372  747,912  269,270   745,485  269,270 
Other classified assets 24,735  24,773  25,004  24,676  4,338   24,735  4,338 
Criticized loans - "special mention loans" 636,069  549,994  452,835  507,689  235,910   636,069  235,910 
Total classified and criticized assets$1,406,289 $1,285,917 $1,184,211 $1,280,277 $509,518  $1,406,289 $509,518 
Loans 30-89 days past due$55,522 $65,632 $48,889 $94,114 $16,347  $55,522 $16,347 
NPLs / EOP loans2 0.81% 0.81% 0.78% 0.88% 0.92%  0.81% 0.92%
ACL to NPLs 132% 133% 134% 122% 95%  132% 95%
Under-performing assets/EOP loans2 0.86% 0.85% 0.83% 0.95% 0.93%  0.86% 0.93%
Under-performing assets/EOP assets 0.57% 0.56% 0.53% 0.59% 0.52%  0.57% 0.52%
30+ day delinquencies2 0.19% 0.22% 0.17% 0.34% 0.12%  0.19% 0.12%
1 Excludes $0.2 million of expense to establish an allowance on held-to-maturity securities during the first quarter of 2022. Provision for unfunded commitments is included in the provision for credit losses. The reclassification of the provision for unfunded commitments out of other expense as a component of noninterest expense was made to prior period amounts to conform to the current period presentation.
2 Excludes loans held for sale.      
3 Includes non-accruing TDRs totaling $24.0 million at December 31, 2022, $23.8 million at September 30, 2022, $24.3 million at June 30, 2022, $23.8 million at March 31, 2022 and $11.7 million at December 31, 2021.
PCD - Purchased credit deteriorated TDR - Troubled debt restructuring
         


         
Non-GAAP Measures (unaudited)
($ and shares in thousands, except per share data)
         
 Three Months Ended Twelve Months Ended
 December 31,September 30,June 30,March 31,December 31, December 31,December 31,
  2022  2022  2022  2022  2021   2022  2021 
Earnings Per Share:        
Net income applicable to common shares$196,701 $136,119 $110,952 $(29,603)$56,188  $414,169 $277,538 
Adjustments:        
Gain on sale of health savings accounts (90,673)          (90,673)  
Tax effect1 23,031           23,031   
Gain on sale of health savings accounts, net (67,642)          (67,642)  
Debt Securities (gains) losses 173  172  85  (342) (435)  88  (4,327)
Tax effect1 (44) (65) (30) 62  109   (76) 1,082 
Debt securities (gains) losses, net 129  107  55  (280) (326)  12