Old National reports 3rd quarter earnings of $77.9 million, or $0.47 per share
EVANSVILLE, Ind., Oct. 19, 2020 (GLOBE NEWSWIRE) —Old National Bancorp (NASDAQ: ONB) reports 3Q20 net income of $77.9 million, diluted EPS of $0.47.
Adjusted1 net income of $76.4 million, or $0.46 per diluted share.
CEO COMMENTARY:THIRD QUARTER HIGHLIGHTS2:1Non-GAAP financial measure that Management believes is useful in evaluating the financial results of the Company – please refer to the Non GAAP reconciliations contained in this release 2Comparisons are on a linked-quarter basis, unless otherwise noted 3Includes loans held for saleRESULTS OF OPERATIONSOld National Bancorp reported third quarter 2020 net income of $77.9 million, or $0.47 per diluted share.Included in the third quarter were pre-tax charges of $2.9 million for the ONB Way. Excluding these charges from the current quarter and netting out debt securities gains, adjusted net income was $76.4 million, or $0.46 per diluted share.LOANS
Strong commercial production drove total loan balances higher.Period-end total loans were $13,977.6 million at September 30, 2020, an increase of $239.4 million when compared to the $13,738.2 million at June 30, 2020.Commercial real estate loans increased $298.2 million to $5,701.5 million, or 22.1% annualized growth.Commercial and industrial loans decreased $42.9 million to $4,264.6 million.Consumer loans decreased $14.4 million to $1,661.1 million and residential mortgage loans increased $36.0 million to $2,265.3 million.Total commercial loan production in the third quarter, excluding $20 million in PPP loan production, was $977.8 million; period-end pipeline totaled $2.9 billion.Average total loans in the third quarter were $13,849.0 million, an increase of $398.9 million from the second quarter of 2020.DEPOSITS
A low-cost core deposit franchise continues to be one of Old National’s strengths.Period-end total deposits were $16,506.5 million at September 30, 2020, an increase of $187.1 million when compared to the $16,319.4 million at June 30, 2020.Noninterest-bearing deposits increased to $5,463.0 million at September 30, 2020 from $5,217.7 million at June 30, 2020.On average, total deposits in the third quarter were $16,436.8 million, compared to $15,652.8 million in the second quarter of 2020.
NET INTEREST INCOME AND MARGIN
Net interest income unchanged while net interest margin is lower as decline in asset yields outpaces decline in deposit and funding costs.Net interest income remained unchanged at $145.6 million in the third quarter of 2020 when compared to the second quarter of 2020.The net interest margin on a fully taxable equivalent basis decreased 11 basis points to 3.03% compared to 3.14% in the second quarter of 2020.PPP interest and net fees combined to have a positive impact of $8.8 million to net interest income in the third quarter while having a net neutral impact to the interest margin.Accretion income was $5.4 million, or 11 basis points of net interest margin, in the third quarter of 2020 compared to $5.8 million, or 12 basis points of net interest margin, in the second quarter of 2020. In the third quarter of 2020, accretion income was 2.6% of adjusted total revenue.Interest collected on nonaccrual loans was $1.0 million, or 2 basis points of net interest margin, in the third quarter of 2020 compared to $0.6 million, or 1 basis point of net interest margin, in the second quarter of 2020.The cost of total deposits declined 4 basis points to 0.13% in the third quarter of 2020 while the cost of total interest-bearing deposits decreased 6 basis points to 0.19%.CREDIT QUALITY
Strong credit quality remains a hallmark of the Old National franchise.
Old National recorded no provision for credit losses in the third quarter of 2020, compared to $22.5 million in the second quarter.Net recoveries in the third quarter were $3.0 million, compared to net charge-offs of $0.5 million in the second quarter.30-89 day delinquencies were 0.20% at the end of the third quarter.Non-performing loans increased as a percentage of total loans to 1.15%.Loans acquired from previous acquisitions were recorded at fair value at the acquisition date. As of September 30, 2020, the remaining discount on these acquired loans was $56.0 million.The allowance for credit losses was $131.4 million, or 0.95% of total loans at September 30, 2020.NONINTEREST INCOME
Noninterest income increased due to a rebound in deposit service charges and continued strength in mortgage banking revenue.Total noninterest income for the third quarter of 2020 was $64.7 million, an increase of $6.3 million from the second quarter of 2020.Service charges on deposit accounts increased $1.1 million and mortgage banking revenue increased $0.8 million when compared to the second quarter of 2020.Gains on sales of debt securities increased $4.4 million when compared to the second quarter of 2020.
NONINTEREST EXPENSE
Third quarter results demonstrate benefit of The ONB Way, helping drive positive operating leverage1.Noninterest expense for the third quarter of 2020 was $120.2 million and included $2.9 million in ONB Way charges and $3.1 million in tax credit amortization.Excluding these items, adjusted noninterest expense for the third quarter was $114.2 million, compared to the $115.0 million in adjusted noninterest expense in the second quarter of 2020.The third quarter efficiency ratio was 55.93%, while the adjusted efficiency ratio was 53.06%.Adjusted operating leverage1 was +298 basis points for the third quarter of 2020 as compared to the third quarter of 2019.INCOME TAXESOn a fully taxable-equivalent basis, income tax expense in the third quarter was $15.6 million, resulting in a 16.6% FTE tax rate.Income tax expense included $3.7 million in tax credit benefit.CAPITAL AND LIQUIDITY
Capital ratios remain strong.At the end of the third quarter, total risk-based capital was 13.10% and regulatory tier 1 capital was 12.10%.Tangible common equity to tangible assets was 8.58% at the end of the third quarter compared to 8.45% in the second quarter of 2020.The Company did not repurchase any shares of common stock during the third quarter.A low loan to deposit ratio of 84.7%, combined with existing funding sources plus available unencumbered, high-quality collateral, provides strong liquidity.NON-GAAP RECONCILIATIONS4Tax-effect calculations use the current statutory FTE tax rates (federal + state)
5Year-over-year basis point change in noninterest expenses plus change in total revenue
6Year-over-year basis point change in adjusted noninterest expense plus change in adjusted total revenue7Tax-effect calculations use the current statutory FTE tax rates (federal + state)CONFERENCE CALL AND WEBCAST
Old National will host a conference call and live webcast at 9:00 a.m. Central Time on Monday, October 19, 2020, to review third-quarter 2020 financial results. The live audio web cast of the call, along with the corresponding presentation slides, will be available on the Company’s Investor Relations web page at oldnational.com and will be archived there for 12 months. A replay of the call will also be available from Noon Central Time on October 19 through November 2. To access the replay, dial 1-855-859-2056, Conference ID Code 1086029.ABOUT OLD NATIONAL
Old National Bancorp (NASDAQ: ONB), the holding company of Old National Bank, is the largest bank holding company headquartered in Indiana. With $22.5 billion in assets, it ranks among the top 100 banking companies in the U.S. and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for nine consecutive years. Since its founding in Evansville in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships and keeping our clients at the center of all we do. This is an approach to business that we call The ONB Way. Today, Old National’s footprint includes Indiana, Kentucky, Michigan, Minnesota and Wisconsin. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investment and capital market services. For more information and financial data, please visit Investor Relations at oldnational.com.USE OF NON-GAAP FINANCIAL MEASURES
This earnings release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Old National’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.FORWARD-LOOKING STATEMENT
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, descriptions of Old National Bancorp’s (“Old National’s”) financial condition, results of operations, asset and credit quality trends and profitability. Forward-looking statements can be identified by the use of the words “anticipate,” “believe,” “expect,” “intend,” “could” and “should,” and other words of similar meaning. These forward-looking statements express management’s current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties, such as statements about the potential impacts of the COVID-19 pandemic. There are a number of factors that could cause actual results to differ materially from those in such statements. Factors that might cause such a difference include, but are not limited to: the severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic and of businesses’ and governments’ responses to the pandemic on our operations and personnel, and on commercial activity and demand across our and our customers’ businesses; market, economic, operational, liquidity, credit and interest rate risks associated with Old National’s business(including developments and volatility arising from the COVID-19 pandemic); competition; government legislation and policies (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and its related regulations); ability of Old National to execute its business plan, including the anticipated impact from the ONB Way strategic plan that may differ from current estimates; changes in the economy which could materially impact credit quality trends and the ability to generate loans and gather deposits; failure or circumvention of our internal controls; failure or disruption of our information systems; significant changes in accounting, tax or regulatory practices or requirements, including the impact of the CECL standard as well as changes to address the impact of COVID-19; new legal obligations or liabilities or unfavorable resolutions of litigations; disruptive technologies in payment systems and other services traditionally provided by banks; computer hacking and other cybersecurity threats; other matters discussed in this press release; and other factors identified in our Annual Report on Form 10-K and other periodic filings with the SEC. These forward-looking statements are made only as of the date of this press release, and Old National does not undertake an obligation to release revisions to these forward-looking statements to reflect events or conditions after the date of this press release.
Media: Kathy A. Schoettlin (812) 465-7269
Investors: Lynell J. Walton (812) 464-1366
