• Old National's 1st Quarter Results Supported by Strong Deposit Franchise, Ample Liquidity, Stable Credit and Expense Discipline

    المصدر: Nasdaq GlobeNewswire / 25 أبريل 2023 08:00:39   America/New_York

    EVANSVILLE, Ind., April 25, 2023 (GLOBE NEWSWIRE) --

    Old National Bancorp (NASDAQ: ONB) reports 1Q23 net income applicable to common shares of $142.6 million, diluted EPS of $0.49; $159.1 million and $0.54 on an adjusted1 basis, respectively.

    COMMENTARY BY CEO JIM RYAN:

    Reflecting on April 10th
    "Five of our Old National team members were lost forever while other team members and two Louisville Metro police officers suffered injuries. In the aftermath, many heroes emerged, including members of law enforcement, city and state officials, the Louisville medical community and some of our own team members who were on the scene.

    Old National would like to thank the Louisville community for their unconditional love and support, as well as countless other individuals and organizations throughout the country whose outpouring of love and care has strengthened us. We also want to acknowledge and thank our resilient team members who rallied in support of those in Louisville and one another, along with our clients, many of whom reached out to us with messages of care and concern.

    Finally, we ask everyone to consider giving the gift of life by donating blood. In addition to honoring those impacted in Louisville, your gift will help save lives throughout our nation."
     
    Reflecting on First Quarter Earnings
    “Our positive first quarter results underscore the stability of Old National's low-cost deposit franchise and the granularity and strength of our loan portfolio and revenue streams. When you also factor in another quarter of excellent expense discipline, stable credit and ample liquidity, you can see why Old National finds itself exceptionally well-positioned for whatever headwinds may lie ahead."

    FIRST QUARTER HIGHLIGHTS2:

    Net Income

    • Net income applicable to common shares of $142.6 million; adjusted net income applicable to common shares1 of $159.1 million
    • Earnings per diluted common share ("EPS") of $0.49; adjusted EPS1 of $0.54
      
    Net Interest Income/NIM

    • Net interest income on a fully taxable equivalent basis1 of $387.2 million
    • Net interest margin on a fully taxable equivalent basis1 ("NIM") of 3.69%, down 16 basis points ("bps")
      
    Operating Performance



    • Pre-provision net revenue1 (“PPNR”) of $207.1 million; adjusted PPNR1 of $228.2 million
    • Noninterest expense of $250.7 million; adjusted noninterest expense1 of $234.8 million
    • Efficiency ratio1 of 52.8%; adjusted efficiency ratio1 of 48.8%
      
    Deposits and Funding







    • Period-end total deposits of $34.9 billion, stable including normal seasonal patterns in public funds
    • Granular low-cost deposit franchise; total deposit costs of 72 bps and a total deposit beta cycle to date of 15% (interest-bearing deposit beta of 23%)
    • Deposits that were either insured or collateralized3 at March 31, 2023 were ~70% of total deposits
    • Strong liquidity provided by existing funding sources plus available unencumbered, high-quality collateral totaling $15.7 billion; ~150% uninsured covered ratio4
    • Total funding of $41.7 billion, up 2.6% compared to December 31, 2022
      
    Note: See following page for footnotes.


    Loans and Credit Quality







    • End-of-period total loans5 of $31.8 billion, up 2.2% compared to December 31, 2022
    • Provision for credit losses6 ("provision") of $13.4 million
    • Net charge-offs of $16.4 million, or 21 bps of average loans; 5 bps excluding purchased credit deteriorated ("PCD") loans that had an allowance at acquisition
    • Non-performing loans of 0.74% of total loans
     
    Return Profile & Capital

    • Return on average tangible common equity1 of 21.0%; adjusted return on average tangible common equity1 of 23.4%
    • Repurchased 1.8 million shares of common stock during the quarter
      
    Notable Items



    • $14.6 million of merger-related charges
    • $1.3 million of property optimization charges
    • $5.2 million of losses on sales of debt securities

    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 3 Uninsured and uncollateralized deposits include the estimate of Old National Bank federally uninsured deposits for regulatory purposes, as adjusted for $1.4 billion of affiliate deposits and $3.4 billion of collateralized or otherwise insured deposits      4 Represents the ratio of liquidity availability (cash and cash equivalents, funding capacity at FHLB, discount window and Bank Term Funding Program ("BTFP"), and unencumbered eligible collateral) at March 31, 2023, plus recently pledged loan collateral to FHLB, to uninsured and uncollateralized deposits at March 31, 2023    Includes loans held for sale Includes the provision for unfunded commitments

    RESULTS OF OPERATIONS
    Old National Bancorp ("Old National") reported first quarter 2023 net income applicable to common shares of $142.6 million, or $0.49 per diluted common share.

    Included in the first quarter was pre-tax charges of $1.3 million for property optimization and $14.6 million related to the February 15, 2022 merger with First Midwest. Excluding these transactions and $5.2 million of realized debt securities losses from the current quarter, adjusted net income was $159.1 million, or $0.54 per diluted common share.

    DEPOSITS AND FUNDING
    Stable low-cost deposits including normal seasonal patterns in public funds; ample funding and liquidity.

    • Period-end total core deposits were $34.9 billion at March 31, 2023, stable including normal seasonal patterns in public funds.
    • On average, total deposits for the first quarter were $34.9 billion, a decrease of 1.4%.
    • Granular low-cost deposit franchise; total deposit costs of 72 bps and a total deposit cycle to date beta of 15% (interest-bearing deposit beta of 23%).
    • Deposits that were either insured or collateralized at March 31, 2023 were approximately 70% of total deposits.
    • Strong liquidity provided by existing funding sources plus available unencumbered, high-quality collateral; ~150% uninsured covered ratio4.
    • Total funding of $41.7 billion, up 2.6% compared to December 31, 2022.
    • A loan to deposit ratio of 91% at March 31, 2023, combined with existing funding sources plus available unencumbered, high-quality collateral totaling approximately $15.7 billion provides strong liquidity.

    LOANS
    Broad-based disciplined commercial loan growth.

    • Period-end total loans3 were $31.8 billion at March 31, 2023, up 2.2% from December 31, 2022, driven by strong commercial loan growth.
    • Total commercial loan production in the first quarter was $1.8 billion; period-end commercial pipeline totaled $5.4 billion.
    • Average total loans in the first quarter were $31.3 billion, an increase of $532.6 million from the fourth quarter of 2022.

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

    • Provision5 expense in the first quarter of 2023 was $13.4 million, compared to $11.4 million in the fourth quarter of 2022, reflecting loan and unfunded commitment growth, economic factors and portfolio mix changes.
    • Net charge-offs in the first quarter were $16.4 million, or 21 bps of average loans compared to net charge-offs of 5 bps of average loans in the fourth quarter of 2022.
      • Excluding PCD loans that had an allowance for credit losses established at acquisition, net charge-offs to average loans were 5 bps for both the first quarter of 2023 and fourth quarter of 2022.
    • 30+ day delinquencies were 0.14% at the end of the first quarter of 2023, compared to 0.19% at the end of the fourth quarter of 2022.
    • Non-performing loans as a percentage of total loans were 0.74% compared to 0.81% for the fourth quarter of 2022.
    • Loans acquired from previous acquisitions were recorded at fair value at the acquisition date. As of March 31, 2023, the remaining discount on these acquired loans was $96 million.
    • The allowance for credit losses, including the allowance for credit losses on unfunded commitments, stood at $332.9 million, or 1.05% of total loans at March 31, 2023, compared to $335.9 million, or 1.08% of total loans at December 31, 2022.

    NET INTEREST INCOME AND MARGIN
    Loan growth and the higher rate environment favorably impact net interest income and margin, more than offset by higher funding costs, fewer days in the quarter and lower accretion.

    • Net interest income on a fully taxable equivalent basis decreased to $387.2 million in the first quarter of 2023 compared to $396.5 million in the fourth quarter of 2022, driven by loan growth and the higher rate environment which were more than offset by higher funding costs, fewer days in the quarter and lower accretion income on loans.
    • Net interest margin on a fully taxable equivalent basis decreased 16 bps to 3.69% compared to the fourth quarter of 2022.
    • Accretion income on loans and borrowings was $7.9 million, or 8 bps of net interest margin, in the first quarter of 2023 compared to $10.4 million, or 10 bps of net interest margin, in the fourth quarter of 2022.
    • Cost of total deposits was 0.72%, increasing 38 bps and the cost of total interest-bearing deposits increased 57 bps to 1.09% in the first quarter of 2023.

    NONINTEREST INCOME
    Increase driven by higher capital markets income as well as wealth management and investment products fees, partly offset by lower bank fees.

    • Total noninterest income for the first quarter of 2023 was $70.7 million.
    • Excluding realized debt securities losses for both periods and a $90.7 million pre-tax gain on the sale of health savings accounts for the fourth quarter of 2022, adjusted noninterest income for the first quarter was $75.9 million, up 1.8% compared to the fourth quarter of 2022, driven by higher capital markets income as well as wealth management and investment product fees, partially offset by lower service charges on deposit accounts and debit card and ATM fees.

    NONINTEREST EXPENSE
    Disciplined expense management.

    • Noninterest expense for the first quarter of 2023 was $250.7 million and included $1.3 million for property optimization and $14.6 million of merger-related charges.
    • Excluding these items, adjusted noninterest expense for the first quarter was $234.8 million, consistent with $235.5 million for the fourth quarter of 2022; lower salary and employee benefits and tax credit amortization was mostly offset by higher FDIC assessment and technology expenses.
    • The efficiency ratio1 was 52.8%, while the adjusted efficiency ratio1 was 48.8% for the first quarter of 2023 compared to 49.1% and 47.5%, respectively, for the fourth quarter of 2022.

    INCOME TAXES

    • Income tax expense in the first quarter of 2023 was $41.4 million, resulting in an effective tax rate of 22.0% compared to 23.4% in the fourth quarter of 2022. On an adjusted fully taxable equivalent ("FTE") basis, the effective tax rate was 24.1% in the first quarter compared to 24.8% in the fourth quarter.
    • Income tax expense included $3.1 million of tax credit benefit.

    CAPITAL
    Capital ratios remain strong.

    • Preliminary total risk-based capital was 11.95% and preliminary regulatory Tier 1 capital was 10.62%, impacted by loan growth, merger related charges, and stock repurchases, partly offset by retained earnings.
    • Tangible common equity to tangible assets was 6.37% at the end of the first quarter compared to 6.18% in the fourth quarter of 2022.
    • The Company repurchased 1.8 million shares of common stock during the quarter.

    CONFERENCE CALL AND WEBCAST
    Old National will host a conference call and live webcast at 9:00 a.m. Central Time on Tuesday, April 25, 2023, to review first quarter 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 892610. A replay of the call will also be available from approximately noon Central Time on April 25, 2023 through May 9, 2023. To access the replay, dial U.S. (866) 813-9403 or international +44 (204) 525-0658, Access code 569807.

    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 $48 billion of assets and $28 billion of assets under management, Old National ranks among the top 35 banking companies headquartered in the U.S. Tracing our roots to 1834, 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 and gains/losses on sales of debt securities. 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 and property optimization 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; unanticipated changes in our liquidity position, including but not limited to changes in 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; 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, 2022 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
     March 31,December 31,September 30,June 30,March 31,
      2023  2022  2022  2022  2022 
    Income Statement     
    Net interest income$381,488 $391,090 $376,589 $337,472 $222,785 
    FTE adjustment1,4 5,666  5,378  4,950  4,314  3,772 
    Net interest income - tax equivalent basis4 387,154  396,468  381,539  341,786  226,557 
    Provision for credit losses2 13,437  11,408  15,490  9,165  108,736 
    Noninterest income 70,681  165,037  80,385  89,117  65,240 
    Noninterest expense2 250,711  282,675  262,444  277,475  215,589 
    Net income (loss) available to common shareholders$142,566 $196,701 $136,119 $110,952 $(29,603)
    Per Common Share Data     
    Weighted average diluted shares 292,756  293,131  292,483  291,881  227,002 
    EPS, diluted$0.49 $0.67 $0.47 $0.38 $(0.13)
    Cash dividends 0.14  0.14  0.14  0.14  0.14 
    Dividend payout ratio3 29% 21% 30% 37%(108)        %
    Book value$17.24 $16.68 $16.05 $16.51 $17.03 
    Stock price 14.42  17.98  16.47  14.79  16.38 
    Tangible book value4 9.98  9.42  8.75  9.23  9.71 
    Performance Ratios     
    ROAA 1.25% 1.74% 1.22% 1.01%(0.31)        %
    ROAE 11.6% 16.8% 11.1% 9.1%(2.9)        %
    ROATCE4 21.0% 31.5% 20.5% 16.9%(4.0)        %
    NIM (FTE) 3.69% 3.85% 3.71% 3.33% 2.88%
    Efficiency ratio4 52.8% 49.1% 55.3% 62.7% 72.3%
    Efficiency ratio (prior presentation)5N/AN/A 56.2% 62.7% 76.2%
    NCOs (recoveries) to average loans 0.21% 0.05% 0.10% 0.02% 0.05%
    ACL on loans to EOP loans 0.94% 0.98% 0.99% 0.97% 0.99%
    ACL6 to EOP loans 1.05% 1.08% 1.08% 1.05% 1.07%
    NPLs to EOP loans 0.74% 0.81% 0.81% 0.78% 0.88%
    Balance Sheet (EOP)     
    Total loans$31,822,374 $31,123,641 $30,528,933 $29,553,648 $28,336,244 
    Total assets 47,842,644  46,763,372  46,215,526  45,748,355  45,834,648 
    Total deposits 34,917,792  35,000,830  36,053,663  35,538,975  35,607,390 
    Total borrowed funds 6,740,454  5,586,314  4,264,750  4,384,411  4,347,560 
    Total shareholders' equity 5,277,426  5,128,595  4,943,383  5,078,783  5,232,114 
    Capital Ratios4     
    Risk-based capital ratios (EOP):     
    Tier 1 common equity 9.96% 10.03% 9.88% 9.90% 10.04%
    Tier 1 capital 10.62% 10.71% 10.58% 10.63% 10.79%
    Total capital 11.95% 12.02% 11.84% 12.03% 12.19%
    Leverage ratio (average assets) 8.53% 8.52% 8.26% 8.19% 10.58%
    Equity to assets (averages) 11.00% 10.70% 11.18% 11.22% 12.03%
    TCE to TA 6.37% 6.18% 5.82% 6.20% 6.51%
    Nonfinancial Data     
    Full-time equivalent employees 4,023  3,967  4,008  4,196  4,333 
    Banking centers 256  263  263  266  267 
    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 amounts prior to December 31, 2022 to conform to the current period presentation.
    3 Cash dividends per common share divided by net income per common share (basic).  
    4 Represents a non-GAAP financial measure. Refer the "Non-GAAP Measures" table for reconciliations to GAAP financial measures.
        March 31, 2023 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
     March 31,December 31,September 30,June 30,March 31,
      2023  2022  2022  2022  2022 
    Interest income$495,649 $457,821 $406,518 $354,358 $235,505 
    Less: interest expense 114,161  66,731  29,929  16,886  12,720 
    Net interest income 381,488  391,090  376,589  337,472  222,785 
    Provision for credit losses1 13,437  11,408  15,490  9,165  108,736 
    Net interest income
    after provision for credit losses
     368,051  379,682  361,099  328,307  114,049 
    Wealth management fees 18,760  17,851  17,317  19,304  14,630 
    Service charges on deposit accounts 17,003  18,109  20,042  20,324  14,026 
    Debit card and ATM fees 9,982  10,798  10,608  11,222  7,599 
    Mortgage banking revenue 3,400  3,888  5,360  6,522  7,245 
    Investment product fees 8,160  7,817  8,042  8,568  7,322 
    Capital markets income 6,939  5,377  8,906  7,261  4,442 
    Company-owned life insurance 3,186  3,108  3,361  4,571  3,524 
    Gain on sale of health savings accounts   90,673       
    Other income 8,467  7,589  6,921  11,430  6,110 
    Gains (losses) on sales of debt securities (5,216) (173) (172) (85) 342 
    Total noninterest income 70,681  165,037  80,385  89,117  65,240 
    Salaries and employee benefits 137,364  142,459  147,203  161,817  124,147 
    Occupancy 28,282  26,488  26,418  26,496  21,019 
    Equipment 7,389  7,591  7,328  7,550  5,168 
    Marketing 9,417  8,508  10,361  9,119  4,276 
    Technology 19,202  19,951  20,269  25,883  18,762 
    Communication 4,461  4,159  5,392  5,878  3,417 
    Professional fees 6,732  6,360  6,559  6,336  19,791 
    FDIC assessment 10,404  5,809  6,249  4,699  2,575 
    Amortization of intangibles 6,186  6,787  7,089  7,170  4,811 
    Amortization of tax credit investments 2,761  5,258  2,662  1,525  1,516 
    Property optimization 1,317  26,818       
    Other expense1 17,196  22,487  22,914  21,002  10,107 
    Total noninterest expense 250,711  282,675  262,444  277,475  215,589 
    Income (loss) before income
    taxes
     188,021  262,044  179,040  139,949  (36,300)
    Income tax expense (benefit) 41,421  61,309  38,887  24,964  (8,714)
    Net income (loss)$146,600 $200,735 $140,153 $114,985 $(27,586)
    Preferred dividends (4,034) (4,034) (4,034) (4,033) (2,017)
    Net income (loss) applicable to common shares$142,566 $196,701 $136,119 $110,952 $(29,603)
          
    EPS$0.49 $0.67 $0.47 $0.38 $(0.13)
    Weighted Average Common Shares Outstanding     
    Basic 291,088  291,012  290,961  290,862  227,002 
    Diluted 292,756  293,131  292,483  291,881  227,002 
    Common shares outstanding (EOP) 291,922  292,903  292,880  292,893  292,959 
          
    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 amounts prior to December 31, 2022 to conform to the current period presentation.
          


     
    End of Period Balance Sheet (unaudited)
    ($ in thousands)
     March 31,December 31,September 30,June 30,March 31,
      2023  2022  2022  2022  2022 
    Earning Assets     
    Federal Reserve Bank account$712,388 $269,374 $328,391 $334,570 $1,545,389 
    Money market investments 14,668  5,606  6,374  7,774  12,419 
    Investments:     
    Treasury and government-sponsored agencies 2,236,413  2,195,175  2,186,551  2,461,173  2,527,568 
    Mortgage-backed securities 5,395,680  5,476,718  5,584,241  5,976,921  6,086,853 
    States and political subdivisions 1,785,072  1,827,164  1,829,561  1,839,333  1,840,823 
    Other securities 826,575  730,476  693,303  719,223  735,550 
    Total investments 10,243,740  10,229,533  10,293,656  10,996,650  11,190,794 
    Loans held for sale, at fair value 10,584  11,926  19,748  26,217  39,376 
    Loans:     
    Commercial 9,751,875  9,508,904  9,311,148  8,923,983  8,624,253 
    Commercial and agriculture real estate 12,908,380  12,457,070  12,227,888  11,796,503  11,337,735 
    Consumer:     
    Home equity 1,009,440  1,033,783  1,043,594  1,097,852  1,080,885 
    Other consumer loans 1,584,013  1,663,443  1,678,997  1,656,253  1,587,216 
    Subtotal of commercial and consumer loans 25,253,708  24,663,200  24,261,627  23,474,591  22,630,089 
    Residential real estate 6,568,666  6,460,441  6,267,306  6,079,057  5,706,155 
    Total loans 31,822,374  31,123,641  30,528,933  29,553,648  28,336,244 
    Total earning assets 42,803,754  41,640,080  41,177,102  40,918,859  41,124,222 
          
    Allowance for credit losses on loans (298,711) (303,671) (302,254) (288,003) (280,507)
    Non-earning Assets:     
    Cash and due from banks 386,879  453,432  466,846  455,620  418,744 
    Premises and equipment, net 566,758  557,307  588,021  586,031  584,113 
    Operating lease right-of-use assets 183,687  189,714  187,626  192,196  201,802 
    Goodwill and other intangible assets 2,118,935  2,125,121  2,135,792  2,131,815  2,144,609 
    Company-owned life insurance 770,471  768,552  767,089  769,595  766,291 
    Other assets 1,310,871  1,332,837  1,195,304  982,242  875,374 
    Total non-earning assets 5,337,601  5,426,963  5,340,678  5,117,499  4,990,933 
    Total assets$47,842,644 $46,763,372 $46,215,526 $45,748,355 $45,834,648 
          
    Liabilities and Equity     
    Noninterest-bearing demand deposits$10,995,083 $11,930,798 $12,400,077 $12,388,379 $12,463,136 
    Interest-bearing:     
    Checking and NOW accounts 7,903,520  8,340,955  8,963,014  8,473,510  8,296,337 
    Savings accounts 6,030,255  6,326,158  6,616,512  6,796,152  6,871,767 
    Money market accounts 5,867,239  5,389,139  5,602,729  5,373,318  5,432,139 
    Other time deposits 3,361,979  2,775,991  2,393,083  2,479,304  2,544,011 
    Total core deposits 34,158,076  34,763,041  35,975,415  35,510,663  35,607,390 
    Brokered deposits 759,716  237,789  78,248  28,312   
    Total deposits 34,917,792  35,000,830  36,053,663  35,538,975  35,607,390 
          
    Federal funds purchased and interbank borrowings 618,955  581,489  301,031  1,561  1,721 
    Securities sold under agreements to repurchase 393,018  432,804  438,053  476,173  509,275 
    Federal Home Loan Bank advances 4,981,612  3,829,018  2,804,617  3,283,963  3,239,357 
    Other borrowings 746,869  743,003  721,049  622,714  597,207 
    Total borrowed funds 6,740,454  5,586,314  4,264,750  4,384,411  4,347,560 
    Operating lease liabilities 205,249  211,964  207,725  215,188  234,049 
    Accrued expenses and other liabilities 701,723  835,669  746,005  530,998  413,535 
    Total liabilities 42,565,218  41,634,777  41,272,143  40,669,572  40,602,534 
    Preferred stock, common stock, surplus, and retained earnings 5,985,784  5,915,017  5,751,833  5,647,916  5,570,313 
    Accumulated other comprehensive income (loss), net of tax (708,358) (786,422) (808,450) (569,133) (338,199)
    Total shareholders' equity 5,277,426  5,128,595  4,943,383  5,078,783  5,232,114 
    Total liabilities and shareholders' equity$47,842,644 $46,763,372 $46,215,526 $45,748,355 $45,834,648 
     


                 
    Average Balance Sheet and Interest Rates (unaudited)
    ($ in thousands)
                 
                 
      Three Months Ended Three Months Ended Three Months Ended
      March 31, 2023 December 31, 2022 March 31, 2022
      AverageIncome1/Yield/ AverageIncome1/Yield/ AverageIncome1/Yield/
    Earning Assets: BalanceExpenseRate BalanceExpenseRate BalanceExpenseRate
    Money market and other interest-earning investments $497,953 $3,0982.52% $324,801 $(259)(0.32)        % $1,336,404 $3080.09%
    Investments:            
    Treasury and government-sponsored agencies  2,197,426  16,5313.01%  2,151,746  14,683 2.73%  2,195,470  8,2191.50%
    Mortgage-backed securities  5,429,200  35,0902.59%  5,470,753  35,344 2.58%  4,869,038  24,3772.00%
    States and political subdivisions  1,808,316  14,6903.25%  1,818,431  14,849 3.27%  1,738,652  13,6373.14%
    Other securities  738,139  8,6044.66%  702,730  7,741 4.41%  605,552  4,1442.74%
    Total investments  10,173,081  74,9152.95%  10,143,660  72,617 2.86%  9,408,712  50,3772.14%
    Loans:2            
    Commercial  9,457,089  147,6206.24%  9,330,906  132,711 5.69%  5,893,907  55,2833.75%
    Commercial and agriculture real estate  12,654,366  179,4755.67%  12,317,057  161,766 5.25%  8,749,162  77,4083.54%
    Consumer:            
    Home equity  929,477  19,0708.32%  949,925  16,926 7.07%  783,729  7,3553.81%
    Other consumer loans  1,706,873  19,0384.52%  1,766,527  19,906 4.47%  1,320,923  14,5604.47%
    Subtotal commercial and consumer loans  24,747,805  365,2035.91%  24,364,415  331,309 5.43%  16,747,721  154,6063.74%
    Residential real estate loans  6,523,074  58,0993.56%  6,373,819  59,532 3.74%  3,990,716  33,9863.41%
                 
    Total loans  31,270,879  423,3025.42%  30,738,234  390,841 5.08%  20,738,437  188,5923.64%
                 
    Total earning assets $41,941,913 $501,3154.79% $41,206,695 $463,199 4.49% $31,483,553 $239,2773.04%
                 
    Less: Allowance for credit losses on loans  (304,393)    (303,009)    (168,175)  
                 
    Non-earning Assets:            
    Cash and due from banks $437,872    $368,874    $268,836   
    Other assets  4,907,115     4,861,247     3,480,640   
                 
    Total assets $46,982,507    $46,133,807    $35,064,854   
                 
    Interest-Bearing Liabilities:            
    Checking and NOW accounts $7,988,579 $19,3590.98% $8,482,651 $13,189 0.62% $6,784,653 $5960.04%
    Savings accounts  6,183,409  2,2300.15%  6,482,369  1,558 0.10%  5,302,015  5890.05%
    Money market accounts  5,641,288  20,0101.44%  5,382,254  8,091 0.60%  3,778,682  6910.07%
    Other time deposits  3,057,870  15,2892.03%  2,540,619  5,688 0.89%  1,745,153  1,3180.31%
    Total interest-bearing core deposits  22,871,146  56,8881.01%  22,887,893  28,526 0.49%  17,610,503  3,1940.07%
    Brokered deposits  500,530  5,7054.62%  129,745  1,366 4.18%    0.00%
    Total interest-bearing deposits  23,371,676  62,5931.09%  23,017,638  29,892 0.52%  17,610,503  3,1940.07%
                 
    Federal funds purchased and interbank borrowings  419,291  4,8394.68%  475,431  4,299 3.59%  1,113  0.01%
    Securities sold under agreements to repurchase  412,819  7790.77%  409,916  556 0.54%  449,939  960.09%
    Federal Home Loan Bank advances  4,273,343  37,9963.61%  3,266,896  25,609 3.11%  2,589,984  5,9630.93%
    Other borrowings  781,221  7,9544.13%  753,401  6,375 3.36%  432,434  3,4673.21%
    Total borrowed funds  5,886,674  51,5683.55%  4,905,644  36,839 2.98%  3,473,470  9,5261.11%
                 
    Total interest-bearing liabilities $29,258,350 $114,1611.58% $27,923,282 $66,731 0.95% $21,083,973 $12,7200.24%
                 
    Noninterest-Bearing Liabilities and Shareholders' Equity           
    Demand deposits $11,526,267    $12,373,495    $9,294,876   
    Other liabilities  1,031,702     900,448     467,589   
    Shareholders' equity  5,166,188     4,936,582     4,218,416   
                 
    Total liabilities and shareholders' equity $46,982,507    $46,133,807    $35,064,854   
                 
    Net interest rate spread   3.21%   3.54%   2.80%
                 
    Net interest margin (GAAP)   3.64%   3.80%   2.83%
                 
    Net interest margin (FTE)3   3.69%   3.85%   2.88%
                 
    FTE adjustment  $5,666   $5,378    $3,772 
                 
    1 Interest income is reflected on a FTE. 
    2 Includes loans held for sale. 
    3 Represents a non-GAAP financial measure. Refer the "Non-GAAP Measures" table for reconciliations to GAAP financial measures. 
     


          
    Asset Quality (EOP) (unaudited)
    ($ in thousands)
          
     Three Months Ended
     March 31,December 31,September 30,June 30,March 31,
      2023  2022  2022  2022  2022 
    Allowance for credit losses:     
    Beginning allowance for credit losses on loans$303,671 $302,254 $288,003 $280,507 $107,341 
    Allowance established for acquired PCD loans     10,558    78,531 
    Provision for credit losses on loans 11,469  5,389  11,288  9,254  97,409 
    Gross charge-offs (18,180) (7,081) (11,440) (4,096) (4,664)
    Gross recoveries 1,751  3,109  3,845  2,338  1,890 
    NCOs (16,429) (3,972) (7,595) (1,758) (2,774)
    Ending allowance for credit losses on loans$298,711 $303,671 $302,254 $288,003 $280,507 
    Beginning allowance for credit losses on unfunded commitments$32,188 $26,169 $21,966 $22,046 $10,879 
    Provision (release) for credit losses on
    unfunded commitments
     1,968  6,019  4,203  (80) 11,167 
    Ending allowance for credit losses on unfunded commitments$34,156 $32,188 $26,169 $21,966 $22,046 
    Allowance for credit losses$332,867 $335,859 $328,423 $309,969 $302,553 
    Provision for credit losses on loans$11,469 $5,389 $11,288 $9,254 $97,409 
    Provision (release) for credit losses on unfunded commitments1 1,968  6,019  4,203  (80) 11,167 
    Provision for credit losses1$13,437 $11,408 $15,491 $9,174 $108,576 
    NCOs / average loans2 0.21% 0.05% 0.10% 0.02% 0.05%
    Average loans2$31,270,299 $30,737,698 $29,890,008 $28,847,003 $20,725,313 
    EOP loans2 31,822,374  31,123,641  30,528,933  29,553,648  28,336,244 
    ACL on loans / EOP loans2 0.94% 0.98% 0.99% 0.97% 0.99%
    ACL / EOP loans2 1.05% 1.08% 1.08% 1.05% 1.07%
    Underperforming Assets:     
    Loans 90 days and over (still accruing)$1,231 $2,650 $767 $882 $1,646 
    NPLs:     
    Nonaccrual loans3,4 234,337  238,178  233,659  214,924  227,925 
    TDRs still accruing4N/A 15,313  13,674  15,665  20,999 
    Total NPLs 234,337  253,491  247,333  230,589  248,924 
    Foreclosed assets 10,817  10,845  11,967  12,618  19,713 
    Total underperforming assets$246,385 $266,986 $260,067 $244,089 $270,283 
    Classified and Criticized Assets:     
    Nonaccrual loans3$234,337 $238,178 $233,659 $214,924 $227,925 
    Substandard loans (still accruing) 570,229  504,657  476,724  490,566  518,341 
    Loans 90 days and over (still accruing) 1,231  2,650  767  882  1,646 
    Total classified loans - "problem loans" 805,797  745,485  711,150  706,372  747,912 
    Other classified assets 26,441  24,735  24,773  25,004  24,676 
    Criticized loans - "special mention loans" 593,307  636,069  549,994  452,835  507,689 
    Total classified and criticized assets$1,425,545 $1,406,289 $1,285,917 $1,184,211 $1,280,277 
    Loans 30-89 days past due$42,071 $55,522 $65,632 $48,889 $94,114 
    NPLs / EOP loans2 0.74% 0.81% 0.81% 0.78% 0.88%
    ACL to NPLs 142% 132% 133% 134% 122%
    Under-performing assets/EOP loans2 0.77% 0.86% 0.85% 0.83% 0.95%
    Under-performing assets/EOP assets 0.51% 0.57% 0.56% 0.53% 0.59%
    30+ day delinquencies2 0.14% 0.19% 0.22% 0.17% 0.34%
    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 amounts prior to December 31, 2022 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 and $23.8 million at March 31, 2022.
    4 As a result of accounting guidance adopted in 2023, the TDR classification is no longer applicable subsequent to December 31, 2022.
    PCD - Purchased credit deteriorated TDR - Troubled debt restructuring  
          


          
    Non-GAAP Measures (unaudited)
    ($ and shares in thousands, except per share data)
          
     Three Months Ended
     March 31,December 31,September 30,June 30,March 31,
      2023  2022  2022  2022  2022 
    Earnings Per Share:     
    Net income applicable to common shares$142,566 $196,701 $136,119 $110,952 $(29,603)
    Adjustments:     
    Merger related charges2 14,558  20,314  22,743  36,585  52,299 
    Tax effect1 (3,172) (5,160) (8,529) (13,057) (9,534)
    Merger related charges, net 11,386  15,154  14,214  23,528  42,765 
    Debt Securities (gains) losses 5,216  173  172  85  (342)
    Tax effect1 (1,137) (44) (65) (30) 62 
    Debt securities (gains) losses, net 4,079  129  107  55  (280)
    Property optimization 1,317  26,818       
    Tax effect1 (287) (6,812)      
    Property optimization, net 1,030  20,006       
    Gain on sale of health savings accounts   (90,673)      
    Tax effect1   23,031       
    Gain on sale of health savings accounts, net   (67,642)      
    Day 1 non-PCD         96,270 
    Tax effect1         (17,550)
    Day 1 non-PCD, net         78,720 
    Total adjustments, net 16,495  (32,353) 14,321  23,583  121,205 
    Net income applicable to common shares, adjusted$159,061 $164,348 $150,440 $134,535 $91,602 
    Weighted average diluted common shares outstanding 292,756  293,131  292,483  291,881  227,002 
    EPS, diluted$0.49 $0.67 $0.47 $0.38 $(0.13)
    Adjusted EPS, diluted$0.54 $0.56 $0.51 $0.46 $0.40 
    NIM:     
    Net interest income$381,488 $391,090 $376,589 $337,472 $222,785 
    Add: FTE adjustment1 5,666  5,378  4,950  4,314  3,772 
    Net interest income (FTE)$387,154 $396,468 $381,539 $341,786 $226,557 
    Average earning assets$41,941,913 $41,206,695 $41,180,026 $41,003,338 $31,483,553 
    NIM (GAAP) 3.64% 3.80% 3.66% 3.29% 2.83%
    NIM (FTE) 3.69% 3.85% 3.71% 3.33% 2.88%


          
    Non-GAAP Measures (unaudited)
    ($ in thousands)
          
     Three Months Ended
     March 31,December 31,September 30,June 30,March 31,
      2023  2022  2022  2022  2022 
    PPNR:     
    Net interest income (FTE)1$387,154 $396,468 $381,539 $341,786 $226,557 
    Add: Noninterest income 70,681  165,037  80,385  89,117  65,240 
    Total revenue (FTE) 457,835  561,505  461,924  430,903  291,797 
    Less: Noninterest expense (250,711) (282,675) (262,444) (277,475) (215,589)
    PPNR$207,124 $278,830 $199,480 $153,428 $76,208 
    Adjustments:     
    Gain on sale of health savings accounts$ $(90,673)$ $ $ 
    Debt securities (gains) losses 5,216  173  172  85  (342)
    Noninterest income adjustments 5,216  (90,500) 172  85  (342)
    Adjusted noninterest income 75,897  74,537  80,557  89,202  64,898 
    Adjusted revenue$463,051 $471,005 $462,096 $430,988 $291,455 
    Adjustments:     
    Merger related charges3$14,558 $20,314 $22,743 $36,585 $41,286 
    Property optimization 1,317  26,818       
    Noninterest expense adjustments 15,875  47,132  22,743  36,585  41,286 
    Adjusted total noninterest expense (234,836) (235,543) (239,701) (240,890) (174,303)
    Adjusted PPNR$228,215 $235,462 $222,395 $190,098 $117,152 
    Efficiency Ratio:     
    Noninterest expense$250,711 $282,675 $262,444 $277,475 $215,589 
    Less: Amortization of intangibles (6,186) (6,787) (7,089) (7,170) (4,811)
    Noninterest expense, excl. amortization of intangibles 244,525  275,888  255,355  270,305  210,778 
    Less: Amortization of tax credit investments (2,761) (5,258) (2,662) (1,525) (1,516)
    Less: Noninterest expense adjustments (15,875) (47,132) (22,743) (36,585) (41,286)
    Adjusted noninterest expense$225,889 $223,498 $229,950 $232,195 $167,976 
    Total revenue (FTE)1$457,835 $561,505 $461,924 $430,903 $291,797 
    Less: Debt securities (gains) losses 5,216  173  172  85  (342)
    Total revenue excl. debt securities (gains) losses 463,051  561,678  462,096  430,988  291,455 
    Less: Gain on sale of health savings accounts   (90,673)      
    Total adjusted revenue$463,051 $471,005 $462,096 $430,988 $291,455 
    Efficiency Ratio 52.8% 49.1% 55.3% 62.7% 72.3%
    Efficiency Ratio (prior presentation)4N/AN/A 56.2% 62.7% 76.2%
    Adjusted Efficiency Ratio 48.8% 47.5% 49.8% 53.9% 57.6%
    Adjusted Efficiency Ratio (prior presentation)4N/AN/A 50.7% 53.9% 57.7%
          


          
    Non-GAAP Measures (unaudited)
    ($ in thousands)
          
     Three Months Ended
     March 31,December 31,September 30,June 30,March 31,
      2023  2022  2022  2022  2022 
    ROAE and ROATCE:     
    Net income (loss) applicable to common shares$142,566 $196,701 $136,119 $110,952 $(29,603)
    Amortization of intangibles 6,186  6,787  7,089  7,170  4,811 
    Tax effect1 (1,547) (1,697) (1,772) (1,793) (877)
    Amortization of intangibles, net 4,639  5,090  5,317  5,377  3,934 
    Net income (loss) applicable to common shares, excluding intangible amortization 147,205  201,791  141,436  116,329  (25,669)
    Total adjustments, net (see pg.11) 16,495  (32,353) 14,321  23,583  121,205 
    Adjusted tangible net income applicable to common shares$163,700 $169,438 $155,757 $139,912 $95,536 
    Average shareholders' equity$5,166,188 $4,936,582 $5,134,153 $5,129,900 $4,218,416 
    Less: Average preferred equity (243,719) (243,719) (243,719) (243,719) (117,210)
    Average shareholders' common equity$4,922,469 $4,692,863 $4,890,434 $4,886,181 $4,101,206 
    Average goodwill and other intangible assets (2,122,157) (2,132,480) (2,129,858) (2,136,964) (1,550,624)
    Average tangible shareholder's common equity$2,800,312 $2,560,383 $2,760,576 $2,749,217 $2,550,582 
    ROAE 11.6% 16.8% 11.1% 9.1% (2.9)%
    ROAE, adjusted 12.9% 14.0% 12.3% 11.0% 8.9%
    ROATCE 21.0% 31.5% 20.5% 16.9% (4.0)%
    ROATCE, adjusted 23.4% 26.5% 22.6% 20.4% 15.0%
          


          
    Non-GAAP Measures (unaudited)
    ($ in thousands)
          
     As of
     March 31,December 31,September 30,June 30,March 31,
      2023  2022  2022  2022  2022 
    Tangible Common Equity:     
    Shareholders' equity$5,277,426 $5,128,595 $4,943,383 $5,078,783 $5,232,114 
    Less: Preferred equity (243,719) (243,719) (243,719) (243,719) (243,719)
    Shareholders' common equity$5,033,707 $4,884,876 $4,699,664 $4,835,064 $4,988,395 
    Less: Goodwill and other intangible assets (2,118,935) (2,125,121) (2,135,792) (2,131,815) (2,144,609)
    Tangible shareholders' common equity$2,914,772 $2,759,755 $2,563,872 $2,703,249 $2,843,786 
          
    Total assets$47,842,644 $46,763,372 $46,215,526 $45,748,355 $45,834,648 
    Less: Goodwill and other intangible assets (2,118,935) (2,125,121) (2,135,792) (2,131,815) (2,144,609)
    Tangible assets$45,723,709 $44,638,251 $44,079,734 $43,616,540 $43,690,039 
          
    Risk-weighted assets5$36,856,873 $35,950,900 $34,741,765 $33,662,205 $32,341,335 
          
    Tangible common equity to tangible assets 6.37% 6.18% 5.82% 6.20% 6.51%
    Tangible common equity to risk-weighted assets5 7.91% 7.68% 7.38% 8.03% 8.79%
    Tangible Common Equity:     
    Common shares outstanding 291,922  292,903  292,880  292,893  292,959 
    Tangible common book value$9.98 $9.42 $8.75 $9.23 $9.71 
          
          
    1 Tax-effect calculations use management's estimate of the full year FTE tax rates (federal + state).
    2 Includes $11.0 million of provision for unfunded commitments for the three months ended March 31, 2022.
    3 Excludes $11.0 million of provision for unfunded commitments that is included in provision for credit losses for the three months ended March 31, 2022.
    4 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.
    5 March 31, 2023 figures are preliminary.

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