EVANSVILLE, Ind., Oct. 21, 2019 (GLOBE NEWSWIRE) —
CEO COMMENTARY:THIRD QUARTER HIGHLIGHTS2:Net Income
Net income of $69.8 million, an increase of 36% from third quarter of 2018Earnings per share of $0.41, an increase of 21% from third quarter of 2018
Net Interest Income/NIMNet interest income on a fully taxable equivalent basis was $156.3 million compared to $158.5 millionNet interest margin on a fully taxable equivalent basis was 3.57% compared to 3.66%Operating PerformancePre-provision net revenue1 (“PPNR”) was $87.6 millionAdjusted PPNR1 was $89.7 million, up 26.5% over third quarter of 2018Noninterest expense was $122.6 millionAdjusted noninterest expense1 was $120.1 millionEfficiency ratio1 was 56.44%Adjusted efficiency ratio1 was 55.26%, a 341 basis point improvement from third quarter of 2018Loans and Credit QualityEnd-of-period total loans3 were $12,075.9 million compared to $12,084.5 millionThird-quarter total commercial production was a record $680 million; September 30 pipeline was a record $2.0 billionProvision for loan losses was $1.4 millionNet charge-offs were $0.8 million, or 0.03% annualized, compared to net charge-offs of $0.3 millionNon-performing loans were 1.31% of total loans compared to 1.34%Return Profile & CapitalReturn on average common equity was 9.91%Return on average tangible common equity1 was 17.01%Adjusted return on average tangible common equity1 was 17.16%Repurchased 2.2 million shares of common stock during the quarterNotable Items$1.3 million in merger and integration charges$1.2 million in tax credit amortization1 Non-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 2 Comparisons are on a linked-quarter basis, unless otherwise noted 3 Includes loans held for saleRESULTS OF OPERATIONSOld National Bancorp reported third-quarter 2019 net income of $69.8 million, or $0.41 per diluted share. Included in the third quarter were pre-tax charges of $1.3 million for merger and integration activity. Excluding these charges from the current quarter and netting out debt securities gains, adjusted net income was $70.5 million, or $0.41 per diluted share.LOANS
Record high commercial loan production; paydowns continued to impact outstandings.Period-end total loans were $12,075.9 million at September 30, 2019, compared to $12,084.5 million at June 30, 2019.Commercial and industrial loans decreased $124.3 million to $2,950.6 million; commercial real estate loans increased $118.4 million to $5,112.1 million; consumer loans decreased $37.5 million to $1,718.3 million.Commercial loan production in the third quarter was $680 million; period-end pipeline totaled $2.0 billion.On average, total loans in the third quarter were $12,073.8 million, down from $12,091.0 million in the second quarter of 2019.DEPOSITS
A low-cost core deposit franchise continues to be one of Old National’s strengths.Period-end total deposits were $14,448.4 million at September 30, 2019, an increase of $85.3 million from the second quarter of 2019.On average, total deposits in the third quarter were $14,330.5 million, compared to $14,369.5 million in the second quarter of 2019. NET INTEREST INCOME AND MARGIN
Net interest income and margin lower with decline in interest collected on nonaccrual loans and mix shift partially offset by higher accretion and higher day count.Net interest income decreased to $153.1 million in the third quarter of 2019 from $155.2 million in the second quarter of 2019.The net interest margin on a fully taxable equivalent basis decreased 9 basis points to 3.57% compared to 3.66% in the second quarter of 2019.Accretion income was $13.4 million, or 31 basis points of net interest margin, in the third quarter of 2019 compared to $11.8 million, or 27 basis points of net interest margin, in the second quarter of 2019. In the third quarter of 2019, accretion income was 6.4% of adjusted total revenue.Interest collected on nonaccrual loans was $2.0 million, or 5 basis points of net interest margin, in the third quarter of 2019 compared to $5.7 million, or 13 basis points of net interest margin, in the second quarter of 2019.The cost of total deposits remained flat at 0.52% in the third quarter of 2019 while the cost of total interest-bearing deposits increased just 1 basis point to 0.71%.CREDIT QUALITY AND CECL
Strong credit quality remains a hallmark of the Old National franchise.Asset quality remained strong with net charge-offs in the third quarter of $0.8 million, or 0.03% of total average loans, and 30-89 day delinquencies of 0.21%.Provision expense was $1.4 million in the third quarter compared to $1.0 million in the second quarter.Non-performing loans decreased as a percentage of total loans to 1.31%.In accordance with current accounting practices, the loans acquired from recent acquisitions were recorded at fair value with no allowance recorded at the acquisition date. As of September 30, 2019, the remaining discount on these acquired loans was $87.1 million.The allowance for loan losses was $56.9 million, or 0.47% of total loans at September 30, 2019.Estimated day one increase to the allowance for loan losses and unfunded commitment liability of approximately $35 million to $45 million upon adoption of CECL. NONINTEREST INCOME
Noninterest income increased due to increases in mortgage banking revenue and capital markets fees.Total noninterest income for the third quarter of 2019 was $53.9 million, an increase of $2.7 million from the second quarter of 2019.Mortgage banking revenue increased $1.7 million and capital markets income increased $1.4 million when compared to the second quarter of 2019.NONINTEREST EXPENSE
Third quarter results demonstrated continued discipline with respect to expense management, helping to drive positive operating leverage1.Noninterest expense for the third quarter of 2019 was $122.6 million and included $1.3 million in merger & integration charges and $1.2 million in tax credit amortization.Excluding these items, adjusted noninterest expense for the third quarter was $120.1 million, compared to the $124.3 million in adjusted noninterest expense in the second quarter of 2019. The third quarter efficiency ratio was 56.44%, while the adjusted efficiency ratio was 55.26%.INCOME TAXESOn a fully taxable-equivalent basis, income tax expense in the third quarter was $16.4 million, resulting in a 19.1% FTE tax rate.Income tax expense included $1.8 million in tax credit benefit.CAPITAL
Strong quarterly earnings drove capital ratios higher.At the end of the third quarter, total risk-based capital was 13.0% and regulatory tier 1 capital was 12.0%.Tangible common equity to tangible assets was 8.95% at the end of the third quarter compared to 8.92% in the second quarter of 2019.The Company repurchased 2.2 million shares of common stock during the third quarter with a weighted average price of $16.80 per share, excluding commissions.NON-GAAP RECONCILIATIONS4 Tax-effect calculations use the current statutory FTE tax rates (federal + state)
5 Year-over-year basis point change in noninterest expenses plus change in total revenue
6 Year-over-year basis point change in adjusted noninterest expense plus change in adjusted total revenue7 Tax-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 7:00 a.m. Central Time on Monday, October 21, 2019, to review third quarter 2019 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 10:00 a.m. Central Time on October 21 through November 4. To access the replay, dial 1-855-859-2056, Conference ID Code 1869785.ABOUT OLD NATIONAL
Old National Bancorp (NASDAQ: ONB) is the holding company of Old National Bank. Headquartered in Evansville with $20.4 billion in assets, it is a top 100 U.S. bank, the largest Indiana-based bank and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for eight consecutive years. For 185 years, Old National has been a community bank committed to building long-term, highly valued relationships with clients. With locations in Indiana, Kentucky, Michigan, Minnesota and Wisconsin, Old National provides retail and commercial banking services along with comprehensive wealth management, investment and capital markets services. For 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. 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: market, economic, operational, liquidity, credit and interest rate risks associated with Old National’s business; 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; 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 new CECL standard; 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
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