EX-99.1 2 onb_exhibit991er3q21.htm EX-99.1 Document

Exhibit 99.1
Old National Bancorp
capture.jpg
One Main Street
Evansville, IN 47708Media: Kathy A. Schoettlin (812) 465-7269
oldnational.comInvestors: Lynell J. Walton (812) 464-1366

Old National's strong 3rd quarter driven by
commercial loan growth of 7% annualized

Evansville, Ind. (October 19, 2021)
Old National Bancorp (NASDAQ: ONB) reports 3Q21 net income of $71.7 million, diluted EPS of $0.43.
Adjusted1 net income of $71.8 million, or $0.43 per diluted share.
CEO COMMENTARY:
"Old National's excellent 3rd quarter results were driven by multiple success factors, including strong commercial
loan growth, good deposit growth, increased fee income, reduced expenses and strong credit metrics," said Chairman and CEO Jim Ryan. "In addition, we continued to make smooth, steady progress throughout the quarter on activities related to our merger of equals with First Midwest Bank, which we expect to be completed as soon as we receive Federal Reserve approval. As previously disclosed, we have already received approval from the OCC."
THIRD QUARTER HIGHLIGHTS2:
Net income
•Net income of $71.7 million
•Earnings per diluted share of $0.43
Net interest income/NIM
•Net interest income on a fully taxable equivalent basis of $155.1 million compared to $153.4 million
•Net interest margin on a fully taxable equivalent basis of 2.92% compared to 2.91%
Operating Performance
•Pre-provision net revenue1 (“PPNR”) of $88.3 million
•Adjusted PPNR1 of $90.2 million
•Noninterest expense of $121.3 million
•Adjusted noninterest expense1 of $118.2 million
•Efficiency ratio1 of 56.86%
•Adjusted efficiency ratio1 of 55.38%

Loans and Credit Quality
•End-of-period total loans3 of $13,636.1 million compared to $13,834.8 million
◦Total commercial loans increased $171.7 million, excluding the $366.1 million decrease in PPP loans
•Third-quarter total commercial production of $1.0 billion
•Provision for credit losses was a recapture of $4.6 million
•September 30 pipeline of $2.7 billion
•Net recoveries of $3.0 million compared to net recoveries of $336 thousand
•Non-performing loans of 0.94% of total loans compared to 1.03%
Return Profile & Capital
•Return on average common equity of 9.48%
•Return on average tangible common equity1 of 15.13%
•Adjusted return on average tangible common equity1 of 15.16%
•No shares of common stock were repurchased during the current quarter
Notable Items
•$1.7 million in tax credit amortization
•$1.4 million in merger charges
1 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 sale





RESULTS OF OPERATIONS
Old National Bancorp ("Old National") reported third quarter 2021 net income of $71.7 million, or $0.43 per diluted share.

Included in the third quarter were pre-tax charges of $1.4 million for the pending merger with First Midwest Bancorp, Inc. Excluding these charges from the current quarter and netting out debt securities gains, adjusted net income was $71.8 million, or $0.43 per diluted share.

LOANS
Strong commercial production results in over 7% annualized commercial loan growth.

•Period-end total loans were $13,636.1 million at September 30, 2021, a decrease of $198.7 million, or 5.7% annualized, when compared to the $13,834.8 million at June 30, 2021.
•Paycheck Protection Program (PPP) loans declined $366.1 million to $354.9 million at September 30, 2021, compared to $721.1 million at June 30, 2021.
•Excluding the $366.1 million decrease in PPP loans during the quarter, total loans increased $167.5 million, or 5.1% annualized.
•Excluding PPP loans, total commercial loans increased $171.7 million, or 7.4% annualized.
•Total commercial loan production in the third quarter was $1.0 billion; period-end pipeline totaled $2.7 billion.
•Consumer loans decreased $15.1 million to $1,564.2 million and residential mortgage loans increased $9.7 million to $2,224.8 million.
•Average total loans in the third quarter were $13,687.3 million, a decrease of $308.0 million from the second quarter of 2021.
•Excluding PPP loans, average total loans in the third quarter increased $185.8 million from the second quarter of 2021.

DEPOSITS
Total deposit growth bolstered by strong increase in noninterest-bearing demand deposits.

•Period-end total deposits were $18,196.1 million at September 30, 2021, an increase of $327.2 million, or 7.3% annualized, when compared to the $17,868.9 million at June 30, 2021.
•Noninterest-bearing deposits increased $297.8 million to $6,440.5 million at September 30, 2021 from $6,142.7 million at June 30, 2021.
•On average, total deposits in the third quarter increased $122.9 million to $17,976.0 million, compared to $17,853.1 million in the second quarter of 2021.

NET INTEREST INCOME AND MARGIN
Net interest income and margin both increase as funding costs stabilize.

•Net interest income increased to $151.6 million in the third quarter of 2021 compared to $149.9 million in the second quarter of 2021.
•The net interest margin on a fully taxable equivalent basis increased 1 basis point to 2.92% compared to 2.91% in the second quarter of 2021.
•PPP interest and net fees combined were $12.2 million, or 16 basis points of net interest margin, in the third quarter of 2021 compared to $11.9 million, or 9 basis points of net interest margin, in the second quarter of 2021.
•Accretion income was $3.0 million, or 6 basis points of net interest margin, in the third quarter of 2021 compared to $5.1 million, or 10 basis points of net interest margin, in the second quarter of 2021.
•Interest collected on nonaccrual loans was $2.3 million, or 4 basis points of net interest margin, in the third quarter of 2021 compared to $1.2 million, or 2 basis points of net interest margin, in the second quarter of 2021.
•The cost of total deposits remained unchanged at 0.06% in the third quarter of 2021 and the cost of total interest-bearing deposits also remained unchanged at 0.09%.







CREDIT QUALITY
Strong credit quality remains a hallmark of the Old National franchise.
•Old National recorded a provision recapture in the third quarter of 2021 of $4.6 million, compared to $4.9 million in provision recapture recorded in the second quarter of 2021.
•Net recoveries in the third quarter were $3.0 million, compared to net recoveries of $336 thousand in the second quarter of 2021.
•30-89 day delinquencies were 0.10% at the end of the third quarter.
•Non-performing loans decreased as a percentage of total loans to 0.94%.
•Loans acquired from previous acquisitions were recorded at fair value at the acquisition date. As of September 30, 2021, the remaining discount on these acquired loans was $37.7 million.
•The allowance for credit losses stood at $107.9 million, or 0.79% of total loans at September 30, 2021.

NONINTEREST INCOME
Noninterest income increased primarily due to higher mortgage banking revenue.

•Total noninterest income for the third quarter of 2021 was $54.5 million, an increase of $3.0 million from the second quarter of 2021.
•Mortgage banking revenue increased $3.0 million when compared to the second quarter of 2021, due primarily to a stabilizing pipeline valuation.
•Gains on sales of debt securities increased $0.5 million when compared to the second quarter of 2021.

NONINTEREST EXPENSE
Decline in third quarter expenses due to reductions in personnel and occupancy expenses.

•Noninterest expense for the third quarter of 2021 was $121.3 million and included $1.4 million in diligence, integration and merger charges and $1.7 million in tax credit amortization.
•Excluding these items, adjusted noninterest expense for the third quarter was $118.2 million, compared to the $120.9 million in adjusted noninterest expense in the second quarter of 2021.
•The third quarter efficiency ratio was 56.86%, while the adjusted efficiency ratio was 55.38%.

INCOME TAXES

•On a fully taxable-equivalent basis, income tax expense in the third quarter was $21.2 million, resulting in a 22.8% FTE tax rate, compared to 21.7% in the second quarter of 2021.
•Income tax expense included $1.5 million in tax credit benefit.

CAPITAL AND LIQUIDITY
Capital ratios remain strong.

•At the end of the third quarter, preliminary total risk-based capital was 12.84% and preliminary regulatory tier 1 capital was 12.08%.
•Tangible common equity to tangible assets was 8.55% at the end of the third quarter compared to 8.47% in the second quarter of 2021.
•The Company did not repurchase any shares of common stock during the third quarter.
•A low loan to deposit ratio of 74.9%, combined with existing funding sources plus available unencumbered, high-quality collateral, provides strong liquidity.












NON-GAAP RECONCILIATIONS
($ in millions, except EPS, shares in 000s)
3Q21
Adjustments4
Adjusted 3Q21
Total Revenues (FTE)$209.6 $(1.2)$208.4 
Less: Provision for Credit Losses4.6 — 4.6 
Less: Noninterest Expenses(121.3)1.4 (119.9)
Income before Income Taxes (FTE)$92.9 $0.2 $93.1 
Income Taxes (FTE)(21.2)(0.1)(21.3)
Net Income$71.7 $0.1 $71.8 
Average Shares Outstanding165,939 — 165,939 
Earnings Per Share - Diluted$0.43 $— $0.43 
4 Tax-effect calculations use the current statutory FTE tax rates (federal + state)

($ in millions)
3Q21
2Q21
Net Interest Income$151.6 $149.9 
Add: FTE Adjustment3.5 3.5 
Net Interest Income (FTE)$155.1 $153.4 
Average Earning Assets$21,228.6 $21,095.3 
Net Interest Margin (FTE)2.92 %2.91 %
($ in millions)
3Q21
3Q20
Net Interest Income$151.6 $145.6 
Add: FTE Adjustment3.5 3.4 
Net Interest Income (FTE)$155.1 $149.0 
Add: Total Noninterest Income54.5 64.7 
Less: Noninterest Expense121.3 120.2 
Pre-Provision Net Revenue$88.3 $93.5 
Less: Debt Securities Gains/Losses(1.2)(4.9)
Add: Diligence, Acquisition and Integration Charges1.4 — 
Add: ONB Way Charges— 2.9 
Add: Amortization of Tax Credit Investments1.7 3.1 
Adjusted Pre-Provision Net Revenue$90.2 $94.6 

($ in millions)
3Q21
2Q21
3Q20
Noninterest Expense$121.3 $129.6 $120.2 
Less: ONB Way Charges— (0.4)(2.9)
Less: Diligence, Acquisition and Integration Charges(1.4)(6.5)— 
Noninterest Expense less Charges$119.9 $122.7 $117.3 
Less: Amortization of Tax Credit Investments(1.7)(1.8)(3.1)
Adjusted Noninterest Expense$118.2 $120.9 $114.2 
Less: Intangible Amortization(2.8)(2.9)(3.4)
Adjusted Noninterest Expense Less Intangible Amortization$115.4 $118.0 $110.8 
Net Interest Income$151.6 $149.9 $145.6 
FTE Adjustment3.5 3.5 3.4 
Net Interest Income (FTE)$155.1 $153.4 $149.0 
Total Noninterest Income54.5 51.5 64.7 
Total Revenue (FTE)$209.6 $204.9 $213.7 
Less: Debt Securities Gains/Losses(1.2)(0.7)(4.9)
Adjusted Total Revenue (FTE)$208.4 $204.2 $208.8 
Efficiency Ratio56.86 %62.05 %55.93 %
Adjusted Efficiency Ratio55.38 %57.74 %53.06 %


        
($ in millions)
3Q21
2Q21
Net Income$71.7 $62.8 
Add: Intangible Amortization (net of tax5)
2.1 2.2 
Tangible Net Income$73.8 $65.0 
Less: Securities Gains/Losses (net of tax5)
(0.9)(0.5)
Add: Diligence, Acquisition and Integration Charges (net of tax5)
1.1 4.9 
Add: ONB Way Charges (net of tax5)
— 0.3 
Adjusted Tangible Net Income$74.0 $69.7 
Average Total Shareholders’ Equity3,027.9 2,992.7 
Less: Average Goodwill(1,037.0)(1,037.0)
Less: Average Intangibles(38.6)(41.4)
Average Tangible Shareholders’ Equity$1,952.3 $1,914.3 
Return on Average Tangible Common Equity15.13 %13.58 %
Adjusted Return on Average Tangible Common Equity15.16 %14.56 %
5 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 9:00 a.m. Central Time on Tuesday, October 19, 2021, to review third-quarter 2021 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. (877) 660-9071 or International (929) 517-9523, Conference I.D. 4242648. A replay of the call will also be available from Noon Central Time on October 19 through November 2. To access the replay, dial (855) 859-2056, Conference ID Code 4242648.


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 $24.0 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 ten 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 STATEMENTS
This communication includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to Old National’s future plans, objectives, performance, revenues, growth, profits, operating expenses or Old National’s underlying assumptions; First Midwest’s and Old National’s beliefs, goals, intentions, and expectations regarding the proposed transaction, revenues, earnings, loan production, asset quality, and capital levels, among other matters; our estimates of future costs and benefits of the actions we may take; our assessments of expected losses on loans; our assessments of interest rate and other market risks; our ability to achieve our financial and other strategic goals; the expected timing of completion of the proposed transaction; the expected cost savings, synergies and other anticipated benefits from the proposed transaction; and other statements that are not historical facts.

Forward‐looking statements are typically identified by such words as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “should,” “will,” and other similar words and expressions, and are subject to numerous assumptions, risks, and uncertainties, which change over time. These forward-looking statements include, without limitation, those relating to the terms, timing and closing of the proposed transaction.

Additionally, forward‐looking statements speak only as of the date they are made; Old National does not assume any duty, and does not undertake, to update such forward‐looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise. Furthermore, because forward‐looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those indicated in such forward-looking statements as a result of a variety of factors, many of which are beyond the control of Old National. Such statements are based upon the current beliefs and expectations of the management of Old National and are subject to significant risks and uncertainties outside of the control of the parties. Caution should be exercised against placing undue reliance on forward-looking statements. The factors that could cause actual results to differ materially include the following: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between First Midwest and Old National; the outcome of any legal proceedings that may be instituted against First Midwest or Old National; the possibility that the proposed transaction will not close when expected or at all because required regulatory or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated (and the risk that required regulatory approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction); the ability of First Midwest and Old National to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of either or both parties to the proposed transaction; the possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where First Midwest and Old National do business; certain restrictions during the pendency of the proposed transaction that may impact the parties’ ability to pursue certain business opportunities or strategic transactions; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events;
diversion of management’s attention from ongoing business operations and opportunities; the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes or at all and to successfully integrate First Midwest’s operations and those of Old National; such integration may be more difficult, time consuming or costly than expected; revenues following the proposed transaction may be lower than expected; First Midwest’s and Old National’s success in executing their respective business plans and strategies and managing the risks involved in the foregoing; the dilution caused by Old National’s issuance of additional shares of its capital stock in connection with the proposed transaction; effects of the announcement, pendency or completion of the proposed transaction on the ability of First Midwest and Old National to retain customers and retain and hire key personnel and maintain relationships with their suppliers, and on their operating results and businesses generally; risks related to the potential impact of general economic, political and market factors on the companies or the proposed transaction and other factors that may affect future results of First Midwest and Old National; uncertainty as to the extent of the duration, scope, and impacts of the COVID-19 pandemic on First Midwest, Old National and the proposed transaction; and the other factors discussed in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of each of First Midwest’s and Old National’s Annual Report on Form 10‐K for the year ended December 31, 2020, in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of each of First Midwest’s and Old National’s Quarterly Report on Form 10‐Q for the quarter ended June 30, 2021, and in other reports First Midwest and Old National file with the U.S. Securities and Exchange Commission (the “SEC”).




Financial Highlights (unaudited)
($ and shares in thousands, except per share data)
Three Months EndedNine Months Ended
September 30,June 30,September 30,September 30,September 30,
20212021202020212020
Income Statement
Net interest income$151,572 $149,927 $145,573 $449,619 $435,015 
Tax equivalent adjustment (1)3,501 3,470 3,379 10,471 10,069 
Net interest income - tax equivalent basis155,073 153,397 148,952 460,090 445,084 
Provision for credit losses(4,613)(4,929)— (26,898)39,495 
Noninterest income54,515 51,508 64,759 162,735 180,722 
Noninterest expense121,274 129,618 120,234 368,632 399,099 
Net income71,746 62,786 77,944 221,350 152,289 
Per Common Share Data
Weighted average diluted shares165,939 165,934 165,419 165,862 166,370 
Net income (diluted)$0.43 $0.38 $0.47 $1.33 $0.92 
Cash dividends0.14 0.14 0.14 0.42 0.42 
Common dividend payout ratio (2)33 %37 %30 %31 %46 %
Book value$18.31 $18.05 $17.67 $18.31 $17.67 
Stock price16.95 17.61 12.56 16.95 12.56 
Tangible common book value (3)11.83 11.55 11.10 11.83 11.10 
Performance Ratios
Return on average assets1.20 %1.06 %1.40 %1.25 %0.95 %
Return on average common equity9.48 %8.39 %10.79 %9.85 %7.11 %
Return on tangible common equity (3)15.05 %13.58 %17.56 %15.49 %11.66 %
Return on average tangible common equity (3)15.13 %13.58 %17.88 %15.84 %12.12 %
Net interest margin (FTE)2.92 %2.91 %3.03 %2.92 %3.15 %
Efficiency ratio (4)56.86 %62.05 %55.93 %58.14 %63.11 %
Net charge-offs (recoveries) to average loans(0.09)%(0.01)%(0.09)%(0.03)%0.04 %
Allowance for credit losses to ending loans0.79 %0.79 %0.95 %0.79 %0.95 %
Non-performing loans to ending loans0.94 %1.03 %1.15 %0.94 %1.15 %
Balance Sheet (EOP)
Total loans$13,584,828$13,784,677$13,892,509$13,584,828$13,892,509
Total assets24,018,73323,675,66622,460,47624,018,73322,460,476
Total deposits18,196,14917,868,91116,506,49418,196,14916,506,494
Total borrowed funds2,536,3032,559,1132,725,7312,536,3032,725,731
Total shareholders' equity3,035,8922,991,1182,921,1493,035,8922,921,149
Capital Ratios (3)
Risk-based capital ratios (EOP):
    Tier 1 common equity12.08 %11.95 %11.84 %12.08 %11.84 %
    Tier 112.08 %11.95 %11.84 %12.08 %11.84 %
    Total12.84 %12.73 %12.81 %12.84 %12.81 %
Leverage ratio (to average assets)8.54 %8.38 %8.15 %8.54 %8.15 %
Total equity to assets (averages)12.69 %12.61 %12.97 %12.69 %13.33 %
Tangible common equity to tangible assets8.55 %8.47 %8.58 %8.55 %8.58 %
Nonfinancial Data
Full-time equivalent employees 2,4102,4652,4842,4102,484
Banking centers162162162162162
(1) Calculated using the federal statutory tax rate in effect of 21% for all periods.
(2) Cash dividends per share divided by net income per share (basic).
(3) Represents a non-GAAP financial measure. Refer the "Non-GAAP Measures" table for reconciliations to GAAP financial measures.
      September 30, 2021 capital ratios are preliminary.
(4) Efficiency ratio is defined as noninterest expense before amortization of intangibles as a percent of FTE net interest income and
      noninterest revenues, excluding net gains from debt securities transactions. This presentation excludes amortization of intangibles
      and net debt securities gains, as is common in other company releases, and better aligns with true operating performance.
FTE - Fully taxable equivalent basis EOP - End of period actual balances



Income Statement (unaudited)
($ and shares in thousands, except per share data)
Three Months EndedNine Months Ended
September 30,June 30,September 30,September 30,September 30,
20212021202020212020
Interest income$162,026 $160,458 $160,086 $481,721 $490,059 
Less: interest expense10,454 10,531 14,513 32,102 55,044 
  Net interest income151,572 149,927 145,573 449,619 435,015 
Provision for credit losses(4,613)(4,929)— (26,898)39,495 
  Net interest income after provision for credit losses156,185 154,856 145,573 476,517 395,520 
Wealth management fees10,134 10,734 9,239 30,576 27,547 
Service charges on deposit accounts8,926 8,514 8,698 25,564 26,357 
Debit card and ATM fees4,942 5,583 5,276 15,668 15,106 
Mortgage banking revenue10,870 7,827 18,110 35,222 46,542 
Investment product fees6,475 6,042 5,351 18,381 16,070 
Capital markets income6,017 5,871 5,428 15,603 15,935 
Company-owned life insurance2,355 2,783 2,830 7,852 8,878 
Other income3,589 3,462 4,906 9,977 13,681 
Gains (losses) on sales of debt securities1,207 692 4,921 3,892 10,606 
  Total noninterest income54,515 51,508 64,759 162,735 180,722 
Salaries and employee benefits71,005 72,640 69,860 211,762 215,589 
Occupancy12,757 14,054 13,930 41,683 42,308 
Equipment3,756 4,506 3,754 12,231 12,912 
Marketing3,267 2,632 2,140 7,961 7,632 
Data processing 11,508 11,697 9,628 35,558 28,724 
Communication2,372 2,411 2,241 7,661 7,335 
Professional fees3,416 8,528 3,083 14,668 10,921 
FDIC assessment1,628 1,226 1,319 4,461 4,942 
Amortization of intangibles2,779 2,909 3,459 8,763 10,847 
Amortization of tax credit investments1,736 1,813 3,115 4,751 8,917 
Other expense7,050 7,202 7,705 19,133 48,972 
  Total noninterest expense121,274 129,618 120,234 368,632 399,099 
  Income before income taxes89,426 76,746 90,098 270,620 177,143 
  Income tax expense17,680 13,960 12,154 49,270 24,854 
   Net income$71,746 $62,786 $77,944 $221,350 $152,289 
Diluted Earnings Per Share
Net income$0.43 $0.38 $0.47 $1.33 $0.92 
Average Common Shares Outstanding
    Basic165,258165,175164,773165,144165,748
    Diluted165,939165,934165,419165,862166,370
Common shares outstanding at end of period165,814165,732165,333165,814165,333


Balance Sheet (unaudited)
($ in thousands)
September 30,June 30,September 30,
202120212020
Assets
  Federal Reserve Bank account$600,581 $287,446 $87,682 
  Money market investments16,294 15,294 13,437 
  Investments:
    Treasury and government-sponsored agencies1,803,273 1,657,079 501,771 
    Mortgage-backed securities3,354,701 3,280,983 3,382,280 
    States and political subdivisions1,609,283 1,567,931 1,426,495 
    Other securities442,503 441,037 462,958 
      Total investments7,209,760 6,947,030 5,773,504 
  Loans held for sale, at fair value51,306 50,121 85,091 
  Loans:
    Commercial3,505,183 3,802,943 4,264,568 
    Commercial and agriculture real estate6,290,632 6,187,318 5,701,493 
    Consumer:
      Home equity554,322 549,951 549,115 
      Other consumer loans1,009,909 1,029,409 1,112,034 
    Subtotal of commercial and consumer loans11,360,046 11,569,621 11,627,210 
    Residential real estate2,224,782 2,215,056 2,265,299 
      Total loans13,584,828 13,784,677 13,892,509 
        Total earning assets21,462,769 21,084,568 19,852,223 
Allowance for credit losses(107,868)(109,444)(131,388)
Non-earning Assets:
    Cash and due from banks180,583 188,391 229,631 
    Premises and equipment, net476,036 484,879 463,253 
    Operating lease right-of-use assets69,912 72,207 77,482 
    Goodwill and other intangible assets1,074,245 1,077,024 1,086,252 
    Company-owned life insurance461,310 459,565 455,975 
    Other assets 401,746 418,476 427,048 
      Total non-earning assets2,663,832 2,700,542 2,739,641 
        Total assets$24,018,733 $23,675,666 $22,460,476 
Liabilities and Equity
  Noninterest-bearing demand deposits$6,440,526 $6,142,724 $5,463,007 
  Interest-bearing:
    Checking and NOW accounts4,956,012 4,921,430 4,588,432 
    Savings accounts3,708,807 3,675,701 3,287,302 
    Money market accounts2,097,967 2,126,537 1,904,404 
    Other time deposits992,837 1,002,519 1,206,658 
     Total core deposits18,196,149 17,868,911 16,449,803 
  Brokered deposits— — 56,691 
     Total deposits18,196,149 17,868,911 16,506,494 
  Federal funds purchased and interbank borrowings34 1,523 1,259 
  Securities sold under agreements to repurchase375,247 396,129 399,141 
  Federal Home Loan Bank advances1,890,054 1,891,143 2,087,648 
  Other borrowings270,968 270,318 237,683 
     Total borrowed funds2,536,303 2,559,113 2,725,731 
Operating lease liabilities76,771 81,333 88,552 
Accrued expenses and other liabilities173,618 175,191 218,550 
     Total liabilities20,982,841 20,684,548 19,539,327 
Common stock, surplus, and retained earnings2,979,082 2,928,856 2,771,865 
Accumulated other comprehensive income (loss), net of tax56,810 62,262 149,284 
     Total shareholders' equity3,035,892 2,991,118 2,921,149 
       Total liabilities and shareholders' equity$24,018,733 $23,675,666 $22,460,476 


Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
Three Months EndedThree Months EndedThree Months Ended
September 30, 2021June 30, 2021September 30, 2020
AverageIncome (1)/Yield/AverageIncome (1)/Yield/AverageIncome (1)/Yield/
Earning Assets:BalanceExpenseRateBalanceExpenseRateBalanceExpenseRate
  Money market and other interest-earning
      investments$467,572 $177 0.15 %$232,723 $48 0.08 %$137,880 $59 0.17 %
  Investments:
    Treasury and government-sponsored agencies1,730,553 6,968 1.61 %1,637,396 5,967 1.46 %454,005 2,457 2.17 %
    Mortgage-backed securities3,313,027 14,509 1.75 %3,287,254 15,067 1.83 %3,342,284 17,478 2.09 %
    States and political subdivisions1,586,743 12,609 3.18 %1,503,447 12,364 3.29 %1,383,765 11,860 3.43 %
    Other securities443,393 2,638 2.38 %439,197 2,690 2.45 %487,405 2,922 2.40 %
       Total investments7,073,716 36,724 2.08 %6,867,294 36,088 2.10 %5,667,459 34,717 2.45 %
  Loans: (2)
    Commercial3,645,197 36,139 3.88 %4,019,553 34,715 3.42 %4,274,894 33,223 3.04 %
    Commercial and agriculture real estate6,200,144 57,820 3.65 %6,146,057 57,655 3.71 %5,546,486 55,891 3.94 %
    Consumer:
      Home equity549,229 4,448 3.21 %538,999 4,201 3.13 %551,380 4,336 3.13 %
      Other consumer loans1,018,385 9,690 3.77 %1,034,439 9,747 3.78 %1,120,681 11,635 4.13 %
    Subtotal commercial and consumer loans11,412,955 108,097 3.76 %11,739,048 106,318 3.63 %11,493,441 105,085 3.64 %
    Residential real estate loans2,274,347 20,529 3.61 %2,256,215 21,474 3.81 %2,355,512 23,604 4.01 %
       Total loans13,687,302 128,626 3.70 %13,995,263 127,792 3.62 %13,848,953 128,689 3.66 %
      Total earning assets$21,228,590 $165,527 3.08 %$21,095,280 $163,928 3.09 %$19,654,292 $163,465 3.29 %
Less: Allowance for credit losses(111,216)(117,020)(132,447)
Non-earning Assets:
Cash and due from banks$272,855 $238,326 $346,343 
Other assets2,479,079 2,520,937 2,405,517 
      Total assets$23,869,308 $23,737,523 $22,273,705 
Interest-Bearing Liabilities:
  Checking and NOW accounts$4,873,914 $484 0.04 %$4,948,773 $513 0.04 %$4,607,427 $886 0.08 %
  Savings accounts3,678,944 500 0.05 %3,647,952 492 0.05 %3,232,375 634 0.08 %
  Money market accounts2,110,981 438 0.08 %2,081,286 433 0.08 %1,902,407 724 0.15 %
  Other time deposits998,060 1,156 0.46 %1,024,777 1,293 0.51 %1,253,058 2,852 0.91 %
     Total interest-bearing core deposits11,661,899 2,578 0.09 %11,702,788 2,731 0.09 %10,995,267 5,096 0.18 %
  Brokered deposits— — 0.00 %9,890 1 0.05 %150,545 201 0.53 %
     Total interest-bearing deposits11,661,899 2,578 0.09 %11,712,678 2,732 0.09 %11,145,812 5,297 0.19 %
  Federal funds purchased and interbank borrowings689 — 0.00 %1,460 — 0.02 %18,347 12 0.25 %
  Securities sold under agreements to repurchase384,724 90 0.09 %406,251 95 0.09 %385,149 160 0.16 %
 Federal Home Loan Bank advances1,890,916 5,326 1.12 %1,906,078 5,218 1.10 %2,021,468 6,709 1.32 %
 Other borrowings270,597 2,460 3.64 %269,259 2,486 3.69 %237,811 2,335 3.93 %
     Total borrowed funds2,546,926 7,876 1.23 %2,583,048 7,799 1.21 %2,662,775 9,216 1.38 %
     Total interest-bearing liabilities$14,208,825 $10,454 0.29 %$14,295,726 $10,531 0.30 %$13,808,587 $14,513 0.42 %
Noninterest-Bearing Liabilities and Shareholders' Equity
Demand deposits$6,314,100 $6,140,424 $5,291,037 
Other liabilities318,448 308,680 284,536 
Shareholders' equity3,027,935 2,992,693 2,889,545 
Total liabilities and shareholders' equity$23,869,308 $23,737,523 $22,273,705 
Net interest rate spread2.79 %2.79 %2.87 %
Net interest margin (FTE)2.92 %2.91 %3.03 %
FTE adjustment$3,501 $3,470 $3,379 
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.


Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
Nine Months EndedNine Months Ended
September 30, 2021September 30, 2020
AverageIncome (1)/Yield/AverageIncome (1)/Yield/
Earning Assets:BalanceExpenseRateBalanceExpenseRate
  Money market and other interest-earning
      investments$357,151 $313 0.12 %$94,149 $442 0.63 %
  Investments:
    Treasury and government-sponsored agencies1,509,931 17,820 1.57 %513,055 9,187 2.39 %
    Mortgage-backed securities3,304,200 45,408 1.83 %3,231,439 54,474 2.25 %
    States and political subdivisions1,523,175 37,174 3.25 %1,317,136 35,026 3.55 %
    Other securities445,298 8,071 2.42 %493,016 9,361 2.53 %
       Total investments$6,782,604 $108,473 2.13 %$5,554,646 $108,048 2.59 %
  Loans: (2)
    Commercial3,878,630 106,421 3.62 %3,745,803 94,005 3.30 %
    Commercial and agriculture real estate6,109,795 171,221 3.70 %5,359,254 176,337 4.32 %
    Consumer:
      Home equity544,111 12,801 3.15 %554,800 14,180 3.41 %
      Other consumer loans1,037,038 29,613 3.82 %1,141,399 35,384 4.14 %
    Subtotal commercial and consumer loans11,569,574 320,056 3.70 %10,801,256 319,906 3.96 %
    Residential real estate loans2,268,142 63,350 3.72 %2,365,037 71,732 4.04 %
       Total loans13,837,716 383,406 3.67 %13,166,293 391,638 3.93 %
      Total earning assets$20,977,471 $492,192 3.11 %$18,815,088 $500,128 3.52 %
Less: Allowance for credit losses(120,619)(107,860)
Non-earning Assets:
Cash and due from banks$266,543 $322,318 
Other assets2,495,512 2,392,893 
      Total assets$23,618,907 $21,422,439 
Interest-Bearing Liabilities:
  Checking and NOW accounts$4,895,539 $1,608 0.04 %$4,381,919 $4,820 0.15 %
  Savings accounts3,608,078 1,479 0.05 %3,040,889 2,669 0.12 %
  Money market accounts2,060,325 1,293 0.08 %1,843,902 4,141 0.30 %
  Other time deposits1,034,389 4,058 0.52 %1,397,222 11,823 1.13 %
     Total interest-bearing core deposits11,598,331 8,438 0.10 %10,663,932 23,453 0.29 %
  Brokered deposits55,312 31 0.08 %101,112 940 1.24 %
     Total interest-bearing deposits11,653,643 8,469 0.10 %10,765,044 24,393 0.30 %
  Federal funds purchased and interbank borrowings1,096 — 0.00 %184,397 1,296 0.94 %
  Securities sold under agreements to repurchase396,495 305 0.10 %355,039 729 0.27 %
 Federal Home Loan Bank advances1,907,322 15,953 1.12 %2,043,617 21,321 1.39 %
 Other borrowings267,650 7,375 3.67 %243,255 7,305 4.00 %
     Total borrowed funds2,572,563 23,633 1.23 %2,826,308 30,651 1.45 %
     Total interest-bearing liabilities14,226,206 32,102 0.30 %13,591,352 55,044 0.54 %
Noninterest-Bearing Liabilities and Shareholders' Equity
Demand deposits$6,072,310 $4,710,969 
Other liabilities323,310 263,841 
Shareholders' equity2,997,081 2,856,277 
Total liabilities and shareholders' equity$23,618,907 $21,422,439 
Net interest rate spread2.81 %2.98 %
Net interest margin (FTE)2.92 %3.15 %
FTE adjustment$10,471 $10,069 
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.



Asset Quality (EOP) (unaudited)
($ in thousands)
Three Months EndedNine Months Ended
September 30,June 30,September 30,September 30,September 30,
20212021202020212020
Beginning allowance for credit losses$109,444 $114,037 $128,394 $131,388 $54,619 
Impact of adopting ASC 326 on 01/01/2020— — — — 41,347 
  Provision for credit losses(4,613)(4,929)— (26,898)39,495 
     Gross charge-offs(1,215)(980)(4,169)(3,765)(14,846)
     Gross recoveries4,252 1,316 7,163 7,143 10,773 
  Net (charge-offs) recoveries3,037 336 2,994 3,378 (4,073)
Ending allowance for credit losses$107,868 $109,444 $131,388 $107,868 $131,388 
Net charge-offs (recoveries) / average loans (1)(0.09)%(0.01)%(0.09)%(0.03)%0.04 %
Average loans outstanding (1)$13,675,436 $13,984,295 $13,827,019 $13,824,569 $13,150,805 
EOP loans outstanding (1)13,584,828 13,784,677 13,892,509 13,584,828 13,892,509 
Allowance for credit losses / EOP loans (1)0.79 %0.79 %0.95 %0.79 %0.95 %
Underperforming Assets:
   Loans 90 Days and over (still accruing)$113 $9 $90 $113 $90 
   Non-performing loans:
      Nonaccrual loans (2)111,586 128,268 137,611 111,586 137,611 
      TDRs still accruing16,420 14,222 22,037 16,420 22,037 
         Total non-performing loans128,006 142,490 159,648 128,006 159,648 
   Foreclosed properties1,943 520 1,248 1,943 1,248 
Total underperforming assets$130,062 $143,019 $160,986 $130,062 $160,986 
Classified and Criticized Assets:
Nonaccrual loans (2)111,586 128,268 137,611 111,586 137,611 
Substandard accruing loans164,192 160,995 189,524 164,192 189,524 
Loans 90 days and over (still accruing)113 9 90 113 90 
Total classified loans - "problem loans"$275,891 $289,272 $327,225 $275,891 $327,225 
Other classified assets4,300 4,305 3,860 4,300 3,860 
Criticized loans - "special mention loans"240,215 228,264 272,859 240,215 272,859 
Total classified and criticized assets$520,406 $521,841 $603,944 $520,406 $603,944 
Non-performing loans / EOP loans (1)0.94 %1.03 %1.15 %0.94 %1.15 %
Allowance to non-performing loans84 %77 %82 %84 %82 %
Under-performing assets / EOP loans (1)0.96 %1.04 %1.16 %0.96 %1.16 %
EOP total assets$24,018,733 $23,675,666 $22,460,476 $24,018,733 $22,460,476 
Under-performing assets / EOP assets0.54 %0.60 %0.72 %0.54 %0.72 %
EOP - End of period actual balances
(1) Excludes loans held for sale.
(2) Includes non-accruing TDRs totaling $12.8 million at September 30, 2021, $13.6 million at June 30, 2021, and $7.7 million at September 30, 2020.



Non-GAAP Measures (unaudited)
($ in thousands)
Three Months EndedNine Months Ended
September 30,June 30,September 30,September 30,September 30,
20212021202020212020
Actual End of Period Balances
GAAP shareholders' equity $3,035,892 $2,991,118 $2,921,149 $3,035,892 $2,921,149 
Deduct:
Goodwill 1,036,994 1,036,994 1,036,994 1,036,994 1,036,994 
Intangibles 37,251 40,030 49,258 37,251 49,258 
1,074,245 1,077,024 1,086,252 1,074,245 1,086,252 
Tangible shareholders' equity $1,961,647 $1,914,094 $1,834,897 $1,961,647 $1,834,897 
Average Balances
GAAP shareholders' equity $3,027,935 $2,992,693 $2,889,545 $2,997,081 $2,856,277 
Deduct:
Goodwill 1,036,994 1,036,994 1,036,994 1,036,994 1,036,994 
Intangibles 38,585 41,410 50,926 41,447 54,488 
1,075,579 1,078,404 1,087,920 1,078,441 1,091,482 
Average tangible shareholders' equity $1,952,356 $1,914,289 $1,801,625 $1,918,640 $1,764,795 
Actual End of Period Balances
GAAP assets $24,018,733 $23,675,666 $22,460,476 $24,018,733 $22,460,476 
Add:
Trust overdrafts116 24 17 116 17 
Deduct:
Goodwill 1,036,994 1,036,994 1,036,994 1,036,994 1,036,994 
Intangibles 37,251 40,030 49,258 37,251 49,258 
1,074,245 1,077,024 1,086,252 1,074,245 1,086,252 
Tangible assets $22,944,604 $22,598,666 $21,374,241 $22,944,604 $21,374,241 
Risk-weighted assets (2)$16,227,070 $15,971,711 $14,770,750 $16,227,070 $14,770,750 
GAAP net income$71,746 $62,786 $77,944 $221,350 $152,289 
Add:
Amortization of intangibles (net of tax)2,084 2,182 2,595 6,572 8,152 
Tangible net income$73,830 $64,968 $80,539 $227,922 $160,441 
Tangible Ratios
Return on tangible common equity15.05 %13.58 %17.56 %15.49 %11.66 %
Return on average tangible common equity15.13 %13.58 %17.88 %15.84 %12.12 %
Return on tangible assets 1.29 %1.15 %1.51 %1.32 %1.00 %
Tangible common equity to tangible assets 8.55 %8.47 %8.58 %8.55 %8.58 %
Tangible common equity to risk-weighted assets (2)12.09 %11.98 %12.42 %12.09 %12.42 %
Tangible common book value (1)11.83 11.55 11.10 11.83 11.10 
Tangible common equity presentation includes other comprehensive income as is common in other company releases.
(1) Tangible common shareholders' equity divided by common shares issued and outstanding at period-end.
Tier 1 common equity (2)$1,960,340 $1,908,053 $1,748,150 $1,960,340 $1,748,150 
Risk-weighted assets (2)16,227,070 15,971,711 14,770,750 16,227,070 14,770,750 
Tier 1 common equity to risk-weighted assets (2)12.08 %11.95 %11.84 %12.08 %11.84 %
(2) September 30, 2021 figures are preliminary.