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Loans and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2023

Schedule of Composition of Loans and Impact of Adoption

The portfolio segment reclassifications follow:


	Balance Sheet Line Item		Portfolio Segment Reclassifications		After Reclassifications

(dollars in thousands)
June 30, 2023
Loans:
Commercial	$	9,698,241	$	(227,414)	$	9,470,827
Commercial real estate	13,450,209		(162,841)		13,287,368
BBCC	N/A		390,255		390,255
Residential real estate	6,684,480		—		6,684,480
Consumer	2,599,543		(2,599,543)		N/A
Indirect	N/A		1,003,287		1,003,287
Direct	N/A		565,950		565,950
Home equity	N/A		1,030,306		1,030,306
Total	$	32,432,473	$	—	$	32,432,473

December 31, 2022
Loans:
Commercial	$	9,508,904	$	(210,280)	$	9,298,624
Commercial real estate	12,457,070		(158,322)		12,298,748
BBCC	N/A		368,602		368,602
Residential real estate	6,460,441		—		6,460,441
Consumer	2,697,226		(2,697,226)		N/A
Indirect	N/A		1,034,257		1,034,257
Direct	N/A		629,186		629,186
Home equity	N/A		1,033,783		1,033,783
Total	$	31,123,641	$	—	$	31,123,641

Schedule of Composition of Loans

The composition of loans by portfolio segment follows:


(dollars in thousands)	June 30, 2023		December 31, 2022
Commercial (1)	$	9,470,827	$	9,298,624
Commercial real estate	13,287,368		12,298,748
BBCC	390,255		368,602
Residential real estate	6,684,480		6,460,441
Indirect	1,003,287		1,034,257
Direct	565,950		629,186
Home equity	1,030,306		1,033,783
Total loans	32,432,473		31,123,641
Allowance for credit losses on loans	(300,555)		(303,671)
Net loans	$	32,131,918	$	30,819,970

(1)Includes direct finance leases of $176.7 million at June 30, 2023 and $188.1 million at December 31, 2022.

Schedule of Activity in Allowance for Loan Losses

Old National’s activity in the allowance for credit losses on loans by portfolio segment was as follows:


(dollars in thousands)	Balance at Beginning of Period		Allowance Established for Acquired PCD Loans		Charge-offs		Recoveries		Provision for Loan Losses		Balance at End of Period
Three Months Ended June 30, 2023
Commercial	$	125,768	$	—	$	(8,331)	$	1,814	$	8,152	$	127,403
Commercial real estate	135,348		—		(2,458)		1,029		2,978		136,897
BBCC	2,316		—		(94)		31		523		2,776
Residential real estate	20,207		—		(218)		53		379		20,421
Indirect	1,434		—		(402)		612		(237)		1,407
Direct	6,766		—		(2,600)		637		(48)		4,755
Home equity	6,872		—		(228)		63		189		6,896
Total	$	298,711	$	—	$	(14,331)	$	4,239	$	11,936	$	300,555

Three Months Ended June 30, 2022
Commercial	$	99,471	$	—	$	(1,344)	$	781	$	3,911	$	102,819
Commercial real estate	140,490		—		(318)		320		1,310		141,802
BBCC	2,069		—		(20)		91		(76)		2,064
Residential real estate	17,252		—		(137)		130		2,484		19,729
Indirect	1,648		—		(528)		320		201		1,641
Direct	14,450		—		(1,722)		676		1,008		14,412
Home equity	5,127		—		(27)		20		416		5,536
Total	$	280,507	$	—	$	(4,096)	$	2,338	$	9,254	$	288,003

Six Months Ended June 30, 2023
Commercial	$	120,612	$	—	$	(20,754)	$	2,097	$	25,448	$	127,403
Commercial real estate	138,244		—		(3,647)		1,292		1,008		136,897
BBCC	2,431		—		(122)		104		363		2,776
Residential real estate	21,916		—		(241)		125		(1,379)		20,421
Indirect	1,532		—		(1,599)		1,024		450		1,407
Direct	12,116		—		(5,838)		1,218		(2,741)		4,755
Home equity	6,820		—		(310)		130		256		6,896
Total	$	303,671	$	—	$	(32,511)	$	5,990	$	23,405	$	300,555

Six Months Ended June 30, 2022
Commercial	$	27,232	$	35,040	$	(3,223)	$	1,013	$	42,757	$	102,819
Commercial real estate	64,004		42,601		(824)		502		35,519		141,802
BBCC	2,458		—		(48)		148		(494)		2,064
Residential real estate	9,347		136		(324)		570		10,000		19,729
Indirect	1,743		—		(1,012)		542		368		1,641
Direct	528		31		(3,251)		1,270		15,834		14,412
Home equity	2,029		723		(78)		183		2,679		5,536
Total	$	107,341	$	78,531	$	(8,760)	$	4,228	$	106,663	$	288,003

Old National’s activity in the allowance for credit losses on unfunded loan commitments was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2023		2022		2023		2022
Allowance for credit losses on unfunded loan commitments:
Balance at beginning of period	$	34,156	$	22,046	$	32,188	$	10,879
Provision for credit losses on unfunded commitments acquired during the period	—		—		—		11,013
Provision for unfunded loan commitments	2,851		(80)		4,819		74
Balance at end of period	$	37,007	$	21,966	$	37,007	$	21,966

Schedule of Risk Category of Loans and Amortized Cost

The following table summarizes the amortized cost of term loans by risk category of commercial, commercial real estate, and BBCC loans by loan portfolio segment, class of loan, and origination year:


	Origination Year														Revolving to Term
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Revolving				Total
June 30, 2023
Commercial:
Risk Rating:
Pass	$	1,108,984	$	1,860,049	$	1,307,700	$	671,792	$	604,875	$	673,184	$	2,185,539	$	465,649	$	8,877,772
Criticized	28,284		84,240		15,092		23,548		29,772		32,376		74,437		25,524		313,273
Classified:
Substandard	17,252		16,246		36,914		36,303		4,671		22,508		52,794		37,482		224,170
Nonaccrual	—		349		—		585		824		6,681		1,064		2,210		11,713
Doubtful	—		24,047		12,536		1,832		583		4,901		—		—		43,899
Total	$	1,154,520	$	1,984,931	$	1,372,242	$	734,060	$	640,725	$	739,650	$	2,313,834	$	530,865	$	9,470,827


Commercial real estate:
Risk Rating:
Pass	$	1,188,882	$	3,335,715	$	2,791,366	$	1,852,690	$	1,083,211	$	1,511,576	$	84,574	$	677,072	$	12,525,086
Criticized	28,324		30,372		31,377		32,238		54,738		88,116		3,893		23,353		292,411
Classified:
Substandard	14,685		71,131		17,505		19,748		79,998		44,060		—		49,825		296,952
Nonaccrual	—		866		18,463		1,064		456		16,081		—		3,272		40,202
Doubtful	—		3,802		31,341		9,249		39,559		48,766		—		—		132,717
Total	$	1,231,891	$	3,441,886	$	2,890,052	$	1,914,989	$	1,257,962	$	1,708,599	$	88,467	$	753,522	$	13,287,368


BBCC:
Risk Rating:
Pass	$	52,620	$	77,831	$	53,068	$	44,433	$	32,200	$	28,305	$	69,107	$	16,637	$	374,201
Criticized	987		1,445		1,081		360		1,045		483		1,836		1,626		8,863
Classified:
Substandard	10		497		629		49		226		836		484		856		3,587
Nonaccrual	37		313		323		128		235		668		—		644		2,348
Doubtful	—		408		219		—		55		74		500		—		1,256
Total	$	53,654	$	80,494	$	55,320	$	44,970	$	33,761	$	30,366	$	71,927	$	19,763	$	390,255


	Origination Year														Revolving to Term
(dollars in thousands)	2022		2021		2020		2019		2018		Prior		Revolving				Total
December 31, 2022
Commercial:
Risk Rating:
Pass	$	2,388,618	$	1,754,364	$	796,340	$	738,208	$	362,986	$	388,617	$	1,988,763	$	329,119	$	8,747,015
Criticized	40,856		30,661		63,557		33,490		9,195		5,312		61,036		4,327		248,434
Classified:
Substandard	37,223		47,522		16,540		22,925		4,844		21,204		67,402		25,143		242,803
Nonaccrual	3,627		1,453		566		—		—		—		1,634		6,623		13,903
Doubtful	2,821		17,604		3,720		8,005		5,968		8,351		—		—		46,469
Total	$	2,473,145	$	1,851,604	$	880,723	$	802,628	$	382,993	$	423,484	$	2,118,835	$	365,212	$	9,298,624

Commercial real estate:
Risk Rating:
Pass	$	3,066,960	$	2,828,758	$	1,989,000	$	1,219,025	$	675,572	$	1,018,719	$	57,818	$	689,553	$	11,545,405
Criticized	75,306		34,422		22,569		82,637		86,504		56,864		—		23,282		381,584
Classified:
Substandard	46,231		16,928		24,319		78,468		57,824		21,591		—		4,108		249,469
Nonaccrual	3,151		9,541		5,014		—		2,312		22,155		—		3,257		45,430
Doubtful	1,934		38,386		10,011		4,605		1,523		20,401		—		—		76,860
Total	$	3,193,582	$	2,928,035	$	2,050,913	$	1,384,735	$	823,735	$	1,139,730	$	57,818	$	720,200	$	12,298,748

BBCC:
Risk Rating:
Pass	$	90,341	$	64,161	$	52,304	$	36,868	$	23,618	$	11,333	$	60,016	$	18,881	$	357,522
Criticized	1,504		525		368		692		353		—		1,006		1,603		6,051
Classified:
Substandard	811		143		—		421		—		—		543		682		2,600
Nonaccrual	42		37		118		—		429		284		—		639		1,549
Doubtful	40		107		439		157		64		73		—		—		880
Total	$	92,738	$	64,973	$	53,229	$	38,138	$	24,464	$	11,690	$	61,565	$	21,805	$	368,602

The following table presents the amortized cost of term residential real estate and consumer loans based on payment activity and origination year:


	Origination Year														Revolving to Term
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Revolving				Total
June 30, 2023
Residential real estate:
Risk Rating:
Performing	$	261,285	$	1,480,926	$	1,948,505	$	1,709,893	$	459,251	$	785,089	$	—	$	143	$	6,645,092
Nonperforming	—		1,892		2,727		4,200		3,378		27,191		—		—		39,388
Total	$	261,285	$	1,482,818	$	1,951,232	$	1,714,093	$	462,629	$	812,280	$	—	$	143	$	6,684,480


Indirect:
Risk Rating:
Performing	$	187,644	$	425,822	$	202,230	$	98,742	$	57,413	$	27,397	$	—	$	83	$	999,331
Nonperforming	65		1,107		798		1,082		438		466		—		—		3,956
Total	$	187,709	$	426,929	$	203,028	$	99,824	$	57,851	$	27,863	$	—	$	83	$	1,003,287


Direct:
Risk Rating:
Performing	$	53,778	$	110,107	$	121,141	$	77,169	$	41,509	$	80,155	$	74,945	$	1,348	$	560,152
Nonperforming	21		275		489		562		463		3,970		8		10		5,798
Total	$	53,799	$	110,382	$	121,630	$	77,731	$	41,972	$	84,125	$	74,953	$	1,358	$	565,950


Home equity:
Risk Rating:
Performing	$	—	$	1,328	$	843	$	859	$	943	$	6,573	$	988,669	$	16,859	$	1,016,074
Nonperforming	—		51		130		82		1,057		4,776		1,961		6,175		14,232
Total	$	—	$	1,379	$	973	$	941	$	2,000	$	11,349	$	990,630	$	23,034	$	1,030,306


	Origination Year														Revolving to Term
	2022		2021		2020		2019		2018		Prior		Revolving				Total
December 31, 2022
Residential real estate:
Risk Rating:
Performing	$	1,327,168	$	1,945,792	$	1,825,762	$	478,529	$	136,260	$	712,175	$	7	$	88	$	6,425,781
Nonperforming	59		529		861		873		1,826		30,512		—		—		34,660
Total	$	1,327,227	$	1,946,321	$	1,826,623	$	479,402	$	138,086	$	742,687	$	7	$	88	$	6,460,441

Indirect:
Risk Rating:
Performing	$	504,410	$	249,407	$	144,265	$	82,304	$	31,484	$	19,095	$	—	$	62	$	1,031,027
Nonperforming	348		1,074		645		531		304		328		—		—		3,230
Total	$	504,758	$	250,481	$	144,910	$	82,835	$	31,788	$	19,423	$	—	$	62	$	1,034,257

Direct:
Risk Rating:
Performing	$	132,934	$	164,126	$	77,406	$	57,919	$	45,299	$	59,212	$	87,622	$	671	$	625,189
Nonperforming	115		851		614		205		327		1,526		5		354		3,997
Total	$	133,049	$	164,977	$	78,020	$	58,124	$	45,626	$	60,738	$	87,627	$	1,025	$	629,186

Home equity:
Risk Rating:
Performing	$	919	$	896	$	1,849	$	1,497	$	983	$	11,646	$	990,001	$	14,792	$	1,022,583
Nonperforming	166		160		166		446		794		4,308		1,698		3,462		11,200
Total	$	1,085	$	1,056	$	2,015	$	1,943	$	1,777	$	15,954	$	991,699	$	18,254	$	1,033,783

The following table summarizes the gross charge-offs of loans by loan portfolio segment and origination year:


	Origination Year
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Revolving		Total
Three Months Ended June 30, 2023
Commercial	$	—	$	2,100	$	5,931	$	120	$	—	$	—	$	180		$	8,331
Commercial real estate	—		—		—		—		—		2,458		—			2,458
BBCC	—		47		—		47		—		—		—			94
Residential real estate	—		—		—		—		—		218		—			218
Indirect	10		164		124		48		16		40		—			402
Direct	—		430		588		172		414		195		801			2,600
Home equity	—		—		—		—		—		228		—			228
Total gross charge-offs	$	10	$	2,741	$	6,643	$	387	$	430	$	3,139	$	981		$	14,331

Six Months Ended June 30, 2023
Commercial	$	—	$	2,100	$	11,161	$	120	$	6,789	$	239	$	345		$	20,754
Commercial real estate	—		54		735		400		—		2,458		—			3,647
BBCC	—		47		28		47		—		—		—			122
Residential real estate	—		—		—		—		—		241		—			241
Indirect	10		678		554		141		127		89		—			1,599
Direct	—		901		1,382		458		741		390		1,966			5,838
Home equity	—		—		—		—		—		310		—			310
Total gross charge-offs	$	10	$	3,780	$	13,860	$	1,166	$	7,657	$	3,727	$	2,311		$	32,511

Schedule of Past Due Financing Receivables

The following table presents the aging of the amortized cost basis in past due loans by class of loans:


(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Past Due 90 Days or More		Total Past Due		Current		Total Loans
June 30, 2023
Commercial	$	4,164	$	3,719	$	15,138	$	23,021	$	9,447,806	$	9,470,827
Commercial real estate	7,760		10,441		35,906		54,107		13,233,261		13,287,368
BBCC	868		847		74		1,789		388,466		390,255
Residential	18,543		4,350		11,131		34,024		6,650,456		6,684,480
Indirect	4,296		1,162		840		6,298		996,989		1,003,287
Direct	3,225		775		1,257		5,257		560,693		565,950
Home equity	6,834		1,473		4,420		12,727		1,017,579		1,030,306
Total	$	45,690	$	22,767	$	68,766	$	137,223	$	32,295,250	$	32,432,473

December 31, 2022
Commercial	$	14,147	$	4,801	$	11,080	$	30,028	$	9,268,596	$	9,298,624
Commercial real estate	47,240		1,312		32,892		81,444		12,217,304		12,298,748
BBCC	730		365		603		1,698		366,904		368,602
Residential	24,181		5,033		11,753		40,967		6,419,474		6,460,441
Indirect	6,302		2,118		958		9,378		1,024,879		1,034,257
Direct	5,404		2,118		1,928		9,450		619,736		629,186
Home equity	6,585		1,966		4,707		13,258		1,020,525		1,033,783
Total	$	104,589	$	17,713	$	63,921	$	186,223	$	30,937,418	$	31,123,641

Schedule of Nonaccrual and Past Due Loans

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due 90 days or more and still accruing by class of loan:


	June 30, 2023						December 31, 2022
(dollars in thousands)	Nonaccrual Amortized Cost		Nonaccrual With No Related Allowance		Past Due 90 Days or More and Accruing		Nonaccrual Amortized Cost		Nonaccrual With No Related Allowance		Past Due 90 Days or More and Accruing
Commercial	$	55,612	$	12,666	$	92	$	60,372	$	7,873	$	152
Commercial real estate	172,919		44,218		173		122,290		33,445		—
BBCC	3,604		—		—		2,429		—		—
Residential	39,388		—		—		34,660		—		1,808
Indirect	3,956		—		—		3,230		—		28
Direct	5,798		—		25		3,997		—		133
Home equity	14,232		—		13		11,200		—		529
Total	$	295,509	$	56,884	$	303	$	238,178	$	41,318	$	2,650

The following table presents the amortized cost basis of collateral dependent loans by class of loan:


	Type of Collateral
(dollars in thousands)	Real Estate		Blanket Lien		Investment Securities/Cash		Auto		Other
June 30, 2023
Commercial	$	14,450	$	37,285	$	652	$	535	$	366
Commercial real estate	156,570		3,908		1,246		—		6,259
BBCC	2,267		1,301		—		36		—
Residential	39,388		—		—		—		—
Indirect	—		—		—		3,956		—
Direct	4,973		6		—		253		32
Home equity	14,232		—		—		—		—
Total loans	$	231,880	$	42,500	$	1,898	$	4,780	$	6,657

December 31, 2022
Commercial	$	8,962	$	42,754	$	2,690	$	1,611	$	980
Commercial real estate	108,871		—		1,718		—		6,411
BBCC	1,939		478		—		12		—
Residential	34,660		—		—		—		—
Indirect	—		—		—		3,230		—
Direct	2,991		13		—		232		23
Home equity	11,200		—		—		—		—
Total loans	$	168,623	$	43,245	$	4,408	$	5,085	$	7,414

Schedule of Activity in Trouble Debt Restructurings

The following table presents the amortized cost basis of financial difficulty modifications at June 30, 2023 that were modified during the three and six months ended June 30, 2023 by class of loans and type of modification:


(dollars in thousands)	Term Extension		Total Class of Loans
Three Months Ended June 30, 2023
Commercial	$	1,231	0.0	%
Commercial real estate	12,449		0.1	%





Total	$	13,680	0.0	%

Six Months Ended June 30, 2023
Commercial	$	18,517	0.2	%
Commercial real estate	19,280		0.1	%





Total	$	37,797	0.1	%

Old National closely monitors the performance of financial difficulty modifications to understand the effectiveness of its efforts. The following table presents the performance of loans identified as financial difficulty modifications at June 30, 2023:


(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Past Due 90 Days or More		Total Past Due		Current		Total Loans
June 30, 2023
Commercial	$	—	$	—	$	2,600	$	2,600	$	15,917	$	18,517
Commercial real estate	—		5,537		—		5,537		13,743		19,280





Total	$	—	$	5,537	$	2,600	$	8,137	$	29,660	$	37,797

The following table summarizes the nature of the financial difficulty modifications during the three and six months ended June 30, 2023 by class of loans:

(dollars in thousands)

Weighted-
Average
Term
Extension
(in months)

Three Months Ended June 30, 2023

Commercial

7.0

Commercial real estate

6.0

Total

6.1

Six Months Ended June 30, 2023

Commercial

6.8

Commercial real estate

5.8

Total

6.3