Old National’s loans consist primarily of loans made to consumers and commercial clients in many diverse industries, including real estate rental and leasing, manufacturing, healthcare, wholesale trade, construction, and agriculture, among others. Most of Old National’s lending activity occurs within our principal geographic markets in the Midwest region. Old National manages concentrations of credit exposure by industry, product, geography, client relationship, and loan size.

Old National has loan participations, which qualify as participating interests, with other financial institutions. At December 31, 2023, these loans totaled $2.8 billion, of which $1.2 billion had been sold to other financial institutions and $1.6 billion was retained by Old National. The loan participations convey proportionate ownership rights with equal priority to each participating interest holder; involve no recourse (other than ordinary representations and warranties) to, or subordination by, any participating interest holder; all cash flows are divided

The loan categories used to monitor and analyze interest income and yields are different than the portfolio segments used to determine the allowance for credit losses on loans. The allowance for credit losses was calculated by pooling loans of similar credit risk characteristics and credit monitoring procedures. The four loan portfolios used to monitor and analyze interest income and yields – commercial, commercial real estate, residential real estate, and consumer – are reclassified into seven segments of loans – commercial, commercial real estate, BBCC, residential real estate, indirect, direct, and home equity for purposes of determining the allowance for credit losses on loans. The commercial and commercial real estate loan categories shown on the balance sheet include the same pool of loans as the commercial, commercial real estate, and BBCC portfolio segments. The consumer loan category shown on the balance sheet is comprised of the same loans in the indirect, direct, and home equity portfolio segments. The portfolio segment reclassifications follow:


	Balance Sheet Line Item		Portfolio Segment Reclassifications		Portfolio Segment After Reclassifications

(dollars in thousands)
December 31, 2023
Commercial (1)	$	9,512,230	$	(232,764)	$	9,279,466
Commercial real estate	14,140,629		(169,058)		13,971,571
BBCC	N/A		401,822		401,822
Residential real estate	6,699,443		—		6,699,443
Consumer	2,639,625		(2,639,625)		N/A
Indirect	N/A		1,050,982		1,050,982
Direct	N/A		523,172		523,172
Home equity	N/A		1,065,471		1,065,471
Total loans (2)	32,991,927		—		32,991,927
Allowance for credit losses on loans	(307,610)		—		(307,610)
Net loans	$	32,684,317	$	—	$	32,684,317

December 31, 2022
Commercial (1)	$	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 loans (2)	31,123,641		—		31,123,641
Allowance for credit losses on loans	(303,671)		—		(303,671)
Net loans	$	30,819,970	$	—	$	30,819,970

Commercial loans are classified primarily on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its clients.

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The properties securing Old National’s commercial real estate portfolio are diverse in terms of type and geographic location. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner-occupied loans.

Included with commercial real estate are construction loans, which are underwritten utilizing independent appraisal reviews, sensitivity analysis of absorption and lease rates, financial analysis of the developers and property owners, and feasibility studies, if available. Construction loans are generally based on estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders (including Old National), sales of developed property, or an interim loan commitment from Old National until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions, and the availability of long-term financing.

BBCC loans are typically granted to small businesses with gross revenues of less than $5 million and aggregate debt of less than $1 million. Old National has established minimum debt service coverage ratios, minimum FICO scores for owners and guarantors, and the ability to show relatively stable earnings as criteria to help mitigate risk. Repayment of these loans depends on the personal income of the borrowers and the cash flows of the business. These factors can be affected by factors such as changes in economic conditions and unemployment levels.

With respect to residential loans that are secured by 1 - 4 family residences and are generally owner occupied, Old National typically establishes a maximum loan-to-value ratio and generally requires private mortgage insurance if that ratio is exceeded. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in residential property values. Portfolio risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Indirect loans are secured by automobile collateral, generally new and used cars and trucks from auto dealers that operate within our footprint. Old National typically mitigates the risk of indirect loans by establishing minimum FICO scores, maximum loan-to-value ratios, and maximum debt-to-income ratios. Repayment of these loans depends largely on the personal income of the borrowers, which can be affected by changes in economic conditions such as unemployment levels. Portfolio risk is mitigated by the fact that the loans are of smaller amounts spread over many borrowers and ongoing reviews of dealer relationships.

Direct loans are typically secured by collateral such as auto or real estate or are unsecured. Old National has established underwriting standards such as minimum FICO scores, maximum loan-to-value ratios, and maximum debt-to-income ratios. Repayment of these loans depends largely on the personal income of the borrowers, which can be affected by changes in economic conditions such as unemployment levels. Portfolio risk is mitigated by the fact that the loans are of smaller amounts spread over many borrowers.

Home equity loans are generally secured by 1-4 family residences that are owner-occupied. Old National has established underwriting standards such as minimum FICO scores, maximum loan-to-value ratios, and maximum debt-to-income ratios. Repayment of these loans depends largely on the personal income of the borrowers, which can be affected by changes in economic conditions such as unemployment levels. Portfolio risk is mitigated by the fact that the loans are of smaller amounts spread over many borrowers, along with monitoring of updated borrower credit scores.

Credit loss assumptions used when computing the level of expected credit losses are estimated using a model that categorizes loan pools based on loss history, delinquency status, and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. The base forecast scenario considers unemployment, gross domestic product, and the BBB ratio (BBB spread to the 10-year U.S. Treasury rate). In addition to the quantitative inputs, several qualitative factors are considered. These factors include the risk that unemployment, gross domestic product, housing product index, and the BBB ratio prove to be more severe and/or prolonged than our baseline forecast due to a variety of factors including monetary actions to control inflation, recent instability in the banking sector, global military conflicts, and global supply chain issues. 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 (Release) for Loan Losses		Balance at End of Period
Year Ended December 31, 2023
Commercial	$	120,612	$	—	$	(41,451)	$	4,172	$	35,000	$	118,333
Commercial real estate	138,244		—		(11,198)		2,417		25,636		155,099
BBCC	2,431		—		(1,650)		275		1,831		2,887
Residential real estate	21,916		—		(256)		1,268		(2,091)		20,837
Indirect	1,532		—		(2,948)		1,559		1,093		1,236
Direct	12,116		—		(10,517)		2,331		(761)		3,169
Home equity	6,820		—		(443)		531		(859)		6,049
Total	$	303,671	$	—	$	(68,463)	$	12,553	$	59,849	$	307,610

Year Ended December 31, 2022
Commercial	$	27,232	$	38,780	$	(6,885)	$	4,610	$	56,875	$	120,612
Commercial real estate	64,004		49,419		(6,519)		1,095		30,245		138,244
BBCC	2,458		—		(85)		281		(223)		2,431
Residential real estate	9,347		136		(344)		760		12,017		21,916
Indirect	1,743		—		(2,525)		1,263		1,051		1,532
Direct	528		31		(10,799)		2,557		19,799		12,116
Home equity	2,029		723		(124)		616		3,576		6,820
Total	$	107,341	$	89,089	$	(27,281)	$	11,182	$	123,340	$	303,671

Year Ended December 31, 2021
Commercial	$	30,567	$	—	$	(1,228)	$	791	$	(2,898)	$	27,232
Commercial real estate	75,810		—		(264)		4,403		(15,945)		64,004
BBCC	6,120		—		(144)		105		(3,623)		2,458
Residential real estate	12,608		—		(346)		339		(3,254)		9,347
Indirect	3,580		—		(1,087)		1,682		(2,432)		1,743
Direct	855		—		(1,159)		777		55		528
Home equity	1,848		—		(82)		978		(715)		2,029
Total	$	131,388	$	—	$	(4,310)	$	9,075	$	(28,812)	$	107,341

Old National maintains an allowance for credit losses on unfunded loan commitments to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the allowance for credit losses on loans, modified to take into account the probability of a drawdown on the commitment. The allowance for credit losses on unfunded loan commitments is classified as a liability account on the balance sheet within accrued expenses and other liabilities, while the corresponding provision for unfunded loan commitments is included in the provision for credit losses. Old National’s activity in the allowance for credit losses on unfunded loan commitments was as follows:

Old National’s management monitors the credit quality of its loans on an ongoing basis with the AQR for commercial loans reviewed annually or at renewal and the performance of its residential and consumer loans based upon the accrual status refreshed at least quarterly. Internally, management assigns an AQR to each non-homogeneous commercial, commercial real estate, and BBCC loan in the portfolio. The primary determinants of the AQR are the reliability of the primary source of repayment and the past, present, and projected financial condition of the borrower. The AQR will also consider current industry conditions. Major factors used in determining the AQR can vary based on the nature of the loan, but commonly include factors such as debt service coverage, internal cash flow, liquidity, leverage, operating performance, debt burden, FICO scores, occupancy, interest rate sensitivity, and expense burden. Old National uses the following definitions for risk ratings:


	Origination Year														Revolving to Term
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Revolving				Total
December 31, 2023
Commercial:
Risk Rating:
Pass	$	1,826,289	$	1,573,669	$	985,964	$	520,883	$	450,911	$	495,979	$	2,051,985	$	651,953	$	8,557,633
Criticized	20,038		90,031		19,953		36,906		25,756		47,357		89,765		44,348		374,154
Classified:
Substandard	27,271		41,164		27,990		37,618		10,461		29,981		72,703		56,716		303,904
Nonaccrual	32		7,034		—		—		823		3,411		—		5,461		16,761
Doubtful	—		7,261		5,925		4,875		1,742		7,211		—		—		27,014
Total	$	1,873,630	$	1,719,159	$	1,039,832	$	600,282	$	489,693	$	583,939	$	2,214,453	$	758,478	$	9,279,466

Commercial real estate:
Risk Rating:
Pass	$	2,177,841	$	3,515,702	$	2,563,638	$	1,576,044	$	1,010,351	$	1,161,119	$	103,332	$	960,386	$	13,068,413
Criticized	69,648		69,946		68,708		27,059		52,107		95,896		3,893		64,730		451,987
Classified:
Substandard	26,638		56,423		21,401		28,983		61,186		49,558		—		48,760		292,949
Nonaccrual	—		21,919		10,706		1,975		1,634		8,632		—		1,400		46,266
Doubtful	5,360		429		30,897		2,306		37,777		35,187		—		—		111,956
Total	$	2,279,487	$	3,664,419	$	2,695,350	$	1,636,367	$	1,163,055	$	1,350,392	$	107,225	$	1,075,276	$	13,971,571

BBCC:
Risk Rating:
Pass	$	81,102	$	64,583	$	44,307	$	38,086	$	27,557	$	19,028	$	68,807	$	33,361	$	376,831
Criticized	—		—		857		700		1,001		349		2,144		12,728		17,779
Classified:
Substandard	436		193		252		—		—		604		15		1,006		2,506
Nonaccrual	—		—		482		—		4		1,105		—		1,402		2,993
Doubtful	302		727		254		286		60		84		—		—		1,713
Total	$	81,840	$	65,503	$	46,152	$	39,072	$	28,622	$	21,170	$	70,966	$	48,497	$	401,822


	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


	Origination Year														Revolving to Term
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Revolving				Total
December 31, 2023
Residential real estate:
Performing	$	453,743	$	1,508,671	$	1,836,078	$	1,705,131	$	430,783	$	722,987	$	—	$	279	$	6,657,672
Nonperforming	116		4,563		4,004		3,375		4,078		25,635		—		—		41,771
Total	$	453,859	$	1,513,234	$	1,840,082	$	1,708,506	$	434,861	$	748,622	$	—	$	279	$	6,699,443

Indirect:
Performing	$	393,369	$	355,822	$	162,735	$	82,871	$	37,967	$	13,815	$	—	$	196	$	1,046,775
Nonperforming	372		1,472		1,207		547		318		291		—		—		4,207
Total	$	393,741	$	357,294	$	163,942	$	83,418	$	38,285	$	14,106	$	—	$	196	$	1,050,982

Direct:
Performing	$	109,372	$	90,310	$	92,491	$	48,387	$	29,659	$	67,129	$	75,080	$	4,852	$	517,280
Nonperforming	67		531		517		560		210		3,872		124		11		5,892
Total	$	109,439	$	90,841	$	93,008	$	48,947	$	29,869	$	71,001	$	75,204	$	4,863	$	523,172

Home equity:
Performing	$	290	$	164	$	160	$	140	$	679	$	4,483	$	1,019,389	$	23,918	$	1,049,223
Nonperforming	—		310		328		404		741		4,327		2,844		7,294		16,248
Total	$	290	$	474	$	488	$	544	$	1,420	$	8,810	$	1,022,233	$	31,212	$	1,065,471

	Origination Year														Revolving to Term
	2022		2021		2020		2019		2018		Prior		Revolving				Total
December 31, 2022
Residential real estate:
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:
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:
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:
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


	Origination Year
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Revolving		Total
Year Ended December 31, 2023
Commercial	$	—	$	6,475	$	24,022	$	120	$	7,245	$	2,880	$	709		$	41,451
Commercial real estate	—		54		2,808		2,144		—		6,192		—			11,198
BBCC	670		548		362		70		—		—		—			1,650
Residential real estate	—		—		—		—		—		256		—			256
Indirect	271		1,447		787		159		152		132		—			2,948
Direct	173		1,899		2,367		746		1,207		543		3,582			10,517
Home equity	—		—		—		35		—		408		—			443
Total gross charge-offs	$	1,114	$	10,423	$	30,346	$	3,274	$	8,604	$	10,411	$	4,291		$	68,463

Old National does not record interest on nonaccrual loans until principal is recovered. For all loan classes, a loan is generally placed on nonaccrual status when principal or interest becomes 90 days past due unless it is well secured and in the process of collection, or earlier when concern exists as to the ultimate collectability of principal or interest. Interest accrued but not received is reversed against earnings. Cash interest received on these loans is applied to the principal balance until the principal is recovered or until the loan returns to accrual status. Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current, remain current for a prescribed period, and future payments are reasonably assured.


(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
December 31, 2023
Commercial	$	16,128	$	1,332	$	4,861	$	22,321	$	9,257,145	$	9,279,466
Commercial real estate	9,081		5,254		30,660		44,995		13,926,576		13,971,571
BBCC	1,368		134		977		2,479		399,343		401,822
Residential	12,358		367		15,249		27,974		6,671,469		6,699,443
Indirect	7,025		1,854		1,342		10,221		1,040,761		1,050,982
Direct	5,436		1,455		1,787		8,678		514,494		523,172
Home equity	7,791		2,347		6,659		16,797		1,048,674		1,065,471
Total	$	59,187	$	12,743	$	61,535	$	133,465	$	32,858,462	$	32,991,927

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


	December 31, 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	$	43,775	$	13,143	$	242	$	60,372	$	7,873	$	152
Commercial real estate	158,222		24,507		585		122,290		33,445		—
BBCC	4,706		—		95		2,429		—		—
Residential	41,771		—		—		34,660		—		1,808
Indirect	4,207		—		8		3,230		—		28
Direct	5,892		—		31		3,997		—		133
Home equity	16,248		—		—		11,200		—		529
Total	$	274,821	$	37,650	$	961	$	238,178	$	41,318	$	2,650

When management determines that foreclosure is probable, expected credit losses for collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. A loan is considered collateral dependent when the borrower is experiencing financial difficulty, and the loan is expected to be repaid substantially through the operation or sale of the collateral. The class of loan represents the primary collateral type associated with the loan. Significant quarter-over-quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value. 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
December 31, 2023
Commercial	$	14,303	$	24,729	$	2,577	$	280	$	328
Commercial Real Estate	146,425		—		1,167		—		6,107
BBCC	3,522		794		—		390		—
Residential	41,771		—		—		—		—
Indirect	—		—		—		4,207		—
Direct	4,727		1		3		366		29
Home equity	16,248		—		—		—		—
Total	$	226,996	$	25,524	$	3,747	$	5,243	$	6,464

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	$	168,623	$	43,245	$	4,408	$	5,085	$	7,414