10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 1-15817

OLD NATIONAL BANCORP

(Exact name of Registrant as specified in its charter)

INDIANA	35-1539838
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One Main Street Evansville, Indiana	47708
(Address of principal executive offices)	(Zip Code)

(800) 731-2265

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, No Par Value	ONB	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days.    Yes  ☑    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (s232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit such files).    Yes  ☑    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ☐    No  ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock.  The registrant has one class of common stock (no par value) with 170,031,000 shares outstanding at September 30, 2019.

OLD NATIONAL BANCORP

FORM 10-Q

TABLE OF CONTENTS

					Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets				4
	Consolidated Statements of Income (unaudited)				5
	Consolidated Statements of Comprehensive Income (unaudited)				6
	Consolidated Statements of Changes in Shareholders’ Equity (unaudited)				7
	Consolidated Statements of Cash Flows (unaudited)				8
	Notes to Consolidated Financial Statements (unaudited)				9
		Note 1.	Basis of Presentation	9
		Note 2.	Recent Accounting Pronouncements	9
		Note 3.	Acquisition and Divestiture Activity	14
		Note 4.	Net Income Per Share	15
		Note 5.	Investment Securities	16
		Note 6.	Loans Held for Sale	20
		Note 7.	Loans and Allowance for Loan Losses	20
		Note 8.	Other Real Estate Owned	31
		Note 9.	Premises and Equipment	31
		Note 10.	Leases	32
		Note 11.	Goodwill and Other Intangible Assets	34
		Note 12.	Loan Servicing Rights	35
		Note 13.	Qualified Affordable Housing Projects and Other Tax Credit Investments	35
		Note 14.	Securities Sold Under Agreements to Repurchase	37
		Note 15.	Federal Home Loan Bank Advances	38
		Note 16.	Other Borrowings	39
		Note 17.	Accumulated Other Comprehensive Income (Loss)	41
		Note 18.	Share-Based Compensation	43
		Note 19.	Income Taxes	44
		Note 20.	Derivative Financial Instruments	46
		Note 21.	Commitments and Contingencies	50
		Note 22.	Financial Guarantees	51
		Note 23.	Segment Information	51
		Note 24.	Fair Value	52
		Note 25.	Revenue from Contracts with Customers	58
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			60
		Financial Highlights		60
		Non-GAAP Financial Measures		61
		Executive Summary		62
		Results of Operations		63
		Financial Condition		71
		Risk Management		74
		Off-Balance Sheet Arrangements		85
		Contractual Obligations		85
		Critical Accounting Policies and Estimates		86
		Forward-Looking Statements		88
Item 3.	Quantitative and Qualitative Disclosures About Market Risk			90
Item 4.	Controls and Procedures			90
PART II.	OTHER INFORMATION			90
Item 1A.	Risk Factors			90
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			91
Item 5.	Other Information			91
Item 6.	Exhibits			92
SIGNATURE				93

2

GLOSSARY OF ABBREVIATIONS AND ACRONYMS

As used in this report, references to “Old National,” “we,” “our,” “us,” and similar terms refer to the consolidated entity consisting of Old National Bancorp and its wholly-owned affiliates. Old National Bancorp refers solely to the parent holding company, and Old National Bank refers to Old National’s bank subsidiary.

The acronyms and abbreviations identified below are used in the Notes to Consolidated Financial Statements (Unaudited) as well as in the Management’s Discussion and Analysis of Financial Condition and Results of Operations. You may find it helpful to refer to this page as you read this report.

Anchor (MN):  Anchor Bancorp, Inc.

Anchor (WI):  Anchor BanCorp Wisconsin Inc.

AOCI:  accumulated other comprehensive income (loss)

AQR:  asset quality rating

ASC:  Accounting Standards Codification

ASU:  Accounting Standards Update

ATM:  automated teller machine

Common Stock:  Old National Bancorp common stock, without par value

CReED:  Indiana Community Revitalization Enhancement District Tax Credit

DTI:  debt-to-income

FASB:  Financial Accounting Standards Board

FDIC:  Federal Deposit Insurance Corporation

FHLB:  Federal Home Loan Bank

FHTC:  Federal Historic Tax Credit

FICO:  Fair Isaac Corporation

GAAP:  U.S. generally accepted accounting principles

Klein:  Klein Financial, Inc.

LGD:  loss given default

LIBOR:  London Interbank Offered Rate

LIHTC:  Low Income Housing Tax Credit

LTV:  loan-to-value

N/A:  not applicable

N/M:  not meaningful

NASDAQ:  The NASDAQ Stock Market LLC

NOW:  negotiable order of withdrawal

OCC:  Office of the Comptroller of the Currency

OTTI:  other-than-temporary impairment

PCI:  purchased credit impaired

PD:  probability of default

PSA:  prepayment speed assumptions

Renewable Energy:  investment tax credits for solar projects

SEC:  Securities and Exchange Commission

TBA:  to be announced

TDR:  troubled debt restructuring

3

OLD NATIONAL BANCORP

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,			September 30,
(dollars and shares in thousands, except per share data)		2019			2018			2018
	(unaudited)						(unaudited)
Assets
Cash and due from banks	$	320,822		$	284,003		$	215,024
Money market and other interest-earning investments		99,428			33,162			71,737
Total cash and cash equivalents		420,250			317,165			286,761
Equity securities		6,562			5,582			5,828
Investment securities - available-for-sale, at fair value:
U.S. Treasury		5,494			5,301			5,237
U.S. government-sponsored entities and agencies		486,104			628,151			611,696
Mortgage-backed securities		3,136,180			2,209,295			1,508,692
States and political subdivisions		969,475			940,429			792,666
Other securities		319,726			340,240			354,165
Total investment securities - available-for-sale		4,916,979			4,123,416			3,272,456
Investment securities - held-to-maturity, at amortized cost    (fair value $425,588; $506,103; and $505,566, respectively)		407,281			506,334			512,207
Federal Home Loan Bank/Federal Reserve Bank stock, at cost		164,101			142,980			136,206
Loans held for sale, at fair value		58,285			14,911			21,384
Loans:
Commercial		2,950,559			3,232,970			2,949,277
Commercial real estate		5,112,123			4,958,851			4,481,554
Residential real estate		2,236,623			2,248,404			2,166,203
Consumer credit, net of unearned income		1,718,343			1,803,667			1,695,625
Total loans		12,017,648			12,243,892			11,292,659
Allowance for loan losses		(56,910	)		(55,461	)		(52,713	)
Net loans		11,960,738			12,188,431			11,239,946
Premises and equipment, net		492,065			485,912			450,253
Operating lease right-of-use assets		102,976			—			—
Accrued interest receivable		80,747			89,464			78,493
Goodwill		1,036,994			1,036,258			828,804
Other intangible assets		64,051			77,016			42,134
Company-owned life insurance		447,110			444,224			405,245
Net deferred tax assets		26,523			87,048			94,667
Loan servicing rights		24,623			24,497			24,336
Other assets		229,503			185,197			169,039
Total assets	$	20,438,788		$	19,728,435		$	17,567,759
Liabilities
Deposits:
Noninterest-bearing demand	$	3,996,264		$	3,965,380		$	3,588,370
Interest-bearing:
Checking and NOW		3,936,318			3,788,339			3,011,544
Savings		2,863,718			2,944,092			2,920,712
Money market		1,821,989			1,627,882			1,185,439
Time		1,830,063			2,024,256			1,892,135
Total deposits		14,448,352			14,349,949			12,598,200
Federal funds purchased and interbank borrowings		240,589			270,135			450,031
Securities sold under agreements to repurchase		337,551			362,294			319,831
Federal Home Loan Bank advances		2,001,960			1,613,481			1,554,515
Other borrowings		251,763			247,883			251,662
Operating lease liabilities		107,272			—			—
Accrued expenses and other liabilities		218,771			195,123			172,840
Total liabilities		17,606,258			17,038,865			15,347,079
Shareholders' Equity
Preferred stock, 2,000 shares authorized, no shares issued or outstanding		—			—			—
Common stock, $1.00 per share stated value, 300,000 shares authorized,    170,031; 175,141; and 152,352 shares issued and outstanding, respectively		170,031			175,141			152,352
Capital surplus		1,948,808			2,031,695			1,645,111
Retained earnings		655,177			527,684			503,147
Accumulated other comprehensive income (loss), net of tax		58,514			(44,950	)		(79,930	)
Total shareholders' equity		2,832,530			2,689,570			2,220,680
Total liabilities and shareholders' equity	$	20,438,788		$	19,728,435		$	17,567,759

The accompanying notes to consolidated financial statements are an integral part of these statements.

4

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars and shares in thousands, except per share data)		2019		2018		2019		2018
Interest Income
Loans including fees:
Taxable	$	145,417	$	125,468	$	432,642	$	368,467
Nontaxable		3,905		4,075		12,114		11,933
Investment securities:
Taxable		28,884		19,391		86,162		56,562
Nontaxable		7,119		6,295		21,776		19,502
Money market and other interest-earning investments		528		140		1,140		347
Total interest income		185,853		155,369		553,834		456,811
Interest Expense
Deposits		18,707		11,189		53,670		27,583
Federal funds purchased and interbank borrowings		1,484		1,191		5,219		2,855
Securities sold under agreements to repurchase		715		535		2,048		1,328
Federal Home Loan Bank advances		9,123		8,880		29,093		25,484
Other borrowings		2,728		2,732		8,430		8,184
Total interest expense		32,757		24,527		98,460		65,434
Net interest income		153,096		130,842		455,374		391,377
Provision for loan losses		1,437		750		3,483		3,576
Net interest income after provision for loan losses		151,659		130,092		451,891		387,801
Noninterest Income
Wealth management fees		9,160		9,022		27,604		27,794
Service charges on deposit accounts		11,860		11,028		34,201		32,552
Debit card and ATM fees		5,370		4,706		16,292		14,651
Mortgage banking revenue		8,850		4,348		20,996		13,729
Investment product fees		5,244		5,073		16,106		15,170
Capital markets income		4,560		2,700		10,227		4,094
Company-owned life insurance		2,703		2,958		8,602		7,993
Net debt securities gains (losses)		424		135		1,486		2,417
Other income		5,790		5,987		16,077		18,751
Total noninterest income		53,961		45,957		151,591		137,151
Noninterest Expense
Salaries and employee benefits		71,729		63,158		214,478		193,929
Occupancy		11,934		12,578		41,071		38,731
Equipment		3,954		3,652		12,945		10,945
Marketing		4,105		3,406		12,267		11,065
Data processing		8,961		8,628		28,509		26,752
Communication		2,349		2,473		8,252		8,309
Professional fees		5,037		3,235		12,868		8,888
Loan expenses		1,811		1,564		5,380		5,151
FDIC assessment		960		2,722		4,501		8,528
Amortization of intangibles		4,168		3,283		12,965		10,308
Amortization of tax credit investments		1,211		9,233		2,039		21,807
Other expense		6,366		5,444		18,469		22,580
Total noninterest expense		122,585		119,376		373,744		366,993
Income before income taxes		83,035		56,673		229,738		157,959
Income tax expense		13,254		5,325		40,717		14,627
Net income	$	69,781	$	51,348	$	189,021	$	143,332
Net income per common share - basic	$	0.41	$	0.34	$	1.10	$	0.95
Net income per common share - diluted		0.41		0.34		1.09		0.94
Weighted average number of common shares outstanding - basic		170,746		151,930		172,807		151,844
Weighted average number of common shares outstanding - diluted		171,551		152,784		173,527		152,616
Dividends per common share	$	0.13	$	0.13	$	0.39	$	0.39

The accompanying notes to consolidated financial statements are an integral part of these statements.

5

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)		2019			2018			2019			2018
Net income	$	69,781		$	51,348		$	189,021		$	143,332
Other comprehensive income (loss):
Change in debt securities available-for-sale:
Unrealized holding gains (losses) for the period		19,567			(18,159	)		133,081			(51,280	)
Reclassification for securities transferred to held-to-maturity		—			—			—			14,007
Reclassification adjustment for securities (gains) losses realized in     income		(424	)		(135	)		(1,486	)		(2,417	)
Income tax effect		(3,602	)		4,188			(30,005	)		9,368
Unrealized gains (losses) on available-for-sale debt securities		15,541			(14,106	)		101,590			(30,322	)
Change in securities held-to-maturity:
Adjustment for securities transferred to available-for-sale		—			—			—			19,412
Adjustment for securities transferred from available-for-sale		—			—			—			(14,007	)
Amortization of unrealized losses on securities transferred     from available-for-sale		1,384			628			2,405			1,740
Income tax effect		(392	)		(146	)		(627	)		(1,291	)
Changes from securities held-to-maturity		992			482			1,778			5,854
Cash flow hedges:
Net unrealized derivative gains (losses) on cash flow hedges		(73	)		725			479			6,804
Reclassification adjustment for (gains) losses realized in net income		(21	)		(226	)		(412	)		553
Income tax effect		23			(122	)		(17	)		(1,805	)
Changes from cash flow hedges		(71	)		377			50			5,552
Defined benefit pension plans:
Amortization of net loss recognized in income		20			27			61			81
Income tax effect		(5	)		(7	)		(15	)		(20	)
Changes from defined benefit pension plans		15			20			46			61
Other comprehensive income (loss), net of tax		16,477			(13,227	)		103,464			(18,855	)
Comprehensive income	$	86,258		$	38,121		$	292,485		$	124,477

The accompanying notes to consolidated financial statements are an integral part of these statements.

6

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)

										Accumulated
										Other			Total
	Common			Capital			Retained			Comprehensive			Shareholders'
(dollars in thousands, except per share data)	Stock			Surplus			Earnings			Income (Loss)			Equity
Balance, December 31, 2017	$	152,040		$	1,639,499		$	413,130		$	(50,272	)	$	2,154,397
Cumulative effect of change in accounting principles		—			—			(4,127	)		(52	)		(4,179	)
Balance, January 1, 2018		152,040			1,639,499			409,003			(50,324	)		2,150,218
Reclassification of certain tax effects related to    the Tax Cuts and Jobs Act of 2017		—			—			10,751			(10,751	)		—
Net income		—			—			47,983			—			47,983
Other comprehensive income (loss)		—			—			—			(451	)		(451	)
Dividends - common stock ($0.13 per share)		—			—			(19,782	)		—			(19,782	)
Common stock issued		6			99			—			—			105
Common stock repurchased		(64	)		(1,051	)		—			—			(1,115	)
Share-based compensation expense		—			1,931			—			—			1,931
Stock activity under incentive compensation plans		190			298			(259	)		—			229
Balance, March 31, 2018		152,172			1,640,776			447,696			(61,526	)		2,179,118
Net income		—			—			44,001			—			44,001
Other comprehensive income (loss)		—			—			—			(5,177	)		(5,177	)
Dividends - common stock ($0.13 per share)		—			—			(19,806	)		—			(19,806	)
Common stock issued		8			109			—			—			117
Common stock repurchased		(36	)		(598	)		—			—			(634	)
Share-based compensation expense		—			1,675			—			—			1,675
Stock activity under incentive compensation plans		207			828			(114	)		—			921
Balance, June 30, 2018		152,351			1,642,790			471,777			(66,703	)		2,200,215
Net income		—			—			51,348			—			51,348
Other comprehensive income (loss)		—			—			—			(13,227	)		(13,227	)
Dividends - common stock ($0.13 per share)		—			—			(19,806	)		—			(19,806	)
Common stock issued		8			141			—			—			149
Common stock repurchased		(2	)		(25	)		—			—			(27	)
Share-based compensation expense		—			2,023			—			—			2,023
Stock activity under incentive compensation plans		(5	)		182			(172	)		—			5
Balance, September 30, 2018	$	152,352		$	1,645,111		$	503,147		$	(79,930	)	$	2,220,680
Balance, December 31, 2018	$	175,141		$	2,031,695		$	527,684		$	(44,950	)	$	2,689,570
Cumulative effect of change in accounting    principles (Note 2)		—			—			6,322			—			6,322
Balance, January 1, 2019		175,141			2,031,695			534,006			(44,950	)		2,695,892
Net income		—			—			56,276			—			56,276
Other comprehensive income (loss)		—			—			—			47,570			47,570
Dividends - common stock ($0.13 per share)		—			—			(22,812	)		—			(22,812	)
Common stock issued		9			121			—			—			130
Common stock repurchased		(1,655	)		(25,642	)		—			—			(27,297	)
Share-based compensation expense		—			1,800			—			—			1,800
Stock activity under incentive compensation plans		484			(12	)		(159	)		—			313
Balance, March 31, 2019		173,979			2,007,962			567,311			2,620			2,751,872
Net income		—			—			62,964			—			62,964
Other comprehensive income (loss)		—			—			—			39,417			39,417
Dividends - common stock ($0.13 per share)		—			—			(22,476	)		—			(22,476	)
Common stock issued		10			138			—			—			148
Common stock repurchased		(1,884	)		(28,961	)		—			—			(30,845	)
Share-based compensation expense		—			1,946			—			—			1,946
Stock activity under incentive compensation plans		126			120			(133	)		—			113
Balance, June 30, 2019		172,231			1,981,205			607,666			42,037			2,803,139
Net income		—			—			69,781			—			69,781
Other comprehensive income (loss)		—			—			—			16,477			16,477
Dividends - common stock ($0.13 per share)		—			—			(22,136	)		—			(22,136	)
Common stock issued		8			133			—			—			141
Common stock repurchased		(2,206	)		(34,866	)		—			—			(37,072	)
Share-based compensation expense		—			2,200			—			—			2,200
Stock activity under incentive compensation plans		(2	)		136			(134	)		—			—
Balance, September 30, 2019	$	170,031		$	1,948,808		$	655,177		$	58,514		$	2,832,530

The accompanying notes to consolidated financial statements are an integral part of these statements.

7

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Nine Months Ended
	September 30,
(dollars in thousands)		2019			2018
Cash Flows From Operating Activities
Net income	$	189,021		$	143,332
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation		19,980			17,666
Amortization of other intangible assets		12,965			10,308
Amortization of tax credit investments		2,039			21,807
Net premium amortization on investment securities		13,199			11,290
Accretion income related to acquired loans		(33,465	)		(29,525	)
Share-based compensation expense		5,946			5,629
Excess tax (benefit) expense on share-based compensation		(1,057	)		416
Provision for loan losses		3,483			3,576
Net debt securities (gains) losses		(1,486	)		(2,417	)
Net (gains) losses on sales of loans and other assets		(3,815	)		(215	)
Increase in cash surrender value of company-owned life insurance		(8,602	)		(7,993	)
Residential real estate loans originated for sale		(564,457	)		(377,702	)
Proceeds from sales of residential real estate loans		528,739			378,849
(Increase) decrease in interest receivable		8,717			5,112
(Increase) decrease in other assets		(1,695	)		5,947
Increase (decrease) in accrued expenses and other liabilities		(32,816	)		(7,866	)
Net cash flows provided by (used in) operating activities		136,696			178,214
Cash Flows From Investing Activities
Purchases of investment securities available-for-sale		(1,713,799	)		(446,276	)
Purchases of Federal Home Loan Bank/Federal Reserve Bank stock		(21,142	)		(16,520	)
Proceeds from maturities, prepayments, and calls of investment securities available-for-sale		810,397			316,239
Proceeds from sales of investment securities available-for-sale		295,615			136,648
Proceeds from maturities, prepayments, and calls of investment securities held-to-maturity		99,913			49,520
Proceeds from sales of Federal Home Loan Bank/Federal Reserve Bank stock		21			—
Proceeds from sales of equity securities		130			128
Proceeds from sale of student loan portfolio		—			70,674
Loan originations and payments, net		257,675			(211,199	)
Proceeds from company-owned life insurance death benefits		5,716			6,501
Proceeds from sales of premises and equipment and other assets		3,038			6,013
Purchases of premises and equipment and other assets		(31,095	)		(24,704	)
Net cash flows provided by (used in) investing activities		(293,531	)		(112,976	)
Cash Flows From Financing Activities
Net increase (decrease) in:
Deposits		98,403			(7,703	)
Federal funds purchased and interbank borrowings		(29,546	)		114,998
Securities sold under agreements to repurchase		(24,743	)		(64,979	)
Other borrowings		3,744			2,427
Payments for maturities of Federal Home Loan Bank advances		(375,999	)		(998,801	)
Proceeds from Federal Home Loan Bank advances		750,000			945,000
Cash dividends paid on common stock		(67,424	)		(59,394	)
Common stock repurchased		(95,214	)		(1,776	)
Proceeds from exercise of stock options		280			948
Common stock issued		419			371
Net cash flows provided by (used in) financing activities		259,920			(68,909	)
Net increase (decrease) in cash and cash equivalents		103,085			(3,671	)
Cash and cash equivalents at beginning of period		317,165			290,432
Cash and cash equivalents at end of period	$	420,250		$	286,761
Supplemental cash flow information:
Total interest paid	$	101,224		$	65,880
Total taxes paid (net of refunds)	$	2,954		$	1,681
Investment securities purchased but not settled	$	64,924		$	2,291
Securities transferred from held-to-maturity to available-for-sale	$	—		$	447,026
Securities transferred from available-for-sale to held-to-maturity	$	—		$	323,990
Operating lease right-of-use assets obtained in exchange for lease obligations	$	117,853		$	—
Finance lease right-of-use assets obtained in exchange for lease obligations	$	7,871		$	—

The accompanying notes to consolidated financial statements are an integral part of these statements.

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OLD NATIONAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of Old National Bancorp and its wholly-owned affiliates (hereinafter collectively referred to as “Old National”) and have been prepared in conformity with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry.  Such principles require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosures of contingent assets and liabilities at the date of the financial statements and amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  In the opinion of management, the consolidated financial statements contain all the normal and recurring adjustments necessary for a fair statement of the financial position of Old National as of September 30, 2019 and 2018, and December 31, 2018, and the results of its operations for the three and nine months ended September 30, 2019 and 2018.  Interim results do not necessarily represent annual results.  These financial statements should be read in conjunction with Old National’s Annual Report for the year ended December 31, 2018.

All significant intercompany transactions and balances have been eliminated.  Certain prior year amounts have been reclassified to conform to the current presentation.  Such reclassifications had no effect on prior period net income or shareholders’ equity and were insignificant amounts.

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Guidance Adopted in 2019

FASB ASC 842 – In February 2016, the FASB issued its new lease accounting guidance in ASU No. 2016-02, Leases (Topic 842).  Under the new guidance, lessees will be required to recognize the following for all leases, with the exception of short-term leases, at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.  Under the new guidance, lessor accounting is largely unchanged.

In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements.  ASU No. 2018-10 provides improvements related to ASU No. 2016-02 to increase stakeholders’ awareness of the amendments and to expedite the improvements.  The amendments affect narrow aspects of the guidance issued in ASU No. 2016-02.  ASU No. 2018-11 allows entities adopting ASU No. 2016-02 to choose an additional (and optional) transition method, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.  ASU No. 2018-11 also allows lessors to not separate non-lease components from the associated lease component if certain conditions are met.  The amendments in these updates became effective for annual periods and interim periods within those annual periods beginning after December 15, 2018.

Old National elected the optional transition method permitted by ASU No. 2018-11.  Under this method, an entity shall recognize and measure leases that exist at the application date and prior comparative periods are not adjusted.  In addition, Old National elected the package of practical expedients to leases that commenced before the effective date:

1. An entity need not reassess whether any expired or existing contracts contain leases.

2. An entity need not reassess the lease classification for any expired or existing leases.

3. An entity need not reassess initial direct costs for any existing leases.

Old National also elected the practical expedient, which must be applied consistently to all leases, to use hindsight in determining the lease term and in assessing impairment of our right-of-use assets.  We also elected a practical expedient to not assess whether existing or expired land easements that were not previously accounted for as leases under Topic 840 contain a lease under this Topic.  Both of these practical expedients may be elected separately or in conjunction with each other or the package noted above.

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Based on both operating and finance leases outstanding at December 31, 2018, the impact of adoption on January 1, 2019 was recording a lease liability of $122.9 million, a right-of-use asset of $118.7 million, and a cumulative-effect adjustment of $6.3 million to increase retained earnings.

FASB ASC 310 – In March 2017, the FASB issued ASU No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.  This update amends the amortization period for certain purchased callable debt securities held at a premium.  FASB is shortening the amortization period for the premium to the earliest call date.  Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument.  Concerns were raised that current GAAP excludes certain callable debt securities from consideration of early repayment of principal even if the holder is certain that the call will be exercised.  As a result, upon the exercise of a call on a callable debt security held at a premium, the unamortized premium is recorded as a loss in earnings.  There is diversity in practice (1) in the amortization period for premiums of callable debt securities and (2) in how the potential for exercise of a call is factored into current impairment assessments.  The amendments in this update became effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods and did not have a material impact on the consolidated financial statements.

FASB ASC 718 – In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.  The amendments in this update expand the scope of Topic 718, Compensation—Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services.  Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned.  The ASU supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees.  The amendments in this update became effective for annual periods beginning after December 15, 2018, including interim periods within that fiscal year and did not have a material impact on the consolidated financial statements.

FASB ASC 958 – In June 2018, the FASB issued ASU No. 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made.  The amendments in this update clarify and improve the scope and accounting guidance around contributions of cash and other assets received and made by not-for-profit organizations and business enterprises.  The ASU clarifies and improves current guidance about whether a transfer of assets, or the reduction, settlement, or cancellation of liabilities, is a contribution or an exchange transaction.  It provides criteria for determining whether the resource provider is receiving commensurate value in return for the resources transferred which, depending on the outcome, determines whether the organization follows contribution guidance or exchange transaction guidance in the revenue recognition and other applicable standards.  It also provides a more robust framework for determining whether a contribution is conditional or unconditional, and for distinguishing a donor-imposed condition from a donor-imposed restriction.  This is important because such classification affects the timing of contribution revenue and expense recognition.  The new ASU does not apply to transfers of assets from governments to businesses.  The amendments in this update became effective for a public business entity for transactions in which the entity serves as a resource recipient to annual periods beginning after June 15, 2018, including interim periods within those annual periods.  The amendments in this update became effective for a public business entity for transactions in which the entity serves as a resource provider to annual periods beginning after December 15, 2018, including interim periods within those annual periods and there was no impact.

FASB ASC 815 – In October 2018, the FASB issued ASU No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting.  In the United States, eligible benchmark interest rates under Topic 815 are interest rates on direct Treasury obligations of the U.S. government (“UST”), the London Interbank Offered Rate (“LIBOR”) swap rate, and the Overnight Index Swap (“OIS”) Rate based on the Fed Funds Effective Rate. When the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, in August 2017, it introduced the Securities Industry and Financial Markets Association (“SIFMA”) Municipal Swap Rate as the fourth permissible U.S. benchmark rate.

The new ASU adds the OIS rate based on SOFR as a U.S. benchmark interest rate to facilitate the LIBOR to SOFR transition and provide sufficient lead time for entities to prepare for changes to interest rate risk hedging strategies for both risk management and hedge accounting purposes.  The amendments in this update became effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years and the financial statement impact immediately upon adoption was immaterial.  The future financial statement impact will depend on

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any new contracts entered into using new benchmark rates, as well as any existing contracts that get migrated from LIBOR to new benchmark interest rates.  The Company has formed a working group who is developing a transition plan for all exposed contracts migrating from LIBOR to SOFR.  The Company has identified contracts that reflect exposure associated with LIBOR-indexed financial instruments that mature beyond 2021 in an aggregate notional amount of $4.8 billion.  Additionally, the working group is monitoring industry specific transition guidance around a LIBOR contract’s “fallback” language with the industry goal to minimize or eliminate value transfers resulting from the transition.  The associated risks identified include dependence on third parties for critical decisions regarding SOFR index calculations, spread adjustments, term rate development, and product development, which may impact the bank’s ability to establish more detailed timelines for action.

Codification Updates to SEC Sections – In July 2019, the FASB issued ASU No. 2019-07, Codification Updates to SEC Sections, which amends certain SEC sections or paragraphs within the Accounting Standards Codification to reflect changes in SEC Final Rule Releases No. 33-10532, “Disclosure Update and Simplification,” and 33-10231 and 33-10442, “Investment Company Reporting Modernization.” Other revisions in ASU No. 2019-07 update language in the codification to match the electronic Code of Federal Regulations.  The amendments became effective upon addition to the FASB Codification and there is no impact on the consolidated financial statements.

Accounting Guidance Issued But Not Yet Adopted

FASB ASC 326 – In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”).  The main objective of this amendment is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.  The amendment requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to enhance their credit loss estimates.  The amendment requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio.  In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.  The current expected credit loss measurement will be used to estimate the allowance for credit losses (“ACL”) over the life of the financial assets.  The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2019.  Early adoption will be permitted beginning after December 15, 2018.

As previously disclosed, Old National formed a cross functional committee to oversee the adoption of the ASU at the effective date. A working group was also formed and has developed a project plan focused on understanding the ASU, researching issues, identifying data needs for modeling inputs, technology requirements, modeling considerations, and ensuring overarching governance has been achieved for each objective and milestone.  Currently, the working group has identified seven distinct loan portfolios for which a model has been developed. For all seven loan portfolios, the data sets have been identified, populated, and internally validated.  Old National has completed data and model validation testing.  During the remainder of 2019, the project plan is targeting multiple parallel processing of our existing allowance for loan losses model compared to the CECL model, as well as model sensitivity analysis, determination of qualitative adjustments, supporting analytics, and execution of the governance and approval process.

Currently, our measurements for estimating the current expected life-time credit losses for loans and debt securities (as well as certain beneficial interests classified as held-to-maturity) includes the following major items:

• Initial forecast – using a period of one year for all portfolio segments and off-balance-sheet credit exposures, using forward-looking economic scenarios of expected losses.

• Historical loss forecast – for a period incorporating the remaining contractual life, adjusted for prepayments, and the changes in various economic variables during representative historical and recessionary periods.

• Reversion period – using two years, which links the initial loss forecast to the historical loss forecast based on economic conditions at the measurement date.

• Discounted cash flow (“DCF”) aggregator – using the items above to estimate the life-time credit losses for all portfolios and losses for loans modified as a TDR.

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During the remainder of 2019, Old National will continue researching and resolving interpretive accounting issues in the ASU, evaluating and refining processes and related controls, finalizing various related accounting policies, and reporting disclosures.

As of the beginning of the first reporting period in which the new standard is effective, Old National expects to recognize a one-time cumulative effect adjustment increasing the allowance for loan losses, since the ASU covers credit losses over the expected life of a loan as well as considering future changes in macroeconomic conditions.  Old National currently estimates an increase to the allowance for credit losses of approximately $35 million to $45 million upon adoption, which includes a range of $3 million to $8 million for off-balance sheet exposures.  At this point in time, the vast majority of this increase is related to the acquired loan portfolio.  Under the current accounting guidance, any remaining unamortized loan discount on an individual loan can be used to offset a charge-off for that loan, so the allowance for loan losses needed for the acquired loans is reduced by the remaining loan discounts.  The new accounting under the ASU removes the ability to offset a charge-off against the remaining loan discount and requires an allowance for credit losses to be recognized in addition to the loan discount.  The ultimate impact of adopting the ASU will be highly dependent on credit quality, macroeconomic forecasts and conditions, composition of our loans and securities portfolios, and other management judgements at the time of adoption. The transition adjustment to record the allowance for credit losses may fall outside of management’s estimated increase based on material changes in these dependencies, specifically the macroeconomic forecast and conditions, used in calculating the allowance for credit losses upon the adoption of CECL.

Old National does not expect a material allowance for credit losses to be recorded on held-to-maturity securities under the CECL credit impairment model, as the composition of these securities are government agency-backed securities for which the risk the risk of loss is minimal.  Additionally, Old National does not expect a material allowance for credit losses to be recorded on its available-for-sale debt securities under the available-for-sale debt security impairment model, as the majority of these securities are government agency-backed securities for which the risk of loss is minimal.

In December 2018, the OCC, the Board of Governors of the Federal Reserve System, and the FDIC approved a final rule to address changes to credit loss accounting under GAAP, including banking organizations’ implementation of CECL.  The final rule provides banking organizations the option to phase in over a three-year period the day-one adverse effects on regulatory capital that may result from the adoption of the new accounting standard.  Old National is planning on adopting the capital transition relief over the permissible three-year period.

FASB ASC 350 – In January 2017, the FASB issued ASU No. 2017-04, Intangibles: Goodwill and Other: Simplifying the Test for Goodwill Impairment.  To simplify the subsequent measurement of goodwill, the amendments eliminate Step 2 from the goodwill impairment test.  The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount.  An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.  In addition, the income tax effects of tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable.  The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test.  An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the qualitative impairment test is necessary.  The amendments should be applied on a prospective basis.  The nature of and reason for the change in accounting principle should be disclosed upon transition.  The amendments in this update should be adopted for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.  Early adoption is permitted on testing dates after January 1, 2017.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 820 – In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.  The updated guidance improves the disclosure requirements on fair value measurements.  The ASU removes certain disclosures required by Topic 820 related to transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; the valuation processes for Level 3 fair value measurements; and for nonpublic entities, the changes in unrealized gains and losses for the period included in earnings for recurring Level 3 fair value measurements held at the end of the reporting period.  The ASU modifies certain disclosures required by Topic 820 related to disclosure of transfers into and out of Level 3 of the fair value hierarchy and purchases and

12

issues of Level 3 assets and liabilities for nonpublic entities; the requirement to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly for investments in certain entities that calculate net asset value; and clarification that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date.  The ASU adds certain disclosure requirements related to changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.  For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.  The amendments in this update become effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2019.  Early adoption is permitted.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 715 – In August 2018, the FASB issued ASU No. 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans.  The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.  The amendments in this update become effective for fiscal years ending after December 15, 2020 and will not have a material impact on the consolidated financial statements.

FASB ASC 350 – In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.  The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.  The amendments in this update become effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.  Early adoption is permitted.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements.

FASB ASC 842 – In March 2019, the FASB issued ASU No. 2019-01, Leases (Topic 842): Codification Improvements.  The amendments in ASU No. 2019-01 align the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in Topic 842 with that of existing guidance.  As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value in Topic 820, Fair Value Measurement should be applied.  ASU No. 2019-01 also requires lessors within the scope of Topic 942, Financial Services—Depository and Lending, to present all “principal payments received under leases” within investing activities.  The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2019.  Early adoption is permitted.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 326, 815, and 825 – In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.  The amendments related to Topic 326 address accrued interest, transfers between classifications or categories for loans and debt securities, recoveries, vintage disclosures, and contractual extensions and renewal options and will become effective for annual periods and interim periods within those annual periods beginning after December 15, 2019.  The improvements and clarifications related to Topic 815 address partial-term fair value hedges of interest-rate risk, amortization, and disclosure of fair value hedge basis adjustments and consideration of hedged contractually specified interest rate under the hypothetical method and will become effective for the annual reporting period beginning January 1, 2020.  The amendments related to Topic 825 contain various improvements to ASU 2016-01, including scope; held-to-maturity debt securities fair value disclosures; and remeasurement of equity securities at historical exchange rates and will become effective for fiscal years and interim periods beginning after December 15, 2019.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

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FASB ASC 326 – In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief.  These amendments provide targeted transition relief allowing entities to irrevocably elect the fair value option, on an instrument-by-instrument basis, for certain financial assets (excluding held-to-maturity debt securities) previously measured at amortized cost.  The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2019.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

NOTE 3 – ACQUISITION AND DIVESTITURE ACTIVITY

Acquisition

Klein Financial, Inc.

Effective November 1, 2018, Old National completed the acquisition of Minnesota-based Klein through a 100% stock merger.  Klein was a bank holding company with KleinBank as its wholly-owned subsidiary.  Founded in 1907 and headquartered in Chaska, Minnesota with 18 full-service branches, KleinBank was the largest family-owned community bank serving the Twin Cities and its western communities.  Old National believes that it will be able to achieve cost savings by integrating the two companies and combining accounting, data processing, retail and lending support, and other administrative functions, which will enable Old National to achieve economies of scale in these areas.

Pursuant to the merger agreement, each holder of Klein common stock received 7.92 shares of Old National Common Stock per share of Klein common stock such holder owned.  The total fair value of consideration for Klein was $406.5 million, consisting of 22.8 million shares of Old National Common Stock valued at $406.5 million.  Through September 30, 2019, transaction and integration costs of $20.1 million associated with this acquisition have been expensed and remaining integration costs will be expensed as incurred.

During the three months ended September 30, 2019, immaterial adjustments were made to the provisional valuation of assets acquired and liabilities assumed as Old National finalized the valuation.  These adjustments affected goodwill, premises and equipment, and net deferred tax assets.  A summary of the fair values of the acquired assets, liabilities assumed, and resulting goodwill follows (in thousands):

Cash and cash equivalents	$	60,759
Investment securities		697,951
FHLB/Federal Reserve Bank stock		2,637
Loans held for sale		3,371
Loans		1,049,073
Premises and equipment		32,408
Accrued interest receivable		7,896
Company-owned life insurance		36,380
Net deferred tax assets		6,746
Other real estate owned		954
Other assets		10,299
Deposits		(1,713,086	)
Securities sold under agreements to repurchase		(19,481	)
Accrued expenses and other liabilities		(17,506	)
Net tangible assets acquired		158,401
Definite-lived intangible assets acquired		39,017
Loan servicing rights		285
Goodwill		208,771
Total consideration	$	406,474

Goodwill related to this acquisition will not be deductible for tax purposes.

The estimated fair value of the core deposit intangible was $39.0 million and is being amortized over an estimated useful life of 12 years.

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Acquired loan data for Klein can be found in the table below:

					Best Estimate at
					Acquisition Date of
	Fair Value		Gross Contractual		Contractual Cash
	of Acquired Loans		Cash Flows at		Flows Not Expected
(in thousands)	at Acquisition Date		Acquisition Date		to be Collected
Acquired receivables subject to    ASC 310-30	$	11,663	$	18,568	$	4,521
Acquired receivables not subject    to ASC 310-30	$	1,037,410	$	1,252,954	$	76,534

NOTE 4 – NET INCOME PER SHARE

Basic and diluted net income per share are calculated using the two-class method.  Net income is divided by the weighted-average number of common shares outstanding during the period.  Adjustments to the weighted average number of common shares outstanding are made only when such adjustments will dilute net income per common share.  Net income is then divided by the weighted-average number of common shares and common share equivalents during the period.

The following table reconciles basic and diluted net income per share for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended				Nine Months Ended
(dollars and shares in thousands,	September 30,				September 30,
except per share data)	2019		2018		2019		2018
Basic Net Income Per Share
Net income	$	69,781	$	51,348	$	189,021	$	143,332
Weighted average common shares outstanding		170,746		151,930		172,807		151,844
Basic Net Income Per Share	$	0.41	$	0.34	$	1.10	$	0.95
Diluted Net Income Per Share
Net income	$	69,781	$	51,348	$	189,021	$	143,332
Weighted average common shares outstanding		170,746		151,930		172,807		151,844
Effect of dilutive securities:
Restricted stock		761		790		672		701
Stock options (1)		44		64		48		71
Weighted average shares outstanding		171,551		152,784		173,527		152,616
Diluted Net Income Per Share	$	0.41	$	0.34	$	1.09	$	0.94

(1) Options to purchase 14 thousand shares outstanding at September 30, 2019 and 2018 were not included in the computation of net income per diluted share for the three and nine months ended September 30, 2019 and 2018 because the exercise price of these options was greater than the average market price of the common shares and, therefore, the effect would be antidilutive.

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NOTE 5 – INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair value of the available-for-sale and held-to-maturity investment securities portfolio at September 30, 2019 and December 31, 2018 and the corresponding amounts of unrealized gains and losses therein:

	Amortized		Unrealized		Unrealized			Fair
(dollars in thousands)	Cost		Gains		Losses			Value
September 30, 2019
Available-for-Sale
U.S. Treasury	$	5,363	$	133	$	(2	)	$	5,494
U.S. government-sponsored entities and agencies		484,226		1,913		(35	)		486,104
Mortgage-backed securities - Agency		3,092,991		49,135		(5,946	)		3,136,180
States and political subdivisions		932,589		37,226		(340	)		969,475
Pooled trust preferred securities		13,825		—		(6,130	)		7,695
Other securities		305,591		7,560		(1,120	)		312,031
Total available-for-sale securities	$	4,834,585	$	95,967	$	(13,573	)	$	4,916,979

Held-to-Maturity
U.S. government-sponsored entities and agencies	$	33,321	$	1,125	$	—	$	34,446
Mortgage-backed securities - Agency		112,187		3,580		—		115,767
States and political subdivisions		261,773		13,602		—		275,375
Total held-to-maturity securities	$	407,281	$	18,307	$	—	$	425,588

December 31, 2018
Available-for-Sale
U.S. Treasury	$	5,332	$	—	$	(31	)	$	5,301
U.S. government-sponsored entities and agencies		639,458		35		(11,342	)		628,151
Mortgage-backed securities - Agency		2,243,774		9,738		(44,217	)		2,209,295
States and political subdivisions		932,757		11,113		(3,441	)		940,429
Pooled trust preferred securities		13,861		—		(5,366	)		8,495
Other securities		337,435		486		(6,176	)		331,745
Total available-for-sale securities	$	4,172,617	$	21,372	$	(70,573	)	$	4,123,416

Held-to-Maturity
U.S. government-sponsored entities and agencies	$	73,986	$	—	$	(1,627	)	$	72,359
Mortgage-backed securities - Agency		127,120		39		(2,750	)		124,409
States and political subdivisions		305,228		6,208		(2,101	)		309,335
Total held-to-maturity securities	$	506,334	$	6,247	$	(6,478	)	$	506,103

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Proceeds from sales or calls of available-for-sale investment securities and the resulting realized gains and realized losses were as follows for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)		2019			2018			2019			2018
Proceeds from sales of available-for-sale debt securities	$	27,983		$	5,327		$	295,615		$	136,648
Proceeds from calls of available-for-sale debt securities		316,361			2,938			378,476			31,585
Total	$	344,344		$	8,265		$	674,091		$	168,233
Realized gains on sales of available-for-sale debt securities	$	340		$	—		$	3,443		$	3,259
Realized gains on calls of available-for-sale debt securities		86			—			89			284
Realized losses on sales of available-for-sale debt securities		(2	)		(74	)		(2,017	)		(1,379	)
Realized losses on calls of available-for-sale debt securities		—			(7	)		(29	)		(60	)
Other securities gains (losses) (1)		—			216			—			313
Net debt securities gains (losses)	$	424		$	135		$	1,486		$	2,417

(1) For the three and nine months ended September 30, 2018, other securities gains (losses) included realized gains and losses of equity securities previously classified as trading securities.  For the three and nine months ended September 30, 2019, gains (losses) on equity securities are included in other income.

(1

All of the mortgage-backed securities in the investment portfolio are residential mortgage-backed securities.  The amortized cost and fair value of the investment securities portfolio are shown by contractual maturity.  Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  Weighted average yield is based on amortized cost.

	At September 30, 2019
(dollars in thousands)					Weighted
	Amortized		Fair		Average
Maturity	Cost		Value		Yield
Available-for-Sale
Within one year	$	155,063	$	154,941		2.47	%
One to five years		2,900,031		2,941,365		2.78
Five to ten years		767,785		787,301		3.17
Beyond ten years		1,011,706		1,033,372		3.23
Total	$	4,834,585	$	4,916,979		2.93	%
Held-to-Maturity
Within one year	$	3,621	$	3,644		3.66	%
One to five years		108,113		111,340		3.28
Five to ten years		106,591		111,513		3.96
Beyond ten years		188,956		199,091		4.22
Total	$	407,281	$	425,588		3.90	%

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The following table summarizes the available-for-sale investment securities with unrealized losses at September 30, 2019 and December 31, 2018 by aggregated major security type and length of time in a continuous unrealized loss position:

	Less than 12 months					12 months or longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
September 30, 2019
Available-for-Sale
U.S. Treasury	$	—	$	—		$	1,494	$	(2	)	$	1,494	$	(2	)
U.S. government-sponsored entities    and agencies		50,979		(20	)		5,322		(15	)		56,301		(35	)
Mortgage-backed securities - Agency		484,912		(2,806	)		295,934		(3,140	)		780,846		(5,946	)
States and political subdivisions		66,516		(278	)		8,192		(62	)		74,708		(340	)
Pooled trust preferred securities		—		—			7,695		(6,130	)		7,695		(6,130	)
Other securities		21,626		(25	)		95,483		(1,095	)		117,109		(1,120	)
Total available-for-sale	$	624,033	$	(3,129	)	$	414,120	$	(10,444	)	$	1,038,153	$	(13,573	)
December 31, 2018
Available-for-Sale
U.S. Treasury	$	3,829	$	(12	)	$	1,472	$	(19	)	$	5,301	$	(31	)
U.S. government-sponsored entities    and agencies		54,701		(594	)		519,911		(10,748	)		574,612		(11,342	)
Mortgage-backed securities - Agency		82,289		(742	)		1,172,984		(43,475	)		1,255,273		(44,217	)
States and political subdivisions		99,162		(1,340	)		151,097		(2,101	)		250,259		(3,441	)
Pooled trust preferred securities		—		—			8,495		(5,366	)		8,495		(5,366	)
Other securities		94,607		(1,965	)		143,842		(4,211	)		238,449		(6,176	)
Total available-for-sale	$	334,588	$	(4,653	)	$	1,997,801	$	(65,920	)	$	2,332,389	$	(70,573	)

The following table summarizes the held-to-maturity investment securities with unrecognized losses at September 30, 2019 and December 31, 2018 by aggregated major security type and length of time in a continuous unrecognized loss position:

	Less than 12 months					12 months or longer					Total
	Fair		Unrecognized			Fair		Unrecognized			Fair		Unrecognized
(dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
September 30, 2019
Held-to-Maturity
U.S. government-sponsored entities    and agencies	$	—	$	—		$	—	$	—		$	—	$	—
Mortgage-backed securities - Agency		—		—			—		—			—		—
States and political subdivisions		—		—			—		—			—		—
Total held-to-maturity	$	—	$	—		$	—	$	—		$	—	$	—
December 31, 2018
Held-to-Maturity
U.S. government-sponsored entities    and agencies	$	—	$	—		$	72,359	$	(4,642	)	$	72,359	$	(4,642	)
Mortgage-backed securities - Agency		4,335		(24	)		119,207		(8,006	)		123,542		(8,030	)
States and political subdivisions		24,533		(983	)		70,022		(3,556	)		94,555		(4,539	)
Total held-to-maturity	$	28,868	$	(1,007	)	$	261,588	$	(16,204	)	$	290,456	$	(17,211	)

The unrecognized losses on held-to-maturity investment securities presented in the table above include unrecognized losses on securities that were transferred from available-for-sale to held-to-maturity totaling $10.7 million at December 31, 2018.  All transferred held-to-maturity investment securities were in an unrealized gain position at September 30, 2019.  The remaining unamortized loss on securities transferred from available-for-sale to held-to-maturity totaled $9.4 million at September 30, 2019.

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Management evaluates debt securities for OTTI at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.  Management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery.  The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When OTTI occurs, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss.  If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date.  Otherwise, the OTTI shall be separated into the amount representing the credit loss and the amount related to all other factors.  The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings.  The amount of the total OTTI related to other factors shall be recognized in other comprehensive income, net of applicable taxes.  The previous amortized cost basis less the OTTI recognized in earnings shall become the new amortized cost basis of the investment.

There was no OTTI recorded during the nine months ended September 30, 2019 or 2018.

At September 30, 2019, Old National’s securities portfolio consisted of 1,937 securities, 256 of which were in an unrealized loss position.  The unrealized losses attributable to our U.S. Treasury, U.S. government-sponsored entities and agencies, agency mortgage-backed securities, states and political subdivisions, and other securities are the result of fluctuations in interest rates.  Our pooled trust preferred securities are discussed below.  At September 30, 2019, we had no intent to sell any securities that were in an unrealized loss position nor is it expected that we would be required to sell the securities prior to their anticipated recovery.

Pooled Trust Preferred Securities

At September 30, 2019, our securities portfolio contained two pooled trust preferred securities with a fair value of $7.7 million and unrealized losses of $6.1 million.  These securities are evaluated using collateral-specific assumptions to estimate the expected future interest and principal cash flows.  For the nine months ended September 30, 2019 and 2018, our analysis indicated no OTTI on these securities.

The table below summarizes the relevant characteristics of our pooled trust preferred securities as well as our single issuer trust preferred securities that are included in the “other securities” category in this footnote.  Each of the pooled trust preferred securities support a more senior tranche of security holders.  Both pooled trust preferred securities have experienced credit defaults.  However, these securities have excess subordination and are not other-than-temporarily impaired as a result of their class hierarchy, which provides more loss protection.

Trust preferred securities													Actual	Expected	Excess
September 30, 2019													Deferrals	Defaults as	Subordination
(dollars in thousands)												# of Issuers	and Defaults	a % of	as a % of
		Lowest					Unrealized			Realized		Currently	as a % of	Remaining	Current
		Credit	Amortized		Fair		Gain/			Losses		Performing/	Original	Performing	Performing
	Class	Rating (1)	Cost		Value		(Loss)			2019		Remaining	Collateral	Collateral	Collateral
Pooled trust preferred securities:
Pretsl XXVII LTD	B	B	$	4,303	$	2,135	$	(2,168	)	$	—	32/41	14.6%	11.3%	26.7%
Trapeza Ser 13A	A2A	BBB		9,522		5,560		(3,962	)		—	42/47	4.5%	6.7%	49.6%
				13,825		7,695		(6,130	)		—
Single Issuer trust preferred securities:
JP Morgan Chase & Co		BBB-		4,795		4,325		(470	)		—
Total			$	18,620	$	12,020	$	(6,600	)	$	—

(1)Lowest rating for the security provided by any nationally recognized credit rating agency.

Equity Securities

Equity securities are recorded at fair value and totaled $6.6 million at September 30, 2019 and $5.6 million at December 31, 2018.  There were gains on equity securities of $0.2 million during the three months ended September

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30, 2019 and $0.4 million during the nine months ended September 30, 2019, compared to gains of $0.2 million during the three months ended September 30, 2018 and $0.3 million during the nine months ended September 30, 2018.  Old National also has equity securities without readily determinable fair values that are included in other assets that totaled $93.3 million at September 30, 2019 and $79.2 million at December 31, 2018.  These are illiquid investments that consist of partnerships, limited liability companies, and other ownership interests that support affordable housing, economic development, and community revitalization initiatives in low-to-moderate income neighborhoods.  There have been no impairments or downward adjustments on these securities in the nine months ended September 30, 2019 or 2018.

NOTE 6 – LOANS HELD FOR SALE

Mortgage loans held for immediate sale in the secondary market were $58.3 million at September 30, 2019, compared to $14.9 million at December 31, 2018.  Residential loans that Old National has originated with the intent to sell are recorded at fair value.  Conventional mortgage production is sold on a servicing retained basis.  Certain loans, such as government guaranteed mortgage loans are sold on servicing released basis.

NOTE 7 – LOANS AND ALLOWANCE FOR LOAN LOSSES

Old National’s loans consist primarily of loans made to consumers and commercial clients in various industries including manufacturing, agribusiness, transportation, mining, wholesaling, and retailing.  Most of Old National’s lending activity occurs within our principal geographic markets of Indiana, Kentucky, Michigan, Wisconsin, and Minnesota.  Old National manages concentrations of credit exposure by industry, product, geography, customer relationship, and loan size.  While loans to lessors of both residential and non-residential real estate exceed 10% of total loans, no individual sub-segment category within those broader categories reaches the 10% threshold.

The composition of loans by lending classification was as follows:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Commercial (1)	$	2,950,559		$	3,232,970
Commercial real estate:
Construction		592,348			504,625
Other		4,519,775			4,454,226
Residential real estate		2,236,623			2,248,404
Consumer credit:
Home equity		555,905			589,322
Auto		1,005,535			1,059,633
Other		156,903			154,712
Total loans		12,017,648			12,243,892
Allowance for loan losses		(56,910	)		(55,461	)
Net loans	$	11,960,738		$	12,188,431

(1) Includes direct finance leases of $50.0 million at September 30, 2019 and $60.0 million at December 31, 2018.

The risk characteristics of each loan portfolio segment are as follows:

Commercial

Commercial loans are primarily based 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 customers.

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Commercial Real Estate

These 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.

At 189%, Old National Bank’s commercial real estate loans as a percentage of its risk-based capital remained well below the regulatory guideline limit of 300% at September 30, 2019.

Residential

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.  Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Consumer

Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles.  Some consumer loans are unsecured such as small installment loans and certain lines of credit.  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 or other collateral values.  Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Allowance for Loan Losses

The allowance for loan losses is maintained at a level believed adequate by management to absorb probable losses incurred in the consolidated loan portfolio.  Management’s evaluation of the adequacy of the allowance is an estimate based on reviews of individual loans, pools of homogeneous loans, assessments of the impact of current and anticipated economic conditions on the portfolio, and historical loss experience.  The allowance is increased through a provision charged to operating expense.  Loans deemed to be uncollectible are charged to the allowance.  Recoveries of loans previously charged-off are added to the allowance.

We utilize a PD and LGD model as a tool to determine the adequacy of the allowance for loan losses for performing commercial and commercial real estate loans.  The PD is forecast using a transition matrix to determine the likelihood of a customer’s AQR migrating from its current AQR to any other status within the time horizon.  Transition rates are measured using Old National’s own historical experience.  The model assumes that recent historical transition rates will continue into the future.  The LGD is defined as credit loss incurred when an obligor

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of the bank defaults.  The sum of all net charge-offs for a particular portfolio segment are divided by all loans that have defaulted over a given period of time. The expected loss derived from the model considers the PD, LGD, and exposure at default.  Additionally, qualitative factors, such as changes in lending policies or procedures, and economic business conditions are also considered.

We use historic loss ratios adjusted for economic conditions to determine the appropriate level of allowance for residential real estate and consumer loans.

No allowance was brought forward on any of the acquired loans as any credit deterioration evident in the loans was included in the determination of the fair value of the loans at the acquisition date.  An allowance for loan losses will be established for any subsequent credit deterioration or adverse changes in expected cash flows.

Old National’s activity in the allowance for loan losses for the three and nine months ended September 30, 2019 and 2018 was as follows:

				Commercial
(dollars in thousands)	Commercial			Real Estate			Residential			Consumer			Total
Three Months Ended September 30, 2019
Balance at beginning of period	$	22,548		$	23,311		$	2,269		$	8,164		$	56,292
Charge-offs		(420	)		(191	)		(384	)		(1,721	)		(2,716	)
Recoveries		374			669			26			828			1,897
Provision		(373	)		465			452			893			1,437
Balance at end of period	$	22,129		$	24,254		$	2,363		$	8,164		$	56,910
Three Months Ended September 30, 2018
Balance at beginning of period	$	21,387		$	22,498		$	1,867		$	7,908		$	53,660
Charge-offs		(1,662	)		(241	)		(284	)		(2,074	)		(4,261	)
Recoveries		467			944			45			1,108			2,564
Provision		(473	)		(309	)		292			1,240			750
Balance at end of period	$	19,719		$	22,892		$	1,920		$	8,182		$	52,713
Nine Months Ended September 30, 2019
Balance at beginning of period	$	21,742		$	23,470		$	2,277		$	7,972		$	55,461
Charge-offs		(1,184	)		(815	)		(702	)		(5,784	)		(8,485	)
Recoveries		1,083			2,444			107			2,817			6,451
Provision		488			(845	)		681			3,159			3,483
Balance at end of period	$	22,129		$	24,254		$	2,363		$	8,164		$	56,910
Nine Months Ended September 30, 2018
Balance at beginning of period	$	19,246		$	21,436		$	1,763		$	7,936		$	50,381
Charge-offs		(2,378	)		(675	)		(941	)		(6,006	)		(10,000	)
Recoveries		1,227			2,011			1,890			3,628			8,756
Provision		1,624			120			(792	)		2,624			3,576
Balance at end of period	$	19,719		$	22,892		$	1,920		$	8,182		$	52,713

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The following table presents Old National’s recorded investment in loans by portfolio segment at September 30, 2019 and December 31, 2018 and other information regarding the allowance:

			Commercial
(dollars in thousands)	Commercial		Real Estate		Residential		Consumer		Total
September 30, 2019
Allowance for loan losses:
Individually evaluated for impairment	$	7,855	$	4,485	$	—	$	—	$	12,340
Collectively evaluated for impairment		14,273		19,621		2,363		7,968		44,225
Loans acquired with deteriorated    credit quality		1		148		—		196		345
Total allowance for loan losses	$	22,129	$	24,254	$	2,363	$	8,164	$	56,910
Loans and leases outstanding:
Individually evaluated for impairment	$	40,270	$	73,627	$	—	$	—	$	113,897
Collectively evaluated for impairment		2,904,851		5,016,357		2,228,965		1,715,701		11,865,874
Loans acquired with deteriorated    credit quality		5,438		22,139		7,658		2,642		37,877
Total loans and leases outstanding	$	2,950,559	$	5,112,123	$	2,236,623	$	1,718,343	$	12,017,648
December 31, 2018
Allowance for loan losses:
Individually evaluated for impairment	$	6,035	$	8,306	$	—	$	—	$	14,341
Collectively evaluated for impairment		15,700		14,845		2,276		7,821		40,642
Loans acquired with deteriorated    credit quality		7		319		1		151		478
Total allowance for loan losses	$	21,742	$	23,470	$	2,277	$	7,972	$	55,461
Loans and leases outstanding:
Individually evaluated for impairment	$	35,410	$	83,104	$	—	$	—	$	118,514
Collectively evaluated for impairment		3,191,367		4,850,356		2,239,147		1,800,115		12,080,985
Loans acquired with deteriorated    credit quality		6,193		25,391		9,257		3,552		44,393
Total loans and leases outstanding	$	3,232,970	$	4,958,851	$	2,248,404	$	1,803,667	$	12,243,892

Credit Quality

Old National’s management monitors the credit quality of its loans in an on-going manner.  Internally, management assigns an AQR to each non-homogeneous commercial and commercial real estate loan in the portfolio, with the exception of certain FICO-scored small business loans.  The primary determinants of the AQR are based upon 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:

Criticized.  Special mention loans that have a potential weakness that deserves management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Classified – Substandard.  Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Classified – Nonaccrual.  Loans classified as nonaccrual have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection in full, on the basis of currently existing facts, conditions, and values, in doubt.

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Classified – Doubtful.  Loans classified as doubtful have all the weaknesses inherent in those classified as nonaccrual, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Pass rated loans are those loans that are other than criticized, classified – substandard, classified – nonaccrual, or classified – doubtful.

The risk category of commercial and commercial real estate loans by class of loans at September 30, 2019 and December 31, 2018 was as follows:

(dollars in thousands)					Commercial				Commercial
					Real Estate -				Real Estate -
Corporate Credit Exposure	Commercial				Construction				Other
Credit Risk Profile by	September 30,		December 31,		September 30,		December 31,		September 30,		December 31,
Internally Assigned Grade	2019		2018		2019		2018		2019		2018
Grade:
Pass	$	2,773,941	$	3,029,130	$	553,854	$	460,158	$	4,251,014	$	4,167,902
Criticized		89,079		98,798		24,839		29,368		119,601		110,586
Classified - substandard		49,659		66,394		—		1,275		92,372		102,961
Classified - nonaccrual		30,067		29,003		13,655		13,824		37,972		37,441
Classified - doubtful		7,813		9,645		—		—		18,816		35,336
Total	$	2,950,559	$	3,232,970	$	592,348	$	504,625	$	4,519,775	$	4,454,226

Old National considers the performance of the loan portfolio and its impact on the allowance for loan losses.  For residential and consumer loan classes, Old National also evaluates credit quality based on the aging status of the loan and by payment activity.  The following table presents the recorded investment in residential and consumer loans based on payment activity at September 30, 2019 and December 31, 2018:

			Consumer
			Home
(dollars in thousands)	Residential		Equity		Auto		Other
September 30, 2019
Performing	$	2,215,864	$	551,129	$	1,002,091	$	155,707
Nonperforming		20,759		4,776		3,444		1,196
Total	$	2,236,623	$	555,905	$	1,005,535	$	156,903
December 31, 2018
Performing	$	2,223,450	$	586,235	$	1,057,038	$	153,113
Nonperforming		24,954		3,087		2,595		1,599
Total	$	2,248,404	$	589,322	$	1,059,633	$	154,712

Impaired Loans

Large commercial credits are subject to individual evaluation for impairment.  Retail credits and other small balance credits that are part of a homogeneous group are not tested for individual impairment unless they are modified as a TDR.  A loan is considered impaired when it is probable that contractual interest and principal payments will not be collected either for the amounts or by the dates as scheduled in the loan agreement.  If a loan is impaired, a portion of the allowance is allocated so that the loan is reported net, at the present value of estimated cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral.  Old National’s policy, for all but PCI loans, is to recognize interest income on impaired loans unless the loan is placed on nonaccrual status.

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The following table shows Old National’s impaired loans at September 30, 2019 and December 31, 2018, respectively.  Only purchased loans that have experienced subsequent impairment since the date acquired (excluding loans acquired with deteriorated credit quality) are included in the table below.

			Unpaid
	Recorded		Principal		Related
(dollars in thousands)	Investment		Balance		Allowance
September 30, 2019
With no related allowance recorded:
Commercial	$	19,154	$	19,462	$	—
Commercial Real Estate - Construction		10,890		10,890		—
Commercial Real Estate - Other		38,517		39,942		—
Residential		1,783		1,803		—
Consumer		1,137		1,303		—
With an allowance recorded:
Commercial		21,116		21,169		7,855
Commercial Real Estate - Construction		2,764		2,764		1,183
Commercial Real Estate - Other		21,456		21,456		3,302
Residential		990		990		39
Consumer		1,065		1,065		53
Total	$	118,872	$	120,844	$	12,432
December 31, 2018
With no related allowance recorded:
Commercial	$	22,031	$	22,292	$	—
Commercial Real Estate - Other		41,126		41,914		—
Residential		2,276		2,296		—
Consumer		362		535		—
With an allowance recorded:
Commercial		13,379		13,432		6,035
Commercial Real Estate - Construction		13,824		13,824		1,830
Commercial Real Estate - Other		28,154		28,154		6,476
Residential		889		889		44
Consumer		2,013		2,013		101
Total	$	124,054	$	125,349	$	14,486

The average balance of impaired loans during the three and nine months ended September 30, 2019 and 2018 are included in the table below.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in thousands)		2019		2018		2019		2018
Average Recorded Investment
With no related allowance recorded:
Commercial	$	20,147	$	19,960	$	20,593	$	20,445
Commercial Real Estate - Construction		10,964		—		5,445		—
Commercial Real Estate - Other		34,073		45,302		39,821		42,209
Residential		2,066		2,303		2,145		2,289
Consumer		1,166		1,392		1,096		1,617
With an allowance recorded:
Commercial		19,866		14,771		17,248		10,393
Commercial Real Estate - Construction		2,764		11,307		8,294		7,537
Commercial Real Estate - Other		21,019		24,305		24,806		26,537
Residential		924		863		907		887
Consumer		1,204		1,909		1,260		2,013
Total	$	114,193	$	122,112	$	121,615	$	113,927

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Old National does not record interest on nonaccrual loans until principal is recovered.  Interest income recognized on impaired loans during the three and nine months ended September 30, 2019 and 2018 was immaterial.

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 during the current year on such loans is reversed against interest income.  Interest accrued in the prior year, if any, is charged to the allowance for loan losses.  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.

Loans accounted for under FASB ASC Topic 310-30 accrue interest, even though they may be contractually past due, as any nonpayment of contractual principal or interest is considered in the periodic re-estimation of expected cash flows and is included in the resulting recognition of current period loan loss provision or prospective yield adjustments.

Old National’s past due loans at September 30, 2019 and December 31, 2018 were as follows:

					Past Due
					90 Days or
	30-59 Days		60-89 Days		More and				Total
(dollars in thousands)	Past Due		Past Due		Accruing		Nonaccrual (1)		Past Due		Current
September 30, 2019
Commercial	$	2,218	$	1,181	$	100	$	37,880	$	41,379	$	2,909,180
Commercial Real Estate:
Construction		—		300		—		13,655		13,955		578,393
Other		549		90		—		56,788		57,427		4,462,348
Residential		8,620		3,546		64		20,759		32,989		2,203,634
Consumer:
Home equity		1,008		118		233		4,776		6,135		549,770
Auto		6,069		769		190		3,444		10,472		995,063
Other		695		105		116		1,196		2,112		154,791
Total loans	$	19,159	$	6,109	$	703	$	138,498	$	164,469	$	11,853,179
December 31, 2018
Commercial	$	3,627	$	279	$	52	$	38,648	$	42,606	$	3,190,364
Commercial Real Estate:
Construction		—		—		—		13,824		13,824		490,801
Other		1,633		500		40		72,777		74,950		4,379,276
Residential		25,947		3,437		258		24,954		54,596		2,193,808
Consumer:
Home equity		1,434		960		456		3,087		5,937		583,385
Auto		7,091		1,903		377		2,595		11,966		1,047,667
Other		711		210		170		1,599		2,690		152,022
Total loans	$	40,443	$	7,289	$	1,353	$	157,484	$	206,569	$	12,037,323

(1) Includes purchased credit impaired loans of $11.0 million at September 30, 2019 and $20.5 million at December 31, 2018 that are categorized as nonaccrual for credit analysis purposes because the collection of principal or interest is doubtful.  However, these loans are accounted for under FASB ASC 310-30 and accordingly treated as performing assets.

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Loan Participations

Old National has loan participations, which qualify as participating interests, with other financial institutions.  At September 30, 2019, these loans totaled $891.9 million, of which $416.0 million had been sold to other financial institutions and $475.9 million 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 among the participating interest holders in proportion to each holder’s share of ownership; and no holder has the right to pledge the entire financial asset unless all participating interest holders agree.

Troubled Debt Restructurings

Old National may choose to restructure the contractual terms of certain loans.  The decision to restructure a loan, versus aggressively enforcing the collection of the loan, may benefit Old National by increasing the ultimate probability of collection.

Any loans that are modified are reviewed by Old National to identify if a TDR has occurred, which is when for economic or legal reasons related to a borrower’s financial difficulties, Old National Bank grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status.  The modification of the terms of such loans include one or a combination of the following:  a reduction of the stated interest rate of the loan, an extension of the maturity date at a stated rate of interest lower than the current market rate of new debt with similar risk, or a permanent reduction of the recorded investment of the loan.

Loans modified in a TDR are typically placed on nonaccrual status until we determine the future collection of principal and interest is reasonably assured, which generally requires that the borrower demonstrate a period of performance according to the restructured terms for six months.

If we are unable to resolve a nonperforming loan issue, the credit will be charged off when it is apparent there will be a loss.  For large commercial type loans, each relationship is individually analyzed for evidence of apparent loss based on quantitative benchmarks or subjectively based upon certain events or particular circumstances.  Generally, Old National charges off small commercial loans scored through our small business credit center with contractual balances under $250,000 that are 90 days or more delinquent and do not have adequate collateral support.  For residential and consumer loans, a charge off is recorded at the time foreclosure is initiated or when the loan becomes 120 to 180 days past due, whichever is earlier.

For commercial TDRs, an allocated reserve is established within the allowance for loan losses for the difference between the carrying value of the loan and its computed value.  To determine the value of the loan, one of the following methods is selected: (1) the present value of expected cash flows discounted at the loan’s original effective interest rate, (2) the loan’s observable market price, or (3) the fair value of the collateral value, if the loan is collateral dependent.  The allocated reserve is established as the difference between the carrying value of the loan and the collectable value.  If there are significant changes in the amount or timing of the loan’s expected future cash flows, impairment is recalculated and the valuation allowance is adjusted accordingly.

When a residential or consumer loan is identified as a TDR, the loan is typically written down to its collateral value less selling costs.

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The following table presents activity in TDRs for the three and nine months ended September 30, 2019 and 2018:

				Commercial
(dollars in thousands)	Commercial			Real Estate			Residential			Consumer			Total
Three Months Ended September 30, 2019
Balance at beginning of period	$	18,872		$	19,363		$	3,080		$	2,516		$	43,831
(Charge-offs)/recoveries		12			13			—			7			32
(Payments)/disbursements		(2,303	)		(1,057	)		(865	)		(322	)		(4,547	)
Additions		530			—			557			—			1,087
Balance at end of period	$	17,111		$	18,319		$	2,772		$	2,201		$	40,403
Three Months Ended September 30, 2018
Balance at beginning of period	$	9,043		$	34,927		$	3,771		$	3,398		$	51,139
(Charge-offs)/recoveries		(7	)		753			—			3			749
(Payments)/disbursements		453			(6,601	)		(75	)		(200	)		(6,423	)
Additions		1,954			—			—			—			1,954
Balance at end of period	$	11,443		$	29,079		$	3,696		$	3,201		$	47,419
Nine Months Ended September 30, 2019
Balance at beginning of period	$	10,275		$	27,671		$	3,390		$	2,374		$	43,710
(Charge-offs)/recoveries		(89	)		(58	)		—			8			(139	)
(Payments)/disbursements		(3,307	)		(19,321	)		(1,175	)		(497	)		(24,300	)
Additions		10,232			10,027			557			316			21,132
Balance at end of period	$	17,111		$	18,319		$	2,772		$	2,201		$	40,403
Nine Months Ended September 30, 2018
Balance at beginning of period	$	12,088		$	34,705		$	3,315		$	3,895		$	54,003
(Charge-offs)/recoveries		(158	)		731			23			(19	)		577
(Payments)/disbursements		(3,525	)		(7,570	)		(144	)		(1,107	)		(12,346	)
Additions		3,038			1,213			502			432			5,185
Balance at end of period	$	11,443		$	29,079		$	3,696		$	3,201		$	47,419

TDRs included with nonaccrual loans totaled $21.8 million at September 30, 2019 and $26.3 million at December 31, 2018.  Old National has allocated specific reserves to customers whose loan terms have been modified in TDRs totaling $6.3 million at September 30, 2019 and $3.0 million at December 31, 2018.  At September 30, 2019, Old National had committed to lend an additional $1.8 million to customers with outstanding loans that are classified as TDRs.

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The pre-modification and post-modification outstanding recorded investments of loans modified as TDRs during the nine months ended September 30, 2019 and 2018 are the same except for when the loan modifications involve the forgiveness of principal.  The following table presents loans by class modified as TDRs that occurred during the nine months ended September 30, 2019 and 2018:

		Pre-modification		Post-modification
		Outstanding		Outstanding
	Number	Recorded		Recorded
(dollars in thousands)	of Loans	Investment		Investment
Nine Months Ended September 30, 2019
TDR:
Commercial	8	$	10,232	$	10,232
Commercial Real Estate - Other	4		10,027		10,027
Residential	1		557		557
Consumer	1		316		316
Total	14	$	21,132	$	21,132
Nine Months Ended September 30, 2018
TDR:
Commercial	5	$	3,038	$	3,038
Commercial Real Estate - Other	2		1,213		1,213
Residential	1		502		502
Consumer	1		432		432
Total	9	$	5,185	$	5,185

The TDRs that occurred during the nine months ended September 30, 2019 decreased the allowance for loan losses by $0.7 million and resulted in no charge-offs during the nine months ended September 30, 2019.  The TDRs that occurred during the nine months ended September 30, 2018 did not have a material impact on the allowance for loan losses and resulted in no charge-offs during the nine months ended September 30, 2018.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

TDRs for which there was a payment default within twelve months following the modification were insignificant during the nine months ended September 30, 2019 and 2018.

The terms of certain other loans were modified during 2019 and 2018 that did not meet the definition of a TDR.  It is our process to review all classified and criticized loans that, during the period, have been renewed, have entered into a forbearance agreement, have gone from principal and interest to interest only, or have extended the maturity date.  In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on its debt in the foreseeable future without the modification.  The evaluation is performed under our internal underwriting policy.  We also evaluate whether a concession has been granted or if we were adequately compensated through a market interest rate, additional collateral or a bona fide guarantee.  We also consider whether the modification was insignificant relative to the other terms of the agreement or the delay in a payment.

PCI loans are not considered impaired until after the point at which there has been a degradation of cash flows below our expected cash flows at acquisition.  If a PCI loan is subsequently modified, and meets the definition of a TDR, it will be removed from PCI accounting and accounted for as a TDR only if the PCI loan was being accounted for individually.  If the PCI loan is being accounted for as part of a pool, it will not be removed from the pool.  As of September 30, 2019, it has not been necessary to remove any loans from PCI accounting.

In general, once a modified loan is considered a TDR, the loan will always be considered a TDR, and therefore impaired, until it is paid in full, otherwise settled, sold, or charged off.  However, guidance also permits for loans to be removed from TDR status when subsequently restructured under these circumstances: (1) at the time of the subsequent restructuring, the borrower is not experiencing financial difficulties, and this is documented by a current credit evaluation at the time of the restructuring, (2) under the terms of the subsequent restructuring agreement, the institution has granted no concession to the borrower; and (3) the subsequent restructuring agreement includes market terms that are no less favorable than those that would be offered for a comparable new loan.  For loans

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subsequently restructured that have cumulative principal forgiveness, the loan should continue to be measured in accordance with ASC 310-10, Receivables – Overall. However, consistent with ASC 310-40-50-2, Troubled Debt Restructurings by Creditors, Creditor Disclosure of Troubled Debt Restructurings, the loan would not be required to be reported in the years following the restructuring if the subsequent restructuring meets both of these criteria: (1) has an interest rate at the time of the subsequent restructuring that is not less than a market interest rate; and (2) is performing in compliance with its modified terms after the subsequent restructuring.

Purchased Credit Impaired Loans

Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date with no carryover of the related allowance for loan and lease losses.  In determining the estimated fair value of purchased loans, management considers a number of factors including, among others, the remaining life of the acquired loans, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral, and net present value of cash flows expected to be received.  Purchased loans are accounted for in accordance with guidance for certain loans acquired in a transfer (ASC 310-30), when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition that the acquirer will not collect all contractually required principal and interest payments.  The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference.  Subsequent decreases to the expected cash flows will generally result in a provision for loan and lease losses.  Subsequent increases in expected cash flows will result in a reversal of the provision for loan losses to the extent of prior charges and then an adjustment to accretable yield, which would have a positive impact on interest income prospectively.

Old National has purchased loans for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.  The carrying amount of those loans was as follows:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Commercial	$	5,438		$	6,193
Commercial real estate		22,139			25,391
Residential		7,658			9,257
Consumer		2,642			3,552
Carrying amount		37,877			44,393
Allowance for loan losses		(345	)		(478	)
Carrying amount, net of allowance	$	37,532		$	43,915

The outstanding balance of loans accounted for under ASC 310-30, including contractual principal, interest, fees and penalties, was $229.8 million at September 30, 2019 and $246.9 million at December 31, 2018.

The accretable difference on PCI loans is the difference between the expected cash flows and the net present value of expected cash flows with such difference accreted into earnings using the effective yield method over the term of the loans.  Accretion recorded as loan interest income totaled $4.8 million during the three months ended September 30, 2019 and $9.0 million during the nine months ended September 30, 2019, compared to $1.9 million during the three months ended September 30, 2018 and $8.9 million during the nine months ended September 30, 2018. Improvement in cash flow expectations has resulted in a reclassification from nonaccretable difference to accretable yield as shown in the table below.

Accretable yield of PCI loans, or income expected to be collected, was as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)	2019			2018			2019			2018
Balance at beginning of period	$	22,414		$	24,249		$	25,051		$	27,835
Accretion of income		(4,848	)		(1,854	)		(8,988	)		(8,927	)
Reclassifications from (to) nonaccretable difference		620			1,599			2,202			5,065
Disposals/other adjustments		118			1			39			22
Balance at end of period	$	18,304		$	23,995		$	18,304		$	23,995

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Included in Old National’s allowance for loan losses is $0.3 million related to the purchased loans disclosed above at September 30, 2019 and $0.5 million at December 31, 2018.

PCI loans purchased during 2018 for which it was probable at acquisition that all contractually required payments would not be collected were as follows:

(dollars in thousands)	Klein (1)
Contractually required payments	$	18,568
Nonaccretable difference		(4,521	)
Cash flows expected to be collected at acquisition		14,047
Accretable yield		(2,384	)
Fair value of acquired loans at acquisition	$	11,663

(1) Old National acquired Klein effective November 1, 2018.

Income is not recognized on PCI loans if Old National cannot reasonably estimate cash flows expected to be collected.  Old National had no PCI loans for which it cannot reasonably estimate cash flows expected to be collected.

NOTE 8 – OTHER REAL ESTATE OWNED

Other real estate owned is included in other assets.  The following table presents activity in other real estate owned for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)	2019			2018			2019			2018
Balance at beginning of period	$	2,819		$	3,729		$	3,232		$	8,810
Additions		411			474			1,084			1,649
Sales		(271	)		(511	)		(1,248	)		(6,136	)
Impairments		(18	)		(129	)		(127	)		(760	)
Balance at end of period (1)	$	2,941		$	3,563		$	2,941		$	3,563

(1) Includes repossessed personal property of $0.5 million at September 30, 2019 and $0.3 million at September 30, 2018.

Foreclosed residential real estate property recorded as a result of obtaining physical possession of the property included in the table above totaled $1.0 million at September 30, 2019 and $1.3 million at December 31, 2018.  Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $3.8 million at September 30, 2019 and $4.9 million at December 31, 2018.

NOTE 9 – PREMISES AND EQUIPMENT

The composition of premises and equipment at September 30, 2019 and December 31, 2018 was as follows:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Land	$	79,967		$	79,231
Buildings		381,028			365,102
Furniture, fixtures, and equipment		107,526			107,862
Leasehold improvements		44,448			42,288
Total		612,969			594,483
Accumulated depreciation		(120,904	)		(108,571	)
Premises and equipment, net	$	492,065		$	485,912

Depreciation expense was $6.8 million for the three months ended September 30, 2019 and $20.0 million for the nine months ended September 30, 2019, compared to $5.9 million for the three months ended September 30, 2018 and $17.7 million for the nine months ended September 30, 2018.

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Finance Leases

Old National leases certain branch buildings under finance leases that are included in premises and equipment.  See Notes 10 and 16 to the consolidated financial statements for detail regarding these leases.

NOTE 10 – LEASES

Old National adopted FASB Topic 842 as of January 1, 2019.  See Note 2 to the consolidated financial statements regarding transition guidance related to the new standard.

Old National determines if an arrangement is or contains a lease at contract inception.  Operating leases are included in operating lease right-of-use assets and operating lease liabilities in our consolidated balance sheet at September 30, 2019.  Finance leases are included in premises and equipment and other borrowings in our consolidated balance sheets at September 30, 2019 and 2018, and December 31, 2018.

Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.  Right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.  In determining the present value of lease payments, we use the implicit lease rate when readily determinable.  As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date.  The incremental borrowing rate is the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment.

Old National has operating and finance leases for land, office space, banking centers, and equipment.  These leases are generally for periods of 10 to 20 years with various renewal options.  We include certain renewal options in the measurement of our right-of-use assets and lease liabilities if they are reasonably certain to be exercised.  Variable lease payments that are dependent on an index or a rate are initially measured using the index or rate at the commencement date and are included in the measurement of the lease liability. Variable lease payments that are not dependent on an index or a rate are excluded from the measurement of the lease liability and are recognized in profit and loss.  Variable lease payments are defined as payments made for the right to use an asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time.

We have made a policy election to exclude the recognition requirements of Topic 842 to all classes of leases with original terms of 12 months or less.  Instead, the short-term lease payments are recognized in profit or loss on a straight-line basis over the lease term.

Old National has lease agreements with lease and non-lease components, which are generally accounted for separately.  For real estate leases, non-lease components and other non-components, such as common area maintenance charges, real estate taxes, and insurance are not included in the measurement of the lease liability since they are generally able to be segregated.  For certain equipment leases, Old National accounts for the lease and non-lease components as a single lease component using the practical expedient available for that class of assets.

Old National does not have any material sub-lease agreements.

The components of lease expense were as follows:

	Affected Line	Three Months			Nine Months
	Item in the	Ended			Ended
(dollars in thousands)	Statement of Income	September 30, 2019			September 30, 2019
Operating lease cost	occupancy/equipment expense	$	4,280		$	12,973
Finance lease cost:
Amortization of right-of-use assets	occupancy expense		166			485
Interest on lease liabilities	interest expense		80			241
Short-term lease cost	occupancy expense		1			2
Sub-lease income	occupancy expense		(193	)		(553	)
Total		$	4,334		$	13,148

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Lease expense for operating leases was $4.4 million for the three months ended September 30, 2018 and $13.4 million for the nine months ended September 30, 2018.

Supplemental balance sheet information related to leases was as follows:

(dollars in thousands)	September 30, 2019
Operating Leases
Operating lease right-of-use assets	$	102,976
Operating lease liabilities		107,272
Finance Leases
Premises and equipment, net		7,337
Other borrowings		7,527
Weighted-Average Remaining Lease Term (in Years)
Operating leases		10.8
Finance leases		11.5
Weighted-Average Discount Rate
Operating leases		3.45	%
Finance leases		4.43	%

Supplemental cash flow information related to leases was as follows:

	Nine Months Ended
(dollars in thousands)	September 30, 2019
Cash paid for amounts included in the measurement of    lease liabilities:
Operating cash flows from operating leases	$	13,201
Operating cash flows from finance leases		241
Financing cash flows from finance leases		344

The following table presents a maturity analysis of the Company’s lease liability by lease classification at September 30, 2019:

	Operating			Finance
(dollars in thousands)	Leases			Leases
2019	$	4,314		$	200
2020		16,772			803
2021		15,698			809
2022		14,138			815
2023		9,682			830
Thereafter		69,091			6,232
Total undiscounted lease payments		129,695			9,689
Amounts representing interest		(22,423	)		(2,162	)
Lease liability	$	107,272		$	7,527

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Old National leases certain office space and buildings to unrelated parties in exchange for consideration.  All of these tenant leases are classified as operating leases.  The following table presents a maturity analysis of the Company’s tenant leases at September 30, 2019:

	Tenant
(dollars in thousands)	Leases
2019	$	588
2020		2,034
2021		1,740
2022		1,431
2023		1,298
Thereafter		3,650
Total undiscounted lease payments	$	10,741

NOTE 11 – GOODWILL AND OTHER INTANGIBLE ASSETS

The following table shows the changes in the carrying amount of goodwill for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in thousands)	2019		2018		2019		2018
Balance at beginning of period	$	1,036,258	$	828,804	$	1,036,258	$	828,051
Acquisition adjustments		736		—		736		753
Balance at end of period	$	1,036,994	$	828,804	$	1,036,994	$	828,804

Old National performed the required annual goodwill impairment test as of August 31, 2019 and there was no impairment.  No events or circumstances since the August 31, 2019 annual impairment test were noted that would indicate it was more likely than not a goodwill impairment exists.  See Note 3 to the consolidated financial statements for detail regarding changes in goodwill associated with acquisitions.

The gross carrying amount and accumulated amortization of other intangible assets at September 30, 2019 and December 31, 2018 were as follows:

	Gross		Accumulated			Net
	Carrying		Amortization			Carrying
(dollars in thousands)	Amount		and Impairment			Amount
September 30, 2019
Core deposit	$	119,051	$	(59,398	)	$	59,653
Customer trust relationships		16,547		(12,149	)		4,398
Total intangible assets	$	135,598	$	(71,547	)	$	64,051
December 31, 2018
Core deposit	$	129,100	$	(57,524	)	$	71,576
Customer trust relationships		16,547		(11,107	)		5,440
Total intangible assets	$	145,647	$	(68,631	)	$	77,016

Other intangible assets consist of core deposit intangibles and customer relationship intangibles and are being amortized primarily on an accelerated basis over their estimated useful lives, generally over a period of 5 to 15 years.

Old National reviews other intangible assets for possible impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable.  No impairment charges were recorded during the nine months ended September 30, 2019 or 2018.  Total amortization expense associated with intangible assets was $4.2 million for the three months ended September 30, 2019 and $13.0 million for the nine months ended September 30, 2019, compared to $3.3 million for the three months ended September 30, 2018 and $10.3 million for the nine months ended September 30, 2018.

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Estimated amortization expense for future years is as follows:

(dollars in thousands)
2019 remaining	$	3,945
2020		14,091
2021		11,336
2022		9,014
2023		7,053
Thereafter		18,612
Total	$	64,051

NOTE 12 – LOAN SERVICING RIGHTS

At September 30, 2019, loan servicing rights derived from loans sold with servicing retained totaled $24.6 million, compared to $24.5 million at December 31, 2018.  Loans serviced for others are not reported as assets.  The principal balance of loans serviced for others was $3.379 billion at September 30, 2019, compared to $3.306 billion at December 31, 2018.  Approximately 99.7% of the loans serviced for others at September 30, 2019 were residential mortgage loans.  Custodial escrow balances maintained in connection with serviced loans were $43.6 million at September 30, 2019 and $10.7 million at December 31, 2018.

The following table summarizes the carrying values and activity related to loan servicing rights and the related valuation allowance for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)	2019			2018			2019			2018
Balance at beginning of period	$	24,364		$	24,318		$	24,512		$	24,690
Additions		2,097			1,147			4,026			3,098
Amortization		(1,717	)		(1,117	)		(3,794	)		(3,440	)
Balance before valuation allowance at end of period		24,744			24,348			24,744			24,348
Valuation allowance:
Balance at beginning of period		(32	)		(15	)		(15	)		(29	)
(Additions)/recoveries		(89	)		3			(106	)		17
Balance at end of period		(121	)		(12	)		(121	)		(12	)
Loan servicing rights, net	$	24,623		$	24,336		$	24,623		$	24,336

At September 30, 2019, the fair value of servicing rights was $25.5 million, which was determined using a discount rate of 12% and a weighted average prepayment speed of 170% PSA.  At December 31, 2018, the fair value of servicing rights was $27.4 million, which was determined using a discount rate of 12% and a weighted average prepayment speed of 119% PSA.

NOTE 13 – QUALIFIED AFFORDABLE HOUSING PROJECTS AND OTHER TAX CREDIT INVESTMENTS

Old National is a limited partner in several tax-advantaged limited partnerships whose purpose is to invest in approved qualified affordable housing, renewable energy, or other renovation or community revitalization projects.  As of September 30, 2019, Old National expects to recover its remaining investments through the use of the tax credits that are generated by the investments.

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The following table summarizes Old National’s investments in qualified affordable housing projects and other tax credit investments at September 30, 2019 and December 31, 2018:

(dollars in thousands)		September 30, 2019				December 31, 2018
				Unfunded				Unfunded
Investment	Accounting Method	Investment		Commitment (1)		Investment		Commitment
LIHTC	Proportional amortization	$	30,577	$	3,973	$	28,396	$	2,238
FHTC	Equity		22,403		20,272		16,815		17,945
CReED	Equity		—		—		17		538
Renewable Energy	Equity		8,255		4,951		9,176		17,827
Total		$	61,235	$	29,196	$	54,404	$	38,548

(1) All commitments will be paid by Old National by 2027.

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The following table summarizes the amortization expense and tax benefit recognized for Old National’s qualified affordable housing projects and other tax credit investments for the three and nine months ended September 30, 2019 and 2018:

			Tax Expense
	Amortization		(Benefit)
(dollars in thousands)	Expense (1)		Recognized (2)
Three Months Ended September 30, 2019
LIHTC	$	793	$	(992	)
FHTC		1,113		(1,244	)
CReED		13		—
Renewable Energy		85		(70	)
Total	$	2,004	$	(2,306	)
Three Months Ended September 30, 2018
LIHTC	$	640	$	(832	)
FHTC		3,282		(1,258	)
CReED		687		—
Renewable Energy		5,264		(3,109	)
Total	$	9,873	$	(5,199	)
Nine Months Ended September 30, 2019
LIHTC	$	2,376	$	(3,076	)
FHTC		1,113	$	(1,244	)
CReED		13		—
Renewable Energy		913		(847	)
Total	$	4,415	$	(5,167	)
Nine Months Ended September 30, 2018
LIHTC	$	1,923	$	(2,494	)
FHTC		8,727		(5,154	)
CReED		687		—
Renewable Energy		12,393		(9,406	)
Total	$	23,730	$	(17,054	)

(1) The amortization expense for the LIHTC investments is included in our income tax expense. The amortization expense for the FHTC, CReED, and Renewable Energy tax credits is included in noninterest expense.

(2) All of the tax benefits recognized are included in our income tax expense.  The tax benefit recognized for the FHTC and Renewable Energy investments primarily reflects the tax credits generated from the investments and excludes the net tax expense (benefit) of the investments’ income (loss).

NOTE 14 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase are secured borrowings.  Old National pledges investment securities to secure these borrowings. The following table presents securities sold under agreements to repurchase and related weighted-average interest rates at or for the nine months ended September 30:

(dollars in thousands)	2019			2018
Outstanding at September 30,	$	337,551		$	319,831
Average amount outstanding		344,294			342,797
Maximum amount outstanding at any month-end		367,884			364,001
Weighted-average interest rate:
During the nine months ended September 30,		0.80	%		0.52	%
At September 30,		0.74			0.74

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The following table presents the contractual maturity of our secured borrowings and class of collateral pledged:

	At September 30, 2019
	Remaining Contractual Maturity of the Agreements
	Overnight and		Up to				Greater Than
(dollars in thousands)	Continuous		30 Days		30-90 Days		90 days		Total
Repurchase Agreements:
U.S. Treasury and agency securities	$	337,551	$	—	$	—	$	—	$	337,551
Total	$	337,551	$	—	$	—	$	—	$	337,551

The fair value of securities pledged to secure repurchase agreements may decline.  Old National has pledged securities valued at 107% of the gross outstanding balance of repurchase agreements at September 30, 2019 to manage this risk.

NOTE 15 – FEDERAL HOME LOAN BANK ADVANCES

The following table summarizes Old National Bank’s FHLB advances at September 30, 2019 and December 31, 2018:

	September 30,		December 31,
(dollars in thousands)	2019		2018
FHLB advances (fixed rates 0.68% to 4.96%    and variable rates 2.29% to 2.45%) maturing    October 2019 to August 2029	$	1,977,644	$	1,603,643
ASC 815 fair value hedge and other basis adjustments		24,316		9,838
Total other borrowings	$	2,001,960	$	1,613,481

FHLB advances had weighted-average rates of 2.19%  at September 30, 2019 and 2.56% at December 31, 2018.  Investment securities and residential real estate loans collateralize these borrowings up to 140%  of outstanding debt.

Contractual maturities of FHLB advances at September 30, 2019 were as follows:

(dollars in thousands)
Due in 2019	$	200,480
Due in 2020		50,000
Due in 2021		20,000
Due in 2022		157,000
Due in 2023		164
Thereafter		1,550,000
ASC 815 fair value hedge and other basis adjustments		24,316
Total	$	2,001,960

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NOTE 16 – OTHER BORROWINGS

The following table summarizes Old National’s other borrowings at September 30, 2019 and December 31, 2018:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Old National Bancorp:
Senior unsecured notes (fixed rate 4.125%)    maturing August 2024	$	175,000		$	175,000
Unamortized debt issuance costs related to senior    unsecured notes		(754	)		(870	)
Junior subordinated debentures (variable rates of    3.44% to 6.31%) maturing April 2032    to June 2037		60,310			60,310
Other basis adjustments		(2,859	)		(3,046	)
Old National Bank:
Finance lease liabilities		7,527			5,262
Subordinated debentures (fixed rate 5.75%)		12,000			12,000
Other		539			(773	)
Total other borrowings	$	251,763		$	247,883

Contractual maturities of other borrowings at September 30, 2019 were as follows:

(dollars in thousands)
Due in 2019	$	120
Due in 2020		499
Due in 2021		524
Due in 2022		553
Due in 2023		591
Thereafter		252,550
Unamortized debt issuance costs and other    basis adjustments		(3,074	)
Total	$	251,763

Senior Notes

In August 2014, Old National issued $175.0 million of senior unsecured notes with a 4.125% interest rate.  These notes pay interest on February 15 and August 15.  The notes mature on August 15, 2024.

Junior Subordinated Debentures

Junior subordinated debentures related to trust preferred securities are classified in “other borrowings.”  On November 1, 2017, Old National acquired Anchor (MN) and exceeded $15 billion in assets.  As a result, these securities can only be treated as Tier 2 capital for regulatory purposes, subject to certain limitations.  Prior to the fourth quarter of 2017, these securities qualified as Tier 1 capital for regulatory purposes.

Through various acquisitions, Old National assumed junior subordinated debenture obligations related to various trusts that issued trust preferred securities.  Old National guarantees the payment of distributions on the trust preferred securities issued by the trusts.  Proceeds from the issuance of each of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by the trusts.

Old National, at any time, may redeem the junior subordinated debentures at par and, thereby cause a redemption of the trust preferred securities in whole or in part.

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The following table summarizes the terms of our outstanding junior subordinated debentures at September 30, 2019:

(dollars in thousands)					Rate at
		Issuance			September 30,
Name of Trust	Issuance Date	Amount		Rate	2019	Maturity Date
VFSC Capital Trust I	April 2002	$	3,093	6-month LIBOR plus 3.70%	6.31%	April 22, 2032
VFSC Capital Trust II	October 2002		4,124	3-month LIBOR plus 3.45%	5.61%	November 7, 2032
VFSC Capital Trust III	April 2004		3,093	3-month LIBOR plus 2.80%	4.94%	September 8, 2034
St. Joseph Capital Trust II	March 2005		5,000	3-month LIBOR plus 1.75%	3.89%	March 17, 2035
Anchor Capital Trust III	August 2005		5,000	3-month LIBOR plus 1.55%	3.65%	September 30, 2035
Tower Capital Trust 2	December 2005		8,000	3-month LIBOR plus 1.34%	3.44%	December 30, 2035
Home Federal Statutory    Trust I	September 2006		15,000	3-month LIBOR plus 1.65%	3.77%	September 15, 2036
Monroe Bancorp Capital    Trust I	July 2006		3,000	3-month LIBOR plus 1.60%	3.90%	October 7, 2036
Tower Capital Trust 3	December 2006		9,000	3-month LIBOR plus 1.69%	3.82%	March 1, 2037
Monroe Bancorp Statutory    Trust II	March 2007		5,000	3-month LIBOR plus 1.60%	3.72%	June 15, 2037
Total		$	60,310

Subordinated Debentures

On November 1, 2017, Old National assumed $12.0 million of subordinated fixed-to-floating notes related to the acquisition of Anchor (MN).  The subordinated debentures have a 5.75% fixed rate of interest through October 29, 2020.  From October 30, 2020 to the October 30, 2025 maturity date, the debentures have a floating rate of interest equal to the three-month LIBOR rate plus 4.356%.

Finance Lease Liabilities

Old National has long-term finance lease liabilities for certain banking centers totaling $7.5 million.  The economic substance of these leases is that Old National is financing the acquisition of the building through the lease and accordingly, the building is recorded as a right-of-use asset in premises and equipment and the lease is recorded as a liability in other borrowings.  The right-of-use assets and lease liabilities are initially measured at the present value of the lease payments over the lease term using Old National’s incremental borrowing rate based on the information available at the commencement date of the lease.  See Note 10 to the consolidated financial statements for a maturity analysis of the Company’s finance lease liabilities.

40

NOTE 17 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes within each classification of AOCI, net of tax, for the three and nine months ended September 30, 2019 and 2018:

(dollars in thousands)	Unrealized Gains and Losses on Available- for-Sale Debt Securities			Unrealized Gains and Losses on Held-to- Maturity Securities			Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Plans			Total
Three Months Ended September 30, 2019
Balance at beginning of period	$	48,701		$	(7,729	)	$	1,220		$	(155	)	$	42,037
Other comprehensive income (loss) before    reclassifications		15,876			—			(58	)		—			15,818
Amounts reclassified from AOCI to income (1)		(335	)		992			(13	)		15			659
Balance at end of period	$	64,242		$	(6,737	)	$	1,149		$	(140	)	$	58,514
Three Months Ended September 30, 2018
Balance at beginning of period	$	(59,356	)	$	(9,335	)	$	2,277		$	(289	)	$	(66,703	)
Other comprehensive income (loss) before    reclassifications		(13,989	)		—			548			—			(13,441	)
Amounts reclassified from AOCI to income (1)		(117	)		482			(171	)		20			214
Balance at end of period	$	(73,462	)	$	(8,853	)	$	2,654		$	(269	)	$	(79,930	)
Nine Months Ended September 30, 2019
Balance at beginning of period	$	(37,348	)	$	(8,515	)	$	1,099		$	(186	)	$	(44,950	)
Other comprehensive income (loss) before    reclassifications		102,737			—			357			—			103,094
Amounts reclassified from AOCI to income (1)		(1,147	)		1,778			(307	)		46			370
Balance at end of period	$	64,242		$	(6,737	)	$	1,149		$	(140	)	$	58,514
Nine Months Ended September 30, 2018
Balance at beginning of period	$	(35,557	)	$	(12,107	)	$	(2,337	)	$	(271	)	$	(50,272	)
Amount reclassified from AOCI to retained       earnings for cumulative effect of       change in accounting principle		—			—			(52	)		—			(52	)
Amounts reclassified from AOCI to retained       earnings related to the Tax Cuts and Jobs       Act of 2017		(7,583	)		(2,600	)		(509	)		(59	)		(10,751	)
Other comprehensive income (loss) before    reclassifications		(28,475	)		4,514			5,135			—			(18,826	)
Amounts reclassified from AOCI to income (1)		(1,847	)		1,340			417			61			(29	)
Balance at end of period	$	(73,462	)	$	(8,853	)	$	2,654		$	(269	)	$	(79,930	)

(1) See tables below for details about reclassifications to income.

41

The following table summarizes the significant amounts reclassified out of each component of AOCI for the three months ended September 30, 2019 and 2018:

	Amount Reclassified						Affected Line Item in the
Details about AOCI Components	from AOCI						Statement of Income
	Three Months Ended
	September 30,
(dollars in thousands)	2019			2018
Unrealized gains and losses on    available-for-sale debt securities	$	424		$	135		Net debt securities gains (losses)
		(89	)		(18	)	Income tax (expense) benefit
	$	335		$	117		Net income
Unrealized gains and losses on    held-to-maturity securities	$	(1,384	)	$	(628	)	Interest income (expense)
		392			146		Income tax (expense) benefit
	$	(992	)	$	(482	)	Net income
Gains and losses on cash flow hedges    Interest rate contracts	$	21		$	226		Interest income (expense)
		(8	)		(55	)	Income tax (expense) benefit
	$	13		$	171		Net income
Amortization of defined benefit    pension items
Actuarial gains (losses)	$	(20	)	$	(27	)	Salaries and employee benefits
		5			7		Income tax (expense) benefit
	$	(15	)	$	(20	)	Net income
Total reclassifications for the period	$	(659	)	$	(214	)	Net income

The following table summarizes the significant amounts reclassified out of each component of AOCI for the nine months ended September 30, 2019 and 2018:

	Amount Reclassified						Affected Line Item in the
Details about AOCI Components	from AOCI						Statement of Income
	Nine Months Ended
	September 30,
(dollars in thousands)	2019			2018
Unrealized gains and losses on    available-for-sale debt securities	$	1,486		$	2,417		Net debt securities gains (losses)
		(339	)		(570	)	Income tax (expense) benefit
	$	1,147		$	1,847		Net income
Unrealized gains and losses on    held-to-maturity securities	$	(2,405	)	$	(1,740	)	Interest income/(expense)
		627			400		Income tax (expense) benefit
	$	(1,778	)	$	(1,340	)	Net income
Gains and losses on cash flow hedges    Interest rate contracts	$	412		$	(553	)	Interest income/(expense)
		(105	)		136		Income tax (expense) benefit
	$	307		$	(417	)	Net income
Amortization of defined benefit    pension items
Actuarial gains (losses)	$	(61	)	$	(81	)	Salaries and employee benefits
		15			20		Income tax (expense) benefit
	$	(46	)	$	(61	)	Net income
Total reclassifications for the period	$	(370	)	$	29		Net income

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NOTE 18 – SHARE-BASED COMPENSATION

At September 30, 2019, Old National had 3.7 million shares remaining available for issuance under the Company’s Amended and Restated 2008 Incentive Compensation Plan.  The granting of awards to key employees is typically in the form of restricted stock awards or units.

Restricted Stock Awards

Old National granted 211 thousand time-based restricted stock awards to certain key officers during the nine months ended September 30, 2019, with shares vesting generally over a thirty-six month period.  Compensation expense is recognized on a straight-line basis over the vesting period.  Shares are subject to certain restrictions and risk of forfeiture by the participants.  At September 30, 2019, unrecognized compensation expense was estimated to be $5.1 million for unvested restricted stock awards.  The cost is expected to be recognized over a weighted-average period of 2.0 years.

Old National recorded share-based compensation expense, net of tax, related to restricted stock awards of $0.7 million during the three months ended September 30, 2019 and $1.9 million during the nine months ended September 30, 2019, compared to $0.6 million during the three months ended September 30, 2018 and $1.7 million during the nine months ended September 30, 2018.

Restricted Stock Units

Old National granted 375 thousand shares of performance based restricted stock units to certain key officers during the nine months ended September 30, 2019, with shares vesting at the end of a thirty-six month period based on the achievement of certain targets.  For certain awards, the level of performance could increase or decrease the number of shares earned.  Compensation expense is recognized on a straight-line basis over the vesting period.  Shares are subject to certain restrictions and risk of forfeiture by the participants.  At September 30, 2019, unrecognized compensation expense was estimated to be $5.4 million.  The cost is expected to be recognized over a weighted-average period of 1.8 years.

Old National recorded share-based compensation expense, net of tax, related to restricted stock units of $1.0 million during the three months ended September 30, 2019 and $2.6 million during the nine months ended September 30, 2019, compared to $0.9 million during the three months ended September 30, 2018 and $2.5 million during the nine months ended September 30, 2018.

Stock Options

Old National has not granted stock options since 2009.  However, Old National did acquire stock options through prior year acquisitions.  Old National did not record any share-based compensation expense related to these stock options during the nine months ended September 30, 2019 or 2018.

Stock Appreciation Rights

Old National has never granted stock appreciation rights.  However, Old National did acquire stock appreciation rights through a prior year acquisition.  Old National did not record any incremental expense associated with the conversion of these stock appreciation rights during the nine months ended September 30, 2019 or 2018.  At September 30, 2019, 57 thousand stock appreciation rights remained outstanding.

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NOTE 19 – INCOME TAXES

Following is a summary of the major items comprising the differences in taxes from continuing operations computed at the federal statutory rate and as recorded in the consolidated statements of income:

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
(dollars in thousands)		2019				2018				2019				2018
Provision at statutory rate of 21%	$	17,437			$	11,901			$	48,245			$	33,171
Tax-exempt income:
Tax-exempt interest		(2,511	)			(2,179	)			(7,645	)			(6,607	)
Section 291/265 interest disallowance		113				84				346				220
Company-owned life insurance income		(568	)			(621	)			(1,806	)			(1,679	)
Tax-exempt income		(2,966	)			(2,716	)			(9,105	)			(8,066	)
State income taxes		1,496				2,091				5,053				4,307
Interim period effective rate adjustment		(1,598	)			(81	)			(557	)			944
Tax credit investments - federal		(2,443	)			(5,483	)			(3,577	)			(16,224	)
Other, net		1,328				(387	)			658				495
Income tax expense	$	13,254			$	5,325			$	40,717			$	14,627
Effective tax rate		16.0		%		9.4		%		17.7		%		9.3		%

In accordance with ASC 740-270, Accounting for Interim Reporting, the provision for income taxes was recorded at September 30, 2019 and 2018 based on the current estimate of the effective annual rate.

The higher effective tax rate during the three and nine months ended September 30, 2019 when compared to the three and nine months ended September 30, 2018 is primarily the result of a decrease in federal tax credits available as well as an increase in pre-tax book income.

Unrecognized Tax Benefits

Old National has an immaterial amount of unrecognized tax benefits.  Old National is currently under audit by the Internal Revenue Service.  Old National expects the total amount of unrecognized tax benefits to be reduced to zero after the audit is finalized.

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Net Deferred Tax Assets

Significant components of net deferred tax assets (liabilities) were as follows at September 30, 2019 and December 31, 2018:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Deferred Tax Assets
Allowance for loan losses, net of recapture	$	14,651		$	14,514
Benefit plan accruals		17,144			21,754
Alternative minimum tax credit		1,272			2,545
Net operating loss carryforwards		25,369			31,765
Federal tax credits		—			1,779
Deferred gain on securities		1,563			1,976
Acquired loans		18,872			26,956
Operating lease liabilities		28,460			—
Lease exit obligation		—			1,025
Unrealized losses on available-for-sale investment securities		—			11,853
Unrealized losses on held-to-maturity investment securities		1,869			2,497
Tax credit investments and other partnerships		1,501			3,004
Other real estate owned		156			144
Other, net		738			3,167
Total deferred tax assets		111,595			122,979
Deferred Tax Liabilities
Accretion on investment securities		(897	)		(595	)
Purchase accounting		(17,575	)		(18,100	)
Loan servicing rights		(6,104	)		(6,141	)
Premises and equipment		(11,840	)		(8,507	)
Prepaid expenses		(673	)		(681	)
Operating lease right-of-use assets		(27,348	)		—
Unrealized gains on available-for-sale investment securities		(18,152	)		—
Unrealized gains on hedges		(374	)		(358	)
Other, net		(2,109	)		(1,549	)
Total deferred tax liabilities		(85,072	)		(35,931	)
Net deferred tax assets	$	26,523		$	87,048

Through the acquisition of Anchor (WI) in the second quarter of 2016 and Lafayette Savings Bank in the fourth quarter of 2014, both former thrifts, Old National Bank’s retained earnings at September 30, 2019 include base-year bad debt reserves, created for tax purposes prior to 1988, totaling $52.8 million.  Of this total, $50.9 million was acquired from Anchor (WI), and $1.9 million was acquired from Lafayette Savings Bank.  Base-year reserves are subject to recapture in the unlikely event that Old National Bank (1) makes distributions in excess of current and accumulated earnings and profits, as calculated for federal income tax purposes, (2) redeems its stock, or (3) liquidates.  Old National Bank has no intention of making such a nondividend distribution.  Accordingly, under current accounting principles, a related deferred income tax liability of $13.0 million has not been recognized.

No valuation allowance was recorded at September 30, 2019 or December 31, 2018 because, based on current expectations, Old National believes it will generate sufficient income in future years to realize deferred tax assets.  Old National has federal net operating loss carryforwards totaling $78.5 million at September 30, 2019 and $104.5 million at December 31, 2018.  This federal net operating loss was acquired from the acquisition of Anchor (WI) in 2016.  If not used, the federal net operating loss carryforwards will expire from 2029 to 2033.  Old National has alternative minimum tax (“AMT”) credit carryforwards totaling $1.3 million at September 30, 2019 and $10.1 million at December 31, 2018.  The enactment of H.R. 1 eliminates the parallel tax system known as the AMT and allows any existing AMT credits to be used to reduce regular tax or be refunded from 2018 to 2021. ASC 740 allows for the reclassification of the AMT credit from a deferred tax asset to a current tax asset, except for the amount limited by section 382.  Old National has $1.3 million of AMT credit carryforward subject to section 382 limitations, which is included in deferred tax assets.  Old National has recorded state net operating loss carryforwards totaling $148.4 million at September 30, 2019 and $165.6 million at December 31, 2018.  If not used,

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the state net operating loss carryforwards will expire from 2024 to 2033.  Old National had federal tax credit carryforwards of $1.8 million at December 31, 2018.

The federal and recorded state net operating loss carryforwards are subject to an annual limitation under Internal Revenue Code section 382.  Old National believes that all of the recorded net operating loss carryforwards will be used prior to expiration.

NOTE 20 – DERIVATIVE FINANCIAL INSTRUMENTS

As part of our overall interest rate risk management, Old National uses derivative instruments, including interest rate swaps, collars, caps, and floors.  The notional amount does not represent amounts exchanged by the parties.  The amount exchanged is determined by reference to the notional amount and the other terms of the individual agreements.  The notional amount of these derivative instruments was $567.0 million at September 30, 2019 and $1.482 billion at December 31, 2018.  These derivative financial instruments at September 30, 2019 consisted of $32.0 million notional amount of receive-fixed, pay-variable interest rate swaps on certain of its FHLB advances, $25.0 million notional amount of pay-fixed, receive-variable interest rate swaps on certain of its FHLB advances, and $510.0 million notional amount interest rate collars and floors related to variable-rate commercial loan pools.  Derivative financial instruments at December 31, 2018 consisted of $757.0 million notional amount of receive-fixed, pay-variable interest rate swaps on certain of its FHLB advances, $525.0 million notional amount of pay-fixed, receive-variable interest rate swaps on certain of its FHLB advances, and $200.0 million notional amount interest rate collars related to a variable-rate commercial loan pool.  These hedges were entered into to manage interest rate risk.  Derivative instruments are recognized on the balance sheet at their fair value and are not reported on a net basis.

In accordance with ASC 815-20-35-1, subsequent changes in fair value for a hedging instrument that has been designated and qualifies as part of a hedging relationship should be accounted for in the following manner:

Cash flow hedges: changes in fair value are recognized as a component in other comprehensive income.

Fair value hedges: changes in fair value are recognized concurrently in earnings.

Consistent with this guidance, as long as a hedging instrument is designated and the results of the effectiveness testing support that the instrument qualifies for hedge accounting treatment, 100% of the periodic changes in fair value of the hedging instrument are accounted for as outlined above. This is the case whether or not economic mismatches exist in the hedging relationship. As a result, there is no periodic measurement or recognition of ineffectiveness. Rather, the full impact of hedge gains and losses is recognized in the period in which the hedged transactions impact earnings.

While separate measurement and presentation of ineffectiveness is eliminated, paragraph 815-20-45-1A requires the change in fair value of the hedging instrument that is included in the assessment of hedge effectiveness be presented in the same income statement line item that is used to present the earnings effect of the hedged item.

Commitments to fund certain mortgage loans (interest rate lock commitments) and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives.  These derivative contracts do not qualify for hedge accounting.  At September 30, 2019, the notional amount of the interest rate lock commitments was $147.7 million and forward commitments were $192.4 million.  At December 31, 2018, the notional amount of the interest rate lock commitments was $27.6 million and forward commitments were $34.5 million.  It is our practice to enter into forward commitments for the future delivery of residential mortgage loans to third party investors when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from our commitment to fund the loans.

Old National also enters into derivative instruments for the benefit of its customers.  The notional amounts of these customer derivative instruments and the offsetting counterparty derivative instruments were $1.208 billion at September 30, 2019.  The notional amounts of these customer derivative instruments and the offsetting counterparty derivative instruments were $793.4 million at December 31, 2018.  These derivative contracts do not qualify for hedge accounting.  These instruments include interest rate swaps, caps, and collars.  Commonly, Old National will economically hedge significant exposures related to these derivative contracts entered into for the benefit of customers by entering into offsetting contracts with approved, reputable, independent counterparties with substantially matching terms.

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Old National enters into derivative financial instruments as part of its foreign currency risk management strategies.  These derivative instruments consist of foreign currency forward contracts to accommodate the business needs of its customers.  Old National does not designate these foreign currency forward contracts for hedge accounting treatment.  The notional amounts of these foreign currency forward contracts and the offsetting counterparty derivative instruments were $3.2 million at September 30, 2019 and $3.6 million at December 31, 2018.

Credit risk arises from the possible inability of counterparties to meet the terms of their contracts.  Old National’s exposure is limited to the replacement value of the contracts rather than the notional, principal, or contract amounts.  There are provisions in our agreements with the counterparties that allow for certain unsecured credit exposure up to an agreed threshold.  Exposures in excess of the agreed thresholds are collateralized.  In addition, we minimize credit risk through credit approvals, limits, and monitoring procedures.

Amounts reported in AOCI related to cash flow hedges will be reclassified to interest income or interest expense as interest payments are received or paid on Old National’s derivative instruments.  During the next 12 months, we estimate that $1.0 million will be reclassified to interest income and $0.7 million will be reclassified to interest expense.

The following table summarizes the fair value of derivative financial instruments utilized by Old National:

	Balance			Balance
	Sheet	Fair		Sheet	Fair
(dollars in thousands)	Location	Value		Location	Value
September 30, 2019
Derivatives designated as hedging instruments
Interest rate contracts	Other assets	$	8,937	Other liabilities	$	1,115
Total derivatives designated as hedging instruments		$	8,937		$	1,115
Derivatives not designated as hedging instruments
Interest rate contracts (1)	Other assets	$	57,695	Other liabilities	$	14,214
Mortgage contracts	Other assets		3,510	Other liabilities		—
Foreign currency contracts	Other assets		204	Other liabilities		155
Total derivatives not designated as hedging instruments		$	61,409		$	14,369
Total		$	70,346		$	15,484
December 31, 2018
Derivatives designated as hedging instruments
Interest rate contracts	Other assets	$	12,741	Other liabilities	$	1,603
Total derivatives designated as hedging instruments		$	12,741		$	1,603
Derivatives not designated as hedging instruments
Interest rate contracts (1)	Other assets	$	15,278	Other liabilities	$	10,562
Mortgage contracts	Other assets		874	Other liabilities		316
Foreign currency contracts	Other assets		112	Other liabilities		69
Total derivatives not designated as hedging instruments		$	16,264		$	10,947
Total		$	29,005		$	12,550

(1) The fair values of counterparty interest rate swaps are zero due to the settlement of centrally-cleared variation margin rules.  The net adjustment was $43.8 million as of September 30, 2019 and $4.8 million as of December 31, 2018.

Summary information about the interest rate swaps designated as fair value hedges is as follows:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Notional amounts	$	32,000		$	757,000
Weighted average pay rates		3.35	%		2.48	%
Weighted average receive rates		4.92	%		2.70	%
Weighted average maturity (in years)		3.1			3.9
Fair value of swaps	$	1,903		$	9,683

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The effect of derivative instruments in fair value hedging relationships on the consolidated statements of income for the three and nine months ended September 30, 2019 and 2018 were as follows:

(dollars in thousands)							Gain (Loss)
							Recognized
	Location of Gain or	Gain (Loss)			Hedged Items	Location of Gain or	in Income on
Derivatives in	(Loss) Recognized in	Recognized			in Fair Value	(Loss) Recognized in	Related
Fair Value Hedging	in Income on	in Income on			Hedging	in Income on Related	Hedged
Relationships	Derivative	Derivative			Relationships	Hedged Item	Items
Three Months Ended
September 30, 2019
Interest rate contracts	Interest income/(expense)	$	12		Fixed-rate debt	Interest income/(expense)	$	(14	)
Three Months Ended
September 30, 2018
Interest rate contracts	Interest income/(expense)	$	(2,786	)	Fixed-rate debt	Interest income/(expense)	$	2,778
Nine Months Ended
September 30, 2019
Interest rate contracts	Interest income/(expense)	$	12,925		Fixed-rate debt	Interest income/(expense)	$	(12,914	)
Nine Months Ended
September 30, 2018
Interest rate contracts	Interest income/(expense)	$	(4,450	)	Fixed-rate debt	Interest income/(expense)	$	4,433

Summary information about the interest rate swaps designated as cash flow hedges is as follows:

	September 30,				December 31,
(dollars in thousands)	2019				2018
Notional amounts	$	25,000			$	525,000
Weighted average pay rates		3.52		%		2.21	%
Weighted average receive rates		2.26		%		2.63	%
Weighted average maturity (in years)		2.3				1.4
Unrealized gains (losses)	$	(1,115	)		$	146

Old National has designated its interest rate collars as cash flow hedges.  The structure of these instruments is such that Old National pays the counterparty an incremental amount if the collar index exceeds the cap rate.  Conversely, Old National receives an incremental amount if the index falls below the floor rate.  No payments are required if the collar index falls between the cap and floor rates.  Summary information about the collars designated as cash flow hedges is as follows:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Notional amounts	$	300,000		$	200,000
Weighted average cap rates		3.21	%		3.44	%
Weighted average floor rates		2.21	%		2.38	%
Weighted average rates		2.08	%		2.35	%
Weighted average maturity (in years)		2.1			2.8
Unrealized gains (losses)	$	4,852		$	1,309

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Old National has designated its interest rate floor spread transactions as cash flow hedges.  The structure of these instruments is such that Old National receives an incremental amount if the index falls below the purchased floor strike rate.  Old National pays an incremental amount if the index falls below the sold floor rate.  Floor corridor protection is limited to the spread between the purchased floor strike rate and the sold floor rate.  No payments are required if the index remains above the purchased floor strike rate.  Summary information about the floor spread transactions designated as cash flow hedges is as follows:

	September 30,
(dollars in thousands)	2019
Notional amounts	$	210,000
Weighted average purchased floor strike rate		2.00	%
Weighted average sold floor rate		1.00	%
Weighted average rate		2.08	%
Weighted average maturity (in years)		2.3
Unrealized gains (losses)	$	2,182

Old National had no interest rate floor spread transactions designated as cash flow hedges as of December 31, 2018.

The effect of derivative instruments in cash flow hedging relationships on the consolidated statements of income for the three and nine months ended September 30, 2019 and 2018 were as follows:

		Three Months Ended					Three Months Ended
		September 30,					September 30,
(dollars in thousands)		2019			2018		2019		2018
		Gain (Loss)					Gain (Loss)
Derivatives in	Location of Gain or	Recognized in Other					Reclassified from
Cash Flow Hedging	(Loss) Reclassified	Comprehensive					AOCI into
Relationships	from AOCI into Income	Income on Derivative					Income
Interest rate contracts	Interest income/(expense)	$	(73	)	$	725	$	21	$	226
		Nine Months Ended					Nine Months Ended
		September 30,					September 30,
(dollars in thousands)		2019			2018		2019		2018
		Gain (Loss)					Gain (Loss)
Derivatives in	Location of Gain or	Recognized in Other					Reclassified from
Cash Flow Hedging	(Loss) Reclassified	Comprehensive					AOCI into
Relationships	from AOCI into Income	Income on Derivative					Income
Interest rate contracts	Interest income/(expense)	$	479		$	6,804	$	412	$	(553	)

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The effect of derivatives not designated as hedging instruments on the consolidated statements of income for the three and nine months ended September 30, 2019 and 2018 were as follows:

		Three Months Ended
		September 30,
(dollars in thousands)		2019			2018
	Location of Gain or (Loss)	Gain (Loss)
Derivatives Not Designated as	Recognized in Income on	Recognized in Income on
Hedging Instruments	Derivative	Derivative
Interest rate contracts (1)	Other income/(expense)	$	(116	)	$	(23	)
Mortgage contracts	Mortgage banking revenue		1,110			(43	)
Foreign currency contracts	Other income/(expense)		—			20
Total		$	994		$	(46	)
		Nine Months Ended
		September 30,
(dollars in thousands)		2019			2018
	Location of Gain or (Loss)	Gain (Loss)
Derivatives Not Designated as	Recognized in Income on	Recognized in Income on
Hedging Instruments	Derivative	Derivative
Interest rate contracts (1)	Other income/(expense)	$	(247	)	$	4
Mortgage contracts	Mortgage banking revenue		2,951			394
Foreign currency contracts	Other income/(expense)		(11	)		43
Total		$	2,693		$	441

(1)Includes the valuation differences between the customer and offsetting swaps.

NOTE 21 – COMMITMENTS AND CONTINGENCIES

Litigation

In the normal course of business, Old National Bancorp and its subsidiaries have been named, from time to time, as defendants in various legal actions.  Certain of the actual or threatened legal actions may include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages.

Old National contests liability and/or the amount of damages as appropriate in each pending matter.  In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases where claimants seek substantial or indeterminate damages or where investigations and proceedings are in the early stages, Old National cannot predict with certainty the loss or range of loss, if any, related to such matters, how or if such matters will be resolved, when they will ultimately be resolved, or what the eventual settlement, or other relief, if any, might be. Subject to the foregoing, Old National believes, based on current knowledge and after consultation with counsel, that the outcome of such pending matters will not have a material adverse effect on the consolidated financial condition of Old National, although the outcome of such matters could be material to Old National’s operating results and cash flows for a particular future period, depending on, among other things, the level of Old National’s revenues or income for such period.  Old National will accrue for a loss contingency if (1) it is probable that a future event will occur and confirm the loss and (2) the amount of the loss can be reasonably estimated.

Old National is not currently involved in any material litigation.

Credit-Related Financial Instruments

In the normal course of business, Old National’s banking affiliates have entered into various agreements to extend credit, including loan commitments of $2.891 billion and standby letters of credit of $93.3 million at September 30, 2019.  At September 30, 2019, approximately $2.650 billion of the loan commitments had fixed rates and $241.2 million had floating rates, with the floating interest rates ranging from 1% to 15%.  At December 31, 2018, loan commitments totaled $3.566 billion and standby letters of credit totaled $319.0 million.  These commitments are not

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reflected in the consolidated financial statements.  The allowance for unfunded loan commitments totaled $2.3 million at September 30, 2019 and $2.5 million at December 31, 2018.

Old National had credit extensions with various unaffiliated banks related to letter of credit commitments issued on behalf of Old National’s clients totaling $9.8 million at September 30, 2019 and $15.5 million at December 31, 2018.  Old National provided collateral to the unaffiliated banks to secure credit extensions totaling $7.7 million at September 30, 2019 and $7.8 million at December 31, 2018.  Old National did not provide collateral for the remaining credit extensions.

Visa Class B Restricted Shares

In 2008, Old National received Visa Class B restricted shares as part of Visa’s initial public offering.  These shares are transferable only under limited circumstances until they can be converted into the publicly traded Class A common shares.  This conversion will not occur until the final settlement of certain litigation for which Visa is indemnified by the holders of Visa’s Class B shares, including Old National.  Visa funded an escrow account from its initial public offering to settle these litigation claims.  Increases in litigation claims requiring Visa to fund the escrow account due to insufficient funds will result in a reduction of the conversion ratio of each Visa Class B share to unrestricted Class A shares.  As of September 30, 2019, the conversion ratio was 1.6228.  Based on the existing transfer restriction and the uncertainty of the outcome of the Visa litigation, the 65,466 Class B shares that Old National owns at September 30, 2019 are carried at a zero cost basis and are included in other assets with our equity securities that have no readily determinable fair value.

NOTE 22 – FINANCIAL GUARANTEES

Old National holds instruments, in the normal course of business with clients, that are considered financial guarantees in accordance with FASB ASC 460-10 (FIN 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others), which requires Old National to record the instruments at fair value.  Standby letters of credit guarantees are issued in connection with agreements made by clients to counterparties.  Standby letters of credit are contingent upon failure of the client to perform the terms of the underlying contract.  Credit risk associated with standby letters of credit is essentially the same as that associated with extending loans to clients and is subject to normal credit policies.  The term of these standby letters of credit is typically one year or less.  At September 30, 2019, the notional amount of standby letters of credit was $93.3 million, which represented the maximum amount of future funding requirements, and the carrying value was $0.6 million.  At December 31, 2018, the notional amount of standby letters of credit was $319.0 million, which represented the maximum amount of future funding requirements, and the carrying value was $0.5 million.

Old National is a party in risk participation transactions of interest rate swaps, which had total notional amount of $38.5 million at September 30, 2019.

NOTE 23 – SEGMENT INFORMATION

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.  Old National Bank, Old National’s bank subsidiary, is the only significant subsidiary upon which management makes decisions regarding how to allocate resources and assess performance.  Each of the branches of Old National Bank provide a group of similar community banking services, including such products and services as commercial, real estate and consumer loans, time deposits, checking and savings accounts, cash management, brokerage, trust, and investment advisory services.  The individual bank branches located throughout our Midwest footprint have similar operating and economic characteristics.  While the chief decision maker monitors the revenue streams of the various products, services, and regional locations, operations are managed and financial performance is evaluated on a Company-wide basis.  Accordingly, all of the community banking services and branch locations are considered by management to be aggregated into one reportable operating segment, community banking.

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NOTE 24 – FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  There are three levels of inputs that may be used to measure fair values:

• Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

• Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Old National used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Investment securities: The fair values for investment securities are determined by quoted market prices, if available (Level 1).  For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2).  For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).  Discounted cash flows are calculated using swap and LIBOR curves plus spreads that adjust for loss severities, volatility, credit risk, and optionality.  During times when trading is more liquid, broker quotes are used (if available) to validate the model.  Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.

Residential loans held for sale: The fair value of loans held for sale is determined using quoted prices for a similar asset, adjusted for specific attributes of that loan (Level 2).

Derivative financial instruments: The fair values of derivative financial instruments are based on derivative valuation models using market data inputs as of the valuation date (Level 2).

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which we have elected the fair value option, are summarized below:

			Fair Value Measurements at September 30, 2019 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Equity securities	$	6,562	$	6,562	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury		5,494		5,494		—		—
U.S. government-sponsored entities and agencies		486,104		—		486,104		—
Mortgage-backed securities - Agency		3,136,180		—		3,136,180		—
States and political subdivisions		969,475		—		969,435		40
Pooled trust preferred securities		7,695		—		—		7,695
Other securities		312,031		31,317		280,714		—
Residential loans held for sale		58,285		—		58,285		—
Derivative assets		70,346		—		70,346		—
Financial Liabilities
Derivative liabilities		15,484		—		15,484		—

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			Fair Value Measurements at December 31, 2018 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Equity securities	$	5,582	$	5,582	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury		5,301		5,301		—		—
U.S. government-sponsored entities and agencies		628,151		—		628,151		—
Mortgage-backed securities - Agency		2,209,295		—		2,209,295		—
States and political subdivisions		940,429		—		936,321		4,108
Pooled trust preferred securities		8,495		—		—		8,495
Other securities		331,745		30,259		301,486		—
Residential loans held for sale		14,911		—		14,911		—
Derivative assets		29,005		—		29,005		—
Financial Liabilities
Derivative liabilities		12,550		—		12,550		—

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

	Pooled Trust			States and
	Preferred			Political
(dollars in thousands)	Securities			Subdivisions
Three Months Ended September 30, 2019
Balance at beginning of period	$	7,836		$	40
Accretion of discount		3			—
Sales/payments received		(14	)		—
Increase (decrease) in fair value of securities		(130	)		—
Balance at end of period	$	7,695		$	40
Three Months Ended September 30, 2018
Balance at beginning of period	$	8,205		$	4,028
Accretion (amortization) of discount		3			(19	)
Sales/payments received		(17	)		—
Increase (decrease) in fair value of securities		881			(30	)
Balance at end of period	$	9,072		$	3,979
Nine Months Ended September 30, 2019
Balance at beginning of period	$	8,495		$	4,108
Accretion of discount		9			—
Sales/payments received		(46	)		(35	)
Increase (decrease) in fair value of securities		(763	)		—
Transfers out of Level 3		—			(4,033	)
Balance at end of period	$	7,695		$	40
Nine Months Ended September 30, 2018
Balance at beginning of period	$	8,448		$	—
Accretion (amortization) of discount		13			(37	)
Sales/payments received		(322	)		—
Increase (decrease) in fair value of securities		933			(45	)
Transfers into Level 3		—			4,061
Balance at end of period	$	9,072		$	3,979

The accretion or amortization of discounts on securities in the table above is included in interest income.  An increase in fair value is reflected in the balance sheet as an increase in the fair value of investment securities available-for-sale, an increase in accumulated other comprehensive income, which is included in shareholders’

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equity, and a decrease in other assets related to the tax impact. A decrease in fair value is reflected in the balance sheet as a decrease in the fair value of investment securities available-for-sale, a decrease in accumulated other comprehensive income, which is included in shareholders’ equity, and an increase in other assets related to the tax impact.  During the nine months ended September 30, 2019, Old National received third party pricing on a $4.0 million state and political subdivisions security and transferred it out of Level 3.  Old National transferred a $4.1 million state and political subdivisions security to Level 3 during the nine months ended September 30, 2018 because Old National could no longer obtain evidence of observable inputs.

The table below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy:

			Valuation	Unobservable	Range (Weighted
(dollars in thousands)	Fair Value		Techniques	Input	Average)
September 30, 2019
Pooled trust preferred securities	$	7,695	Discounted cash flow	Constant prepayment rate (a)	0.00%
				Additional asset defaults (b)	6.3% - 9.2% (7.2%)
				Expected asset recoveries (c)	0.00%
State and political subdivisions		40	Discounted cash flow	No observable inputs	N/A
				Local municipality issuance
				Old National owns 100%
				Carried at par
December 31, 2018
Pooled trust preferred securities	$	8,495	Discounted cash flow	Constant prepayment rate (a)	0.00%
				Additional asset defaults (b)	6.8% - 8.5% (7.3%)
				Expected asset recoveries (c)	0.00%
State and political subdivisions		4,108	Discounted cash flow	No observable inputs	N/A
				Local municipality issuance
				Old National owns 100%
				Carried at par

(a) Assuming no prepayments.

(b) Each currently performing pool asset is assigned a default probability based on the banking environment, which is adjusted for specific issuer evaluation, of 0%, 50%, or 100%.

(c) Each currently defaulted pool asset is assigned a recovery probability based on specific issuer evaluation of 0%, 25%, or 100%.

Significant changes in any of the unobservable inputs used in the fair value measurement in isolation would result in a significant change to the fair value measurement.  The pooled trust preferred securities Old National owns are subordinate note classes that rely on an ongoing cash flow stream to support their values.  The senior note classes receive the benefit of prepayments to the detriment of subordinate note classes since the ongoing interest cash flow stream is reduced by the early redemption.  Generally, a change in prepayment rates or additional pool asset defaults has an impact that is directionally opposite from a change in the expected recovery of a defaulted pool asset.

Assets measured at fair value on a non-recurring basis at September 30, 2019 are summarized below:

			Fair Value Measurements at September 30, 2019 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Impaired Loans:
Commercial loans	$	13,261	$	—	$	—	$	13,261
Commercial real estate loans		15,241		—		—		15,241
Loan servicing rights		4,621		—		4,621		—

Impaired commercial and commercial real estate loans that are deemed collateral dependent are valued based on the fair value of the underlying collateral.  These estimates are based on the most recently available appraisals with certain adjustments made based on the type of property, age of appraisal, current status of the property, and other related factors to estimate the current value of the collateral.  These impaired commercial and commercial real estate loans had a principal amount of $39.7 million, with a valuation allowance of $11.2 million at September 30, 2019.  Old National recorded provision expense associated with these loans totaling $0.3 million for the three months

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ended September 30, 2019 and $2.6 million for the nine months ended September 30, 2019.  Old National recorded provision expense associated with impaired commercial and commercial real estate loans that were deemed collateral dependent totaling $1.2 million for the three months ended September 30, 2018 and $7.7 million for the nine months ended September 30, 2018.

Other real estate owned and other repossessed property is measured at fair value less costs to sell.  The estimates of fair value are based on the most recently available appraisals with certain adjustments made based on the type of property, age of appraisal, current status of the property, and other related factors to estimate the current value of the collateral.  Old National did not have any other real estate owned or other repossessed property measured at fair value on a non-recurring basis at September 30, 2019. There were write-downs of other real estate owned of $18 thousand for the three months ended September 30, 2019 and $39 thousand for the nine months ended September 30, 2019.  There were write-downs of $0.1 million for the three months ended September 30, 2018 and $0.5 million for the nine months ended September 30, 2018.

Loan servicing rights are evaluated for impairment based upon the fair value of the rights as compared to the carrying amount.  If the carrying amount of an individual tranche exceeds fair value, impairment is recorded on that tranche so that the servicing asset is carried at fair value.  Fair value is determined at a tranche level, based on market prices for comparable mortgage servicing contracts when available, or alternatively based on a valuation model that calculates the present value of estimated future net servicing income.  The valuation model utilizes a discount rate, weighted average prepayment speed, and other economic factors that market participants would use in estimating future net servicing income and that can be validated against available market data (Level 2).  The valuation allowance for loan servicing rights with impairments at September 30, 2019 totaled $0.1 million.  Old National recorded impairments associated with these loan servicing rights totaling $0.1 million during the three months ended September 30, 2019 and the nine months ended September 30, 2019.  There were recoveries associated with loan servicing rights totaling $3 thousand for the three months ended September 30, 2018 and $17 thousand for the nine months ended September 30, 2018.

Assets measured at fair value on a non-recurring basis at December 31, 2018 are summarized below:

			Fair Value Measurements at December 31, 2018 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Impaired Loans:
Commercial loans	$	7,242	$	—	$	—	$	7,242
Commercial real estate loans		29,125		—		—		29,125
Foreclosed Assets:
Residential		68		—		—		68
Loan servicing rights		104		—		104		—

At December 31, 2018, impaired commercial and commercial real estate loans had a principal amount of $49.3 million, with a valuation allowance of $12.9 million.

Other real estate owned and other repossessed property had a net carrying amount of $68 thousand at December 31, 2018.

The valuation allowance for loan servicing rights with impairments at December 31, 2018 totaled $15 thousand.

55

The table below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy:

			Valuation	Unobservable	Range (Weighted
(dollars in thousands)	Fair Value		Techniques	Input	Average)
September 30, 2019
Collateral Dependent Impaired    Loans
Commercial loans	$	13,261	Fair value of	Discount for type of property,	0% - 90% (31%)
			collateral	age of appraisal, and current
				status
Commercial real estate loans		15,241	Fair value of	Discount for type of property,	35% - 45% (40%)
			collateral	age of appraisal and current
				status
December 31, 2018
Collateral Dependent Impaired    Loans
Commercial loans	$	7,242	Fair value of	Discount for type of property,	0% - 90% (35%)
			collateral	age of appraisal, and current
				status
Commercial real estate loans		29,125	Fair value of	Discount for type of property,	0% - 50% (35%)
			collateral	age of appraisal and current
				status
Foreclosed Assets
Residential		68	Fair value of	Discount for type of property,	15% - 16% (15%)
			collateral	age of appraisal, and current status

Financial instruments recorded using fair value option

Old National may elect to report most financial instruments and certain other items at fair value on an instrument-by instrument basis with changes in fair value reported in net income.  After the initial adoption, the election is made at the acquisition of an eligible financial asset, financial liability, or firm commitment or when certain specified reconsideration events occur.  The fair value election may not be revoked once an election is made.

Residential loans held for sale

Old National has elected the fair value option for residential loans held for sale.  For these loans, interest income is recorded in the consolidated statements of income based on the contractual amount of interest income earned on the financial assets (except any that are on nonaccrual status).  None of these loans are 90 days or more past due, nor are any on nonaccrual status.  Included in the income statement is interest income for loans held for sale totaling $0.4 million for the three months ended September 30, 2019 and $0.9 million for the nine months ended September 30, 2019, compared to $0.2 million for the three months ended September 30, 2018 and $0.3 million for the nine months ended September 30, 2018.

Old National has elected the fair value option for newly originated conforming fixed-rate and adjustable-rate first mortgage loans held for sale.  These loans are intended for sale and are hedged with derivative instruments.  Old National has elected the fair value option to mitigate accounting mismatches in cases where hedge accounting is complex and to achieve operational simplification.  The fair value option was not elected for loans held for investment.

The difference between the aggregate fair value and the aggregate remaining principal balance for loans for which the fair value option has been elected at September 30, 2019 and December 31, 2018 was as follows:

	Aggregate				Contractual
(dollars in thousands)	Fair Value		Difference		Principal
September 30, 2019
Residential loans held for sale	$	58,285	$	1,799	$	56,486
December 31, 2018
Residential loans held for sale	$	14,911	$	475	$	14,436

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Accrued interest at period end is included in the fair value of the instruments.

The following table presents the amount of gains and losses from fair value changes included in income before income taxes for financial assets carried at fair value:

									Total Changes
									in Fair Values
	Other								Included in
	Gains and			Interest		Interest			Current Period
(dollars in thousands)	(Losses)			Income		(Expense)			Earnings
Three Months Ended September 30, 2019
Residential loans held for sale	$	137		$	2	$	—		$	139
Three Months Ended September 30, 2018
Residential loans held for sale	$	(368	)	$	3	$	—		$	(365	)
Nine Months Ended September 30, 2019
Residential loans held for sale	$	1,312		$	12	$	—		$	1,324
Nine Months Ended September 30, 2018
Residential loans held for sale	$	54		$	6	$	(4	)	$	56

The carrying amounts and estimated fair values of financial instruments not carried at fair value at September 30, 2019 and December 31, 2018 were as follows:

			Fair Value Measurements at September 30, 2019 Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash, due from banks, money market,    and other interest-earning investments	$	420,250	$	420,250	$	—	$	—
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies		33,321		—		34,446		—
Mortgage-backed securities - Agency		112,187		—		115,767		—
State and political subdivisions		261,773		—		275,375		—
Loans, net:
Commercial		2,928,430		—		—		2,882,142
Commercial real estate		5,087,869		—		—		5,046,715
Residential real estate		2,234,260		—		—		2,246,971
Consumer credit		1,710,179		—		—		1,671,597
Accrued interest receivable		80,747		34		24,183		56,530
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits	$	3,996,264	$	3,996,264	$	—	$	—
Checking, NOW, savings, and money market    interest-bearing deposits		8,622,025		8,622,025		—		—
Time deposits		1,830,063		—		1,842,750		—
Federal funds purchased and interbank borrowings		240,589		240,589		—		—
Securities sold under agreements to repurchase		337,551		337,551		—		—
FHLB advances		2,001,960		—		2,007,228		—
Other borrowings		251,763		—		262,921		—
Accrued interest payable		7,107		—		7,107		—
Standby letters of credit		573		—		—		573
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	5,925

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			Fair Value Measurements at December 31, 2018 Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash, due from banks, money market,    and other interest-earning investments	$	317,165	$	317,165	$	—	$	—
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies		73,986		—		72,359		—
Mortgage-backed securities - Agency		127,120		—		124,409		—
State and political subdivisions		305,228		—		309,335		—
Loans, net:
Commercial		3,211,228		—		—		3,161,132
Commercial real estate		4,935,381		—		—		4,781,294
Residential real estate		2,246,127		—		—		2,225,853
Consumer credit		1,795,695		—		—		1,773,352
Accrued interest receivable		89,464		13		27,580		61,871
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits	$	3,965,380	$	3,965,380	$	—	$	—
Checking, NOW, savings, and money market    interest-bearing deposits		8,360,313		8,360,313		—		—
Time deposits		2,024,256		—		2,002,187		—
Federal funds purchased and interbank borrowings		270,135		270,135		—		—
Securities sold under agreements to repurchase		362,294		362,294		—		—
FHLB advances		1,613,481		—		1,611,103		—
Other borrowings		247,883		—		248,065		—
Accrued interest payable		9,871		—		9,871		—
Standby letters of credit		525		—		—		525
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	3,115

The methods utilized to measure the fair value of financial instruments at September 30, 2019 and December 31, 2018 represent an approximation of exit price, however, an actual exit price may differ.

NOTE 25 – REVENUE FROM CONTRACTS WITH CUSTOMERS

Old National’s revenue from contracts with customers in the scope of Topic 606 is recognized within noninterest income.  The consolidated statements of income include all categories of noninterest income.  The following table reflects only the categories of noninterest income that are within the scope of Topic 606:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in thousands)	2019		2018		2019		2018
Wealth management fees	$	9,160	$	9,022	$	27,604	$	27,794
Service charges on deposit accounts		11,860		11,028		34,201		32,552
Debit card and ATM fees		5,370		4,706		16,292		14,651
Investment product fees		5,244		5,073		16,106		15,170
Other income:
Merchant processing fees		775		779		2,303		2,198
Gain (loss) on other real estate owned		29		260		194		981
Safe deposit box fees		267		221		936		849
Insurance premiums and commissions		194		83		569		265
Total	$	32,899	$	31,172	$	98,205	$	94,460

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Wealth management fees: Old National earns wealth management fees based upon asset custody and investment management services provided to individual and institutional customers.  Most of these customers receive monthly or quarterly billings for services rendered based upon the market value of assets in custody.  Fees that are transaction based are recognized at the point in time that the transaction is executed.

Service charges on deposit accounts: Old National earns fees from deposit customers for transaction-based, account maintenance, and overdraft services.  Transaction-based fees and overdraft fees are recognized at a point in time, since the customer generally has a right to cancel the depository arrangement at any time.  The arrangement is considered a day-to-day contract with ongoing renewals and optional purchases, so the duration of the contract does not extend beyond the services already performed.  Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which Old National satisfies its performance obligation.

Debit card and ATM fees: Debit card and ATM fees include ATM usage fees and debit card interchange income.  As with the transaction-based fees on deposit accounts, the ATM fees are recognized at the point in time that Old National fulfills the customer’s request.  Old National earns interchange fees from cardholder transactions processed through card association networks.  Interchange rates are generally set by the card associations based upon purchase volumes and other factors.  Interchange fees represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder.

Investment product fees: Investment product fees are the commissions and fees received from a registered broker/dealer and investment adviser that provide those services to Old National customers.  Old National acts as an agent in arranging the relationship between the customer and the third-party service provider.  These fees are recognized monthly from the third-party broker based upon services already performed, net of the processing fees charged to Old National by the broker.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is an analysis of our results of operations for the three and nine months ended September 30, 2019 and 2018, and financial condition as of September 30, 2019, compared to September 30, 2018 and December 31, 2018.  This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes.  This discussion contains forward-looking statements concerning our business that are based on estimates and involves certain risks and uncertainties.  Therefore, future results could differ significantly from our current expectations and the related forward-looking statements.

FINANCIAL HIGHLIGHTS

The following table sets forth certain financial highlights of Old National:

	Three Months Ended									Nine Months Ended
(dollars and shares in thousands,	September 30,			June 30,			September 30,			September 30,
except per share data)	2019			2019			2018			2019			2018
Income Statement:
Net interest income	$	153,096		$	155,230		$	130,842		$	455,374		$	391,377
Taxable equivalent adjustment (1)		3,171			3,289			2,753			9,659			8,345
Net interest income - tax equivalent basis		156,267			158,519			133,595			465,033			399,722
Provision for loan losses		1,437			1,003			750			3,483			3,576
Noninterest income		53,961			51,214			45,957			151,591			137,151
Noninterest expense		122,585			128,118			119,376			373,744			366,993
Net income		69,781			62,964			51,348			189,021			143,332
Common Share Data:
Weighted average diluted shares		171,551			173,675			152,784			173,527			152,616
Net income (diluted)	$	0.41		$	0.36		$	0.34		$	1.09		$	0.94
Cash dividends		0.13			0.13			0.13			0.39			0.39
Common dividend payout ratio (2)		32	%		35	%		38	%		35	%		41	%
Book value	$	16.66		$	16.28		$	14.58		$	16.66		$	14.58
Stock price		17.20			16.59			19.30			17.20			19.30
Tangible common book value (3)		10.18			9.86			8.86			10.18			8.86
Performance Ratios:
Return on average assets		1.39	%		1.26	%		1.18	%		1.26	%		1.10	%
Return on average common equity		9.91			9.13			9.28			9.12			8.74
Return on tangible common equity (3)		16.85			15.59			15.99			15.31			14.96
Return on average tangible common    equity (3)		17.01			16.04			16.10			16.00			15.40
Net interest margin (3)		3.57			3.66			3.51			3.58			3.51
Efficiency ratio (3)		56.44			59.35			64.71			58.65			66.74
Net charge-offs (recoveries) to    average loans		0.03			0.01			0.06			0.02			0.01
Allowance for loan losses to ending loans		0.47			0.47			0.47			0.47			0.47
Non-performing loans to ending loans		1.31			1.34			1.47			1.31			1.47
Balance Sheet:
Total loans	$	12,017,648		$	12,046,578		$	11,292,659		$	12,017,648		$	11,292,659
Total assets		20,438,788			20,145,285			17,567,759			20,438,788			17,567,759
Total deposits		14,448,352			14,363,101			12,598,200			14,448,352			12,598,200
Total borrowed funds		2,831,863			2,726,481			2,576,039			2,831,863			2,576,039
Total shareholders' equity		2,832,530			2,803,139			2,220,680			2,832,530			2,220,680
Nonfinancial Data:
Full-time equivalent employees		2,778			2,829			2,554			2,778			2,554
Banking centers		192			192			182			192			182

(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 to the "Non-GAAP Financial Measures" section for reconciliations to GAAP financial measures.

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NON-GAAP FINANCIAL MEASURES

Non-GAAP financial measures exclude certain items that are included in the financial results presented in accordance with GAAP.  Management believes these non-GAAP financial measures enhance an investor’s understanding of the financial results of Old National by providing a meaningful basis for period-to-period comparisons, assisting in operating results analysis, and predicting future performance.

The following table presents GAAP to non-GAAP reconciliations.

		Three Months Ended						Nine Months Ended
(dollars and shares in thousands,		September 30,						September 30,
except per share data)		2019			2018			2019			2018
Tangible common book value:
Shareholders' equity (GAAP)		$	2,832,530		$	2,220,680		$	2,832,530		$	2,220,680
Deduct:	Goodwill		1,036,994			828,804			1,036,994			828,804
	Intangible assets		64,051			42,134			64,051			42,134
Tangible shareholders' equity (non-GAAP)		$	1,731,485		$	1,349,742		$	1,731,485		$	1,349,742
Period end common shares			170,031			152,352			170,031			152,352
Tangible common book value			10.18			8.86			10.18			8.86
Return on tangible common equity:
Net income (GAAP)		$	69,781		$	51,348		$	189,021		$	143,332
Add:  Intangible amortization (net of tax)			3,145			2,593			9,780			8,143
Tangible net income (non-GAAP)		$	72,926		$	53,941		$	198,801		$	151,475
Tangible shareholders' equity (non-GAAP)    (see above)		$	1,731,485		$	1,349,742		$	1,731,485		$	1,349,742
Return on tangible common equity			16.85	%		15.99	%		15.31	%		14.96	%
Return on average tangible common equity:
Tangible net income (non-GAAP) (see above)		$	72,926		$	53,941		$	198,801		$	151,475
Average shareholders' equity (GAAP)		$	2,817,452		$	2,212,700		$	2,763,673		$	2,187,624
Deduct:	Average goodwill		1,036,306			828,804			1,036,274			828,585
	Average intangible assets		66,047			43,685			70,361			47,249
Average tangible shareholders' equity    (non-GAAP)		$	1,715,099		$	1,340,211		$	1,657,038		$	1,311,790
Return on average tangible common equity			17.01	%		16.10	%		16.00	%		15.40	%
Net interest margin:
Net interest income (GAAP)		$	153,096		$	130,842		$	455,374		$	391,377
Taxable equivalent adjustment			3,171			2,753			9,659			8,345
Net interest income - taxable equivalent    basis (non-GAAP)		$	156,267		$	133,595		$	465,033		$	399,722
Average earning assets		$	17,510,487		$	15,213,384		$	17,320,260		$	15,198,690
Net interest margin			3.57	%		3.51	%		3.58	%		3.51	%
Efficiency ratio:
Noninterest expense (GAAP)		$	122,585		$	119,376		$	373,744		$	366,993
Deduct:  Intangible amortization expense			4,168			3,283			12,965			10,308
Adjusted noninterest expense (non-GAAP)		$	118,417		$	116,093		$	360,779		$	356,685
Net interest income - taxable equivalent    basis (non-GAAP) (see above)		$	156,267		$	133,595		$	465,033		$	399,722
Noninterest income			53,961			45,957			151,591			137,151
Deduct:	Net debt securities gains (losses)		424			135			1,486			2,417
Adjusted total revenue (non-GAAP)		$	209,804		$	179,417		$	615,138		$	534,456
Efficiency ratio			56.44	%		64.71	%		58.65	%		66.74	%

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Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited.  Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.  These non-GAAP measures are not necessarily comparable to similar measures that may be represented by other companies.

EXECUTIVE SUMMARY

During the third quarter of 2019, net income was $69.8 million, or $0.41 per diluted share.  Net income was $51.3 million, or $0.34 per diluted share, for the third quarter of 2018.

Our basic banking strategy remains unchanged.  This strategy encompasses how we invest our capital, grow loans, manage credit, and contain expenses.  Operationally, this translates primarily into using our low-cost core deposits to fund our commercial loans.  Coupled with this is our refined credit process, which enables us to identify weaknesses in credits and work through credit issues timely.  Additionally, we maintain a disciplined expense culture across all facets of the bank and remain committed to generating positive operating leverage.

We have continued to re-mix our earning assets towards more productive commercial and commercial real estate loans and out of indirect and other loans.

Loans:  Our loan balances, excluding loans held for sale, declined $28.9 million to $12.018 billion at September 30, 2019 compared to $12.047 billion at June 30, 2019.  This was primarily driven by a decline in commercial loans and consumer indirect loans, substantially offset by higher commercial real estate and residential real estate loans.  We reported commercial loan production of $680 million in the third quarter of 2019 and the pipeline totaled $2.0 billion at September 30, 2019.

Net Interest Income: For the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, our net interest income increased primarily due to the acquisition of Klein in November 2018 and increased loan yields, partially offset by higher costs of interest-bearing liabilities.  Net interest income decreased in the third quarter of 2019 compared to the second quarter of 2019 with lower interest collected on nonaccrual loans and a change in the mix of average interest earning assets and interest-bearing liabilities, partially offset by higher accretion income associated with acquired loans and an additional day in the third quarter.

Noninterest Income:  Noninterest income increased to $151.6 million for the nine months of 2019 from $137.2 million for the nine months ended September 30, 2018 substantially due to higher noninterest income associated with the Klein partnership.  The third quarter of 2019 compared to the second quarter of 2019 increased $2.7 million reflecting higher mortgage banking revenue and capital markets income.

Expenses:  Noninterest expenses were well controlled, increasing $6.8 million, or 2%, for the nine months ended September 30, 2019 when compared to the nine months ended September 30, 2018.  The increase was primarily attributable to higher expenses associated with the Klein partnership.  The third quarter of 2019 compared to the second quarter of 2019 decreased $5.5 million reflecting lower merger and integration charges associated with Klein.

Old National has spent the year internally focused.  This included a comprehensive analysis of every business, every department, and every function within the company.  We have partnered with a leading consulting firm with the ultimate goal of improving the overall efficiency of the organization while serving our clients better.  Our acquisition strategy has not changed. We remain an active looker and a selective buyer.  We are patient and continue to wait for the perfect pitch while we remain focused on execution.

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RESULTS OF OPERATIONS

The following table sets forth certain income statement information of Old National for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended									Nine Months Ended
	September 30,						%			September 30,						%
(dollars in thousands)	2019			2018			Change			2019			2018			Change
Income Statement Summary:
Net interest income	$	153,096		$	130,842			17.0	%	$	455,374		$	391,377			16.4		%
Provision for loan losses		1,437			750			91.6			3,483			3,576			(2.6	)
Noninterest income		53,961			45,957			17.4			151,591			137,151			10.5
Noninterest expense		122,585			119,376			2.7			373,744			366,993			1.8
Other Data:
Return on average common equity		9.91	%		9.28	%					9.12	%		8.74	%
Return on tangible common equity (1)		16.85			15.99						15.31			14.96
Return on average tangible common    equity (1)		17.01			16.10						16.00			15.40
Efficiency ratio (1)		56.44			64.71						58.65			66.74
Tier 1 leverage ratio		8.79			8.56						8.79			8.56
Net charge-offs (recoveries) to    average loans		0.03			0.06						0.02			0.01

(1) Represents a non-GAAP financial measure.  Refer to "Non-GAAP Financial Measures" section for reconciliations to GAAP financial measures.

Net Interest Income

Net interest income is the most significant component of our earnings, comprising 75% of revenues for the nine months ended September 30, 2019.  Net interest income and margin are influenced by many factors, primarily the volume and mix of earning assets, funding sources, and interest rate fluctuations.  Other factors include the level of accretion income on purchased loans, prepayment risk on mortgage and investment-related assets, and the composition and maturity of earning assets and interest-bearing liabilities.

The Federal Reserve lowered the discount rate by 25 basis points effective August 1, 2019 and lowered another 25 basis points effective September 19, 2019.  At September 30, 2019, the Treasury yield curve was slightly inverted from the 1-month Treasury bill to the 10-year Treasury note. This could cause our interest rate spread to decline, which may result in a decrease in our net interest income. However, management has taken balance sheet restructuring and derivative actions to help mitigate this risk.

Loans typically generate more interest income than investment securities with similar maturities.  Funding from client deposits generally costs less than wholesale funding sources.  Factors such as general economic activity, Federal Reserve monetary policy, and price volatility of competing alternative investments, can also exert significant influence on our ability to optimize the mix of assets and funding, net interest income, and margin.

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Net interest income is the excess of interest received from earning assets over interest paid on interest-bearing liabilities.  For analytical purposes, net interest income is also presented in the table that follows, adjusted to a taxable equivalent basis to reflect what our tax-exempt assets would need to yield in order to achieve the same after-tax yield as a taxable asset.  We used the federal statutory tax rate in effect of 21% for all periods.  This analysis portrays the income tax benefits related to tax-exempt assets and helps to facilitate a comparison between taxable and tax-exempt assets.  Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully taxable equivalent basis.  Therefore, management believes these measures provide useful information for both management and investors by allowing them to make peer comparisons.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)	2019			2018			2019			2018
Net interest income	$	153,096		$	130,842		$	455,374		$	391,377
Conversion to fully taxable equivalent		3,171			2,753			9,659			8,345
Net interest income - taxable equivalent basis	$	156,267		$	133,595		$	465,033		$	399,722
Average earning assets	$	17,510,487		$	15,213,384		$	17,320,260		$	15,198,690
Net interest margin		3.50	%		3.44	%		3.51	%		3.43	%
Net interest margin - taxable equivalent basis		3.57	%		3.51	%		3.58	%		3.51	%

The increase in net interest income for the three and nine months ended September 30, 2019 when compared to the three months ended September 30, 2018 was primarily due to higher average earning assets of $2.297 billion in the three months ended September 30, 2019 when compared to the three months ended September 30, 2018 and $2.121 billion in the nine months ended September 30, 2019 when compared to the nine months ended September 30, 2018.  Partially offsetting the higher average earning assets were higher average interest-bearing liabilities of $1.757 billion in the three months ended September 30, 2019 when compared to the three months ended September 30, 2018 and $1.611 billion in the nine months ended September 30, 2019 when compared to the nine months ended September 30, 2018.  Net interest income for the three and nine months ended September 30, 2019 and 2018 included accretion income (interest income in excess of contractual interest income) associated with acquired loans.  Accretion income totaled $13.4 million in the three months ended September 30, 2019 and $34.1 million in the nine months ended September 30, 2019, compared to $7.3 million in the three months ended September 30, 2018 and $29.8 million in the nine months ended September 30, 2018.  We expect accretion income on loans to decrease over time, but this may be offset by future acquisitions.

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The following tables present the average balance sheet for each major asset and liability category, its related interest income and yield, or its expense and rate for the three and nine months ended September 30, 2019 and 2018.

(tax equivalent basis,	Three Months Ended								Three Months Ended
dollars in thousands)	September 30, 2019								September 30, 2018
	Average			Income (1)/		Yield/			Average			Income (1)/		Yield/
Earning Assets	Balance			Expense		Rate			Balance			Expense		Rate
Money market and other interest-earning    investments	$	63,142		$	528		3.32	%	$	35,928		$	140		1.54	%
Investment securities:
Treasury and government sponsored agencies		682,940			4,341		2.54	%		685,919			3,748		2.19	%
Mortgage-backed securities		3,019,322			18,589		2.46	%		1,595,630			9,381		2.35	%
States and political subdivisions		1,172,017			10,896		3.72	%		1,103,347			10,110		3.67	%
Other securities		499,308			4,049		3.24	%		500,837			4,116		3.29	%
Total investment securities		5,373,587			37,875		2.82	%		3,885,733			27,355		2.82	%
Loans: (2)
Commercial		3,018,638			35,428		4.59	%		2,928,744			33,381		4.46	%
Commercial real estate		5,037,909			71,604		5.56	%		4,465,105			57,377		5.03	%
Residential real estate loans		2,283,704			24,261		4.25	%		2,187,130			22,536		4.12	%
Consumer		1,733,507			19,328		4.42	%		1,710,744			17,333		4.02	%
Total loans		12,073,758			150,621		4.91	%		11,291,723			130,627		4.56	%
Total earning assets		17,510,487		$	189,024		4.27	%		15,213,384		$	158,122		4.11	%
Less: Allowance for loan losses		(56,894	)							(53,734	)
Non-Earning Assets
Cash and due from banks		264,145								205,446
Other assets		2,429,466								2,068,469
Total assets	$	20,147,204							$	17,433,565
Interest-Bearing Liabilities
Checking and NOW accounts	$	3,895,654		$	4,448		0.45	%	$	3,026,289		$	1,180		0.15	%
Savings accounts		2,855,401			2,128		0.30	%		2,974,147			2,119		0.28	%
Money market accounts		1,822,698			4,017		0.87	%		1,153,906			1,254		0.43	%
Time deposits		1,914,917			8,114		1.68	%		1,847,322			6,636		1.43	%
Total interest-bearing deposits		10,488,670			18,707		0.71	%		9,001,664			11,189		0.49	%
Federal funds purchased and interbank    borrowings		254,971			1,484		2.31	%		238,514			1,191		1.98	%
Securities sold under agreements to repurchase		340,158			715		0.83	%		352,998			535		0.60	%
FHLB advances		1,889,407			9,123		1.92	%		1,624,661			8,880		2.17	%
Other borrowings		251,817			2,728		4.33	%		250,255			2,732		4.37	%
Total borrowed funds		2,736,353			14,050		2.04	%		2,466,428			13,338		2.15	%
Total interest-bearing liabilities	$	13,225,023		$	32,757		0.98	%	$	11,468,092		$	24,527		0.85	%
Noninterest-Bearing Liabilities and    Shareholders' Equity
Demand deposits	$	3,841,867							$	3,596,159
Other liabilities		262,862								156,614
Shareholders' equity		2,817,452								2,212,700
Total liabilities and shareholders' equity	$	20,147,204							$	17,433,565
Net interest rate spread							3.29	%							3.26	%
Net interest margin (3)							3.57	%							3.51	%
Taxable equivalent adjustment				$	3,171							$	2,753

(1) Interest income is reflected on a fully taxable equivalent basis.

(2) Includes loans held for sale.

(3) Net interest margin is defined as net interest income on a tax equivalent basis as a percentage of average earning assets.

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	Nine Months Ended								Nine Months Ended
(dollars in thousands)	September 30, 2019								September 30, 2018
	Average			Income (1)/		Yield/			Average			Income (1)/		Yield/
Earning Assets	Balance			Expense		Rate			Balance			Expense		Rate
Money market and other interest-earning    investments	$	60,071		$	1,140		2.54	%	$	51,284		$	347		0.90	%
Investment securities:
Treasury and government sponsored agencies		694,628			12,544		2.41	%		666,015			10,559		2.11	%
Mortgage-backed securities		2,763,406			54,991		2.65	%		1,605,324			27,805		2.31	%
States and political subdivisions		1,198,962			33,584		3.73	%		1,141,827			31,179		3.64	%
Other securities		497,854			12,553		3.36	%		489,465			11,694		3.19	%
Total investment securities		5,154,850			113,672		2.94	%		3,902,631			81,237		2.78	%
Loans: (2)
Commercial		3,067,830			109,290		4.70	%		2,854,691			94,114		4.35	%
Commercial real estate		5,015,973			208,894		5.49	%		4,436,576			170,414		5.07	%
Residential real estate loans		2,263,595			71,972		4.24	%		2,180,416			66,216		4.05	%
Consumer		1,757,941			58,525		4.45	%		1,773,092			52,828		3.98	%
Total loans		12,105,339			448,681		4.91	%		11,244,775			383,572		4.52	%
Total earning assets		17,320,260		$	563,493		4.32	%		15,198,690		$	465,156		4.06	%
Less: Allowance for loan losses		(56,442	)							(52,070	)
Non-Earning Assets
Cash and due from banks		242,938								203,421
Other assets		2,464,192								2,081,615
Total assets	$	19,970,948							$	17,431,656
Interest-Bearing Liabilities
Checking and NOW accounts	$	3,829,213		$	11,786		0.41	%	$	3,063,636		$	2,969		0.13	%
Savings accounts		2,889,977			6,556		0.30	%		3,020,955			5,239		0.23	%
Money market accounts		1,772,150			10,572		0.80	%		1,138,679			2,502		0.29	%
Time deposits		1,979,185			24,756		1.67	%		1,798,616			16,873		1.25	%
Total interest-bearing deposits		10,470,525			53,670		0.69	%		9,021,886			27,583		0.41	%
Federal funds purchased and interbank    borrowings		290,699			5,219		2.40	%		213,362			2,855		1.79	%
Securities sold under agreements to repurchase		344,294			2,048		0.80	%		342,797			1,328		0.52	%
FHLB advances		1,753,283			29,093		2.22	%		1,671,211			25,484		2.04	%
Other borrowings		251,070			8,430		4.48	%		249,464			8,184		4.37	%
Total borrowed funds		2,639,346			44,790		2.27	%		2,476,834			37,851		2.04	%
Total interest-bearing liabilities	$	13,109,871		$	98,460		1.00	%	$	11,498,720		$	65,434		0.76	%
Noninterest-Bearing Liabilities and    Shareholders' Equity
Demand deposits	$	3,833,605							$	3,587,453
Other liabilities		263,799								157,859
Shareholders' equity		2,763,673								2,187,624
Total liabilities and shareholders' equity	$	19,970,948							$	17,431,656
Net interest rate spread							3.32	%							3.30	%
Net interest margin (3)							3.58	%							3.51	%
Taxable equivalent adjustment				$	9,659							$	8,345

(1) Interest income is reflected on a fully taxable equivalent basis.

(2) Includes loans held for sale.

(3) Net interest margin is defined as net interest income on a tax equivalent basis as a percentage of average earning assets.

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The following table presents the dollar amount of changes in taxable equivalent net interest income attributable to changes in the average balances of assets and liabilities and the yields earned or rates paid for the three and nine months ended September 30, 2019 and 2018.

	From Three Months Ended									From Nine Months Ended
	September 30, 2018 to Three									September 30, 2018 to Nine
	Months Ended September 30, 2019									Months Ended September 30, 2019
	Total			Attributed to						Total		Attributed to
(dollars in thousands)	Change			Volume			Rate			Change		Volume			Rate
Interest Income
Money market and other interest-earning    investments	$	388		$	166		$	222		$	793	$	113		$	680
Investment securities (1)		10,520			10,480			40			32,435		26,839			5,596
Loans (1)		19,994			9,425			10,569			65,109		30,690			34,419
Total interest income		30,902			20,071			10,831			98,337		57,642			40,695
Interest Expense
Checking and NOW deposits		3,268			673			2,595			8,817		1,549			7,268
Savings deposits		9			(86	)		95			1,317		(262	)		1,579
Money market deposits		2,763			1,102			1,661			8,070		2,585			5,485
Time deposits		1,478			268			1,210			7,883		1,976			5,907
Federal funds purchased and interbank    borrowings		293			89			204			2,364		1,211			1,153
Securities sold under agreements to    repurchase		180			(22	)		202			720		7			713
FHLB advances		243			1,353			(1,110	)		3,609		1,307			2,302
Other borrowings		(4	)		17			(21	)		246		53			193
Total interest expense		8,230			3,394			4,836			33,026		8,426			24,600
Net interest income	$	22,672		$	16,677		$	5,995		$	65,311	$	49,216		$	16,095

The variance not solely due to rate or volume is allocated equally between the rate and volume variances.

(1) Interest on investment securities and loans includes the effect of taxable equivalent adjustments of $1.9 million and $1.3 million, respectively, during the three months ended September 30, 2019; and $5.7 million and $3.9 million, respectively, during the nine months ended September 30, 2019 using the federal statutory rate in effect of 21%.

The increase in the net interest margin on a fully taxable equivalent basis for the three and nine months ended September 30, 2019 when compared to the same periods in 2018 was primarily due to higher average earning assets and higher yields on interest earning assets, partially offset by higher costs of interest-bearing liabilities and a change in the mix of average interest earning assets and interest-bearing liabilities. The yield on interest earning assets increased 16 basis points and the cost of interest-bearing liabilities increased 13 basis points in the quarterly year-over-year comparison.  The yield on interest earning assets is calculated by dividing annualized taxable equivalent net interest income by average interest earning assets while the cost of interest-bearing liabilities is calculated by dividing annualized interest expense by average interest-bearing liabilities.  The yield on interest earning assets increased 26 basis points and the cost of interest-bearing liabilities increased 24 basis points in the nine months ended September 30, 2019 when compared to the nine months ended September 30, 2018.  Accretion income represented 31 basis points of the net interest margin for the three months ended September 30, 2019, compared to 19 basis points for the three months ended September 30, 2018.  Accretion income represented 26 basis points of the net interest margin for the nine months ended September 30, 2019 and the nine months ended September 30, 2018.

Average earning assets were $17.510 billion for the three months ended September 30, 2019, compared to $15.213 billion for the three months ended September 30, 2018, an increase of $2.297 billion, or 15%.  Average earning assets were $17.320 billion for the nine months ended September 30, 2019, compared to $15.199 billion for the nine months ended September 30, 2018, an increase of $2.121 billion, or 14%.  The increases in average earning assets were primarily due to our acquisition of Klein in November 2018. The loan portfolio including loans held for sale, which generally has an average yield higher than the investment portfolio, was 70% of average interest earning assets for the nine months ended September 30, 2019, compared to 74% for the nine months ended September 30, 2018.

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Average loans including loans held for sale increased $782.0 million for the three months ended September 30, 2019 and $860.6 million for the nine months ended September 30, 2019 when compared to the same periods in 2018 primarily due to loans acquired from Klein in November 2018.  Loans including loans held for sale attributable to the Klein acquisition totaled $1.052 billion as of the closing date of the acquisition, which was November 1, 2018.

Average investments increased $1.488 billion for the three months ended September 30, 2019 and $1.252 billion for the nine months ended September 30, 2019 when compared to the same periods in 2018 reflecting the Klein acquisition.  Excess liquidity generated in 2019 also resulted in higher investment securities.

Average noninterest-bearing deposits increased $245.7 million for the three months ended September 30, 2019 and $246.2 million for the nine months ended September 30, 2019 when compared to the same periods in 2018.  Average interest-bearing deposits increased $1.487 billion for the three months ended September 30, 2019 and $1.449 billion for the nine months ended September 30, 2019 when compared to the same periods in 2018.  The increases in average deposits also reflected the Klein acquisition.

Average borrowed funds increased $269.9 million for the three months ended September 30, 2019 and $162.5 million for the nine months ended September 30, 2019 when compared to the same periods in 2018.

Provision for Loan Losses

The provision for loan losses was $1.4 million for the three months ended September 30, 2019, compared to $0.8 million for the three months ended September 30, 2018. Net charge-offs totaled $0.8 million during the three months ended September 30, 2019, compared to net charge-offs of $1.7 million during the three months ended September 30, 2018.  The provision for loan losses was $3.5 million for the nine months ended September 30, 2019, compared to $3.6 million for the nine months ended September 30, 2018. Net charge-offs totaled $2.0 million during the nine months ended September 30, 2019, compared to net charge-offs of $1.2 million during the nine months ended September 30, 2018.  The higher provision for loan losses in the three months ended September 30, 2019 when compared to the three months ended September 30, 2018 is the result of loan growth, partially offset by a decrease in specific reserves on loans individually evaluated for impairment. Continued loan growth in future periods, a decline in our current level of recoveries, or an increase in charge-offs could result in an increase in provision expense.

Noninterest Income

We generate revenues in the form of noninterest income through client fees, sales commissions, and other gains and losses from our core banking franchise and other related businesses, such as wealth management, investment consulting, and investment products.  The following table details the components in noninterest income for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended								Nine Months Ended
	September 30,				%				September 30,				%
(dollars in thousands)		2019		2018	Change					2019		2018	Change
Wealth management fees	$	9,160	$	9,022		1.5		%	$	27,604	$	27,794		(0.7	)	%
Service charges on deposit accounts		11,860		11,028		7.5				34,201		32,552		5.1
Debit card and ATM fees		5,370		4,706		14.1				16,292		14,651		11.2
Mortgage banking revenue		8,850		4,348		103.5				20,996		13,729		52.9
Investment product fees		5,244		5,073		3.4				16,106		15,170		6.2
Capital markets income		4,560		2,700		68.9				10,227		4,094		149.8
Company-owned life insurance		2,703		2,958		(8.6	)			8,602		7,993		7.6
Net debt securities gains (losses)		424		135		214.1				1,486		2,417		(38.5	)
Other income		5,790		5,987		(3.3	)			16,077		18,751		(14.3	)
Total noninterest income	$	53,961	$	45,957		17.4		%	$	151,591	$	137,151		10.5		%

The increase in noninterest income for the three months ended September 30, 2019 when compared to the three months ended September 30, 2018 was primarily due to higher mortgage banking revenue, higher noninterest income attributable to the Klein partnership, and higher capital markets income.

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The increase in noninterest income for the nine months ended September 30, 2019 when compared to the nine months ended September 30, 2018 was primarily due to higher noninterest income attributable to the Klein partnership, higher mortgage banking revenue, and higher capital markets income.  These increases were partially offset by a $2.2 million gain on the sale of our student loan portfolio in the second quarter of 2018 and lower net gains on sales of debt securities.

Service charges and overdraft fees increased $0.8 million for the three months ended September 30, 2019 and $1.6 million for the nine months ended September 30, 2019 when compared to the same periods in 2018 primarily due to service charges and overdraft fees attributable to the Klein partnership.

Debit card and ATM fees increased $0.7 million for the three months ended September 30, 2019 and $1.6 million for the nine months ended September 30, 2019 when compared to the same periods in 2018 primarily due to higher interchange income attributable to the Klein partnership.

Mortgage banking revenue increased $4.5 million for the three months ended September 30, 2019 and $7.3 million for the nine months ended September 30, 2019 when compared to the same periods in 2018 primarily due to increased mortgage originations and strong pipeline growth in 2019.

Capital markets income is comprised of customer interest rate swap fees, foreign currency exchange fees, net gains (losses) on foreign currency adjustments, and tax credit fee income.  Capital markets income increased $1.9 million for the three months ended September 30, 2019 and $6.1 million for the nine months ended September 30, 2019 when compared to the same periods in 2018 primarily due to higher customer interest rate swap fees.

Net debt securities gains (losses) had an unfavorable variance of $0.9 million for the nine months ended September 30, 2019 when compared to the nine months ended September 30, 2018 primarily due to higher realized losses on sales of available-for-sale securities in 2019.

Other income decreased $2.7 million for the nine months ended September 30, 2019 when compared to the nine months ended September 30, 2018 primarily due to a $2.2 million gain on the sale of our student loan portfolio in the second quarter of 2018.  Also contributing to the decrease in other income was the recognition of deferred gains on sale leaseback transactions of $1.2 million in the nine months ended September 30, 2018.  The deferred gains were eliminated as a cumulative-effect adjustment upon adoption of the new accounting guidance in Topic 842 effective January 1, 2019.  These decreases were partially offset by other income attributable to the Klein partnership.

Noninterest Expense

The following table details the components in noninterest expense for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended								Nine Months Ended
	September 30,				%				September 30,				%
(dollars in thousands)	2019		2018		Change				2019		2018		Change
Salaries and employee benefits	$	71,729	$	63,158		13.6		%	$	214,478	$	193,929		10.6		%
Occupancy		11,934		12,578		(5.1	)			41,071		38,731		6.0
Equipment		3,954		3,652		8.3				12,945		10,945		18.3
Marketing		4,105		3,406		20.5				12,267		11,065		10.9
Data processing		8,961		8,628		3.9				28,509		26,752		6.6
Communication		2,349		2,473		(5.0	)			8,252		8,309		(0.7	)
Professional fees		5,037		3,235		55.7				12,868		8,888		44.8
Loan expenses		1,811		1,564		15.8				5,380		5,151		4.4
FDIC assessment		960		2,722		(64.7	)			4,501		8,528		(47.2	)
Amortization of intangibles		4,168		3,283		27.0				12,965		10,308		25.8
Amortization of tax credit investments		1,211		9,233		(86.9	)			2,039		21,807		(90.6	)
Other expense		6,366		5,444		16.9				18,469		22,580		(18.2	)
Total noninterest expense	$	122,585	$	119,376		2.7		%	$	373,744	$	366,993		1.8		%

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Noninterest expense increased $3.2 million for the three months ended September 30, 2019 when compared to the three months ended September 30, 2018 reflecting higher operating expenses and acquisition and integration costs associated with Klein and higher commissions and incentive compensation expenses.  These increases were substantially offset by a decrease in amortization of tax credit investments totaling $8.0 million.

Noninterest expense increased $6.8 million for the nine months ended September 30, 2019 when compared to the nine months ended September 30, 2018 reflecting higher operating expenses and acquisition and integration costs associated with Klein, higher commissions and incentive compensation expenses, and higher professional fees.  These increases were partially offset by a decrease in amortization of tax credit investments totaling $19.8 million.

Salaries and employee benefits increased $8.6 million for the three months ended September 30, 2019 and $20.5 million for the nine months ended September 30, 2019 when compared to the same periods in 2018 primarily due to higher salaries and employee benefits attributable to the Klein partnership.  Also contributing to the increase in salaries and benefits were higher commissions and incentive compensation expenses.

Equipment expenses increased $2.0 million for the nine months ended September 30, 2019 when compared to the same period in 2018 primarily due to higher equipment expenses attributable to the Klein partnership and an increase in small equipment expenses.

Professional fees increased $1.8 million for the three months ended September 30, 2019 and $4.0 million for the nine months ended September 30, 2019 when compared to the same periods in 2018 primarily due to higher consulting fees.

FDIC assessment expenses decreased $1.8 million for the three months ended September 30, 2019 and $4.0 million for the nine months ended September 30, 2019 when compared to the same periods in 2018 primarily due to the elimination of an FDIC surcharge.

Amortization of intangibles increased $0.9 million for the three months ended September 30, 2019 and $2.7 million for the nine months ended September 30, 2019 when compared to the same periods in 2018 primarily due to amortization of core deposit intangibles related to the Klein acquisition.

Amortization of tax credit investments decreased $8.0 million for the three months ended September 30, 2019 and $19.8 million for the nine months ended September 30, 2019 when compared to the same periods in 2018. The recognition of tax credit amortization expense is contingent upon the successful rehabilitation of a historic building or completion of a solar project within the reporting period. Many factors including weather, labor availability, building regulations, inspections, and other unexpected construction delays related to a rehabilitation project can cause a project to exceed its estimated completion date.  See Note 13 to the consolidated financial statements for additional information on our tax credit investments.

Other expense increased $0.9 million for the three months ended September 30, 2019 when compared to the three months ended September 30, 2018 primarily due to an unfavorable variance in provision for unfunded commitments.  Other expense decreased $4.1 million for the nine months ended September 30, 2019 when compared to the nine months ended September 30, 2018 primarily due to impairments of long-lived assets of $2.5 million in the nine months ended September 30, 2018 related to branch consolidations and higher integration expenses associated with the Anchor (MN) partnership totaling $1.5 million in the nine months ended September 30, 2018.

Provision for Income Taxes

We record a provision for income taxes currently payable and for income taxes payable or benefits to be received in the future, which arise due to timing differences in the recognition of certain items for financial statement and income tax purposes.  The major difference between the effective tax rate applied to our financial statement income and the federal statutory tax rate is caused by a tax benefit from our tax credit investments and interest on tax-exempt securities and loans.  The provision for income taxes, as a percentage of pre-tax income, was 16.0% for the three months ended September 30, 2019, compared to 9.4% for the three months ended September 30, 2018.  The provision for income taxes, as a percentage of pre-tax income, was 17.7% for the nine months ended September 30, 2019, compared to 9.3% for the nine months ended September 30, 2018.  In accordance with ASC 740-270,

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Accounting for Interim Reporting, the provision for income taxes was recorded at September 30, 2019 based on the current estimate of the effective annual rate.  The higher effective tax rate during the three and nine months ended September 30, 2019 when compared to the same periods in 2018 was primarily the result of a decrease in federal tax credits available as well as an increase in pre-tax book income.  See Note 19 to the consolidated financial statements for additional information.

FINANCIAL CONDITION

Overview

At September 30, 2019, our assets were $20.439 billion, a $2.871 billion increase compared to assets of $17.568 billion at September 30, 2018, and a $710.4 million increase compared to assets of $19.728 billion at December 31, 2018.  The increase from September 30, 2018 to September 30, 2019 was primarily due to the acquisition of Klein in November 2018, which had $2.157 billion in assets as of the closing date of the acquisition, including goodwill of $208.8 million.  An increase in investment securities also contributed to the September 30, 2018 to September 30, 2019 increase in assets.

Earning Assets

Our earning assets are comprised of investment securities, portfolio loans, loans held for sale, money market investments, interest earning accounts with the Federal Reserve, and equity securities.  Earning assets were $17.670 billion at September 30, 2019, a $2.358 billion increase compared to earning assets of $15.312 billion at September 30, 2018, and a $600.0 million increase compared to earning assets of $17.070 billion at December 31, 2018.

Investment Securities

We classify the majority of our investment securities as available-for-sale to give management the flexibility to sell the securities prior to maturity if needed, based on fluctuating interest rates or changes in our funding requirements.  However, we also have $33.3 million of U.S. government-sponsored entities and agencies securities, $112.2 million of fixed-rate mortgage-backed securities, and $261.8 million of state and political subdivision securities in our held-to-maturity investment portfolio at September 30, 2019.

Equity securities are recorded at fair value and totaled $6.6 million at September 30, 2019 compared to $5.8 million at September 30, 2018.

At September 30, 2019, the investment securities portfolio, including equity securities, was $5.495 billion compared to $3.927 billion at September 30, 2018, an increase of $1.568 billion.  Investment securities attributable to the Klein acquisition totaled $700.6 million as of the closing date of the acquisition.  Investment securities represented 31% of earning assets at September 30, 2019, compared to 26% at September 30, 2018 and 28% at December 31, 2018.  Excess liquidity generated in 2019 resulted in a higher percentage of investment securities compared to December 31, 2018. Stronger commercial loan demand in the future could result in management’s decision to reduce the securities portfolio.  At September 30, 2019, management does not intend to sell any securities in an unrealized loss position and does not believe we will be required to sell such securities.

The investment securities available-for-sale portfolio had net unrealized gains of $82.4 million at September 30, 2019, compared to net unrealized losses of $96.1 million at September 30, 2018, and net unrealized losses of $49.2 million at December 31, 2018.  Net unrealized gains (losses) increased from December 31, 2018 to September 30, 2019 reflecting higher net unrealized gains on mortgage-backed securities and state and political subdivision securities due to a decline in long-term interest rates.

The investment portfolio had an effective duration of 3.04 at September 30, 2019, compared to 4.49 at September 30, 2018, and 4.00 at December 31, 2018.  Effective duration measures the percentage change in value of the portfolio in response to a change in interest rates.  Generally, there is more uncertainty in interest rates over a longer average maturity, resulting in a higher duration percentage.  The annualized average yields on investment securities, on a taxable equivalent basis, were 2.82% for the three months ended September 30, 2019 and 2.94% for the nine months ended September 30, 2019, compared to 2.82% for the three months ended September 30, 2018 and 2.78% for the nine months ended September 30, 2018.

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Loans Held for Sale

Mortgage loans held for immediate sale in the secondary market were $58.3 million at September 30, 2019, compared to $14.9 million at December 31, 2018.  Certain mortgage loans are committed for sale at or prior to origination at a contracted price to an outside investor.  Other mortgage loans held for immediate sale are hedged with TBA forward agreements and committed for sale when they are ready for delivery and remain on the Company’s balance sheet for a short period of time (typically 30 to 60 days).  These loans are sold without recourse, beyond customary representations and warranties, and Old National has not experienced material losses arising from these sales.  Mortgage originations are subject to volatility due to interest rates and home sales, among other factors.

We have elected the fair value option prospectively for residential loans held for sale.  The aggregate fair value exceeded the unpaid principal balance by $1.8 million at September 30, 2019, compared to $0.5 million at December 31, 2018.

Commercial and Commercial Real Estate Loans

Commercial and commercial real estate loans are the largest classification within earning assets, representing 46% of earning assets at September 30, 2019, compared to 49% at September 30, 2018 and 48% at December 31, 2018.  At September 30, 2019, commercial and commercial real estate loans were $8.063 billion, an increase of $631.9 million, or 9%, compared to September 30, 2018, and a decrease of $129.1 million, or 2%, compared to December 31, 2018.  Commercial and commercial real estate loans attributable to the Klein acquisition totaled $836.8 million as of the closing date of the acquisition.

Residential Real Estate Loans

At September 30, 2019, residential real estate loans held in our loan portfolio were $2.237 billion, an increase of $70.4 million compared to September 30, 2018, and a decrease of $11.8 million compared to December 31, 2018.  Residential real estate loans attributable to the Klein acquisition totaled $77.7 million as of the closing date of the acquisition.  Future increases in interest rates could result in a decline in the level of refinancings and new originations of residential real estate loans.

Consumer Loans

Consumer loans, including automobile loans and personal and home equity loans and lines of credit, increased $22.7 million at September 30, 2019 compared to September 30, 2018, and decreased $85.3 million from December 31, 2018.  Consumer loans attributable to the Klein acquisition totaled $134.6 million as of the closing date of the acquisition.  We continue to see runoff in our less profitable indirect consumer loan portfolio.

Operating Lease Right-of-Use Assets

Old National adopted ASU No. 2016-02, Leases (Topic 842) on January 1, 2019, which required the recognition of operating lease right-of-use assets.  Operating lease right-of-use assets represent the lessee’s right to use, or control the use of, specified assets for the lease term.  Operating lease right-of-use assets are recognized based on the present value of lease payments over the lease term.  Operating lease right-of-use assets totaled $103.0 million at September 30, 2019.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets at September 30, 2019 totaled $1.101 billion, an increase of $230.1 million compared to $870.9 million at September 30, 2018.  During 2018, we recorded $247.8 million of goodwill and other intangible assets associated with the acquisition of Klein.

Net Deferred Tax Assets

Net deferred tax assets decreased $68.1 million compared to September 30, 2018 primarily due to decreases in net deferred tax assets related to net unrealized gains or losses on available-for-sale investment securities, federal tax credits, and net operating loss carryforwards.  Net deferred tax assets decreased $60.5 million compared to

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December 31, 2018 primarily due to decreases in net deferred tax assets related to net unrealized gains or losses on available-for-sale investment securities, acquired loans, net operating loss carryforwards, and benefit plan accruals.  Future changes in the corporate tax rate could result in a change in value of Old National’s deferred tax assets and future income tax expense.  See Note 19 to the consolidated financial statements for additional information.

Other Assets

Other assets increased $60.5 million, or 36%, compared to September 30, 2018 and $44.3 million, or 24%, compared to December 31, 2018 primarily due to increases in derivative assets.

Funding

Total funding, comprised of deposits and wholesale borrowings, was $17.280 billion at September 30, 2019, an increase of $2.106 billion from $15.174 billion at September 30, 2018, and an increase of $436.5 million from $16.844 billion at December 31, 2018.  Included in total funding were deposits of $14.448 billion at September 30, 2019, an increase of $1.850 billion from $12.598 billion at September 30, 2018, and an increase of $98.4 million from $14.350 billion at December 31, 2018.  Deposits attributable to the Klein acquisition totaled $1.713 billion as of the closing date of the acquisition. Noninterest-bearing deposits increased $407.9 million from September 30, 2018 to September 30, 2019.  Interest-bearing checking and NOW deposits increased $924.8 million from September 30, 2018 to September 30, 2019, while savings deposits decreased $57.0 million.  Money market deposits increased $636.6 million from September 30, 2018 to September 30, 2019, while time deposits decreased $62.1 million.

We use wholesale funding to augment deposit funding and to help maintain our desired interest rate risk position.  At September 30, 2019, wholesale borrowings, including federal funds purchased and interbank borrowings, securities sold under agreements to repurchase, FHLB advances, and other borrowings, totaled $2.832 billion, an increase of $255.8 million from September 30, 2018, and an increase of $338.1 million from December 31, 2018.  Wholesale funding as a percentage of total funding was 16% at September 30, 2019, 17% at September 30, 2018, and 15% at December 31, 2018.  The increase in wholesale funding from September 30, 2018 to September 30, 2019 was due to increases in FHLB advances and securities sold under agreements to repurchase, partially offset by a decrease in federal funds purchased and interbank borrowings.

Operating Lease Liabilities

The adoption of ASU No. 2016-02, Leases (Topic 842) on January 1, 2019 also required the recognition of operating lease liabilities.  Operating lease liabilities represent a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis.  Operating lease liabilities totaled $107.3 million at September 30, 2019.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities increased $45.9 million, or 27%, from September 30, 2018 and $23.6 million, or 12%, compared to December 31, 2018 primarily due to investment securities purchased but not settled before September 30, 2019.  The increase in accrued expenses and other liabilities from December 31, 2018 to September 30, 2019 was partially offset by decreases in accrued expenses related to the Klein acquisition and decreases in unfunded commitments on various tax credit investments.

Capital

Shareholders’ equity totaled $2.833 billion at September 30, 2019, compared to $2.221 billion at September 30, 2018 and $2.690 billion at December 31, 2018.  Shareholders’ equity at September 30, 2019 included $406.5 million from the 22.8 million shares of Common Stock that were issued in conjunction with the acquisition of Klein.  The change in unrealized gains (losses) on available-for-sale investment securities increased equity by $101.6 million during the nine months ended September 30, 2019.  Old National repurchased 5.6 million shares of Common Stock in the nine months ended September 30, 2019 under a stock repurchase plan that was approved by the Company’s Board of Directors, which reduced equity by $91.9 million.  We also paid cash dividends of $0.39 per share in the nine months ended September 30, 2019, which reduced equity by $67.4 million.  The Company’s Common Stock is traded on the NASDAQ under the symbol “ONB” with 37,053 shareholders of record at September 30, 2019.

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Capital Adequacy

Old National and the banking industry are subject to various regulatory capital requirements administered by the federal banking agencies. At September 30, 2019, Old National and its bank subsidiary exceeded the regulatory minimums and Old National Bank met the regulatory definition of well-capitalized based on the most recent regulatory definition.

At September 30, 2019, Old National’s consolidated capital position remains strong as evidenced by the following comparisons of key industry ratios.

	Regulatory Guidelines			September 30,						December 31,
	Minimum			2019			2018			2018
Risk-based capital:
Tier 1 capital to total average assets (leverage ratio)		4.00	%		8.79	%		8.56	%		9.17	%
Common equity Tier 1 capital to risk-adjusted    total assets		7.00			12.03			11.09			11.36
Tier 1 capital to risk-adjusted total assets		8.50			12.03			11.09			11.36
Total capital to risk-adjusted total assets		10.50			12.97			12.09			12.27
Shareholders' equity to assets	N/A				13.86			12.64			13.63

At September 30, 2019, Old National Bank, Old National’s bank subsidiary, maintained a strong capital position as evidenced by the following comparisons of key industry ratios.

	Regulatory Guidelines			Well Capitalized			September 30,						December 31,
	Minimum			Guidelines			2019			2018			2018
Risk-based capital:
Tier 1 capital to total average assets (leverage    ratio)		4.00	%		5.00	%		9.57	%		9.08	%		9.58	%
Common equity Tier 1 capital to risk-adjusted
total assets		7.00			6.50			13.00			11.86			11.98
Tier 1 capital to risk-adjusted total assets		8.50			8.00			13.00			11.86			11.98
Total capital to risk-adjusted total assets		10.50			10.00			13.51			12.39			12.47

In December 2018, the OCC, the Board of Governors of the Federal Reserve System, and the FDIC approved a final rule to address changes to credit loss accounting under GAAP, including banking organizations’ implementation of CECL.  The final rule provides banking organizations the option to phase in over a three-year period the day-one adverse effects on regulatory capital that may result from the adoption of the new accounting standard.  Old National is planning on adopting the capital transition relief over the permissible three-year period.

RISK MANAGEMENT

Overview

Old National has adopted a Risk Appetite Statement to enable the Board of Directors, Executive Leadership Group, and Senior Management to better assess, understand, and mitigate the risks of Old National.  The Risk Appetite Statement addresses the following major risks:  strategic, market, liquidity, credit, operational/technology/cyber, regulatory/compliance/legal, reputational, and human resources.  Our Chief Risk Officer is independent of management and reports directly to the Chair of the Board’s Enterprise Risk Management Committee.  The following discussion addresses these major risks: credit, market, liquidity, operational/technology/cyber, and regulatory/compliance/legal.

Credit Risk

Credit risk represents the risk of loss arising from an obligor’s inability or failure to meet contractual payment or performance terms.  Our primary credit risks result from our investment and lending activities.

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Investment Activities

We carry a higher exposure to loss in our pooled trust preferred securities, which are collateralized debt obligations, due to illiquidity in that market and the performance of the underlying collateral.  At September 30, 2019, we had pooled trust preferred securities with a fair value of $7.7 million, or less than 1% of the available-for-sale securities portfolio.  These securities remained classified as available-for-sale and at September 30, 2019, the unrealized loss on our pooled trust preferred securities was $6.1 million. The fair value of these securities should improve as we get closer to maturity, but not in all cases.  There was no OTTI recorded during the nine months ended September 30, 2019 or 2018.

All of our mortgage-backed securities are backed by U.S. government-sponsored or federal agencies.  Municipal bonds, corporate bonds, and other debt securities are evaluated by reviewing the credit-worthiness of the issuer and general market conditions.  See Note 5 to the consolidated financial statements for additional details about our investment security portfolio.

Counterparty Exposure

Counterparty exposure is the risk that the other party in a financial transaction will not fulfill its obligation.  We define counterparty exposure as nonperformance risk in transactions involving federal funds sold and purchased, repurchase agreements, correspondent bank relationships, and derivative contracts with companies in the financial services industry.  Old National manages exposure to counterparty risk in connection with its derivatives transactions by generally engaging in transactions with counterparties having ratings of at least A by Standard & Poor’s Rating Service or A2 by Moody’s Investors Service.  Total credit exposure is monitored by counterparty and managed within limits that management believes to be prudent. Old National’s net counterparty exposure was a liability of $51.1 million at September 30, 2019.

Lending Activities

Commercial

Commercial and industrial loans are made primarily for the purpose of financing equipment acquisition, expansion, working capital, and other general business purposes.  Lease financing consists of direct financing leases and are used by commercial customers to finance capital purchases ranging from computer equipment to transportation equipment.  The credit decisions for these transactions are based upon an assessment of the overall financial capacity of the applicant.  A determination is made as to the applicant’s ability to repay in accordance with the proposed terms as well as an overall assessment of the risks involved.  In addition to an evaluation of the applicant’s financial condition, a determination is made of the probable adequacy of the primary and secondary sources of repayment, such as additional collateral or personal guarantees, to be relied upon in the transaction.  Credit agency reports of the applicant’s credit history supplement the analysis of the applicant’s creditworthiness.

Commercial mortgages and construction loans are offered to real estate investors, developers, and builders primarily domiciled in the geographic market areas we serve:  Indiana, Kentucky, Michigan, Wisconsin, and Minnesota.  These loans are secured by first mortgages on real estate at LTV margins deemed appropriate for the property type, quality, location, and sponsorship.  Generally, these LTV ratios do not exceed 80%.  The commercial properties are predominantly non-residential properties such as retail centers, apartments, industrial properties and, to a lesser extent, more specialized properties.  Substantially all of our commercial real estate loans are secured by properties located in our primary market area.

In the underwriting of our commercial real estate loans, we obtain appraisals for the underlying properties.  Decisions to lend are based on the economic viability of the property and the creditworthiness of the borrower.  In evaluating a proposed commercial real estate loan, we primarily emphasize the ratio of the property’s projected net cash flows to the loan’s debt service requirement.  The debt service coverage ratio normally is not less than 120% and it is computed after deduction for a vacancy factor and property expenses as appropriate.  In addition, a personal guarantee of the loan or a portion thereof is often required from the principal(s) of the borrower.  In most cases, we require title insurance insuring the priority of our lien, fire, and extended coverage casualty insurance, and flood insurance, if appropriate, in order to protect our security interest in the underlying property.  In addition, business interruption insurance or other insurance may be required.

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Construction loans are underwritten against projected cash flows derived from rental income, business income from an owner-occupant, or the sale of the property to an end-user.  We may mitigate the risks associated with these types of loans by requiring fixed-price construction contracts, performance and payment bonding, controlled disbursements, and pre-sale contracts or pre-lease agreements.

Consumer

We offer a variety of first mortgage and junior lien loans to consumers within our markets, with residential home mortgages comprising our largest consumer loan category.  These loans are secured by a primary residence and are underwritten using traditional underwriting systems to assess the credit risks of the consumer.  Decisions are primarily based on LTV ratios, DTI ratios, liquidity, and credit scores.  A maximum LTV ratio of 80% is generally required, although higher levels are permitted with mortgage insurance or other mitigating factors.  We offer fixed rate mortgages and variable rate mortgages with interest rates that are subject to change every year after the first, third, fifth, or seventh year, depending on the product and are based on fully-indexed rates such as LIBOR.  We do not offer payment-option facilities, sub-prime loans, or any product with negative amortization.

Home equity loans are secured primarily by second mortgages on residential property of the borrower.  The underwriting terms for the home equity product generally permits borrowing availability, in the aggregate, up to 90% of the appraised value of the collateral property at the time of origination.  We offer fixed and variable rate home equity loans, with variable rate loans underwritten at fully-indexed rates.  Decisions are primarily based on LTV ratios, DTI ratios, and credit scores.  We do not offer home equity loan products with reduced documentation.

Automobile loans include loans and leases secured by new or used automobiles.  We originate automobile loans and leases primarily on an indirect basis through selected dealerships.  We require borrowers to maintain collision insurance on automobiles securing consumer loans, with us listed as loss payee.  Our procedures for underwriting automobile loans include an assessment of an applicant’s overall financial capacity, including credit history and the ability to meet existing obligations and payments on the proposed loan.  Although an applicant’s creditworthiness is the primary consideration, the underwriting process also includes a comparison of the value of the collateral security to the proposed loan amount.

Asset Quality

Community-based lending personnel, along with region-based independent underwriting and analytic support staff, extend credit under guidelines established and administered by our Enterprise Risk Committee.  This committee, which meets quarterly, is made up of outside directors.  The committee monitors credit quality through its review of information such as delinquencies, credit exposures, peer comparisons, problem loans, and charge-offs.  In addition, the committee reviews and approves recommended loan policy changes to assure it remains appropriate for the current lending environment.

We lend to commercial and commercial real estate clients in various industries including manufacturing, agribusiness, transportation, mining, wholesaling, and retailing.  Old National manages concentrations of credit exposure by industry, product, geography, customer relationship, and loan size.  At September 30, 2019, our average commercial loan size was under $300,000 and our average commercial real estate loan size was under $675,000.  In addition, while loans to lessors of both residential and non-residential real estate exceed 10% of total loans, no individual sub-segment category within those broader categories reaches the 10% threshold.  At September 30, 2019, we had minimal exposure to foreign borrowers and no sovereign debt.  Our policy is to concentrate our lending activity in the geographic market areas we serve, primarily Indiana, Kentucky, Michigan, Wisconsin, and Minnesota.  We are experiencing a slow and gradual improvement in the economy of our principal markets.  Management expects that trends in under-performing, criticized, and classified loans will be influenced by the degree to which the economy strengthens or weakens.

On November 1, 2018, Old National closed on its acquisition of Klein.  As of the closing date of the acquisition, loans totaled $1.049 billion and other real estate owned totaled $1.0 million.  In accordance with accounting for business combinations, there was no allowance brought forward on any of the acquired loans, as the credit losses evident in the loans were included in the determination of the fair value of the loans at the acquisition date.  Old National reviewed the acquired loans and determined that as of September 30, 2019, $27.3 million met the definition of criticized and $37.7 million were considered classified (of which $12.1 million are reported with nonaccrual

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loans).  Our current preference would be to work these loans and avoid foreclosure actions unless additional credit deterioration becomes apparent.  These acquired impaired loans are included in our summary of under-performing, criticized, and classified assets found below.

Summary of under-performing, criticized, and classified assets:

	September 30,						December 31,
(dollars in thousands)	2019			2018			2018
Nonaccrual loans:
Commercial	$	37,880		$	36,515		$	38,648
Commercial real estate		70,443			81,233			86,601
Residential real estate		20,759			23,435			24,954
Consumer		9,416			7,633			7,281
Total nonaccrual loans (1)		138,498			148,816			157,484
Renegotiated loans not on nonaccrual		18,884			17,547			17,356
Past due loans (90 days or more and still accruing):
Commercial		100			1			52
Commercial real estate		—			—			40
Residential real estate		64			190			258
Consumer		539			789			1,003
Total past due loans		703			980			1,353
Other real estate owned		2,941			3,563			3,232
Total under-performing assets	$	161,026		$	170,906		$	179,425
Classified loans (includes nonaccrual, renegotiated,    past due 90 days, and other problem loans)	$	285,188		$	257,053		$	334,785
Other classified assets (2)		2,556			3,070			2,820
Criticized loans		233,519			181,165			238,752
Total criticized and classified assets	$	521,263		$	441,288		$	576,357
Asset Quality Ratios:
Non-performing loans/total loans (3) (4)		1.31	%		1.47	%		1.43	%
Under-performing assets/total loans and     other real estate owned (3)		1.34			1.51			1.47
Under-performing assets/total assets		0.79			0.97			0.91
Allowance for loan losses/under-performing assets (5)		35.34			30.84			30.91
Allowance for loan losses/nonaccrual loans (1)		41.09			35.42			35.22

(1) Includes purchased credit impaired loans of $11.0 million at September 30, 2019, $9.9 million at September 30, 2018, and $20.5 million at December 31, 2018 that are categorized as nonaccrual for credit analysis purposes because the collection of principal or interest is doubtful.  However, these loans are accounted for under FASB ASC 310-30 and accordingly treated as performing assets.

(2) Includes one pooled trust preferred security and one insurance policy at September 30, 2019.

(3) Loans exclude loans held for sale.

(4) Non-performing loans include nonaccrual and renegotiated loans.

(5) Because the acquired loans were recorded at fair value at the date of acquisition, the credit risk is incorporated in the fair value recorded.  No allowance for loan losses is recorded on the acquisition date.

Under-performing assets totaled $161.0 million at September 30, 2019, compared to $170.9 million at September 30, 2018 and $179.4 million at December 31, 2018.  Under-performing assets as a percentage of total loans and other real estate owned at September 30, 2019 were 1.34%, a decrease of 17 basis points from 1.51% at September 30, 2018 and a decrease of 13 basis points from 1.47% at December 31, 2018.

Nonaccrual loans decreased from September 30, 2018 primarily due to a decrease in commercial real estate nonaccrual loans.  Nonaccrual loans at September 30, 2019 include $12.1 million of loans related to the Klein acquisition.  As a percentage of nonaccrual loans, the allowance for loan losses was 41.09% at September 30, 2019, compared to 35.42% at September 30, 2018 and 35.22% at December 31, 2018.  PCI loans that were included in the nonaccrual category for credit analysis purposes because the collection of principal or interest is doubtful totaled $11.0 million at September 30, 2019, compared to $9.9 million at September 30, 2018 and $20.5 million at December 31, 2018. However, they are accounted for under FASB ASC 310-30 and accordingly treated as performing assets.

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Total criticized and classified assets were $521.3 million at September 30, 2019, an increase of $80.0 million from September 30, 2018, and a decrease of $55.1 million from December 31, 2018. Other classified assets include investment securities that fell below investment grade rating totaling $2.6 million at September 30, 2019, compared to $3.1 million at September 30, 2018 and $2.8 million at December 31, 2018.

Old National may choose to restructure the contractual terms of certain loans.  The decision to restructure a loan, versus aggressively enforcing the collection of the loan, may benefit Old National by increasing the ultimate probability of collection.

Any loans that are modified are reviewed by Old National to identify if a TDR has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, Old National Bank grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status.  The modification of the terms of such loans include one or a combination of the following:  a reduction of the stated interest rate of the loan, an extension of the maturity date at a stated rate of interest lower than the current market rate of new debt with similar risk, or a permanent reduction of the recorded investment of the loan.

Loans modified in a TDR are typically placed on nonaccrual status until we determine the future collection of principal and interest is reasonably assured, which generally requires that the borrower demonstrate a period of performance according to the restructured terms for six months.

If we are unable to resolve a nonperforming loan issue, the credit will be charged off when it is apparent there will be a loss.  For large commercial type loans, each relationship is individually analyzed for evidence of apparent loss based on quantitative benchmarks or subjectively based upon certain events or particular circumstances.  Generally, Old National charges off small commercial loans scored through our small business credit center with contractual balances under $250,000 that are 90 days or more delinquent and do not have adequate collateral support.  For residential and consumer loans, a charge off is recorded at the time foreclosure is initiated or when the loan becomes 120 to 180 days past due, whichever is earlier.

For commercial TDRs, an allocated reserve is established within the allowance for loan losses for the difference between the carrying value of the loan and its computed value.  To determine the value of the loan, one of the following methods is selected: (1) the present value of expected cash flows discounted at the loan’s original effective interest rate, (2) the loan’s observable market price, or (3) the fair value of the collateral value, if the loan is collateral dependent.  The allocated reserve is established as the difference between the carrying value of the loan and the collectable value.  If there are significant changes in the amount or timing of the loan’s expected future cash flows, impairment is recalculated and the valuation allowance is adjusted accordingly.

When a residential or consumer loan is identified as a TDR, the loan is typically written down to its collateral value less selling costs.

At September 30, 2019, our TDRs consisted of $17.1 million of commercial loans, $18.3 million of commercial real estate loans, $2.8 million of residential loans, and $2.2 million of consumer loans totaling $40.4 million.  TDRs included with nonaccrual loans totaled $21.8 million at September 30, 2019.  At December 31, 2018, our TDRs consisted of $10.3 million of commercial loans, $27.6 million of commercial real estate loans, $3.4 million of residential loans, and $2.4 million of consumer loans totaling $43.7 million.  TDRs included with nonaccrual loans totaled $26.3 million at December 31, 2018.

Old National has allocated specific reserves to customers whose loan terms have been modified in TDRs totaling $6.3 million at September 30, 2019 and $3.0 million of December 31, 2018.  At September 30, 2019, Old National had committed to lend an additional $1.8 million to customers with outstanding loans that are classified as TDRs.

The terms of certain other loans were modified during 2019 and 2018 that did not meet the definition of a TDR.  It is our process to review all classified and criticized loans that, during the period, have been renewed, have entered into a forbearance agreement, have gone from principal and interest to interest only, or have extended the maturity date.  In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on its debt in the foreseeable future without the modification.  The evaluation is performed under our internal underwriting policy.  We also evaluate whether a

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concession has been granted or if we were adequately compensated through a market interest rate, additional collateral, or a bona fide guarantee.  We also consider whether the modification was insignificant relative to the other terms of the agreement or the delay in a payment.

PCI loans are not considered impaired until after the point at which there has been a degradation of cash flows below our expected cash flows at acquisition.  If a PCI loan is subsequently modified, and meets the definition of a TDR, it will be removed from PCI accounting and accounted for as a TDR only if the PCI loan was being accounted for individually.  If the PCI loan is being accounted for as part of a pool, it will not be removed from the pool.  At September 30, 2019, it has not been necessary to remove any loans from PCI accounting.

In general, once a modified loan is considered a TDR, the loan will always be considered a TDR, and therefore impaired, until it is paid in full, otherwise settled, sold, or charged off.  However, guidance also permits for loans to be removed from TDR status when subsequently restructured under these circumstances: (1) at the time of the subsequent restructuring, the borrower is not experiencing financial difficulties, and this is documented by a current credit evaluation at the time of the restructuring, (2) under the terms of the subsequent restructuring agreement, the institution has granted no concession to the borrower; and (3) the subsequent restructuring agreement includes market terms that are no less favorable than those that would be offered for a comparable new loan.  For loans subsequently restructured that have cumulative principal forgiveness, the loan should continue to be measured in accordance with ASC 310-10, Receivables – Overall.  However, consistent with ASC 310-40-50-2, Troubled Debt Restructurings by Creditors, Creditor Disclosure of Troubled Debt Restructurings, the loan would not be required to be reported in the years following the restructuring if the subsequent restructuring meets both of these criteria: (1) has an interest rate at the time of the subsequent restructuring that is not less than a market interest rate; and (2) is performing in compliance with its modified terms after the subsequent restructuring.

Allowance for Loan Losses and Reserve for Unfunded Commitments

Loan charge-offs, net of recoveries, totaled $0.8 million for the three months ended September 30, 2019, compared to $1.7 million for the three months ended September 30, 2018.  Annualized, net charge-offs (recoveries) to average loans were 0.03% for the three months ended September 30, 2019 compared to 0.06% for the three months ended September 30, 2018.  Loan charge-offs, net of recoveries, totaled $2.0 million for the nine months ended September 30, 2019, compared to $1.2 million for the nine months ended September 30, 2018.  Annualized, net charge-offs (recoveries) to average loans were 0.02% for the nine months ended September 30, 2019 compared to 0.01% for the nine months ended September 30, 2018.  Management will continue its efforts to reduce the level of non-performing loans and may consider the possibility of sales of troubled and non-performing loans, which could result in additional charge-offs to the allowance for loan losses.

To provide for the risk of loss inherent in extending credit, we maintain an allowance for loan losses.  The allowance for loan losses is maintained at a level believed adequate by management to absorb probable losses incurred in the consolidated loan portfolio.  Management’s evaluation of the adequacy of the allowance is an estimate based on reviews of individual loans, pools of homogeneous loans, assessments of the impact of current and anticipated economic conditions on the portfolio, and historical loss experience.

At September 30, 2019, the allowance for loan losses was $56.9 million, an increase of $4.2 million compared to $52.7 million at September 30, 2018, and an increase of $1.4 million compared to $55.5 million at December 31, 2018. Continued loan growth in future periods, a decline in our current level of recoveries, or an increase in charge-offs could result in an increase in provision expense.

As a percentage of total loans excluding loans held for sale, the allowance was 0.47% at September 30, 2019, compared to 0.47% at September 30, 2018 and 0.45% at December 31, 2018.

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The following table provides additional details of the components of the allowance for loan losses, including ASC 450, Contingencies, for loans collectively evaluated for impairment, ASC 310-10, Receivables, for loans individually evaluated for impairment, and ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, for loans acquired with deteriorated credit quality:

	Collectively			Individually			Acquired with
	Evaluated for			Evaluated for			Deteriorated
(dollars in thousands)	Impairment			Impairment			Credit Quality			Total
Originated loans	$	9,329,103		$	86,525		$	—		$	9,415,628
Acquired loans		2,605,085			28,599			55,407			2,689,091
Total loans	$	11,934,188		$	115,124		$	55,407		$	12,104,719
Remaining purchase discount		(68,314	)		(1,227	)		(17,530	)		(87,071	)
Loans, net of discount	$	11,865,874		$	113,897		$	37,877		$	12,017,648
Allowance, January 1, 2019	$	40,642		$	14,341		$	478		$	55,461
Charge-offs		(6,483	)		(1,914	)		(88	)		(8,485	)
Recoveries		2,906			3,462			83			6,451
Provision expense		7,160			(3,549	)		(128	)		3,483
Allowance, September 30, 2019	$	44,225		$	12,340		$	345		$	56,910

We maintain an allowance for losses on unfunded commercial lending commitments and letters of credit 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 loan losses, modified to take into account the probability of a drawdown on the commitment.  The reserve for unfunded loan commitments is classified as a liability account on the balance sheet and totaled $2.3 million at September 30, 2019, compared to $2.5 million at December 31, 2018.

Old National will adopt ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”) effective January 1, 2019.  The main objective of this amendment is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.  The amendment requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to enhance their credit loss estimates.  As of the beginning of the first reporting period in which the new standard is effective, Old National expects to recognize a one-time cumulative effect adjustment increasing the allowance for loan losses, since the ASU covers credit losses over the expected life of a loan as well as considering future changes in macroeconomic conditions.  Old National currently estimates an increase to the allowance for credit losses of approximately $35 million to $45 million upon adoption, which includes a range of $3 million to $8 million for off-balance sheet exposures.  At this point in time, the vast majority of this increase is related to the acquired loan portfolio.  Under the current accounting guidance, any remaining unamortized loan discount on an individual loan can be used to offset a charge-off for that loan, so the allowance for loan losses needed for the acquired loans is reduced by the remaining loan discounts.  The new accounting under the ASU removes the ability to offset a charge-off against the remaining loan discount and requires an allowance for credit losses to be recognized in addition to the loan discount.  The ultimate impact of adopting the ASU will be highly dependent on credit quality, macroeconomic forecasts and conditions, composition of our loans and securities portfolios, and other management judgements at the time of adoption. The transition adjustment to record the allowance for credit losses may fall outside of management’s estimated increase based on material changes in these dependencies, specifically the macroeconomic forecast and conditions, used in calculating the allowance for credit losses upon the adoption of CECL.

Old National does not expect a material allowance for credit losses to be recorded on held-to-maturity securities under the CECL credit impairment model, as the composition of these securities are government agency-backed securities for which the risk the risk of loss is minimal.  Additionally, Old National does not expect a material allowance for credit losses to be recorded on its available-for-sale debt securities under the available-for-sale debt security impairment model, as the majority of these securities are government agency-backed securities for which the risk of loss is minimal.

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Market Risk

Market risk is the risk that the estimated fair value of our assets, liabilities, and derivative financial instruments will decline as a result of changes in interest rates or financial market volatility, or that our net income will be significantly reduced by interest rate changes.

The objective of our interest rate management process is to maximize net interest income while operating within acceptable limits established for interest rate risk and maintaining adequate levels of funding and liquidity.

Potential cash flows, sales, or replacement value of many of our assets and liabilities, especially those that earn or pay interest, are sensitive to changes in the general level of interest rates.  This interest rate risk arises primarily from our normal business activities of gathering deposits and extending loans.  Many factors affect our exposure to changes in interest rates, such as general economic and financial conditions, customer preferences, historical pricing relationships, and re-pricing characteristics of financial instruments.  Our earnings can also be affected by the monetary and fiscal policies of the U.S. Government and its agencies, particularly the Federal Reserve.

In managing interest rate risk, we, through the Funds Management Committee, a committee of the Board of Directors, establish guidelines, for asset and liability management, including measurement of short and long-term sensitivities to changes in interest rates.  Based on the results of our analysis, we may use different techniques to manage changing trends in interest rates including:

• adjusting balance sheet mix or altering interest rate characteristics of assets and liabilities;

• changing product pricing strategies;

• modifying characteristics of the investment securities portfolio; or

• using derivative financial instruments, to a limited degree.

A key element in our ongoing process is to measure and monitor interest rate risk using a model to quantify the impact of changing interest rates on Old National.  The model quantifies the effects of various possible interest rate scenarios on projected net interest income.  The model measures the impact on net interest income relative to a base case scenario.  The base case scenario assumes that the balance sheet and interest rates are held at current levels.  The model shows our projected net interest income sensitivity based on interest rate changes only and does not consider other forecast assumptions.

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The following table illustrates our projected net interest income sensitivity over a two year cumulative horizon based on the asset/liability model at September 30, 2019 and 2018:

	Immediate
	Rate Decrease					Immediate Rate Increase
	-50					+100			+200			+300
(dollars in thousands)	Basis Points			Base		Basis Points			Basis Points			Basis Points
September 30, 2019
Projected interest income:
Money market, other interest earning    investments, and investment    securities	$	312,946		$	330,216	$	353,274		$	367,236		$	380,849
Loans		1,007,193			1,064,314		1,184,097			1,299,709			1,413,164
Total interest income		1,320,139			1,394,530		1,537,371			1,666,945			1,794,013
Projected interest expense:
Deposits		101,683			140,784		234,087			327,527			420,967
Borrowings		108,043			119,660		147,381			176,206			205,321
Total interest expense		209,726			260,444		381,468			503,733			626,288
Net interest income	$	1,110,413		$	1,134,086	$	1,155,903		$	1,163,212		$	1,167,725
Change from base	$	(23,673	)			$	21,817		$	29,126		$	33,639
% change from base		(2.09	)%				1.92	%		2.57	%		2.97	%
September 30, 2018
Projected interest income:
Money market, other interest earning    investments, and investment    securities	$	238,894		$	245,374	$	258,572		$	271,183		$	283,562
Loans		968,240			1,023,923		1,136,505			1,247,110			1,357,113
Total interest income		1,207,134			1,269,297		1,395,077			1,518,293			1,640,675
Projected interest expense:
Deposits		68,155			101,836		181,611			260,799			339,983
Borrowings		113,459			131,669		168,032			204,404			240,783
Total interest expense		181,614			233,505		349,643			465,203			580,766
Net interest income	$	1,025,520		$	1,035,792	$	1,045,434		$	1,053,090		$	1,059,909
Change from base	$	(10,272	)			$	9,642		$	17,298		$	24,117
% change from base		(0.99	)%				0.93	%		1.67	%		2.33	%

Our asset sensitivity increased year over year primarily due to changes in our hedging strategies, balance sheet mix, investment duration, and prepayment speed behavior.

A key element in the measurement and modeling of interest rate risk is the re-pricing assumptions of our transaction deposit accounts, which have no contractual maturity dates.  Because the models are driven by expected behavior in various interest rate scenarios and many factors besides market interest rates affect our net interest income, we recognize that model outputs are not guarantees of actual results.  For this reason, we model many different combinations of interest rates and balance sheet assumptions to understand our overall sensitivity to market interest rate changes, including shocks, ramps, yield curve flattening, yield curve steepening, as well as forecasts of likely interest rate scenarios.  At September 30, 2019, our projected net interest income sensitivity based on the asset/liability models we utilize was within the limits of our interest rate risk policy for the scenarios tested.

We use derivative instruments, primarily interest rate swaps, collars, and floor spreads, to mitigate interest rate risk, including certain cash flow hedges on variable-rate assets and liabilities with a notional amount of $535 million at September 30, 2019.  Our derivatives had an estimated fair value gain of $54.9 million at September 30, 2019, compared to an estimated fair value gain of $16.5 million at December 31, 2018.  See Note 20 to the consolidated financial statements for further discussion of derivative financial instruments.

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Liquidity Risk

Liquidity risk arises from the possibility that we may not be able to satisfy current or future financial commitments, or may become unduly reliant on alternative funding sources.  The Funds Management Committee of the Board of Directors establishes liquidity risk guidelines and, along with the Balance Sheet Management Committee, monitors liquidity risk.  The objective of liquidity management is to ensure we have the ability to fund balance sheet growth and meet deposit and debt obligations in a timely and cost-effective manner.  Management monitors liquidity through a regular review of asset and liability maturities, funding sources, and loan and deposit forecasts.  We maintain strategic and contingency liquidity plans to ensure sufficient available funding to satisfy requirements for balance sheet growth, properly manage capital markets’ funding sources and to address unexpected liquidity requirements.

Loan repayments and maturing investment securities are a relatively predictable source of funds.  However, deposit flows, calls of investment securities and prepayments of loans and mortgage-related securities are strongly influenced by interest rates, the housing market, general and local economic conditions, and competition in the marketplace.  We continually monitor marketplace trends to identify patterns that might improve the predictability of the timing of deposit flows or asset prepayments.

A time deposit maturity schedule for Old National Bank is shown in the following table at September 30, 2019.

(dollars in thousands)
Maturity Bucket	Amount		Rate
2019	$	640,625		1.73	%
2020		864,303		1.64
2021		154,333		1.31
2022		70,583		1.40
2023		55,600		1.73
2024 and beyond		44,619		1.75
Total	$	1,830,063		1.64	%

Our ability to acquire funding at competitive prices is influenced by rating agencies’ views of our credit quality, liquidity, capital, and earnings.  Moody’s Investor Service places us in an investment grade that indicates a low risk of default.  For both Old National and Old National Bank:

• Moody’s Investor Service affirmed the Long-Term Rating of A3 of Old National’s senior unsecured/issuer rating on February 2, 2018.

• Moody’s Investor Service affirmed Old National Bank’s long-term deposit rating of Aa3 on February 2, 2018.  The bank’s short-term deposit rating was affirmed at P-1 and the bank’s issuer rating was affirmed at A3.

The rating outlook from Moody’s Investor Service is negative.  Moody’s Investor Service concluded a rating review of Old National Bank on February 2, 2018.

The credit ratings of Old National and Old National Bank at September 30, 2019 are shown in the following table.

	Moody's Investor Service
	Long-term	Short-term
Old National	A3	N/A
Old National Bank	Aa3	P-1

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Old National Bank maintains relationships in capital markets with brokers and dealers to issue certificates of deposit and short-term and medium-term bank notes as well.  At September 30, 2019, Old National and its subsidiaries had the following availability of liquid funds and borrowings:

	Parent
(dollars in thousands)	Company		Subsidiaries
Available liquid funds:
Cash and due from banks	$	30,714	$	389,536
Unencumbered government-issued debt securities		—		2,302,441
Unencumbered investment grade municipal securities		—		627,127
Unencumbered corporate securities		—		146,191
Availability of borrowings:
Amount available from Federal Reserve discount window*		—		377,268
Amount available from Federal Home Loan Bank Indianapolis*		—		339,655
Total available funds	$	30,714	$	4,182,218

* Based on collateral pledged

Old National Bancorp has routine funding requirements consisting primarily of operating expenses, dividends to shareholders, debt service, net derivative cash flows, and funds used for acquisitions.  Old National Bancorp can obtain funding to meet its obligations from dividends and management fees collected from its subsidiaries, operating line of credit, and through the issuance of debt securities.  Additionally, Old National Bancorp has a shelf registration in place with the SEC permitting ready access to the public debt and equity markets.  At September 30, 2019, Old National Bancorp’s other borrowings outstanding were $231.7 million.

Federal banking laws regulate the amount of dividends that may be paid by banking subsidiaries without prior approval.  Prior regulatory approval is required if dividends to be declared in any year would exceed net earnings of the current year plus retained net profits for the preceding two years.  Prior regulatory approval to pay dividends was not required in 2018 and is not currently required.

Operational/Technology/Cyber Risk

Operational/technology/cyber risk is the potential that inadequate information systems, operational problems, breaches in internal controls, information security breaches, fraud, or unforeseen catastrophes will result in unexpected losses.  We maintain frameworks, programs, and internal controls to prevent or minimize financial loss from failure of systems, people, or processes.  This includes specific programs and frameworks intended to prevent or limit the effects of cyber risks including cyber-attacks or other information security breaches that might allow unauthorized transactions or unauthorized access to customer, associate, or company sensitive information.  Metrics and measurements are used by Executive Leaders in the management of day-to-day operations to ensure effective customer service, minimization of service disruptions, and oversight of operational and cyber risk.  We continually monitor and report on operational, technology, and cyber risks related to clients, products, and business practices; external and internal fraud; business disruptions and systems failures; cyber-attacks, information security or data breaches; damage to physical assets; and execution, delivery, and process management.

The Enterprise Risk Management Committee of the Board of Directors is responsible for the oversight, guidance, and monitoring of risks, including operational/technology/cyber risks, being taken by the Company.  The monitoring is accomplished through on-going review of management reports, data on risks, policy limits and discussion on enterprise risk management strategies, policies, and risk assessments.

Regulatory/Compliance/Legal Risk

Regulatory/compliance/legal risk is the risk that the Company violated or was not in compliance with applicable laws, regulations or practices, industry standards, or ethical standards.  The legal portion assesses the risk that unenforceable contracts, lawsuits, or adverse judgments can disrupt or otherwise negatively impact the Company.  The Board of Directors expects we will perform business in a manner compliant with applicable laws and/or regulations and expects issues to be identified, analyzed, and remediated in a timely and complete manner.

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OFF-BALANCE SHEET ARRANGEMENTS

Off-balance sheet arrangements include commitments to extend credit and financial guarantees.  Commitments to extend credit and financial guarantees are used to meet the financial needs of our customers.  Our banking affiliates have entered into various agreements to extend credit, including loan commitments of $2.891 billion and standby letters of credit of $93.3 million at September 30, 2019.  At September 30, 2019, approximately $2.650 billion of the loan commitments had fixed rates and $241.2 million had floating rates, with the floating rates ranging from 1% to 15%.  At December 31, 2018, loan commitments were $3.566 billion and standby letters of credit were $319.0 million.  The term of these off-balance sheet arrangements is typically one year or less.

Old National is a party in risk participation transactions of interest rate swaps, which had total notional amount of $38.5 million at September 30, 2019.

CONTRACTUAL OBLIGATIONS

The following table presents our significant fixed and determinable contractual obligations at September 30, 2019:

	Payments Due In
	One Year		One to		Three to		Over
(dollars in thousands)	or Less (1)		Three Years		Five Years		Five Years		Total
Deposits without stated maturity	$	12,618,289	$	—	$	—	$	—	$	12,618,289
IRAs, consumer, and brokered certificates    of deposit		640,625		1,018,636		126,183		44,619		1,830,063
Federal funds purchased and interbank borrowings		240,589		—		—		—		240,589
Securities sold under agreements to repurchase		337,551		—		—		—		337,551
FHLB advances		200,480		70,000		157,164		1,574,316		2,001,960
Other borrowings		120		1,023		1,144		249,476		251,763
Fixed interest payments (2)		12,672		97,460		90,986		125,847		326,965
Operating leases		4,314		32,470		23,820		69,091		129,695
Other long-term liabilities (3)		7,162		21,538		447		49		29,196

(1) For the remaining three months of fiscal 2019.

(2) Our senior notes, subordinated notes, certain trust preferred securities, and certain FHLB advances have fixed rates ranging from 0.68% to 4.96%.  All of our other long-term debt is at LIBOR based variable rates at September 30, 2019.  The projected variable interest assumes no increase in LIBOR rates from September 30, 2019.

(3) Includes unfunded commitments on qualified affordable housing projects and other tax credit investments.

We rent certain premises and equipment under operating leases.  See Note 10 to the consolidated financial statements for additional information on long-term lease arrangements.

We are party to various derivative contracts as a means to manage the balance sheet and our related exposure to changes in interest rates, to manage our residential real estate loan origination and sale activity, and to provide derivative contracts to our clients.  Since the derivative liabilities recorded on the balance sheet change frequently and do not represent the amounts that may ultimately be paid under these contracts, these liabilities are not included in the table of contractual obligations presented above.  Further discussion of derivative instruments is included in Note 20 to the consolidated financial statements.

In the normal course of business, various legal actions and proceedings are pending against us and our affiliates which are incidental to the business in which they are engaged.  Further discussion of contingent liabilities is included in Note 21 to the consolidated financial statements.

In addition, liabilities recorded under FASB ASC 740-10 (FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109) are not included in the table because the amount and timing of any cash payments cannot be reasonably estimated.  Further discussion of income taxes and liabilities is included in Note 19 to the consolidated financial statements.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018.  Certain accounting policies require management to use significant judgment and estimates, which can have a material impact on the carrying value of certain assets and liabilities.  We consider these policies to be critical accounting policies.  The judgment and assumptions made are based upon historical experience or other factors that management believes to be reasonable under the circumstances.  Because of the nature of the judgment and assumptions, actual results could differ from estimates, which could have a material effect on our financial condition and results of operations.

The following accounting policies materially affect our reported earnings and financial condition and require significant judgments and estimates.  Management has reviewed these critical accounting estimates and related disclosures with our Audit Committee.

Goodwill

• Description.  For acquisitions, we are required to record the assets acquired, including identified intangible assets, and the liabilities assumed at their fair value.  These often involve estimates based on third party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques that may include estimates of attrition, inflation, asset growth rates, or other relevant factors.  Goodwill recorded must be reviewed for impairment on an annual basis, as well as on an interim basis if events or changes indicate that the asset might be impaired.  An impairment loss must be recognized for any excess of carrying value over fair value of the goodwill.

• Judgments and Uncertainties.  The determination of fair values is based on valuations using management’s assumptions of future growth rates, future attrition, discount rates, multiples of earnings or other relevant factors.

• Effect if Actual Results Differ From Assumptions.  Changes in these factors, as well as downturns in economic or business conditions, could have a significant adverse impact on the carrying value of goodwill and could result in impairment losses affecting our financials as a whole and our banking subsidiary in which the goodwill resides.

Allowance for Loan Losses

• Description.  The allowance for loan losses is maintained at a level believed adequate by management to absorb probable incurred losses in the consolidated loan portfolio.  Management’s evaluation of the adequacy of the allowance is an estimate based on reviews of individual loans, pools of homogeneous loans, assessments of the impact of current and anticipated economic conditions on the portfolio, and historical loss experience.  The allowance represents management’s best estimate, but significant downturns in circumstances relating to loan quality and economic conditions could result in a requirement for additional allowance.  Likewise, an upturn in loan quality and improved economic conditions may allow a reduction in the required allowance.  In either instance, unanticipated changes could have a significant impact on results of operations.

The allowance is increased through a provision charged to operating expense.  Uncollectible loans are charged-off through the allowance.  Recoveries of loans previously charged-off are added to the allowance.  A loan is considered impaired when it is probable that contractual interest and principal payments will not be collected either for the amounts or by the dates as scheduled in the loan agreement.  Our policy for recognizing income on impaired loans is to accrue interest unless a loan is placed on nonaccrual status.  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.  We monitor the quality of our loan portfolio on an on-going basis and use a combination of detailed credit assessments by relationship managers and credit officers, historic loss trends, and economic and business environment factors in determining the allowance for loan losses.  We record provisions for loan losses based on current loans outstanding, grade changes, mix of loans, and expected losses.  A detailed loan loss evaluation on an individual loan basis for our highest risk loans is performed quarterly.  Management follows the progress of the economy and how it might affect our borrowers in both the near and the intermediate term.  We have a formalized and disciplined independent loan review program to evaluate loan administration, credit quality, and compliance with corporate loan

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standards.  This program includes periodic, regular reviews of problem loan reports, delinquencies and charge-offs.

• Judgments and Uncertainties.  We utilize a PD/LGD model as a tool to determine the adequacy of the allowance for loan losses for performing commercial and commercial real estate loans.  The PD is forecast using a transition matrix to determine the likelihood of a customer’s AQR migrating from its current AQR to any other status within the time horizon.  Transition rates are measured using Old National’s own historical experience.  The model assumes that recent historical transition rates will continue into the future.  The LGD is defined as credit loss incurred when an obligor of the bank defaults.  The sum of all net charge-offs for a particular portfolio segment are divided by all loans that have defaulted over a given period of time. The expected loss derived from the model considers the PD, LGD, and exposure at default.  Additionally, qualitative factors, such as changes in lending policies or procedures, and economic business conditions are also considered.

We use historic loss ratios adjusted for economic conditions to determine the appropriate level of allowance for residential real estate and consumer loans.

• Effect if Actual Results Differ From Assumptions.  The allowance represents management’s best estimate, but significant downturns in circumstances relating to loan quality and economic conditions could result in a requirement for additional allowance.  Likewise, an upturn in loan quality and improved economic conditions may allow a reduction in the required allowance.  In either instance, unanticipated changes could have a significant impact on results of operations.

Management’s analysis of probable losses in the portfolio at September 30, 2019 resulted in a range for allowance for loan losses of $18.2 million.  The range pertains to general (FASB ASC 450, Contingencies) reserves for both retail and performing commercial loans.  Specific (FASB ASC 310, Receivables) reserves do not have a range of probable loss.  Due to the risks and uncertainty associated with the economy and our projection of loss rates inherent in the portfolio, we establish a range of probable outcomes (a high-end estimate and a low-end estimate) and evaluate our position within this range.  The potential effect to net income based on our position in the range relative to the high and low endpoints is a decrease of $2.0 million and an increase of $11.7 million, respectively, after taking into account the tax effects.  These sensitivities are hypothetical and may not represent actual results.

Derivative Financial Instruments

• Description.  As part of our overall interest rate risk management, we use derivative instruments to reduce exposure to changes in interest rates and market prices for financial instruments.  The application of the hedge accounting policy requires judgment in the assessment of hedge effectiveness, identification of similar hedged item groupings and measurement of changes in the fair value of derivative financial instruments and hedged items.  To the extent hedging relationships are found to be effective, changes in fair value of the derivatives are offset by changes in the fair value of the related hedged item or recorded to other comprehensive income.  Management believes hedge effectiveness is evaluated properly in preparation of the financial statements.  All of the derivative financial instruments we use have an active market and indications of fair value can be readily obtained.  We are not using the “short-cut” method of accounting for any fair value derivatives.

• Judgments and Uncertainties.  The application of the hedge accounting policy requires judgment in the assessment of hedge effectiveness, identification of similar hedged item groupings and measurement of changes in the fair value of derivative financial instruments and hedged items.

• Effect if Actual Results Differ From Assumptions.  To the extent hedging relationships are found to be effective, changes in fair value of the derivatives are offset by changes in the fair value of the related hedged item or recorded to other comprehensive income.  However, if in the future the derivative financial instruments used by us no longer qualify for hedge accounting treatment, all changes in fair value of the derivative would flow through the consolidated statements of income in other noninterest income, resulting in greater volatility in our earnings.

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Income Taxes

• Description.  We are subject to the income tax laws of the U.S., its states, and the municipalities in which we operate.  These tax laws are complex and subject to different interpretations by the taxpayer and the relevant government taxing authorities.  We review income tax expense and the carrying value of deferred tax assets quarterly; and as new information becomes available, the balances are adjusted as appropriate.  FASB ASC 740-10 (FIN 48) prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements.  See Note 19 to the consolidated financial statements for a further description of our provision and related income tax assets and liabilities.

• Judgments and Uncertainties. In establishing a provision for income tax expense, we must make judgments and interpretations about the application of these inherently complex tax laws.  We must also make estimates about when in the future certain items will affect taxable income in the various tax jurisdictions.  Disputes over interpretations of the tax laws may be subject to review/adjudication by the court systems of the various tax jurisdictions or may be settled with the taxing authority upon examination or audit.

• Effect if Actual Results Differ From Assumptions.  Although management believes that the judgments and estimates used are reasonable, actual results could differ and we may be exposed to losses or gains that could be material.  To the extent we prevail in matters for which reserves have been established, or are required to pay amounts in excess of our reserves, our effective income tax rate in a given financial statement period could be materially affected.  An unfavorable tax settlement would result in an increase in our effective income tax rate in the period of resolution.  A favorable tax settlement would result in a reduction in our effective income tax rate in the period of resolution.

Management has discussed the development and selection of these critical accounting estimates with the Audit Committee and the Audit Committee has reviewed our disclosure relating to it in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

FORWARD-LOOKING STATEMENTS

In this report, we have made various statements regarding current expectations or forecasts of future events, which speak only as of the date the statements are made.  These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are also made from time-to-time in press releases and in oral statements made by the officers of Old National Bancorp (“Old National” or the “Company”).  Forward-looking statements can be identified by the use of the words “expect,” “may,” “could,” “intend,” “project,” “estimate,” “believe,” “anticipate,” and other words of similar meaning.  Forward-looking statements also include, but are not limited to, statements regarding estimated cost savings, plans and objectives for future operations, the Company’s business and growth strategies, including future acquisitions of banks, regulatory developments, and expectations about performance as well as economic and market conditions and trends.  

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Such forward-looking statements are based on assumptions and estimates, which although believed to be reasonable, may turn out to be incorrect.  Therefore, undue reliance should not be placed upon these estimates and statements.  We cannot assure that any of these statements, estimates, or beliefs will be realized and actual results may differ from those contemplated in these “forward-looking statements.”  We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.  You are advised to consult further disclosures we may make on related subjects in our filings with the SEC.  In addition to other factors discussed in this report, some of the important factors that could cause actual results to differ materially from those discussed in the forward-looking statements include the following:

• market, economic, operational, liquidity, credit, and interest rate risks associated with our business;

• competition;

• government legislation and policies (including the impact of the Dodd-Frank Wall Street Reform and the Consumer Protection Act and its related regulations);

• our ability to execute our 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; and

• computer hacking and other cybersecurity threats.

Investors should consider these risks, uncertainties, and other factors in addition to risk factors included in this filing and our other filings with the SEC.

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ITEM 3.  QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk and Liquidity Risk.

ITEM 4.  CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Evaluation of disclosure controls and procedures.  Old National’s principal executive officer and principal financial officer have concluded that Old National’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended), based on their evaluation of these controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q, are effective at the reasonable assurance level as discussed below to ensure that information required to be disclosed by Old National in the reports it files under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to Old National’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Controls.  Management, including the principal executive officer and principal financial officer, does not expect that Old National’s disclosure controls and internal controls will prevent all error and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be only reasonable assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Over time, control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting.  There were no changes in Old National’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, Old National’s internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1A.  RISK FACTORS

There have been no material changes from the risk factors previously disclosed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

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ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
07/01/19 - 07/31/19		926	$	16.77		—		3,652,877
08/01/19 - 08/31/19		2,053,690		16.85		2,053,502		1,599,375
09/01/19 - 09/30/19		151,522		16.50		151,206		1,448,169
Quarter-to-date 09/30/19		2,206,138	$	16.82		2,204,708		1,448,169

In the first quarter of 2019, the Board of Directors approved the repurchase of up to 7.0 million shares of the Company’s stock to be repurchased, as conditions warrant, through January 31, 2020.  During the three months ended September 30, 2019, Old National also repurchased a limited number of shares associated with employee share-based incentive programs.

ITEM 5.  OTHER INFORMATION

(a) None

(b) There have been no material changes in the procedure by which security holders recommend nominees to the Company’s board of directors.

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ITEM 6.  EXHIBITS

Exhibit No.	Description
2.1	Agreement and Plan of Merger dated as of June 20, 2018 by and between Old National Bancorp and Klein Financial, Inc. (the schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K) (incorporated by reference to Exhibit 2.1 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 21, 2018).
3.1	Fourth Amended and Restated Articles of Incorporation of Old National, amended May 13, 2016 (incorporated by reference to Exhibit 3.1 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 16, 2016).
3.2	Amended and Restated By-Laws of Old National, amended July 28, 2016 (incorporated by reference to Exhibit 3.1 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 1, 2016).
4.1	Senior Indenture between Old National and The Bank of New York Trust Company (as successor to J.P. Morgan Trust Company, National Association (as successor to Bank One, N.A.)), as trustee, dated as of July 23, 1997 (incorporated by reference to Exhibit 4.3 to Old National’s Registration Statement on Form S-3, Registration No. 333-118374, filed with the Securities and Exchange Commission on December 2, 2004).
4.2	Second Indenture Supplement, dated as of August 15, 2014, between Old National and The Bank of New York Mellon Trust Company, N.A., as trustee, providing for the issuance of its 4.125% Senior Notes due 2024 (incorporated by reference to Exhibit 4.1 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 15, 2014).
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from Old National’s Form 10-Q Report for the quarterly period ended September 30, 2019, formatted in inline XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.
104	The cover page from Old National’s Form 10-Q Report for the quarterly period ended September 30, 2019, formatted in inline XBRL and contained in Exhibit 101.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	OLD NATIONAL BANCORP
	(Registrant)
By:	/s/  Brendon B. Falconer
	Brendon B. Falconer
	Senior Executive Vice President and Chief Financial Officer
	Duly Authorized Officer and Principal Financial Officer
	Date:  October 30, 2019

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EX-31.1

Exhibit 31.1

FORM OF SECTION 302 CERTIFICATION

I, James C. Ryan, III, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Old National Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	October 30, 2019	By:	/s/  James C. Ryan, III
			James C. Ryan, III
			Chief Executive Officer
			(Principal Executive Officer)

EX-31.2

Exhibit 31.2

FORM OF SECTION 302 CERTIFICATION

I, Brendon B. Falconer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Old National Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	October 30, 2019	By:	/s/  Brendon B. Falconer
			Brendon B. Falconer
			Chief Financial Officer
			(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Old National Bancorp (the “Company”) on Form 10-Q for the quarter ending September 30, 2019as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James C. Ryan, III, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By:	/s/  James C. Ryan, III
	James C. Ryan, III
	Chief Executive Officer
	(Principal Executive Officer)
	Date:  October 30, 2019

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Old National Bancorp (the “Company”) on Form 10-Q for the quarter ending September 30, 2019as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brendon B. Falconer, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By:	/s/  Brendon B. Falconer
	Brendon B. Falconer
	Chief Financial Officer
	(Principal Financial Officer)
	Date:  October 30, 2019

XML

Loan Servicing Rights

9 Months Ended

Sep. 30, 2019

Text Block [Abstract]

Loan Servicing Rights

NOTE 12 – LOAN SERVICING RIGHTS

At September 30, 2019, loan servicing rights derived from loans sold with servicing retained totaled $24.6 million, compared to $24.5 million at December 31, 2018.  Loans serviced for others are not reported as assets.  The principal balance of loans serviced for others was $3.379 billion at September 30, 2019, compared to $3.306 billion at December 31, 2018.  Approximately 99.7% of the loans serviced for others at September 30, 2019 were residential mortgage loans.  Custodial escrow balances maintained in connection with serviced loans were $43.6 million at September 30, 2019 and $10.7 million at December 31, 2018.

The following table summarizes the carrying values and activity related to loan servicing rights and the related valuation allowance for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)	2019			2018			2019			2018
Balance at beginning of period	$	24,364		$	24,318		$	24,512		$	24,690
Additions		2,097			1,147			4,026			3,098
Amortization		(1,717	)		(1,117	)		(3,794	)		(3,440	)
Balance before valuation allowance at end of period		24,744			24,348			24,744			24,348
Valuation allowance:
Balance at beginning of period		(32	)		(15	)		(15	)		(29	)
(Additions)/recoveries		(89	)		3			(106	)		17
Balance at end of period		(121	)		(12	)		(121	)		(12	)
Loan servicing rights, net	$	24,623		$	24,336		$	24,623		$	24,336

At September 30, 2019, the fair value of servicing rights was $25.5 million, which was determined using a discount rate of 12% and a weighted average prepayment speed of 170% PSA.  At December 31, 2018, the fair value of servicing rights was $27.4 million, which was determined using a discount rate of 12% and a weighted average prepayment speed of 119% PSA.

XML

Other Borrowings

9 Months Ended

Sep. 30, 2019

Other Liabilities Disclosure [Abstract]

Other Borrowings

NOTE 16 – OTHER BORROWINGS

The following table summarizes Old National’s other borrowings at September 30, 2019 and December 31, 2018:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Old National Bancorp:
Senior unsecured notes (fixed rate 4.125%)    maturing August 2024	$	175,000		$	175,000
Unamortized debt issuance costs related to senior    unsecured notes		(754	)		(870	)
Junior subordinated debentures (variable rates of    3.44% to 6.31%) maturing April 2032    to June 2037		60,310			60,310
Other basis adjustments		(2,859	)		(3,046	)
Old National Bank:
Finance lease liabilities		7,527			5,262
Subordinated debentures (fixed rate 5.75%)		12,000			12,000
Other		539			(773	)
Total other borrowings	$	251,763		$	247,883

Contractual maturities of other borrowings at September 30, 2019 were as follows:

(dollars in thousands)
Due in 2019	$	120
Due in 2020		499
Due in 2021		524
Due in 2022		553
Due in 2023		591
Thereafter		252,550
Unamortized debt issuance costs and other    basis adjustments		(3,074	)
Total	$	251,763

Senior Notes

In August 2014, Old National issued $175.0 million of senior unsecured notes with a 4.125% interest rate.  These notes pay interest on February 15 and August 15.  The notes mature on August 15, 2024.

Junior Subordinated Debentures

Junior subordinated debentures related to trust preferred securities are classified in “other borrowings.”  On November 1, 2017, Old National acquired Anchor (MN) and exceeded $15 billion in assets.  As a result, these securities can only be treated as Tier 2 capital for regulatory purposes, subject to certain limitations.  Prior to the fourth quarter of 2017, these securities qualified as Tier 1 capital for regulatory purposes.

Through various acquisitions, Old National assumed junior subordinated debenture obligations related to various trusts that issued trust preferred securities.  Old National guarantees the payment of distributions on the trust preferred securities issued by the trusts.  Proceeds from the issuance of each of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by the trusts.

Old National, at any time, may redeem the junior subordinated debentures at par and, thereby cause a redemption of the trust preferred securities in whole or in part.

The following table summarizes the terms of our outstanding junior subordinated debentures at September 30, 2019:

(dollars in thousands)					Rate at
		Issuance			September 30,
Name of Trust	Issuance Date	Amount		Rate	2019	Maturity Date
VFSC Capital Trust I	April 2002	$	3,093	6-month LIBOR plus 3.70%	6.31%	April 22, 2032
VFSC Capital Trust II	October 2002		4,124	3-month LIBOR plus 3.45%	5.61%	November 7, 2032
VFSC Capital Trust III	April 2004		3,093	3-month LIBOR plus 2.80%	4.94%	September 8, 2034
St. Joseph Capital Trust II	March 2005		5,000	3-month LIBOR plus 1.75%	3.89%	March 17, 2035
Anchor Capital Trust III	August 2005		5,000	3-month LIBOR plus 1.55%	3.65%	September 30, 2035
Tower Capital Trust 2	December 2005		8,000	3-month LIBOR plus 1.34%	3.44%	December 30, 2035
Home Federal Statutory    Trust I	September 2006		15,000	3-month LIBOR plus 1.65%	3.77%	September 15, 2036
Monroe Bancorp Capital    Trust I	July 2006		3,000	3-month LIBOR plus 1.60%	3.90%	October 7, 2036
Tower Capital Trust 3	December 2006		9,000	3-month LIBOR plus 1.69%	3.82%	March 1, 2037
Monroe Bancorp Statutory    Trust II	March 2007		5,000	3-month LIBOR plus 1.60%	3.72%	June 15, 2037
Total		$	60,310

Subordinated Debentures

On November 1, 2017, Old National assumed $12.0 million of subordinated fixed-to-floating notes related to the acquisition of Anchor (MN).  The subordinated debentures have a 5.75% fixed rate of interest through October 29, 2020.  From October 30, 2020 to the October 30, 2025 maturity date, the debentures have a floating rate of interest equal to the three-month LIBOR rate plus 4.356%.

Finance Lease Liabilities

Old National has long-term finance lease liabilities for certain banking centers totaling $7.5 million.  The economic substance of these leases is that Old National is financing the acquisition of the building through the lease and accordingly, the building is recorded as a right-of-use asset in premises and equipment and the lease is recorded as a liability in other borrowings.  The right-of-use assets and lease liabilities are initially measured at the present value of the lease payments over the lease term using Old National’s incremental borrowing rate based on the information available at the commencement date of the lease.  See Note 10 to the consolidated financial statements for a maturity analysis of the Company’s finance lease liabilities.

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Derivative Financial Instruments

9 Months Ended

Sep. 30, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

NOTE 20 – DERIVATIVE FINANCIAL INSTRUMENTS

As part of our overall interest rate risk management, Old National uses derivative instruments, including interest rate swaps, collars, caps, and floors.  The notional amount does not represent amounts exchanged by the parties.  The amount exchanged is determined by reference to the notional amount and the other terms of the individual agreements.  The notional amount of these derivative instruments was $567.0 million at September 30, 2019 and $1.482 billion at December 31, 2018.  These derivative financial instruments at September 30, 2019 consisted of $32.0 million notional amount of receive-fixed, pay-variable interest rate swaps on certain of its FHLB advances, $25.0 million notional amount of pay-fixed, receive-variable interest rate swaps on certain of its FHLB advances, and $510.0 million notional amount interest rate collars and floors related to variable-rate commercial loan pools.  Derivative financial instruments at December 31, 2018 consisted of $757.0 million notional amount of receive-fixed, pay-variable interest rate swaps on certain of its FHLB advances, $525.0 million notional amount of pay-fixed, receive-variable interest rate swaps on certain of its FHLB advances, and $200.0 million notional amount interest rate collars related to a variable-rate commercial loan pool.  These hedges were entered into to manage interest rate risk.  Derivative instruments are recognized on the balance sheet at their fair value and are not reported on a net basis.

In accordance with ASC 815-20-35-1, subsequent changes in fair value for a hedging instrument that has been designated and qualifies as part of a hedging relationship should be accounted for in the following manner:

Cash flow hedges: changes in fair value are recognized as a component in other comprehensive income.

Fair value hedges: changes in fair value are recognized concurrently in earnings.

Consistent with this guidance, as long as a hedging instrument is designated and the results of the effectiveness testing support that the instrument qualifies for hedge accounting treatment, 100% of the periodic changes in fair value of the hedging instrument are accounted for as outlined above. This is the case whether or not economic mismatches exist in the hedging relationship. As a result, there is no periodic measurement or recognition of ineffectiveness. Rather, the full impact of hedge gains and losses is recognized in the period in which the hedged transactions impact earnings.

While separate measurement and presentation of ineffectiveness is eliminated, paragraph 815-20-45-1A requires the change in fair value of the hedging instrument that is included in the assessment of hedge effectiveness be presented in the same income statement line item that is used to present the earnings effect of the hedged item.

Commitments to fund certain mortgage loans (interest rate lock commitments) and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives.  These derivative contracts do not qualify for hedge accounting.  At September 30, 2019, the notional amount of the interest rate lock commitments was $147.7 million and forward commitments were $192.4 million.  At December 31, 2018, the notional amount of the interest rate lock commitments was $27.6 million and forward commitments were $34.5 million.  It is our practice to enter into forward commitments for the future delivery of residential mortgage loans to third party investors when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from our commitment to fund the loans.

Old National also enters into derivative instruments for the benefit of its customers.  The notional amounts of these customer derivative instruments and the offsetting counterparty derivative instruments were $1.208 billion at September 30, 2019.  The notional amounts of these customer derivative instruments and the offsetting counterparty derivative instruments were $793.4 million at December 31, 2018.  These derivative contracts do not qualify for hedge accounting.  These instruments include interest rate swaps, caps, and collars.  Commonly, Old National will economically hedge significant exposures related to these derivative contracts entered into for the benefit of customers by entering into offsetting contracts with approved, reputable, independent counterparties with substantially matching terms.

Old National enters into derivative financial instruments as part of its foreign currency risk management strategies.  These derivative instruments consist of foreign currency forward contracts to accommodate the business needs of its customers.  Old National does not designate these foreign currency forward contracts for hedge accounting treatment.  The notional amounts of these foreign currency forward contracts and the offsetting counterparty derivative instruments were $3.2 million at September 30, 2019 and $3.6 million at December 31, 2018.

Credit risk arises from the possible inability of counterparties to meet the terms of their contracts.  Old National’s exposure is limited to the replacement value of the contracts rather than the notional, principal, or contract amounts.  There are provisions in our agreements with the counterparties that allow for certain unsecured credit exposure up to an agreed threshold.  Exposures in excess of the agreed thresholds are collateralized.  In addition, we minimize credit risk through credit approvals, limits, and monitoring procedures.

Amounts reported in AOCI related to cash flow hedges will be reclassified to interest income or interest expense as interest payments are received or paid on Old National’s derivative instruments.  During the next 12 months, we estimate that $1.0 million will be reclassified to interest income and $0.7 million will be reclassified to interest expense.

The following table summarizes the fair value of derivative financial instruments utilized by Old National:

	Balance			Balance
	Sheet	Fair		Sheet	Fair
(dollars in thousands)	Location	Value		Location	Value
September 30, 2019
Derivatives designated as hedging instruments
Interest rate contracts	Other assets	$	8,937	Other liabilities	$	1,115
Total derivatives designated as hedging instruments		$	8,937		$	1,115
Derivatives not designated as hedging instruments
Interest rate contracts (1)	Other assets	$	57,695	Other liabilities	$	14,214
Mortgage contracts	Other assets		3,510	Other liabilities		—
Foreign currency contracts	Other assets		204	Other liabilities		155
Total derivatives not designated as hedging instruments		$	61,409		$	14,369
Total		$	70,346		$	15,484
December 31, 2018
Derivatives designated as hedging instruments
Interest rate contracts	Other assets	$	12,741	Other liabilities	$	1,603
Total derivatives designated as hedging instruments		$	12,741		$	1,603
Derivatives not designated as hedging instruments
Interest rate contracts (1)	Other assets	$	15,278	Other liabilities	$	10,562
Mortgage contracts	Other assets		874	Other liabilities		316
Foreign currency contracts	Other assets		112	Other liabilities		69
Total derivatives not designated as hedging instruments		$	16,264		$	10,947
Total		$	29,005		$	12,550

(1) The fair values of counterparty interest rate swaps are zero due to the settlement of centrally-cleared variation margin rules.  The net adjustment was $43.8 million as of September 30, 2019 and $4.8 million as of December 31, 2018.

Summary information about the interest rate swaps designated as fair value hedges is as follows:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Notional amounts	$	32,000		$	757,000
Weighted average pay rates		3.35	%		2.48	%
Weighted average receive rates		4.92	%		2.70	%
Weighted average maturity (in years)		3.1			3.9
Fair value of swaps	$	1,903		$	9,683

The effect of derivative instruments in fair value hedging relationships on the consolidated statements of income for the three and nine months ended September 30, 2019 and 2018 were as follows:

(dollars in thousands)							Gain (Loss)
							Recognized
	Location of Gain or	Gain (Loss)			Hedged Items	Location of Gain or	in Income on
Derivatives in	(Loss) Recognized in	Recognized			in Fair Value	(Loss) Recognized in	Related
Fair Value Hedging	in Income on	in Income on			Hedging	in Income on Related	Hedged
Relationships	Derivative	Derivative			Relationships	Hedged Item	Items
Three Months Ended
September 30, 2019
Interest rate contracts	Interest income/(expense)	$	12		Fixed-rate debt	Interest income/(expense)	$	(14	)
Three Months Ended
September 30, 2018
Interest rate contracts	Interest income/(expense)	$	(2,786	)	Fixed-rate debt	Interest income/(expense)	$	2,778
Nine Months Ended
September 30, 2019
Interest rate contracts	Interest income/(expense)	$	12,925		Fixed-rate debt	Interest income/(expense)	$	(12,914	)
Nine Months Ended
September 30, 2018
Interest rate contracts	Interest income/(expense)	$	(4,450	)	Fixed-rate debt	Interest income/(expense)	$	4,433

Summary information about the interest rate swaps designated as cash flow hedges is as follows:

	September 30,				December 31,
(dollars in thousands)	2019				2018
Notional amounts	$	25,000			$	525,000
Weighted average pay rates		3.52		%		2.21	%
Weighted average receive rates		2.26		%		2.63	%
Weighted average maturity (in years)		2.3				1.4
Unrealized gains (losses)	$	(1,115	)		$	146

Old National has designated its interest rate collars as cash flow hedges.  The structure of these instruments is such that Old National pays the counterparty an incremental amount if the collar index exceeds the cap rate.  Conversely, Old National receives an incremental amount if the index falls below the floor rate.  No payments are required if the collar index falls between the cap and floor rates.  Summary information about the collars designated as cash flow hedges is as follows:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Notional amounts	$	300,000		$	200,000
Weighted average cap rates		3.21	%		3.44	%
Weighted average floor rates		2.21	%		2.38	%
Weighted average rates		2.08	%		2.35	%
Weighted average maturity (in years)		2.1			2.8
Unrealized gains (losses)	$	4,852		$	1,309

Old National has designated its interest rate floor spread transactions as cash flow hedges.  The structure of these instruments is such that Old National receives an incremental amount if the index falls below the purchased floor strike rate.  Old National pays an incremental amount if the index falls below the sold floor rate.  Floor corridor protection is limited to the spread between the purchased floor strike rate and the sold floor rate.  No payments are required if the index remains above the purchased floor strike rate.  Summary information about the floor spread transactions designated as cash flow hedges is as follows:

	September 30,
(dollars in thousands)	2019
Notional amounts	$	210,000
Weighted average purchased floor strike rate		2.00	%
Weighted average sold floor rate		1.00	%
Weighted average rate		2.08	%
Weighted average maturity (in years)		2.3
Unrealized gains (losses)	$	2,182

Old National had no interest rate floor spread transactions designated as cash flow hedges as of December 31, 2018.

The effect of derivative instruments in cash flow hedging relationships on the consolidated statements of income for the three and nine months ended September 30, 2019 and 2018 were as follows:

		Three Months Ended					Three Months Ended
		September 30,					September 30,
(dollars in thousands)		2019			2018		2019		2018
		Gain (Loss)					Gain (Loss)
Derivatives in	Location of Gain or	Recognized in Other					Reclassified from
Cash Flow Hedging	(Loss) Reclassified	Comprehensive					AOCI into
Relationships	from AOCI into Income	Income on Derivative					Income
Interest rate contracts	Interest income/(expense)	$	(73	)	$	725	$	21	$	226
		Nine Months Ended					Nine Months Ended
		September 30,					September 30,
(dollars in thousands)		2019			2018		2019		2018
		Gain (Loss)					Gain (Loss)
Derivatives in	Location of Gain or	Recognized in Other					Reclassified from
Cash Flow Hedging	(Loss) Reclassified	Comprehensive					AOCI into
Relationships	from AOCI into Income	Income on Derivative					Income
Interest rate contracts	Interest income/(expense)	$	479		$	6,804	$	412	$	(553	)

The effect of derivatives not designated as hedging instruments on the consolidated statements of income for the three and nine months ended September 30, 2019 and 2018 were as follows:

		Three Months Ended
		September 30,
(dollars in thousands)		2019			2018
	Location of Gain or (Loss)	Gain (Loss)
Derivatives Not Designated as	Recognized in Income on	Recognized in Income on
Hedging Instruments	Derivative	Derivative
Interest rate contracts (1)	Other income/(expense)	$	(116	)	$	(23	)
Mortgage contracts	Mortgage banking revenue		1,110			(43	)
Foreign currency contracts	Other income/(expense)		—			20
Total		$	994		$	(46	)
		Nine Months Ended
		September 30,
(dollars in thousands)		2019			2018
	Location of Gain or (Loss)	Gain (Loss)
Derivatives Not Designated as	Recognized in Income on	Recognized in Income on
Hedging Instruments	Derivative	Derivative
Interest rate contracts (1)	Other income/(expense)	$	(247	)	$	4
Mortgage contracts	Mortgage banking revenue		2,951			394
Foreign currency contracts	Other income/(expense)		(11	)		43
Total		$	2,693		$	441

(1)Includes the valuation differences between the customer and offsetting swaps.

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Share-Based Compensation - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Remaining shares available for issuance	3,700,000		3,700,000
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted during period			211,000
Share-based compensation awards, vesting period			36 months
Unrecognized compensation expense	$ 5,100,000		$ 5,100,000
Expected weighted-average period for cost recognition (in years)			2 years
Share-based compensation expense	700,000	$ 600,000	$ 1,900,000	$ 1,700,000
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted during period			375,000
Share-based compensation awards, vesting period			36 months
Unrecognized compensation expense	5,400,000		$ 5,400,000
Expected weighted-average period for cost recognition (in years)			1 year 9 months 18 days
Share-based compensation expense	$ 1,000,000.0	$ 900,000	$ 2,600,000	2,500,000
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense			0	0
Stock Appreciation Rights (SARs) [Member] | Old National Bancorp [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incremental expense associated with conversion of stock appreciation rights			$ 0	$ 0
Stock appreciation rights, Outstanding	57,000		57,000

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Summary of Differences in Taxes from Continuing Operations Computed at Statutory Rate

Following is a summary of the major items comprising the differences in taxes from continuing operations computed at the federal statutory rate and as recorded in the consolidated statements of income:

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
(dollars in thousands)		2019				2018				2019				2018
Provision at statutory rate of 21%	$	17,437			$	11,901			$	48,245			$	33,171
Tax-exempt income:
Tax-exempt interest		(2,511	)			(2,179	)			(7,645	)			(6,607	)
Section 291/265 interest disallowance		113				84				346				220
Company-owned life insurance income		(568	)			(621	)			(1,806	)			(1,679	)
Tax-exempt income		(2,966	)			(2,716	)			(9,105	)			(8,066	)
State income taxes		1,496				2,091				5,053				4,307
Interim period effective rate adjustment		(1,598	)			(81	)			(557	)			944
Tax credit investments - federal		(2,443	)			(5,483	)			(3,577	)			(16,224	)
Other, net		1,328				(387	)			658				495
Income tax expense	$	13,254			$	5,325			$	40,717			$	14,627
Effective tax rate		16.0		%		9.4		%		17.7		%		9.3		%

Schedule of Significant Components of Net Deferred Tax Assets (Liabilities)

Significant components of net deferred tax assets (liabilities) were as follows at September 30, 2019 and December 31, 2018:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Deferred Tax Assets
Allowance for loan losses, net of recapture	$	14,651		$	14,514
Benefit plan accruals		17,144			21,754
Alternative minimum tax credit		1,272			2,545
Net operating loss carryforwards		25,369			31,765
Federal tax credits		—			1,779
Deferred gain on securities		1,563			1,976
Acquired loans		18,872			26,956
Operating lease liabilities		28,460			—
Lease exit obligation		—			1,025
Unrealized losses on available-for-sale investment securities		—			11,853
Unrealized losses on held-to-maturity investment securities		1,869			2,497
Tax credit investments and other partnerships		1,501			3,004
Other real estate owned		156			144
Other, net		738			3,167
Total deferred tax assets		111,595			122,979
Deferred Tax Liabilities
Accretion on investment securities		(897	)		(595	)
Purchase accounting		(17,575	)		(18,100	)
Loan servicing rights		(6,104	)		(6,141	)
Premises and equipment		(11,840	)		(8,507	)
Prepaid expenses		(673	)		(681	)
Operating lease right-of-use assets		(27,348	)		—
Unrealized gains on available-for-sale investment securities		(18,152	)		—
Unrealized gains on hedges		(374	)		(358	)
Other, net		(2,109	)		(1,549	)
Total deferred tax liabilities		(85,072	)		(35,931	)
Net deferred tax assets	$	26,523		$	87,048

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Other Borrowings - Summary of Terms of Outstanding Junior Subordinated Debentures (Detail) - Trust Preferred Securities [Member] - Junior Subordinated Debt [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Debt Instrument [Line Items]
Issuance Amount	$ 60,310
VFSC Capital Trust I [Member]
Debt Instrument [Line Items]
Issuance Date	Apr. 30, 2002
Issuance Amount	$ 3,093
Description of LIBOR Rate	6-month LIBOR plus 3.70%
Rate	6.31%
Maturity Date	Apr. 22, 2032
VFSC Capital Trust II [Member]
Debt Instrument [Line Items]
Issuance Date	Oct. 31, 2002
Issuance Amount	$ 4,124
Description of LIBOR Rate	3-month LIBOR plus 3.45%
Rate	5.61%
Maturity Date	Nov. 07, 2032
VFSC Capital Trust III [Member]
Debt Instrument [Line Items]
Issuance Date	Apr. 30, 2004
Issuance Amount	$ 3,093
Description of LIBOR Rate	3-month LIBOR plus 2.80%
Rate	4.94%
Maturity Date	Sep. 08, 2034
St Joseph Capital Trust II [Member]
Debt Instrument [Line Items]
Issuance Date	Mar. 31, 2005
Issuance Amount	$ 5,000
Description of LIBOR Rate	3-month LIBOR plus 1.75%
Rate	3.89%
Maturity Date	Mar. 17, 2035
Anchor Capital Trust III [Member]
Debt Instrument [Line Items]
Issuance Date	Aug. 31, 2005
Issuance Amount	$ 5,000
Description of LIBOR Rate	3-month LIBOR plus 1.55%
Rate	3.65%
Maturity Date	Sep. 30, 2035
Tower Capital Trust 2 [Member]
Debt Instrument [Line Items]
Issuance Date	Dec. 31, 2005
Issuance Amount	$ 8,000
Description of LIBOR Rate	3-month LIBOR plus 1.34%
Rate	3.44%
Maturity Date	Dec. 30, 2035
Home Federal Statutory Trust I [Member]
Debt Instrument [Line Items]
Issuance Date	Sep. 30, 2006
Issuance Amount	$ 15,000
Description of LIBOR Rate	3-month LIBOR plus 1.65%
Rate	3.77%
Maturity Date	Sep. 15, 2036
Monroe Bancorp Capital Trust I [Member]
Debt Instrument [Line Items]
Issuance Date	Jul. 31, 2006
Issuance Amount	$ 3,000
Description of LIBOR Rate	3-month LIBOR plus 1.60%
Rate	3.90%
Maturity Date	Oct. 07, 2036
Monroe Bancorp Statutory Trust II [Member]
Debt Instrument [Line Items]
Issuance Date	Mar. 31, 2007
Issuance Amount	$ 5,000
Description of LIBOR Rate	3-month LIBOR plus 1.60%
Rate	3.72%
Maturity Date	Jun. 15, 2037
Tower Capital Trust 3 [Member]
Debt Instrument [Line Items]
Issuance Date	Dec. 31, 2006
Issuance Amount	$ 9,000
Description of LIBOR Rate	3-month LIBOR plus 1.69%
Rate	3.82%
Maturity Date	Mar. 01, 2037

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Securities Sold Under Agreements to Repurchase (Tables)

9 Months Ended

Sep. 30, 2019

Transfers And Servicing [Abstract]

Schedule Of Securities Sold Under Agreements To Repurchase And Weighted Average Interest Rates Table Text Block

The following table presents securities sold under agreements to repurchase and related weighted-average interest rates at or for the nine months ended September 30:

(dollars in thousands)	2019			2018
Outstanding at September 30,	$	337,551		$	319,831
Average amount outstanding		344,294			342,797
Maximum amount outstanding at any month-end		367,884			364,001
Weighted-average interest rate:
During the nine months ended September 30,		0.80	%		0.52	%
At September 30,		0.74			0.74

Schedule Of Remaining Contractual Maturity Of Secured Borrowings And Class Of Collateral Pledged Under Repurchase Agreements Table Text Block

The following table presents the contractual maturity of our secured borrowings and class of collateral pledged:

	At September 30, 2019
	Remaining Contractual Maturity of the Agreements
	Overnight and		Up to				Greater Than
(dollars in thousands)	Continuous		30 Days		30-90 Days		90 days		Total
Repurchase Agreements:
U.S. Treasury and agency securities	$	337,551	$	—	$	—	$	—	$	337,551
Total	$	337,551	$	—	$	—	$	—	$	337,551

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Leases (Tables)

9 Months Ended

Sep. 30, 2019

Lessee Disclosure [Abstract]

Schedule of Components of Lease Expense

The components of lease expense were as follows:

	Affected Line	Three Months			Nine Months
	Item in the	Ended			Ended
(dollars in thousands)	Statement of Income	September 30, 2019			September 30, 2019
Operating lease cost	occupancy/equipment expense	$	4,280		$	12,973
Finance lease cost:
Amortization of right-of-use assets	occupancy expense		166			485
Interest on lease liabilities	interest expense		80			241
Short-term lease cost	occupancy expense		1			2
Sub-lease income	occupancy expense		(193	)		(553	)
Total		$	4,334		$	13,148

Schedule of Supplemental Balance Sheet Information Related to Leases

Supplemental balance sheet information related to leases was as follows:

(dollars in thousands)	September 30, 2019
Operating Leases
Operating lease right-of-use assets	$	102,976
Operating lease liabilities		107,272
Finance Leases
Premises and equipment, net		7,337
Other borrowings		7,527
Weighted-Average Remaining Lease Term (in Years)
Operating leases		10.8
Finance leases		11.5
Weighted-Average Discount Rate
Operating leases		3.45	%
Finance leases		4.43	%

Schedule of Supplemental Cash Flow Information Related to Leases

Supplemental cash flow information related to leases was as follows:

	Nine Months Ended
(dollars in thousands)	September 30, 2019
Cash paid for amounts included in the measurement of    lease liabilities:
Operating cash flows from operating leases	$	13,201
Operating cash flows from finance leases		241
Financing cash flows from finance leases		344

Schedule of Maturity Analysis of Lease Liability by Lease Classification

The following table presents a maturity analysis of the Company’s lease liability by lease classification at September 30, 2019:

	Operating			Finance
(dollars in thousands)	Leases			Leases
2019	$	4,314		$	200
2020		16,772			803
2021		15,698			809
2022		14,138			815
2023		9,682			830
Thereafter		69,091			6,232
Total undiscounted lease payments		129,695			9,689
Amounts representing interest		(22,423	)		(2,162	)
Lease liability	$	107,272		$	7,527

Schedule of Maturity Analysis of Tenant Leases

The following table presents a maturity analysis of the Company’s tenant leases at September 30, 2019:

	Tenant
(dollars in thousands)	Leases
2019	$	588
2020		2,034
2021		1,740
2022		1,431
2023		1,298
Thereafter		3,650
Total undiscounted lease payments	$	10,741

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Segment Information - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2019 Segment
Community Banking Segment [Member]
Segment Reporting Information [Line Items]
Number of reportable operating segment	1

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Consolidated Statements of Changes in Shareholders' Equity (unaudited) (Parenthetical) - $ / shares	3 Months Ended						9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement Of Stockholders Equity [Abstract]
Dividends per common share	$ 0.13	$ 0.13	$ 0.13	$ 0.13	$ 0.13	$ 0.13	$ 0.39	$ 0.39

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 28, 2018
Investment securities - held-to-maturity, fair value	$ 425,588	$ 506,103	$ 505,566
Common stock, stated value	$ 1.00	$ 1.00	$ 1.00
Authorized and unissued common shares reserved for issuance	300,000,000	300,000,000	300,000,000
Common stock, shares issued	170,031,000	175,141,000	152,352,000
Common stock, shares outstanding	170,031,000	175,141,000	152,352,000
Series A Preferred Stock [Member]
Preferred stock, shares authorized	2,000,000	2,000,000	2,000,000
Preferred stock, shares issued	0	0	0
Preferred stock, shares outstanding	0	0	0

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Fair Value - Quantitative Information about Significant Unobservable Inputs Used in Fair Value Measurements (Detail) $ in Thousands	Sep. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities - available-for-sale	$ 4,916,979	$ 4,123,416	$ 3,272,456
Significant Unobservable Inputs (Level 3) [Member] | Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 15,241	$ 29,125
Valuation Techniques	onb:ValuationTechniqueFairValueOfCollateralMember	onb:ValuationTechniqueFairValueOfCollateralMember
Unobservable Input	us-gaap:MeasurementInputDiscountRateMember	us-gaap:MeasurementInputDiscountRateMember
Significant Unobservable Inputs (Level 3) [Member] | Commercial Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 13,261	$ 7,242
Valuation Techniques	onb:ValuationTechniqueFairValueOfCollateralMember	onb:ValuationTechniqueFairValueOfCollateralMember
Unobservable Input	us-gaap:MeasurementInputDiscountRateMember	us-gaap:MeasurementInputDiscountRateMember
Significant Unobservable Inputs (Level 3) [Member] | Minimum [Member] | Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans Held-for-sale, Measurement Input	0.35	0.00
Significant Unobservable Inputs (Level 3) [Member] | Minimum [Member] | Commercial Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans Held-for-sale, Measurement Input	0.00	0.00
Significant Unobservable Inputs (Level 3) [Member] | Maximum [Member] | Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans Held-for-sale, Measurement Input	0.45	0.50
Significant Unobservable Inputs (Level 3) [Member] | Maximum [Member] | Commercial Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans Held-for-sale, Measurement Input	0.90	0.90
Significant Unobservable Inputs (Level 3) [Member] | Weighted Average [Member] | Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans Held-for-sale, Measurement Input	0.40	0.35
Significant Unobservable Inputs (Level 3) [Member] | Weighted Average [Member] | Commercial Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans Held-for-sale, Measurement Input	0.31	0.35
Significant Unobservable Inputs (Level 3) [Member] | Pooled Trust Preferred Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities - available-for-sale	$ 7,695	$ 8,495
Valuation Techniques	us-gaap:ValuationTechniqueDiscountedCashFlowMember	us-gaap:ValuationTechniqueDiscountedCashFlowMember
Significant Unobservable Inputs (Level 3) [Member] | Pooled Trust Preferred Securities [Member] | Constant Prepayment Rate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale, Measurement Input	0.0000	0.0000
Significant Unobservable Inputs (Level 3) [Member] | Pooled Trust Preferred Securities [Member] | Expected Asset Recoveries [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale, Measurement Input	0.0000	0.0000
Significant Unobservable Inputs (Level 3) [Member] | Pooled Trust Preferred Securities [Member] | Minimum [Member] | Additional Asset Defaults [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale, Measurement Input	0.063	0.068
Significant Unobservable Inputs (Level 3) [Member] | Pooled Trust Preferred Securities [Member] | Maximum [Member] | Additional Asset Defaults [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale, Measurement Input	0.092	0.085
Significant Unobservable Inputs (Level 3) [Member] | Pooled Trust Preferred Securities [Member] | Weighted Average [Member] | Additional Asset Defaults [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale, Measurement Input	0.072	0.073
Significant Unobservable Inputs (Level 3) [Member] | States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment securities - available-for-sale	$ 40	$ 4,108
Valuation Techniques	us-gaap:ValuationTechniqueDiscountedCashFlowMember	us-gaap:ValuationTechniqueDiscountedCashFlowMember
Significant Unobservable Inputs (Level 3) [Member] | Residential Foreclosed Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		$ 68
Valuation Techniques		onb:ValuationTechniqueFairValueOfCollateralMember
Unobservable Input		us-gaap:MeasurementInputDiscountRateMember
Significant Unobservable Inputs (Level 3) [Member] | Residential Foreclosed Assets [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans Held-for-sale, Measurement Input		0.15
Significant Unobservable Inputs (Level 3) [Member] | Residential Foreclosed Assets [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans Held-for-sale, Measurement Input		0.16
Significant Unobservable Inputs (Level 3) [Member] | Residential Foreclosed Assets [Member] | Weighted Average [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans Held-for-sale, Measurement Input		0.15

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Investment Securities - Available-for-Sale and Held-to-Maturity Investment Securities with Unrealized Losses by Aggregated Major Security Type and Length of Time in Continuous Unrealized Loss Position (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Less than 12 Months, Fair Value	$ 624,033	$ 334,588
Available-for-Sale, Less than 12 Months, Unrealized Losses	(3,129)	(4,653)
Available-for-Sale, 12 months or longer, Fair Value	414,120	1,997,801
Available-for-Sale, 12 months or longer, Unrealized Losses	(10,444)	(65,920)
Available-for-Sale, Fair Value	1,038,153	2,332,389
Available-for-Sale, Unrealized Losses	(13,573)	(70,573)
Held-to-Maturity, Less than 12 Months, Fair Value		28,868
Held-to-Maturity, Less than 12 Months, Unrecognized Losses		(1,007)
Held-to-Maturity, 12 months or longer, Fair Value		261,588
Held-to-Maturity, 12 months or longer, Unrecognized Losses		(16,204)
Held-to-Maturity, Fair Value		290,456
Held-to-Maturity, Unrecognized Losses		(17,211)
U.S. Treasury [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Less than 12 Months, Fair Value		3,829
Available-for-Sale, Less than 12 Months, Unrealized Losses		(12)
Available-for-Sale, 12 months or longer, Fair Value	1,494	1,472
Available-for-Sale, 12 months or longer, Unrealized Losses	(2)	(19)
Available-for-Sale, Fair Value	1,494	5,301
Available-for-Sale, Unrealized Losses	(2)	(31)
U.S. Government-Sponsored Entities and Agencies [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Less than 12 Months, Fair Value	50,979	54,701
Available-for-Sale, Less than 12 Months, Unrealized Losses	(20)	(594)
Available-for-Sale, 12 months or longer, Fair Value	5,322	519,911
Available-for-Sale, 12 months or longer, Unrealized Losses	(15)	(10,748)
Available-for-Sale, Fair Value	56,301	574,612
Available-for-Sale, Unrealized Losses	(35)	(11,342)
Held-to-Maturity, 12 months or longer, Fair Value		72,359
Held-to-Maturity, 12 months or longer, Unrecognized Losses		(4,642)
Held-to-Maturity, Fair Value		72,359
Held-to-Maturity, Unrecognized Losses		(4,642)
Mortgage-Backed Securities - Agency [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Less than 12 Months, Fair Value	484,912	82,289
Available-for-Sale, Less than 12 Months, Unrealized Losses	(2,806)	(742)
Available-for-Sale, 12 months or longer, Fair Value	295,934	1,172,984
Available-for-Sale, 12 months or longer, Unrealized Losses	(3,140)	(43,475)
Available-for-Sale, Fair Value	780,846	1,255,273
Available-for-Sale, Unrealized Losses	(5,946)	(44,217)
Held-to-Maturity, Less than 12 Months, Fair Value		4,335
Held-to-Maturity, Less than 12 Months, Unrecognized Losses		(24)
Held-to-Maturity, 12 months or longer, Fair Value		119,207
Held-to-Maturity, 12 months or longer, Unrecognized Losses		(8,006)
Held-to-Maturity, Fair Value		123,542
Held-to-Maturity, Unrecognized Losses		(8,030)
States and Political Subdivisions [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Less than 12 Months, Fair Value	66,516	99,162
Available-for-Sale, Less than 12 Months, Unrealized Losses	(278)	(1,340)
Available-for-Sale, 12 months or longer, Fair Value	8,192	151,097
Available-for-Sale, 12 months or longer, Unrealized Losses	(62)	(2,101)
Available-for-Sale, Fair Value	74,708	250,259
Available-for-Sale, Unrealized Losses	(340)	(3,441)
Held-to-Maturity, Less than 12 Months, Fair Value		24,533
Held-to-Maturity, Less than 12 Months, Unrecognized Losses		(983)
Held-to-Maturity, 12 months or longer, Fair Value		70,022
Held-to-Maturity, 12 months or longer, Unrecognized Losses		(3,556)
Held-to-Maturity, Fair Value		94,555
Held-to-Maturity, Unrecognized Losses		(4,539)
Pooled Trust Preferred Securities [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, 12 months or longer, Fair Value	7,695	8,495
Available-for-Sale, 12 months or longer, Unrealized Losses	(6,130)	(5,366)
Available-for-Sale, Fair Value	7,695	8,495
Available-for-Sale, Unrealized Losses	(6,130)	(5,366)
Other Securities [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Less than 12 Months, Fair Value	21,626	94,607
Available-for-Sale, Less than 12 Months, Unrealized Losses	(25)	(1,965)
Available-for-Sale, 12 months or longer, Fair Value	95,483	143,842
Available-for-Sale, 12 months or longer, Unrealized Losses	(1,095)	(4,211)
Available-for-Sale, Fair Value	117,109	238,449
Available-for-Sale, Unrealized Losses	$ (1,120)	$ (6,176)

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Leases - Schedule of Maturity Analysis of Lease Liability by Lease Classification (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Operating Leases
Operating Leases, 2019	$ 4,314
Operating Leases, 2020	16,772
Operating Leases, 2021	15,698
Operating Leases, 2022	14,138
Operating Leases, 2023	9,682
Operating Leases, Thereafter	69,091
Operating Leases, Total undiscounted lease payments	129,695
Amounts representing interest, Operating Leases	(22,423)
Operating Leases, Lease liability	107,272	$ 0	$ 0
Finance Leases
Finance Leases, 2019	200
Finance Leases, 2020	803
Finance Leases, 2021	809
Finance Leases, 2022	815
Finance Leases, 2023	830
Finance Leases, Thereafter	6,232
Finance Leases, Total undiscounted lease payments	9,689
Amounts representing interest, Finance Leases	(2,162)
Finance Leases, Lease liability	$ 7,527

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Fair Value - Changes in Fair Value for Items Measured at Fair Value Pursuant to Election of the Fair Value (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Schedule of Trading Securities and Other Trading Assets [Line Items]
Interest Income	$ 153,096	$ 130,842	$ 455,374	$ 391,377
Interest (Expense)	(32,757)	(24,527)	(98,460)	(65,434)
Residential Loans Held for Sale [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Other Gains and (Losses)	137	(368)	1,312	54
Interest Income	2	3	12	6
Interest (Expense)				(4)
Total Changes in Fair Values Included in Current Period Earnings	$ 139	$ (365)	$ 1,324	$ 56

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Goodwill and Other Intangible Assets - Schedule of Gross Carrying Amounts and Accumulated Amortization of Other Intangible Assets (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 135,598	$ 145,647
Accumulated Amortization and Impairment	(71,547)	(68,631)
Net Carrying Amount	64,051	77,016	$ 42,134
Core Deposit [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	119,051	129,100
Accumulated Amortization and Impairment	(59,398)	(57,524)
Net Carrying Amount	59,653	71,576
Customer Trust Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	16,547	16,547
Accumulated Amortization and Impairment	(12,149)	(11,107)
Net Carrying Amount	$ 4,398	$ 5,440

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Loans and Allowance for Loan Losses - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Financing Receivable, Allowance for Credit Losses [Line Items]
Loan placed on nonaccrual when past due, number of days			90 days
Loan participations	$ 891,900,000		$ 891,900,000
Loan participations sold	416,000,000.0		416,000,000.0
Loan participations retained	475,900,000		$ 475,900,000
Troubled debt restructuring term			6 months
Minimum number of days for loan charge off to be recorded			120 days
Maximum number of days for loan charge off to be recorded			180 days
Nonaccrual period for loans			90 days
Financing receivable TDR's included with non-accrual loans	21,800,000		$ 21,800,000		$ 26,300,000
Financing receivable troubled debt restructurings specific reserves	6,300,000		6,300,000		3,000,000.0
Unfunded commitments on TDRs	1,800,000		1,800,000
Increase (decrease) in allowance for loan losses			(700,000)	$ 0
Allowance for loan losses charge-offs			$ 0	0
Number of days for a loan to be considered to be in payment default			90 days
Outstanding loans including principal, interest, fees and penalties	229,800,000		$ 229,800,000		246,900,000
Accretion of income	4,800,000	$ 1,900,000	9,000,000.0	$ 8,900,000
Financing receivable allowance for loan losses related to purchased loans	$ 345,000		345,000		478,000
Maximum [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Value of small commercial loans on nonaccrual status or 90 days or more delinquent			$ 250,000
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Percentage of risk-based capital	189.00%		189.00%
Regulatory guideline limit	300.00%		300.00%
Financing receivable allowance for loan losses related to purchased loans	$ 148,000		$ 148,000		$ 319,000
Credit Concentration Risk [Member] | Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Concentration Risk Percentage			10.00%
Credit Concentration Risk [Member] | Non Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Concentration Risk Percentage			10.00%

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Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2019

Summary of Fair Value of Derivative Financial Instruments

The following table summarizes the fair value of derivative financial instruments utilized by Old National:

	Balance			Balance
	Sheet	Fair		Sheet	Fair
(dollars in thousands)	Location	Value		Location	Value
September 30, 2019
Derivatives designated as hedging instruments
Interest rate contracts	Other assets	$	8,937	Other liabilities	$	1,115
Total derivatives designated as hedging instruments		$	8,937		$	1,115
Derivatives not designated as hedging instruments
Interest rate contracts (1)	Other assets	$	57,695	Other liabilities	$	14,214
Mortgage contracts	Other assets		3,510	Other liabilities		—
Foreign currency contracts	Other assets		204	Other liabilities		155
Total derivatives not designated as hedging instruments		$	61,409		$	14,369
Total		$	70,346		$	15,484
December 31, 2018
Derivatives designated as hedging instruments
Interest rate contracts	Other assets	$	12,741	Other liabilities	$	1,603
Total derivatives designated as hedging instruments		$	12,741		$	1,603
Derivatives not designated as hedging instruments
Interest rate contracts (1)	Other assets	$	15,278	Other liabilities	$	10,562
Mortgage contracts	Other assets		874	Other liabilities		316
Foreign currency contracts	Other assets		112	Other liabilities		69
Total derivatives not designated as hedging instruments		$	16,264		$	10,947
Total		$	29,005		$	12,550

(1) The fair values of counterparty interest rate swaps are zero due to the settlement of centrally-cleared variation margin rules.  The net adjustment was $43.8 million as of September 30, 2019 and $4.8 million as of December 31, 2018.

Summary of Interest Rate Swaps Designated as Fair Value Hedges

Summary information about the interest rate swaps designated as cash flow hedges is as follows:

	September 30,				December 31,
(dollars in thousands)	2019				2018
Notional amounts	$	25,000			$	525,000
Weighted average pay rates		3.52		%		2.21	%
Weighted average receive rates		2.26		%		2.63	%
Weighted average maturity (in years)		2.3				1.4
Unrealized gains (losses)	$	(1,115	)		$	146

Summary information about the collars designated as cash flow hedges is as follows:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Notional amounts	$	300,000		$	200,000
Weighted average cap rates		3.21	%		3.44	%
Weighted average floor rates		2.21	%		2.38	%
Weighted average rates		2.08	%		2.35	%
Weighted average maturity (in years)		2.1			2.8
Unrealized gains (losses)	$	4,852		$	1,309

Schedule Of Derivative Instruments Effect On Consolidated Statement Of Income

The effect of derivative instruments in fair value hedging relationships on the consolidated statements of income for the three and nine months ended September 30, 2019 and 2018 were as follows:

(dollars in thousands)							Gain (Loss)
							Recognized
	Location of Gain or	Gain (Loss)			Hedged Items	Location of Gain or	in Income on
Derivatives in	(Loss) Recognized in	Recognized			in Fair Value	(Loss) Recognized in	Related
Fair Value Hedging	in Income on	in Income on			Hedging	in Income on Related	Hedged
Relationships	Derivative	Derivative			Relationships	Hedged Item	Items
Three Months Ended
September 30, 2019
Interest rate contracts	Interest income/(expense)	$	12		Fixed-rate debt	Interest income/(expense)	$	(14	)
Three Months Ended
September 30, 2018
Interest rate contracts	Interest income/(expense)	$	(2,786	)	Fixed-rate debt	Interest income/(expense)	$	2,778
Nine Months Ended
September 30, 2019
Interest rate contracts	Interest income/(expense)	$	12,925		Fixed-rate debt	Interest income/(expense)	$	(12,914	)
Nine Months Ended
September 30, 2018
Interest rate contracts	Interest income/(expense)	$	(4,450	)	Fixed-rate debt	Interest income/(expense)	$	4,433

The effect of derivative instruments in cash flow hedging relationships on the consolidated statements of income for the three and nine months ended September 30, 2019 and 2018 were as follows:

		Three Months Ended					Three Months Ended
		September 30,					September 30,
(dollars in thousands)		2019			2018		2019		2018
		Gain (Loss)					Gain (Loss)
Derivatives in	Location of Gain or	Recognized in Other					Reclassified from
Cash Flow Hedging	(Loss) Reclassified	Comprehensive					AOCI into
Relationships	from AOCI into Income	Income on Derivative					Income
Interest rate contracts	Interest income/(expense)	$	(73	)	$	725	$	21	$	226
		Nine Months Ended					Nine Months Ended
		September 30,					September 30,
(dollars in thousands)		2019			2018		2019		2018
		Gain (Loss)					Gain (Loss)
Derivatives in	Location of Gain or	Recognized in Other					Reclassified from
Cash Flow Hedging	(Loss) Reclassified	Comprehensive					AOCI into
Relationships	from AOCI into Income	Income on Derivative					Income
Interest rate contracts	Interest income/(expense)	$	479		$	6,804	$	412	$	(553	)

The effect of derivatives not designated as hedging instruments on the consolidated statements of income for the three and nine months ended September 30, 2019 and 2018 were as follows:

		Three Months Ended
		September 30,
(dollars in thousands)		2019			2018
	Location of Gain or (Loss)	Gain (Loss)
Derivatives Not Designated as	Recognized in Income on	Recognized in Income on
Hedging Instruments	Derivative	Derivative
Interest rate contracts (1)	Other income/(expense)	$	(116	)	$	(23	)
Mortgage contracts	Mortgage banking revenue		1,110			(43	)
Foreign currency contracts	Other income/(expense)		—			20
Total		$	994		$	(46	)
		Nine Months Ended
		September 30,
(dollars in thousands)		2019			2018
	Location of Gain or (Loss)	Gain (Loss)
Derivatives Not Designated as	Recognized in Income on	Recognized in Income on
Hedging Instruments	Derivative	Derivative
Interest rate contracts (1)	Other income/(expense)	$	(247	)	$	4
Mortgage contracts	Mortgage banking revenue		2,951			394
Foreign currency contracts	Other income/(expense)		(11	)		43
Total		$	2,693		$	441

(1)Includes the valuation differences between the customer and offsetting swaps.

Fixed Interest Swap [Member]

Summary of Interest Rate Swaps Designated as Fair Value Hedges

Summary information about the interest rate swaps designated as fair value hedges is as follows:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Notional amounts	$	32,000		$	757,000
Weighted average pay rates		3.35	%		2.48	%
Weighted average receive rates		4.92	%		2.70	%
Weighted average maturity (in years)		3.1			3.9
Fair value of swaps	$	1,903		$	9,683

Interest Rate Floor [Member]

Schedule of Floor Spread Transactions Designated as Cash Flow Hedges

Summary information about the floor spread transactions designated as cash flow hedges is as follows:

	September 30,
(dollars in thousands)	2019
Notional amounts	$	210,000
Weighted average purchased floor strike rate		2.00	%
Weighted average sold floor rate		1.00	%
Weighted average rate		2.08	%
Weighted average maturity (in years)		2.3
Unrealized gains (losses)	$	2,182

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Acquisition and Divestiture Activity - Additional Information (Detail) - KleinBank [Member] - Minnesota [Member] shares in Millions, $ in Millions	Nov. 01, 2018 USD ($) Branch shares
Business Acquisition [Line Items]
Stock merger acquisition ratio	100.00%
Number of branches | Branch	18
Portion of share received by merged entity	7.92
Total fair value of consideration paid	$ 406.5
Issuance of common stock shares for acquisitions of business | shares	22.8
Value of issuance common stock shares	$ 406.5
Transaction and integration costs associated with the acquisition	20.1
Core Deposit [Member]
Business Acquisition [Line Items]
Estimated fair value of intangible assets acquired	$ 39.0
Estimated useful life of intangible assets	12 years

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Securities Sold Under Agreements to Repurchase - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2019
Securities Sold Under Agreements To Repurchase [Abstract]
Gross outstanding balance of repurchase agreements collateralized by securities percentage	107.00%

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Net Income Per Share - Summary of Table Reconciling Basic and Diluted Net Income Per Share (Parenthetical) (Detail) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Stock Options [Member]
Summary Of Computation Of Basic And Diluted Earnings Per Share [Line Items]
Antidilutive securities not included in the computation of net income per diluted share	14	14	14	14

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Federal Home Loan Bank Advances - Summary of Contractual Maturities of FHLB Advances (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Federal Home Loan Banks [Abstract]
Due in 2019	$ 200,480
Due in 2020	50,000
Due in 2021	20,000
Due in 2022	157,000
Due in 2023	164
Thereafter	1,550,000
ASC 815 fair value hedge and other basis adjustments	24,316	$ 9,838
Total	$ 2,001,960	$ 1,613,481	$ 1,554,515

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Loans and Allowance for Credit Losses - Schedule of Activity in Troubled Debt Restructurings (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Financing Receivable Impaired [Line Items]
Balance at beginning of period	$ 43,831	$ 51,139	$ 43,710	$ 54,003
(Charge-offs)/recoveries	32	749	(139)	577
(Payments)/disbursements	(4,547)	(6,423)	(24,300)	(12,346)
Additions	1,087	1,954	21,132	5,185
Balance at end of period	40,403	47,419	40,403	47,419
Commercial Loan [Member]
Financing Receivable Impaired [Line Items]
Balance at beginning of period	18,872	9,043	10,275	12,088
(Charge-offs)/recoveries	12	(7)	(89)	(158)
(Payments)/disbursements	(2,303)	453	(3,307)	(3,525)
Additions	530	1,954	10,232	3,038
Balance at end of period	17,111	11,443	17,111	11,443
Commercial Real Estate [Member]
Financing Receivable Impaired [Line Items]
Balance at beginning of period	19,363	34,927	27,671	34,705
(Charge-offs)/recoveries	13	753	(58)	731
(Payments)/disbursements	(1,057)	(6,601)	(19,321)	(7,570)
Additions			10,027	1,213
Balance at end of period	18,319	29,079	18,319	29,079
Residential [Member]
Financing Receivable Impaired [Line Items]
Balance at beginning of period	3,080	3,771	3,390	3,315
(Charge-offs)/recoveries				23
(Payments)/disbursements	(865)	(75)	(1,175)	(144)
Additions	557		557	502
Balance at end of period	2,772	3,696	2,772	3,696
Consumer Loan [Member]
Financing Receivable Impaired [Line Items]
Balance at beginning of period	2,516	3,398	2,374	3,895
(Charge-offs)/recoveries	7	3	8	(19)
(Payments)/disbursements	(322)	(200)	(497)	(1,107)
Additions			316	432
Balance at end of period	$ 2,201	$ 3,201	$ 2,201	$ 3,201

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Premises and Equipment - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Property Plant And Equipment [Abstract]
Depreciation	$ 6,800	$ 5,900	$ 19,980	$ 17,666

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Derivative Financial Instruments - Schedule of Floor Spread Transactions Designated as Cash Flow Hedges (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Derivative Instruments, Gain (Loss) [Line Items]
Notional amount	$ 567,000,000.0	$ 1,482,000,000
Interest Rate Floor [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Notional amount	$ 210,000,000
Weighted average floor rates	2.00%
Weighted average sold floor rate	1.00%
Weighted average rates	2.08%
Weighted average maturity (in years)	2 years 3 months 18 days
Unrealized gains (losses)	$ 2,182,000

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Other Real Estate Owned - Activity in Other Real Estate Owned (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Regulatory Assets [Abstract]
Balance at beginning of period	$ 2,819	$ 3,729	$ 3,232	$ 8,810
Additions	411	474	1,084	1,649
Sales	(271)	(511)	(1,248)	(6,136)
Impairments	(18)	(129)	(127)	(760)
Balance at end of period	$ 2,941	$ 3,563	$ 2,941	$ 3,563

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Loans and Allowance for Loan Losses - Schedule of Impaired Loans (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Financing Receivable Impaired [Line Items]
Recorded Investment, Total	$ 118,872	$ 124,054
Unpaid Principal Balance, Total	120,844	125,349
Related Allowance	12,432	14,486
Commercial [Member]
Financing Receivable Impaired [Line Items]
Related Allowance	7,855	6,035
Recorded Investment with no related allowance	19,154	22,031
Unpaid Principal Balance with no related allowance	19,462	22,292
Recorded Investment with related allowance	21,116	13,379
Unpaid Principal Balance with related allowance	21,169	13,432
Commercial Real Estate [Member]
Financing Receivable Impaired [Line Items]
Related Allowance	1,183	1,830
Recorded Investment with no related allowance	10,890
Unpaid Principal Balance with no related allowance	10,890
Recorded Investment with related allowance	2,764	13,824
Unpaid Principal Balance with related allowance	2,764	13,824
Commercial Real Estate - Other [Member]
Financing Receivable Impaired [Line Items]
Related Allowance	3,302	6,476
Recorded Investment with no related allowance	38,517	41,126
Unpaid Principal Balance with no related allowance	39,942	41,914
Recorded Investment with related allowance	21,456	28,154
Unpaid Principal Balance with related allowance	21,456	28,154
Residential [Member]
Financing Receivable Impaired [Line Items]
Related Allowance	39	44
Recorded Investment with no related allowance	1,783	2,276
Unpaid Principal Balance with no related allowance	1,803	2,296
Recorded Investment with related allowance	990	889
Unpaid Principal Balance with related allowance	990	889
Consumer [Member]
Financing Receivable Impaired [Line Items]
Related Allowance	53	101
Recorded Investment with no related allowance	1,137	362
Unpaid Principal Balance with no related allowance	1,303	535
Recorded Investment with related allowance	1,065	2,013
Unpaid Principal Balance with related allowance	$ 1,065	$ 2,013

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Derivative Financial Instruments - Summary of Interest Rate Swaps Designated as Fair Value Hedges (Detail) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Derivative Instruments, Gain (Loss) [Line Items]
Notional amount	$ 567,000,000.0	$ 1,482,000,000
Fixed Interest Swap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Notional amount	$ 32,000,000	$ 757,000,000
Weighted average pay rates	3.35%	2.48%
Weighted average receive rates	4.92%	2.70%
Weighted average maturity (in years)	3 years 1 month 6 days	3 years 10 months 24 days
Fair value of swaps	$ 1,903,000	$ 9,683,000

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Income Taxes - Schedule of Significant Components of Net Deferred Tax Assets (Liabilities) (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Deferred Tax Assets
Allowance for loan losses, net of recapture	$ 14,651	$ 14,514
Benefit plan accruals	17,144	21,754
Alternative minimum tax credit	1,272	2,545
Net operating loss carryforwards	25,369	31,765
Federal tax credits		1,779
Deferred gain on securities	1,563	1,976
Acquired loans	18,872	26,956
Operating lease liabilities	28,460	0
Lease exit obligation		1,025
Unrealized losses on available-for-sale investment securities		11,853
Unrealized losses on held-to-maturity investment securities	1,869	2,497
Tax credit investments and other partnerships	1,501	3,004
Other real estate owned	156	144
Other, net	738	3,167
Total deferred tax assets	111,595	122,979
Deferred Tax Liabilities
Accretion on investment securities	(897)	(595)
Purchase accounting	(17,575)	(18,100)
Loan servicing rights	(6,104)	(6,141)
Premises and equipment	(11,840)	(8,507)
Prepaid expenses	(673)	(681)
Operating lease right-of-use assets	(27,348)	0
Unrealized gains on available-for-sale investment securities	(18,152)	0
Unrealized gains on hedges	(374)	(358)
Other, net	(2,109)	(1,549)
Total deferred tax liabilities	(85,072)	(35,931)
Net deferred tax assets	$ 26,523	$ 87,048

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Revenue from Contracts with Customers - Summary of Topic 606 Revenue Items (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation Of Revenue [Line Items]
Noninterest income within scope of Topic 606	$ 32,899	$ 31,172	$ 98,205	$ 94,460
Wealth Management Fees [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income within scope of Topic 606	9,160	9,022	27,604	27,794
Service Charges on Deposit Accounts [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income within scope of Topic 606	11,860	11,028	34,201	32,552
Debit Card and ATM Fees [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income within scope of Topic 606	5,370	4,706	16,292	14,651
Investment Product Fees [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income within scope of Topic 606	5,244	5,073	16,106	15,170
Merchant Processing Fees [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income within scope of Topic 606	775	779	2,303	2,198
Gain (Loss) on Other Real Estate Owned [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income within scope of Topic 606	29	260	194	981
Safe Deposit Box Fees [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income within scope of Topic 606	267	221	936	849
Insurance Premiums and Commissions [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income within scope of Topic 606	$ 194	$ 83	$ 569	$ 265

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Net Income Per Share

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Net Income Per Share

NOTE 4 – NET INCOME PER SHARE

Basic and diluted net income per share are calculated using the two-class method.  Net income is divided by the weighted-average number of common shares outstanding during the period.  Adjustments to the weighted average number of common shares outstanding are made only when such adjustments will dilute net income per common share.  Net income is then divided by the weighted-average number of common shares and common share equivalents during the period.

The following table reconciles basic and diluted net income per share for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended				Nine Months Ended
(dollars and shares in thousands,	September 30,				September 30,
except per share data)	2019		2018		2019		2018
Basic Net Income Per Share
Net income	$	69,781	$	51,348	$	189,021	$	143,332
Weighted average common shares outstanding		170,746		151,930		172,807		151,844
Basic Net Income Per Share	$	0.41	$	0.34	$	1.10	$	0.95
Diluted Net Income Per Share
Net income	$	69,781	$	51,348	$	189,021	$	143,332
Weighted average common shares outstanding		170,746		151,930		172,807		151,844
Effect of dilutive securities:
Restricted stock		761		790		672		701
Stock options (1)		44		64		48		71
Weighted average shares outstanding		171,551		152,784		173,527		152,616
Diluted Net Income Per Share	$	0.41	$	0.34	$	1.09	$	0.94

(1) Options to purchase 14 thousand shares outstanding at September 30, 2019 and 2018 were not included in the computation of net income per diluted share for the three and nine months ended September 30, 2019 and 2018 because the exercise price of these options was greater than the average market price of the common shares and, therefore, the effect would be antidilutive.

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Other Real Estate Owned

9 Months Ended

Sep. 30, 2019

Banking And Thrift [Abstract]

Other Real Estate Owned

NOTE 8 – OTHER REAL ESTATE OWNED

Other real estate owned is included in other assets.  The following table presents activity in other real estate owned for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)	2019			2018			2019			2018
Balance at beginning of period	$	2,819		$	3,729		$	3,232		$	8,810
Additions		411			474			1,084			1,649
Sales		(271	)		(511	)		(1,248	)		(6,136	)
Impairments		(18	)		(129	)		(127	)		(760	)
Balance at end of period (1)	$	2,941		$	3,563		$	2,941		$	3,563

(1) Includes repossessed personal property of $0.5 million at September 30, 2019 and $0.3 million at September 30, 2018.

Foreclosed residential real estate property recorded as a result of obtaining physical possession of the property included in the table above totaled $1.0 million at September 30, 2019 and $1.3 million at December 31, 2018.  Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $3.8 million at September 30, 2019 and $4.9 million at December 31, 2018.

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Other Real Estate Owned (Tables)

9 Months Ended

Sep. 30, 2019

Banking And Thrift [Abstract]

Activity in Other Real Estate Owned

The following table presents activity in other real estate owned for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)	2019			2018			2019			2018
Balance at beginning of period	$	2,819		$	3,729		$	3,232		$	8,810
Additions		411			474			1,084			1,649
Sales		(271	)		(511	)		(1,248	)		(6,136	)
Impairments		(18	)		(129	)		(127	)		(760	)
Balance at end of period (1)	$	2,941		$	3,563		$	2,941		$	3,563

(1) Includes repossessed personal property of $0.5 million at September 30, 2019 and $0.3 million at September 30, 2018.

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Acquisition and Divestiture Activity (Tables) - KleinBank [Member] - Minnesota [Member]

9 Months Ended

Sep. 30, 2019

Summary of Fair Values of Acquired Assets, Liabilities Assumed and Resulting Goodwill

During the three months ended September 30, 2019, immaterial adjustments were made to the provisional valuation of assets acquired and liabilities assumed as Old National finalized the valuation.  These adjustments affected goodwill, premises and equipment, and net deferred tax assets.  A summary of the fair values of the acquired assets, liabilities assumed, and resulting goodwill follows (in thousands):

Cash and cash equivalents	$	60,759
Investment securities		697,951
FHLB/Federal Reserve Bank stock		2,637
Loans held for sale		3,371
Loans		1,049,073
Premises and equipment		32,408
Accrued interest receivable		7,896
Company-owned life insurance		36,380
Net deferred tax assets		6,746
Other real estate owned		954
Other assets		10,299
Deposits		(1,713,086	)
Securities sold under agreements to repurchase		(19,481	)
Accrued expenses and other liabilities		(17,506	)
Net tangible assets acquired		158,401
Definite-lived intangible assets acquired		39,017
Loan servicing rights		285
Goodwill		208,771
Total consideration	$	406,474

Summary of Acquired Loan Data

Acquired loan data for Klein can be found in the table below:

					Best Estimate at
					Acquisition Date of
	Fair Value		Gross Contractual		Contractual Cash
	of Acquired Loans		Cash Flows at		Flows Not Expected
(in thousands)	at Acquisition Date		Acquisition Date		to be Collected
Acquired receivables subject to    ASC 310-30	$	11,663	$	18,568	$	4,521
Acquired receivables not subject    to ASC 310-30	$	1,037,410	$	1,252,954	$	76,534

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Segment Information

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segment Information

NOTE 23 – SEGMENT INFORMATION

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.  Old National Bank, Old National’s bank subsidiary, is the only significant subsidiary upon which management makes decisions regarding how to allocate resources and assess performance.  Each of the branches of Old National Bank provide a group of similar community banking services, including such products and services as commercial, real estate and consumer loans, time deposits, checking and savings accounts, cash management, brokerage, trust, and investment advisory services.  The individual bank branches located throughout our Midwest footprint have similar operating and economic characteristics.  While the chief decision maker monitors the revenue streams of the various products, services, and regional locations, operations are managed and financial performance is evaluated on a Company-wide basis.  Accordingly, all of the community banking services and branch locations are considered by management to be aggregated into one reportable operating segment, community banking.

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Securities Sold Under Agreements to Repurchase - Schedule of Remaining Contractual Maturity of Secured Borrowings and Class of Collateral Pledged Under Repurchase Agreements (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Assets Sold Under Agreements To Repurchase [Line Items]
Secured borrowings and class of collateral pledged under repurchase agreements	$ 337,551	$ 362,294	$ 319,831
U.S. Treasury [Member]
Assets Sold Under Agreements To Repurchase [Line Items]
Secured borrowings and class of collateral pledged under repurchase agreements	337,551
Overnight and Continuous [Member]
Assets Sold Under Agreements To Repurchase [Line Items]
Secured borrowings and class of collateral pledged under repurchase agreements	337,551
Overnight and Continuous [Member] | U.S. Treasury [Member]
Assets Sold Under Agreements To Repurchase [Line Items]
Secured borrowings and class of collateral pledged under repurchase agreements	$ 337,551

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Investment Securities - Amortized Cost and Fair Value of Available-for-Sale and Held-to-Maturity Investment Securities Portfolio (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Sep. 28, 2018
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	$ 4,834,585	$ 4,172,617
Available-for-Sale, Unrealized Gains	95,967	21,372
Available-for-Sale, Unrealized Losses	(13,573)	(70,573)
Available-for-Sale securities, Fair Value	4,916,979	4,123,416	$ 3,272,456
Held-to-Maturity, Amortized Cost	407,281	506,334	512,207
Held-to-Maturity, Unrealized Gains	18,307	6,247
Held-to-Maturity, Unrealized Losses		(6,478)
Investment securities - held-to-maturity, fair value	425,588	506,103		$ 505,566
U.S. Treasury [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	5,363	5,332
Available-for-Sale, Unrealized Gains	133
Available-for-Sale, Unrealized Losses	(2)	(31)
Available-for-Sale securities, Fair Value	5,494	5,301	5,237
U.S. Government-Sponsored Entities and Agencies [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	484,226	639,458
Available-for-Sale, Unrealized Gains	1,913	35
Available-for-Sale, Unrealized Losses	(35)	(11,342)
Available-for-Sale securities, Fair Value	486,104	628,151	611,696
Held-to-Maturity, Amortized Cost	33,321	73,986
Held-to-Maturity, Unrealized Gains	1,125
Held-to-Maturity, Unrealized Losses		(1,627)
Investment securities - held-to-maturity, fair value	34,446	72,359
Mortgage-Backed Securities - Agency [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	3,092,991	2,243,774
Available-for-Sale, Unrealized Gains	49,135	9,738
Available-for-Sale, Unrealized Losses	(5,946)	(44,217)
Available-for-Sale securities, Fair Value	3,136,180	2,209,295	1,508,692
Held-to-Maturity, Amortized Cost	112,187	127,120
Held-to-Maturity, Unrealized Gains	3,580	39
Held-to-Maturity, Unrealized Losses		(2,750)
Investment securities - held-to-maturity, fair value	115,767	124,409
States and Political Subdivisions [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	932,589	932,757
Available-for-Sale, Unrealized Gains	37,226	11,113
Available-for-Sale, Unrealized Losses	(340)	(3,441)
Available-for-Sale securities, Fair Value	969,475	940,429	$ 792,666
Held-to-Maturity, Amortized Cost	261,773	305,228
Held-to-Maturity, Unrealized Gains	13,602	6,208
Held-to-Maturity, Unrealized Losses		(2,101)
Investment securities - held-to-maturity, fair value	275,375	309,335
Pooled Trust Preferred Securities [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	13,825	13,861
Available-for-Sale, Unrealized Losses	(6,130)	(5,366)
Available-for-Sale securities, Fair Value	7,695	8,495
Other Securities [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	305,591	337,435
Available-for-Sale, Unrealized Gains	7,560	486
Available-for-Sale, Unrealized Losses	(1,120)	(6,176)
Available-for-Sale securities, Fair Value	$ 312,031	$ 331,745

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Federal Home Loan Bank Advances - Additional Information (Detail)	Sep. 30, 2019	Dec. 31, 2018
Federal Home Loan Bank, Advances [Line Items]
Weighted-average rates of FHLB advances	2.19%	2.56%
Federal Home Loan Bank Advances [Member]
Federal Home Loan Bank, Advances [Line Items]
Percentage of borrowings collateralized by investment securities and residential real estate loans	140.00%

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Fair Value (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which we have elected the fair value option, are summarized below:

			Fair Value Measurements at September 30, 2019 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Equity securities	$	6,562	$	6,562	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury		5,494		5,494		—		—
U.S. government-sponsored entities and agencies		486,104		—		486,104		—
Mortgage-backed securities - Agency		3,136,180		—		3,136,180		—
States and political subdivisions		969,475		—		969,435		40
Pooled trust preferred securities		7,695		—		—		7,695
Other securities		312,031		31,317		280,714		—
Residential loans held for sale		58,285		—		58,285		—
Derivative assets		70,346		—		70,346		—
Financial Liabilities
Derivative liabilities		15,484		—		15,484		—

			Fair Value Measurements at December 31, 2018 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Equity securities	$	5,582	$	5,582	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury		5,301		5,301		—		—
U.S. government-sponsored entities and agencies		628,151		—		628,151		—
Mortgage-backed securities - Agency		2,209,295		—		2,209,295		—
States and political subdivisions		940,429		—		936,321		4,108
Pooled trust preferred securities		8,495		—		—		8,495
Other securities		331,745		30,259		301,486		—
Residential loans held for sale		14,911		—		14,911		—
Derivative assets		29,005		—		29,005		—
Financial Liabilities
Derivative liabilities		12,550		—		12,550		—

Reconciliation of All Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

	Pooled Trust			States and
	Preferred			Political
(dollars in thousands)	Securities			Subdivisions
Three Months Ended September 30, 2019
Balance at beginning of period	$	7,836		$	40
Accretion of discount		3			—
Sales/payments received		(14	)		—
Increase (decrease) in fair value of securities		(130	)		—
Balance at end of period	$	7,695		$	40
Three Months Ended September 30, 2018
Balance at beginning of period	$	8,205		$	4,028
Accretion (amortization) of discount		3			(19	)
Sales/payments received		(17	)		—
Increase (decrease) in fair value of securities		881			(30	)
Balance at end of period	$	9,072		$	3,979
Nine Months Ended September 30, 2019
Balance at beginning of period	$	8,495		$	4,108
Accretion of discount		9			—
Sales/payments received		(46	)		(35	)
Increase (decrease) in fair value of securities		(763	)		—
Transfers out of Level 3		—			(4,033	)
Balance at end of period	$	7,695		$	40
Nine Months Ended September 30, 2018
Balance at beginning of period	$	8,448		$	—
Accretion (amortization) of discount		13			(37	)
Sales/payments received		(322	)		—
Increase (decrease) in fair value of securities		933			(45	)
Transfers into Level 3		—			4,061
Balance at end of period	$	9,072		$	3,979

Quantitative Information about Significant Unobservable Inputs Used in Fair Value Measurements

The table below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy:

			Valuation	Unobservable	Range (Weighted
(dollars in thousands)	Fair Value		Techniques	Input	Average)
September 30, 2019
Pooled trust preferred securities	$	7,695	Discounted cash flow	Constant prepayment rate (a)	0.00%
				Additional asset defaults (b)	6.3% - 9.2% (7.2%)
				Expected asset recoveries (c)	0.00%
State and political subdivisions		40	Discounted cash flow	No observable inputs	N/A
				Local municipality issuance
				Old National owns 100%
				Carried at par
December 31, 2018
Pooled trust preferred securities	$	8,495	Discounted cash flow	Constant prepayment rate (a)	0.00%
				Additional asset defaults (b)	6.8% - 8.5% (7.3%)
				Expected asset recoveries (c)	0.00%
State and political subdivisions		4,108	Discounted cash flow	No observable inputs	N/A
				Local municipality issuance
				Old National owns 100%
				Carried at par

(a) Assuming no prepayments.

(b) Each currently performing pool asset is assigned a default probability based on the banking environment, which is adjusted for specific issuer evaluation, of 0%, 50%, or 100%.

(c) Each currently defaulted pool asset is assigned a recovery probability based on specific issuer evaluation of 0%, 25%, or 100%.

The table below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy:

			Valuation	Unobservable	Range (Weighted
(dollars in thousands)	Fair Value		Techniques	Input	Average)
September 30, 2019
Collateral Dependent Impaired    Loans
Commercial loans	$	13,261	Fair value of	Discount for type of property,	0% - 90% (31%)
			collateral	age of appraisal, and current
				status
Commercial real estate loans		15,241	Fair value of	Discount for type of property,	35% - 45% (40%)
			collateral	age of appraisal and current
				status
December 31, 2018
Collateral Dependent Impaired    Loans
Commercial loans	$	7,242	Fair value of	Discount for type of property,	0% - 90% (35%)
			collateral	age of appraisal, and current
				status
Commercial real estate loans		29,125	Fair value of	Discount for type of property,	0% - 50% (35%)
			collateral	age of appraisal and current
				status
Foreclosed Assets
Residential		68	Fair value of	Discount for type of property,	15% - 16% (15%)
			collateral	age of appraisal, and current status

Assets Measured at Fair Value on a Non-Recurring Basis

Assets measured at fair value on a non-recurring basis at September 30, 2019 are summarized below:

			Fair Value Measurements at September 30, 2019 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Impaired Loans:
Commercial loans	$	13,261	$	—	$	—	$	13,261
Commercial real estate loans		15,241		—		—		15,241
Loan servicing rights		4,621		—		4,621		—

Assets measured at fair value on a non-recurring basis at December 31, 2018 are summarized below:

			Fair Value Measurements at December 31, 2018 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Impaired Loans:
Commercial loans	$	7,242	$	—	$	—	$	7,242
Commercial real estate loans		29,125		—		—		29,125
Foreclosed Assets:
Residential		68		—		—		68
Loan servicing rights		104		—		104		—

Schedule of Difference Between the Aggregate Fair Value and the Aggregate Remaining Principal Balance

The difference between the aggregate fair value and the aggregate remaining principal balance for loans for which the fair value option has been elected at September 30, 2019 and December 31, 2018 was as follows:

	Aggregate				Contractual
(dollars in thousands)	Fair Value		Difference		Principal
September 30, 2019
Residential loans held for sale	$	58,285	$	1,799	$	56,486
December 31, 2018
Residential loans held for sale	$	14,911	$	475	$	14,436

The following table presents the amount of gains and losses from fair value changes included in income before income taxes for financial assets carried at fair value:

									Total Changes
									in Fair Values
	Other								Included in
	Gains and			Interest		Interest			Current Period
(dollars in thousands)	(Losses)			Income		(Expense)			Earnings
Three Months Ended September 30, 2019
Residential loans held for sale	$	137		$	2	$	—		$	139
Three Months Ended September 30, 2018
Residential loans held for sale	$	(368	)	$	3	$	—		$	(365	)
Nine Months Ended September 30, 2019
Residential loans held for sale	$	1,312		$	12	$	—		$	1,324
Nine Months Ended September 30, 2018
Residential loans held for sale	$	54		$	6	$	(4	)	$	56

Carrying Amounts and Estimated Fair Values of Financial Instruments, Not Carried at Fair Value

The carrying amounts and estimated fair values of financial instruments not carried at fair value at September 30, 2019 and December 31, 2018 were as follows:

			Fair Value Measurements at September 30, 2019 Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash, due from banks, money market,    and other interest-earning investments	$	420,250	$	420,250	$	—	$	—
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies		33,321		—		34,446		—
Mortgage-backed securities - Agency		112,187		—		115,767		—
State and political subdivisions		261,773		—		275,375		—
Loans, net:
Commercial		2,928,430		—		—		2,882,142
Commercial real estate		5,087,869		—		—		5,046,715
Residential real estate		2,234,260		—		—		2,246,971
Consumer credit		1,710,179		—		—		1,671,597
Accrued interest receivable		80,747		34		24,183		56,530
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits	$	3,996,264	$	3,996,264	$	—	$	—
Checking, NOW, savings, and money market    interest-bearing deposits		8,622,025		8,622,025		—		—
Time deposits		1,830,063		—		1,842,750		—
Federal funds purchased and interbank borrowings		240,589		240,589		—		—
Securities sold under agreements to repurchase		337,551		337,551		—		—
FHLB advances		2,001,960		—		2,007,228		—
Other borrowings		251,763		—		262,921		—
Accrued interest payable		7,107		—		7,107		—
Standby letters of credit		573		—		—		573
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	5,925

			Fair Value Measurements at December 31, 2018 Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash, due from banks, money market,    and other interest-earning investments	$	317,165	$	317,165	$	—	$	—
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies		73,986		—		72,359		—
Mortgage-backed securities - Agency		127,120		—		124,409		—
State and political subdivisions		305,228		—		309,335		—
Loans, net:
Commercial		3,211,228		—		—		3,161,132
Commercial real estate		4,935,381		—		—		4,781,294
Residential real estate		2,246,127		—		—		2,225,853
Consumer credit		1,795,695		—		—		1,773,352
Accrued interest receivable		89,464		13		27,580		61,871
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits	$	3,965,380	$	3,965,380	$	—	$	—
Checking, NOW, savings, and money market    interest-bearing deposits		8,360,313		8,360,313		—		—
Time deposits		2,024,256		—		2,002,187		—
Federal funds purchased and interbank borrowings		270,135		270,135		—		—
Securities sold under agreements to repurchase		362,294		362,294		—		—
FHLB advances		1,613,481		—		1,611,103		—
Other borrowings		247,883		—		248,065		—
Accrued interest payable		9,871		—		9,871		—
Standby letters of credit		525		—		—		525
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	3,115

XML

Acquisition and Divestiture Activity - Summary of Fair Values of Acquired Assets, Liabilities Assumed and Resulting Goodwill (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018	Nov. 01, 2018	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Goodwill	$ 1,036,994	$ 1,036,258	$ 1,036,258		$ 828,804	$ 828,804	$ 828,051
KleinBank [Member] | Minnesota [Member]
Business Acquisition [Line Items]
Cash and cash equivalents				$ 60,759
Investment securities				697,951
FHLB/Federal Reserve Bank stock				2,637
Loans held for sale				3,371
Loans				1,049,073
Premises and equipment				32,408
Accrued interest receivable				7,896
Company-owned life insurance				36,380
Net deferred tax assets				6,746
Other real estate owned				954
Other assets				10,299
Deposits				(1,713,086)
Securities sold under agreements to repurchase				(19,481)
Accrued expenses and other liabilities				(17,506)
Net tangible assets acquired				158,401
Definite-lived intangible assets acquired				39,017
Loan servicing rights				285
Goodwill				208,771
Total consideration				$ 406,474

XML

Derivative Financial Instruments - Schedule of Effect of Derivative Instruments on the Consolidated Statements of Income (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) Recognized in Other Comprehensive Income on Derivative	$ (73)	$ 725	$ 479	$ 6,804
Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivative	994	(46)	2,693	441
Interest Rate Contracts [Member] | Interest Income / (Expense) [Member] | Fair Value Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivative	12	(2,786)	12,925	(4,450)
Interest Rate Contracts [Member] | Interest Income / (Expense) [Member] | Cash Flow Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) Recognized in Other Comprehensive Income on Derivative	(73)	725	479	6,804
Gain (Loss) Reclassified from AOCI into Income	21	226	412	(553)
Interest Rate Contracts [Member] | Other Income / (Expense) [Member] | Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivative	(116)	(23)	(247)	4
Fixed Rate Debt [Member] | Interest Income / (Expense) [Member] | Fair Value Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income on Related Hedged Items	(14)	2,778	(12,914)	4,433
Mortgage Contracts [Member] | Mortgage banking revenue [Member] | Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivative	$ 1,110	(43)	2,951	394
Foreign Currency Contracts [Member] | Other Income / (Expense) [Member] | Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivative		$ 20	$ (11)	$ 43

XML

Derivative Financial Instruments - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2019	Dec. 31, 2018
Derivative [Line Items]
Notional amount	$ 567,000,000.0		$ 567,000,000.0			$ 1,482,000,000
Percentage of periodic changes in fair value qualifies for hedge accounting treatment	100.00%		100.00%
Reclassified interest income (expense)	$ 153,096,000	$ 130,842,000	$ 455,374,000	$ 391,377,000
Derivative Instruments in Hedges, Assets, at Fair Value						0
Reclassifications out of Accumulated Other Comprehensive Income (Loss) [Member] | Interest Income [Member]
Derivative [Line Items]
Reclassified interest income (expense)			1,000,000.0
Reclassifications out of Accumulated Other Comprehensive Income (Loss) [Member] | Interest Expense [Member]
Derivative [Line Items]
Reclassified interest income (expense)			(700,000)
Fixed Interest Swap [Member]
Derivative [Line Items]
Notional amount	32,000,000.0		32,000,000.0			757,000,000.0
Variable Interest Rate Swap [Member]
Derivative [Line Items]
Notional amount	25,000,000.0		25,000,000.0		$ 25,000,000	525,000,000.0
Variable Interest Rate Collars and Floors [Member]
Derivative [Line Items]
Notional amount	510,000,000.0		510,000,000.0
Variable Interest Rate Collar [Member]
Derivative [Line Items]
Notional amount						200,000,000.0
Interest Rate Lock Commitments [Member]
Derivative [Line Items]
Notional amount	147,700,000		147,700,000			27,600,000
Forward Commitments [Member]
Derivative [Line Items]
Notional amount	192,400,000		192,400,000			34,500,000
Customer Derivative Instrument [Member]
Derivative [Line Items]
Notional amount	1,208,000,000		1,208,000,000			793,400,000
Offsetting Counter Party Derivative Instrument [Member]
Derivative [Line Items]
Notional amount	1,208,000,000		1,208,000,000			793,400,000
Offsetting Counter Party Derivative Instrument [Member] | Foreign Currency Contracts [Member]
Derivative [Line Items]
Notional amount	3,200,000		3,200,000			3,600,000
Foreign Currency Forward Contract [Member] | Foreign Currency Contracts [Member]
Derivative [Line Items]
Notional amount	$ 3,200,000		$ 3,200,000			$ 3,600,000

XML

Loans and Allowance for Credit Losses - Schedule of Past Due Loans (Parenthetical) (Detail) - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
Receivables [Abstract]
Purchased credit impaired loans	$ 11.0	$ 20.5

XML

Premises and Equipment - Summary of Premises and Equipment (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Property, Plant and Equipment [Line Items]
Total	$ 612,969	$ 594,483
Accumulated depreciation	(120,904)	(108,571)
Premises and equipment, net	492,065	485,912	$ 450,253
Land [Member]
Property, Plant and Equipment [Line Items]
Total	79,967	79,231
Buildings [Member]
Property, Plant and Equipment [Line Items]
Total	381,028	365,102
Furniture, Fixtures, and Equipment [Member]
Property, Plant and Equipment [Line Items]
Total	107,526	107,862
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Total	$ 44,448	$ 42,288

XML

Commitments and Contingencies - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2019 USD ($) shares	Dec. 31, 2018 USD ($)
Loss Contingencies [Line Items]
Loan commitments	$ 2,891,000,000	$ 3,566,000,000
Fixed rate loan commitment	2,650,000,000
Floating rate loan commitment	241,200,000
Standby letters of credit	$ 93,300,000	319,000,000.0
Loan commitments floating rate, minimum	1.00%
Loan commitments floating rate, maximum	15.00%
Allowance for unfunded loan commitments	$ 2,300,000	2,500,000
Extended credit	9,800,000	15,500,000
Credit extensions with collateral	$ 7,700,000	$ 7,800,000
Class B Restricted Shares [Member] | Visa [Member]
Loss Contingencies [Line Items]
Restricted stock conversion ratio	1.6228
Investment owned, balance, shares | shares	65,466
Investment owned, at cost	$ 0

XML

Loans and Allowance for Loan Losses - Schedule of Receivables for which Contractually Required Payments would not be Collected (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2018
KleinBank [Member] | Minnesota [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Effective date of acquisition	Nov. 01, 2018

XML

Loans and Allowance for Loan Losses - Schedule of Recorded Investment in Residential and Consumer Loans Based on Payment Activity (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Performing	$ 11,853,179	$ 12,037,323
Total loans and leases outstanding	12,017,648	12,243,892	$ 11,292,659
Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans and leases outstanding	2,236,623	2,248,404	$ 2,166,203
Residential Real Estate [Member] | Performing Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Performing	2,215,864	2,223,450
Residential Real Estate [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Nonperforming	20,759	24,954
Consumer Home Equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans and leases outstanding	555,905	589,322
Consumer Home Equity [Member] | Performing Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Performing	551,129	586,235
Consumer Home Equity [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Nonperforming	4,776	3,087
Consumer Auto [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans and leases outstanding	1,005,535	1,059,633
Consumer Auto [Member] | Performing Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Performing	1,002,091	1,057,038
Consumer Auto [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Nonperforming	3,444	2,595
Consumer - Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans and leases outstanding	156,903	154,712
Consumer - Other [Member] | Performing Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Performing	155,707	153,113
Consumer - Other [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Nonperforming	$ 1,196	$ 1,599

XML

Investment Securities

9 Months Ended

Sep. 30, 2019

Investments Debt And Equity Securities [Abstract]

Investment Securities

NOTE 5 – INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair value of the available-for-sale and held-to-maturity investment securities portfolio at September 30, 2019 and December 31, 2018 and the corresponding amounts of unrealized gains and losses therein:

	Amortized		Unrealized		Unrealized			Fair
(dollars in thousands)	Cost		Gains		Losses			Value
September 30, 2019
Available-for-Sale
U.S. Treasury	$	5,363	$	133	$	(2	)	$	5,494
U.S. government-sponsored entities and agencies		484,226		1,913		(35	)		486,104
Mortgage-backed securities - Agency		3,092,991		49,135		(5,946	)		3,136,180
States and political subdivisions		932,589		37,226		(340	)		969,475
Pooled trust preferred securities		13,825		—		(6,130	)		7,695
Other securities		305,591		7,560		(1,120	)		312,031
Total available-for-sale securities	$	4,834,585	$	95,967	$	(13,573	)	$	4,916,979

Held-to-Maturity
U.S. government-sponsored entities and agencies	$	33,321	$	1,125	$	—	$	34,446
Mortgage-backed securities - Agency		112,187		3,580		—		115,767
States and political subdivisions		261,773		13,602		—		275,375
Total held-to-maturity securities	$	407,281	$	18,307	$	—	$	425,588

December 31, 2018
Available-for-Sale
U.S. Treasury	$	5,332	$	—	$	(31	)	$	5,301
U.S. government-sponsored entities and agencies		639,458		35		(11,342	)		628,151
Mortgage-backed securities - Agency		2,243,774		9,738		(44,217	)		2,209,295
States and political subdivisions		932,757		11,113		(3,441	)		940,429
Pooled trust preferred securities		13,861		—		(5,366	)		8,495
Other securities		337,435		486		(6,176	)		331,745
Total available-for-sale securities	$	4,172,617	$	21,372	$	(70,573	)	$	4,123,416

Held-to-Maturity
U.S. government-sponsored entities and agencies	$	73,986	$	—	$	(1,627	)	$	72,359
Mortgage-backed securities - Agency		127,120		39		(2,750	)		124,409
States and political subdivisions		305,228		6,208		(2,101	)		309,335
Total held-to-maturity securities	$	506,334	$	6,247	$	(6,478	)	$	506,103

Proceeds from sales or calls of available-for-sale investment securities and the resulting realized gains and realized losses were as follows for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)		2019			2018			2019			2018
Proceeds from sales of available-for-sale debt securities	$	27,983		$	5,327		$	295,615		$	136,648
Proceeds from calls of available-for-sale debt securities		316,361			2,938			378,476			31,585
Total	$	344,344		$	8,265		$	674,091		$	168,233
Realized gains on sales of available-for-sale debt securities	$	340		$	—		$	3,443		$	3,259
Realized gains on calls of available-for-sale debt securities		86			—			89			284
Realized losses on sales of available-for-sale debt securities		(2	)		(74	)		(2,017	)		(1,379	)
Realized losses on calls of available-for-sale debt securities		—			(7	)		(29	)		(60	)
Other securities gains (losses) (1)		—			216			—			313
Net debt securities gains (losses)	$	424		$	135		$	1,486		$	2,417

(1) For the three and nine months ended September 30, 2018, other securities gains (losses) included realized gains and losses of equity securities previously classified as trading securities.  For the three and nine months ended September 30, 2019, gains (losses) on equity securities are included in other income.

(1

All of the mortgage-backed securities in the investment portfolio are residential mortgage-backed securities.  The amortized cost and fair value of the investment securities portfolio are shown by contractual maturity.  Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  Weighted average yield is based on amortized cost.

	At September 30, 2019
(dollars in thousands)					Weighted
	Amortized		Fair		Average
Maturity	Cost		Value		Yield
Available-for-Sale
Within one year	$	155,063	$	154,941		2.47	%
One to five years		2,900,031		2,941,365		2.78
Five to ten years		767,785		787,301		3.17
Beyond ten years		1,011,706		1,033,372		3.23
Total	$	4,834,585	$	4,916,979		2.93	%
Held-to-Maturity
Within one year	$	3,621	$	3,644		3.66	%
One to five years		108,113		111,340		3.28
Five to ten years		106,591		111,513		3.96
Beyond ten years		188,956		199,091		4.22
Total	$	407,281	$	425,588		3.90	%

The following table summarizes the available-for-sale investment securities with unrealized losses at September 30, 2019 and December 31, 2018 by aggregated major security type and length of time in a continuous unrealized loss position:

	Less than 12 months					12 months or longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
September 30, 2019
Available-for-Sale
U.S. Treasury	$	—	$	—		$	1,494	$	(2	)	$	1,494	$	(2	)
U.S. government-sponsored entities    and agencies		50,979		(20	)		5,322		(15	)		56,301		(35	)
Mortgage-backed securities - Agency		484,912		(2,806	)		295,934		(3,140	)		780,846		(5,946	)
States and political subdivisions		66,516		(278	)		8,192		(62	)		74,708		(340	)
Pooled trust preferred securities		—		—			7,695		(6,130	)		7,695		(6,130	)
Other securities		21,626		(25	)		95,483		(1,095	)		117,109		(1,120	)
Total available-for-sale	$	624,033	$	(3,129	)	$	414,120	$	(10,444	)	$	1,038,153	$	(13,573	)
December 31, 2018
Available-for-Sale
U.S. Treasury	$	3,829	$	(12	)	$	1,472	$	(19	)	$	5,301	$	(31	)
U.S. government-sponsored entities    and agencies		54,701		(594	)		519,911		(10,748	)		574,612		(11,342	)
Mortgage-backed securities - Agency		82,289		(742	)		1,172,984		(43,475	)		1,255,273		(44,217	)
States and political subdivisions		99,162		(1,340	)		151,097		(2,101	)		250,259		(3,441	)
Pooled trust preferred securities		—		—			8,495		(5,366	)		8,495		(5,366	)
Other securities		94,607		(1,965	)		143,842		(4,211	)		238,449		(6,176	)
Total available-for-sale	$	334,588	$	(4,653	)	$	1,997,801	$	(65,920	)	$	2,332,389	$	(70,573	)

The following table summarizes the held-to-maturity investment securities with unrecognized losses at September 30, 2019 and December 31, 2018 by aggregated major security type and length of time in a continuous unrecognized loss position:

	Less than 12 months					12 months or longer					Total
	Fair		Unrecognized			Fair		Unrecognized			Fair		Unrecognized
(dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
September 30, 2019
Held-to-Maturity
U.S. government-sponsored entities    and agencies	$	—	$	—		$	—	$	—		$	—	$	—
Mortgage-backed securities - Agency		—		—			—		—			—		—
States and political subdivisions		—		—			—		—			—		—
Total held-to-maturity	$	—	$	—		$	—	$	—		$	—	$	—
December 31, 2018
Held-to-Maturity
U.S. government-sponsored entities    and agencies	$	—	$	—		$	72,359	$	(4,642	)	$	72,359	$	(4,642	)
Mortgage-backed securities - Agency		4,335		(24	)		119,207		(8,006	)		123,542		(8,030	)
States and political subdivisions		24,533		(983	)		70,022		(3,556	)		94,555		(4,539	)
Total held-to-maturity	$	28,868	$	(1,007	)	$	261,588	$	(16,204	)	$	290,456	$	(17,211	)

The unrecognized losses on held-to-maturity investment securities presented in the table above include unrecognized losses on securities that were transferred from available-for-sale to held-to-maturity totaling $10.7 million at December 31, 2018.  All transferred held-to-maturity investment securities were in an unrealized gain position at September 30, 2019.  The remaining unamortized loss on securities transferred from available-for-sale to held-to-maturity totaled $9.4 million at September 30, 2019.

Management evaluates debt securities for OTTI at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.  Management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery.  The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When OTTI occurs, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss.  If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date.  Otherwise, the OTTI shall be separated into the amount representing the credit loss and the amount related to all other factors.  The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings.  The amount of the total OTTI related to other factors shall be recognized in other comprehensive income, net of applicable taxes.  The previous amortized cost basis less the OTTI recognized in earnings shall become the new amortized cost basis of the investment.

There was no OTTI recorded during the nine months ended September 30, 2019 or 2018.

At September 30, 2019, Old National’s securities portfolio consisted of 1,937 securities, 256 of which were in an unrealized loss position.  The unrealized losses attributable to our U.S. Treasury, U.S. government-sponsored entities and agencies, agency mortgage-backed securities, states and political subdivisions, and other securities are the result of fluctuations in interest rates.  Our pooled trust preferred securities are discussed below.  At September 30, 2019, we had no intent to sell any securities that were in an unrealized loss position nor is it expected that we would be required to sell the securities prior to their anticipated recovery.

Pooled Trust Preferred Securities

At September 30, 2019, our securities portfolio contained two pooled trust preferred securities with a fair value of $7.7 million and unrealized losses of $6.1 million.  These securities are evaluated using collateral-specific assumptions to estimate the expected future interest and principal cash flows.  For the nine months ended September 30, 2019 and 2018, our analysis indicated no OTTI on these securities.

The table below summarizes the relevant characteristics of our pooled trust preferred securities as well as our single issuer trust preferred securities that are included in the “other securities” category in this footnote.  Each of the pooled trust preferred securities support a more senior tranche of security holders.  Both pooled trust preferred securities have experienced credit defaults.  However, these securities have excess subordination and are not other-than-temporarily impaired as a result of their class hierarchy, which provides more loss protection.

Trust preferred securities													Actual	Expected	Excess
September 30, 2019													Deferrals	Defaults as	Subordination
(dollars in thousands)												# of Issuers	and Defaults	a % of	as a % of
		Lowest					Unrealized			Realized		Currently	as a % of	Remaining	Current
		Credit	Amortized		Fair		Gain/			Losses		Performing/	Original	Performing	Performing
	Class	Rating (1)	Cost		Value		(Loss)			2019		Remaining	Collateral	Collateral	Collateral
Pooled trust preferred securities:
Pretsl XXVII LTD	B	B	$	4,303	$	2,135	$	(2,168	)	$	—	32/41	14.6%	11.3%	26.7%
Trapeza Ser 13A	A2A	BBB		9,522		5,560		(3,962	)		—	42/47	4.5%	6.7%	49.6%
				13,825		7,695		(6,130	)		—
Single Issuer trust preferred securities:
JP Morgan Chase & Co		BBB-		4,795		4,325		(470	)		—
Total			$	18,620	$	12,020	$	(6,600	)	$	—

(1)Lowest rating for the security provided by any nationally recognized credit rating agency.

Equity Securities

Equity securities are recorded at fair value and totaled $6.6 million at September 30, 2019 and $5.6 million at December 31, 2018.  There were gains on equity securities of $0.2 million during the three months ended September

30, 2019 and $0.4 million during the nine months ended September 30, 2019, compared to gains of $0.2 million during the three months ended September 30, 2018 and $0.3 million during the nine months ended September 30, 2018.  Old National also has equity securities without readily determinable fair values that are included in other assets that totaled $93.3 million at September 30, 2019 and $79.2 million at December 31, 2018.  These are illiquid investments that consist of partnerships, limited liability companies, and other ownership interests that support affordable housing, economic development, and community revitalization initiatives in low-to-moderate income neighborhoods.  There have been no impairments or downward adjustments on these securities in the nine months ended September 30, 2019 or 2018.

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Premises and Equipment

9 Months Ended

Sep. 30, 2019

Property Plant And Equipment [Abstract]

Premises and Equipment

NOTE 9 – PREMISES AND EQUIPMENT

The composition of premises and equipment at September 30, 2019 and December 31, 2018 was as follows:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Land	$	79,967		$	79,231
Buildings		381,028			365,102
Furniture, fixtures, and equipment		107,526			107,862
Leasehold improvements		44,448			42,288
Total		612,969			594,483
Accumulated depreciation		(120,904	)		(108,571	)
Premises and equipment, net	$	492,065		$	485,912

Depreciation expense was $6.8 million for the three months ended September 30, 2019 and $20.0 million for the nine months ended September 30, 2019, compared to $5.9 million for the three months ended September 30, 2018 and $17.7 million for the nine months ended September 30, 2018.

Finance Leases

Old National leases certain branch buildings under finance leases that are included in premises and equipment.  See Notes 10 and 16 to the consolidated financial statements for detail regarding these leases.

XML

Fair Value - Carrying Amounts and Estimated Fair Values of Financial Instruments, Not Carried at Fair Value (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash, due from banks, money market, and other interest-earning investments	$ 420,250	$ 317,165	$ 286,761
Investment securities held to maturity	407,281	506,334	512,207
Loans, net	12,017,648	12,243,892	11,292,659
Accrued interest receivable	80,747	89,464	78,493
Noninterest-bearing demand deposits	3,996,264	3,965,380	3,588,370
Time deposits	1,830,063	2,024,256	1,892,135
Federal funds purchased and interbank borrowings	240,589	270,135	450,031
Securities sold under agreements to repurchase	337,551	362,294	319,831
Federal Home Loan Bank advances	2,001,960	1,613,481	1,554,515
Other borrowings	251,763	247,883	251,662
Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities held to maturity	112,187	127,120
States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities held to maturity	261,773	305,228
Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans, net	5,112,123	4,958,851	4,481,554
Consumer Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans, net	1,718,343	1,803,667	1,695,625
Commercial Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans, net	2,950,559	3,232,970	2,949,277
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash, due from banks, money market, and other interest-earning investments	420,250	317,165
Accrued interest receivable	34	13
Noninterest-bearing demand deposits	3,996,264	3,965,380
Checking, NOW, savings, and money market interest-bearing deposits	8,622,025	8,360,313
Federal funds purchased and interbank borrowings	240,589	270,135
Securities sold under agreements to repurchase	337,551	362,294
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Accrued interest receivable	24,183	27,580
Time deposits	1,842,750	2,002,187
Federal Home Loan Bank advances	2,007,228	1,611,103
Other borrowings	262,921	248,065
Accrued interest payable	7,107	9,871
Significant Other Observable Inputs (Level 2) [Member] | U.S. Government-Sponsored Entities and Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities held to maturity	34,446	72,359
Significant Other Observable Inputs (Level 2) [Member] | Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities held to maturity	115,767	124,409
Significant Other Observable Inputs (Level 2) [Member] | States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities held to maturity	275,375	309,335
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Accrued interest receivable	56,530	61,871
Standby letters of credit	573	525
Commitments to extend credit	5,925	3,115
Significant Unobservable Inputs (Level 3) [Member] | Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans, net	5,046,715	4,781,294
Significant Unobservable Inputs (Level 3) [Member] | Consumer Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans, net	1,671,597	1,773,352
Significant Unobservable Inputs (Level 3) [Member] | Commercial Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans, net	2,882,142	3,161,132
Residential Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans, net	2,236,623	2,248,404	$ 2,166,203
Residential Real Estate [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans, net	2,246,971	2,225,853
Carrying Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash, due from banks, money market, and other interest-earning investments	420,250	317,165
Accrued interest receivable	80,747	89,464
Noninterest-bearing demand deposits	3,996,264	3,965,380
Checking, NOW, savings, and money market interest-bearing deposits	8,622,025	8,360,313
Time deposits	1,830,063	2,024,256
Federal funds purchased and interbank borrowings	240,589	270,135
Securities sold under agreements to repurchase	337,551	362,294
Federal Home Loan Bank advances	2,001,960	1,613,481
Other borrowings	251,763	247,883
Accrued interest payable	7,107	9,871
Standby letters of credit	573	525
Carrying Value [Member] | U.S. Government-Sponsored Entities and Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities held to maturity	33,321	73,986
Carrying Value [Member] | Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities held to maturity	112,187	127,120
Carrying Value [Member] | States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities held to maturity	261,773	305,228
Carrying Value [Member] | Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans, net	5,087,869	4,935,381
Carrying Value [Member] | Consumer Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans, net	1,710,179	1,795,695
Carrying Value [Member] | Commercial Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans, net	2,928,430	3,211,228
Carrying Value [Member] | Residential Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans, net	$ 2,234,260	$ 2,246,127

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of Old National Bancorp and its wholly-owned affiliates (hereinafter collectively referred to as “Old National”) and have been prepared in conformity with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry.  Such principles require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosures of contingent assets and liabilities at the date of the financial statements and amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  In the opinion of management, the consolidated financial statements contain all the normal and recurring adjustments necessary for a fair statement of the financial position of Old National as of September 30, 2019 and 2018, and December 31, 2018, and the results of its operations for the three and nine months ended September 30, 2019 and 2018.  Interim results do not necessarily represent annual results.  These financial statements should be read in conjunction with Old National’s Annual Report for the year ended December 31, 2018.

All significant intercompany transactions and balances have been eliminated.  Certain prior year amounts have been reclassified to conform to the current presentation.  Such reclassifications had no effect on prior period net income or shareholders’ equity and were insignificant amounts.

Recent Accounting Pronouncements

Accounting Guidance Adopted in 2019

FASB ASC 842 – In February 2016, the FASB issued its new lease accounting guidance in ASU No. 2016-02, Leases (Topic 842).  Under the new guidance, lessees will be required to recognize the following for all leases, with the exception of short-term leases, at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.  Under the new guidance, lessor accounting is largely unchanged.

In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements.  ASU No. 2018-10 provides improvements related to ASU No. 2016-02 to increase stakeholders’ awareness of the amendments and to expedite the improvements.  The amendments affect narrow aspects of the guidance issued in ASU No. 2016-02.  ASU No. 2018-11 allows entities adopting ASU No. 2016-02 to choose an additional (and optional) transition method, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.  ASU No. 2018-11 also allows lessors to not separate non-lease components from the associated lease component if certain conditions are met.  The amendments in these updates became effective for annual periods and interim periods within those annual periods beginning after December 15, 2018.

Old National elected the optional transition method permitted by ASU No. 2018-11.  Under this method, an entity shall recognize and measure leases that exist at the application date and prior comparative periods are not adjusted.  In addition, Old National elected the package of practical expedients to leases that commenced before the effective date:

1. An entity need not reassess whether any expired or existing contracts contain leases.

2. An entity need not reassess the lease classification for any expired or existing leases.

3. An entity need not reassess initial direct costs for any existing leases.

Old National also elected the practical expedient, which must be applied consistently to all leases, to use hindsight in determining the lease term and in assessing impairment of our right-of-use assets.  We also elected a practical expedient to not assess whether existing or expired land easements that were not previously accounted for as leases under Topic 840 contain a lease under this Topic.  Both of these practical expedients may be elected separately or in conjunction with each other or the package noted above.

Based on both operating and finance leases outstanding at December 31, 2018, the impact of adoption on January 1, 2019 was recording a lease liability of $122.9 million, a right-of-use asset of $118.7 million, and a cumulative-effect adjustment of $6.3 million to increase retained earnings.

FASB ASC 310 – In March 2017, the FASB issued ASU No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.  This update amends the amortization period for certain purchased callable debt securities held at a premium.  FASB is shortening the amortization period for the premium to the earliest call date.  Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument.  Concerns were raised that current GAAP excludes certain callable debt securities from consideration of early repayment of principal even if the holder is certain that the call will be exercised.  As a result, upon the exercise of a call on a callable debt security held at a premium, the unamortized premium is recorded as a loss in earnings.  There is diversity in practice (1) in the amortization period for premiums of callable debt securities and (2) in how the potential for exercise of a call is factored into current impairment assessments.  The amendments in this update became effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods and did not have a material impact on the consolidated financial statements.

FASB ASC 718 – In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.  The amendments in this update expand the scope of Topic 718, Compensation—Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services.  Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned.  The ASU supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees.  The amendments in this update became effective for annual periods beginning after December 15, 2018, including interim periods within that fiscal year and did not have a material impact on the consolidated financial statements.

FASB ASC 958 – In June 2018, the FASB issued ASU No. 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made.  The amendments in this update clarify and improve the scope and accounting guidance around contributions of cash and other assets received and made by not-for-profit organizations and business enterprises.  The ASU clarifies and improves current guidance about whether a transfer of assets, or the reduction, settlement, or cancellation of liabilities, is a contribution or an exchange transaction.  It provides criteria for determining whether the resource provider is receiving commensurate value in return for the resources transferred which, depending on the outcome, determines whether the organization follows contribution guidance or exchange transaction guidance in the revenue recognition and other applicable standards.  It also provides a more robust framework for determining whether a contribution is conditional or unconditional, and for distinguishing a donor-imposed condition from a donor-imposed restriction.  This is important because such classification affects the timing of contribution revenue and expense recognition.  The new ASU does not apply to transfers of assets from governments to businesses.  The amendments in this update became effective for a public business entity for transactions in which the entity serves as a resource recipient to annual periods beginning after June 15, 2018, including interim periods within those annual periods.  The amendments in this update became effective for a public business entity for transactions in which the entity serves as a resource provider to annual periods beginning after December 15, 2018, including interim periods within those annual periods and there was no impact.

FASB ASC 815 – In October 2018, the FASB issued ASU No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting.  In the United States, eligible benchmark interest rates under Topic 815 are interest rates on direct Treasury obligations of the U.S. government (“UST”), the London Interbank Offered Rate (“LIBOR”) swap rate, and the Overnight Index Swap (“OIS”) Rate based on the Fed Funds Effective Rate. When the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, in August 2017, it introduced the Securities Industry and Financial Markets Association (“SIFMA”) Municipal Swap Rate as the fourth permissible U.S. benchmark rate.

The new ASU adds the OIS rate based on SOFR as a U.S. benchmark interest rate to facilitate the LIBOR to SOFR transition and provide sufficient lead time for entities to prepare for changes to interest rate risk hedging strategies for both risk management and hedge accounting purposes.  The amendments in this update became effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years and the financial statement impact immediately upon adoption was immaterial.  The future financial statement impact will depend on

any new contracts entered into using new benchmark rates, as well as any existing contracts that get migrated from LIBOR to new benchmark interest rates.  The Company has formed a working group who is developing a transition plan for all exposed contracts migrating from LIBOR to SOFR.  The Company has identified contracts that reflect exposure associated with LIBOR-indexed financial instruments that mature beyond 2021 in an aggregate notional amount of $4.8 billion.  Additionally, the working group is monitoring industry specific transition guidance around a LIBOR contract’s “fallback” language with the industry goal to minimize or eliminate value transfers resulting from the transition.  The associated risks identified include dependence on third parties for critical decisions regarding SOFR index calculations, spread adjustments, term rate development, and product development, which may impact the bank’s ability to establish more detailed timelines for action.

Codification Updates to SEC Sections – In July 2019, the FASB issued ASU No. 2019-07, Codification Updates to SEC Sections, which amends certain SEC sections or paragraphs within the Accounting Standards Codification to reflect changes in SEC Final Rule Releases No. 33-10532, “Disclosure Update and Simplification,” and 33-10231 and 33-10442, “Investment Company Reporting Modernization.” Other revisions in ASU No. 2019-07 update language in the codification to match the electronic Code of Federal Regulations.  The amendments became effective upon addition to the FASB Codification and there is no impact on the consolidated financial statements.

Accounting Guidance Issued But Not Yet Adopted

FASB ASC 326 – In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”).  The main objective of this amendment is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.  The amendment requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to enhance their credit loss estimates.  The amendment requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio.  In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.  The current expected credit loss measurement will be used to estimate the allowance for credit losses (“ACL”) over the life of the financial assets.  The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2019.  Early adoption will be permitted beginning after December 15, 2018.

As previously disclosed, Old National formed a cross functional committee to oversee the adoption of the ASU at the effective date. A working group was also formed and has developed a project plan focused on understanding the ASU, researching issues, identifying data needs for modeling inputs, technology requirements, modeling considerations, and ensuring overarching governance has been achieved for each objective and milestone.  Currently, the working group has identified seven distinct loan portfolios for which a model has been developed. For all seven loan portfolios, the data sets have been identified, populated, and internally validated.  Old National has completed data and model validation testing.  During the remainder of 2019, the project plan is targeting multiple parallel processing of our existing allowance for loan losses model compared to the CECL model, as well as model sensitivity analysis, determination of qualitative adjustments, supporting analytics, and execution of the governance and approval process.

Currently, our measurements for estimating the current expected life-time credit losses for loans and debt securities (as well as certain beneficial interests classified as held-to-maturity) includes the following major items:

• Initial forecast – using a period of one year for all portfolio segments and off-balance-sheet credit exposures, using forward-looking economic scenarios of expected losses.

• Historical loss forecast – for a period incorporating the remaining contractual life, adjusted for prepayments, and the changes in various economic variables during representative historical and recessionary periods.

• Reversion period – using two years, which links the initial loss forecast to the historical loss forecast based on economic conditions at the measurement date.

• Discounted cash flow (“DCF”) aggregator – using the items above to estimate the life-time credit losses for all portfolios and losses for loans modified as a TDR.

During the remainder of 2019, Old National will continue researching and resolving interpretive accounting issues in the ASU, evaluating and refining processes and related controls, finalizing various related accounting policies, and reporting disclosures.

As of the beginning of the first reporting period in which the new standard is effective, Old National expects to recognize a one-time cumulative effect adjustment increasing the allowance for loan losses, since the ASU covers credit losses over the expected life of a loan as well as considering future changes in macroeconomic conditions.  Old National currently estimates an increase to the allowance for credit losses of approximately $35 million to $45 million upon adoption, which includes a range of $3 million to $8 million for off-balance sheet exposures.  At this point in time, the vast majority of this increase is related to the acquired loan portfolio.  Under the current accounting guidance, any remaining unamortized loan discount on an individual loan can be used to offset a charge-off for that loan, so the allowance for loan losses needed for the acquired loans is reduced by the remaining loan discounts.  The new accounting under the ASU removes the ability to offset a charge-off against the remaining loan discount and requires an allowance for credit losses to be recognized in addition to the loan discount.  The ultimate impact of adopting the ASU will be highly dependent on credit quality, macroeconomic forecasts and conditions, composition of our loans and securities portfolios, and other management judgements at the time of adoption. The transition adjustment to record the allowance for credit losses may fall outside of management’s estimated increase based on material changes in these dependencies, specifically the macroeconomic forecast and conditions, used in calculating the allowance for credit losses upon the adoption of CECL.

Old National does not expect a material allowance for credit losses to be recorded on held-to-maturity securities under the CECL credit impairment model, as the composition of these securities are government agency-backed securities for which the risk the risk of loss is minimal.  Additionally, Old National does not expect a material allowance for credit losses to be recorded on its available-for-sale debt securities under the available-for-sale debt security impairment model, as the majority of these securities are government agency-backed securities for which the risk of loss is minimal.

In December 2018, the OCC, the Board of Governors of the Federal Reserve System, and the FDIC approved a final rule to address changes to credit loss accounting under GAAP, including banking organizations’ implementation of CECL.  The final rule provides banking organizations the option to phase in over a three-year period the day-one adverse effects on regulatory capital that may result from the adoption of the new accounting standard.  Old National is planning on adopting the capital transition relief over the permissible three-year period.

FASB ASC 350 – In January 2017, the FASB issued ASU No. 2017-04, Intangibles: Goodwill and Other: Simplifying the Test for Goodwill Impairment.  To simplify the subsequent measurement of goodwill, the amendments eliminate Step 2 from the goodwill impairment test.  The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount.  An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.  In addition, the income tax effects of tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable.  The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test.  An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the qualitative impairment test is necessary.  The amendments should be applied on a prospective basis.  The nature of and reason for the change in accounting principle should be disclosed upon transition.  The amendments in this update should be adopted for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.  Early adoption is permitted on testing dates after January 1, 2017.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 820 – In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.  The updated guidance improves the disclosure requirements on fair value measurements.  The ASU removes certain disclosures required by Topic 820 related to transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; the valuation processes for Level 3 fair value measurements; and for nonpublic entities, the changes in unrealized gains and losses for the period included in earnings for recurring Level 3 fair value measurements held at the end of the reporting period.  The ASU modifies certain disclosures required by Topic 820 related to disclosure of transfers into and out of Level 3 of the fair value hierarchy and purchases and

issues of Level 3 assets and liabilities for nonpublic entities; the requirement to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly for investments in certain entities that calculate net asset value; and clarification that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date.  The ASU adds certain disclosure requirements related to changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.  For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.  The amendments in this update become effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2019.  Early adoption is permitted.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 715 – In August 2018, the FASB issued ASU No. 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans.  The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.  The amendments in this update become effective for fiscal years ending after December 15, 2020 and will not have a material impact on the consolidated financial statements.

FASB ASC 350 – In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.  The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.  The amendments in this update become effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.  Early adoption is permitted.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements.

FASB ASC 842 – In March 2019, the FASB issued ASU No. 2019-01, Leases (Topic 842): Codification Improvements.  The amendments in ASU No. 2019-01 align the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in Topic 842 with that of existing guidance.  As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value in Topic 820, Fair Value Measurement should be applied.  ASU No. 2019-01 also requires lessors within the scope of Topic 942, Financial Services—Depository and Lending, to present all “principal payments received under leases” within investing activities.  The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2019.  Early adoption is permitted.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 326, 815, and 825 – In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.  The amendments related to Topic 326 address accrued interest, transfers between classifications or categories for loans and debt securities, recoveries, vintage disclosures, and contractual extensions and renewal options and will become effective for annual periods and interim periods within those annual periods beginning after December 15, 2019.  The improvements and clarifications related to Topic 815 address partial-term fair value hedges of interest-rate risk, amortization, and disclosure of fair value hedge basis adjustments and consideration of hedged contractually specified interest rate under the hypothetical method and will become effective for the annual reporting period beginning January 1, 2020.  The amendments related to Topic 825 contain various improvements to ASU 2016-01, including scope; held-to-maturity debt securities fair value disclosures; and remeasurement of equity securities at historical exchange rates and will become effective for fiscal years and interim periods beginning after December 15, 2019.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 326 – In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief.  These amendments provide targeted transition relief allowing entities to irrevocably elect the fair value option, on an instrument-by-instrument basis, for certain financial assets (excluding held-to-maturity debt securities) previously measured at amortized cost.  The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2019.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

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Financial Guarantees

9 Months Ended

Sep. 30, 2019

Guarantees And Product Warranties [Abstract]

Financial Guarantees

NOTE 22 – FINANCIAL GUARANTEES

Old National holds instruments, in the normal course of business with clients, that are considered financial guarantees in accordance with FASB ASC 460-10 (FIN 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others), which requires Old National to record the instruments at fair value.  Standby letters of credit guarantees are issued in connection with agreements made by clients to counterparties.  Standby letters of credit are contingent upon failure of the client to perform the terms of the underlying contract.  Credit risk associated with standby letters of credit is essentially the same as that associated with extending loans to clients and is subject to normal credit policies.  The term of these standby letters of credit is typically one year or less.  At September 30, 2019, the notional amount of standby letters of credit was $93.3 million, which represented the maximum amount of future funding requirements, and the carrying value was $0.6 million.  At December 31, 2018, the notional amount of standby letters of credit was $319.0 million, which represented the maximum amount of future funding requirements, and the carrying value was $0.5 million.

Old National is a party in risk participation transactions of interest rate swaps, which had total notional amount of $38.5 million at September 30, 2019.

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Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2019

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Schedule of Composition of Loans

The composition of loans by lending classification was as follows:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Commercial (1)	$	2,950,559		$	3,232,970
Commercial real estate:
Construction		592,348			504,625
Other		4,519,775			4,454,226
Residential real estate		2,236,623			2,248,404
Consumer credit:
Home equity		555,905			589,322
Auto		1,005,535			1,059,633
Other		156,903			154,712
Total loans		12,017,648			12,243,892
Allowance for loan losses		(56,910	)		(55,461	)
Net loans	$	11,960,738		$	12,188,431

(1) Includes direct finance leases of $50.0 million at September 30, 2019 and $60.0 million at December 31, 2018.

Schedule of Activity in Allowance for Loan Losses

Old National’s activity in the allowance for loan losses for the three and nine months ended September 30, 2019 and 2018 was as follows:

				Commercial
(dollars in thousands)	Commercial			Real Estate			Residential			Consumer			Total
Three Months Ended September 30, 2019
Balance at beginning of period	$	22,548		$	23,311		$	2,269		$	8,164		$	56,292
Charge-offs		(420	)		(191	)		(384	)		(1,721	)		(2,716	)
Recoveries		374			669			26			828			1,897
Provision		(373	)		465			452			893			1,437
Balance at end of period	$	22,129		$	24,254		$	2,363		$	8,164		$	56,910
Three Months Ended September 30, 2018
Balance at beginning of period	$	21,387		$	22,498		$	1,867		$	7,908		$	53,660
Charge-offs		(1,662	)		(241	)		(284	)		(2,074	)		(4,261	)
Recoveries		467			944			45			1,108			2,564
Provision		(473	)		(309	)		292			1,240			750
Balance at end of period	$	19,719		$	22,892		$	1,920		$	8,182		$	52,713
Nine Months Ended September 30, 2019
Balance at beginning of period	$	21,742		$	23,470		$	2,277		$	7,972		$	55,461
Charge-offs		(1,184	)		(815	)		(702	)		(5,784	)		(8,485	)
Recoveries		1,083			2,444			107			2,817			6,451
Provision		488			(845	)		681			3,159			3,483
Balance at end of period	$	22,129		$	24,254		$	2,363		$	8,164		$	56,910
Nine Months Ended September 30, 2018
Balance at beginning of period	$	19,246		$	21,436		$	1,763		$	7,936		$	50,381
Charge-offs		(2,378	)		(675	)		(941	)		(6,006	)		(10,000	)
Recoveries		1,227			2,011			1,890			3,628			8,756
Provision		1,624			120			(792	)		2,624			3,576
Balance at end of period	$	19,719		$	22,892		$	1,920		$	8,182		$	52,713

Schedule of Recorded Investment in Loans

The following table presents Old National’s recorded investment in loans by portfolio segment at September 30, 2019 and December 31, 2018 and other information regarding the allowance:

			Commercial
(dollars in thousands)	Commercial		Real Estate		Residential		Consumer		Total
September 30, 2019
Allowance for loan losses:
Individually evaluated for impairment	$	7,855	$	4,485	$	—	$	—	$	12,340
Collectively evaluated for impairment		14,273		19,621		2,363		7,968		44,225
Loans acquired with deteriorated    credit quality		1		148		—		196		345
Total allowance for loan losses	$	22,129	$	24,254	$	2,363	$	8,164	$	56,910
Loans and leases outstanding:
Individually evaluated for impairment	$	40,270	$	73,627	$	—	$	—	$	113,897
Collectively evaluated for impairment		2,904,851		5,016,357		2,228,965		1,715,701		11,865,874
Loans acquired with deteriorated    credit quality		5,438		22,139		7,658		2,642		37,877
Total loans and leases outstanding	$	2,950,559	$	5,112,123	$	2,236,623	$	1,718,343	$	12,017,648
December 31, 2018
Allowance for loan losses:
Individually evaluated for impairment	$	6,035	$	8,306	$	—	$	—	$	14,341
Collectively evaluated for impairment		15,700		14,845		2,276		7,821		40,642
Loans acquired with deteriorated    credit quality		7		319		1		151		478
Total allowance for loan losses	$	21,742	$	23,470	$	2,277	$	7,972	$	55,461
Loans and leases outstanding:
Individually evaluated for impairment	$	35,410	$	83,104	$	—	$	—	$	118,514
Collectively evaluated for impairment		3,191,367		4,850,356		2,239,147		1,800,115		12,080,985
Loans acquired with deteriorated    credit quality		6,193		25,391		9,257		3,552		44,393
Total loans and leases outstanding	$	3,232,970	$	4,958,851	$	2,248,404	$	1,803,667	$	12,243,892

Schedule of Risk Category of Commercial and Commercial Real Estate Loans

The risk category of commercial and commercial real estate loans by class of loans at September 30, 2019 and December 31, 2018 was as follows:

(dollars in thousands)					Commercial				Commercial
					Real Estate -				Real Estate -
Corporate Credit Exposure	Commercial				Construction				Other
Credit Risk Profile by	September 30,		December 31,		September 30,		December 31,		September 30,		December 31,
Internally Assigned Grade	2019		2018		2019		2018		2019		2018
Grade:
Pass	$	2,773,941	$	3,029,130	$	553,854	$	460,158	$	4,251,014	$	4,167,902
Criticized		89,079		98,798		24,839		29,368		119,601		110,586
Classified - substandard		49,659		66,394		—		1,275		92,372		102,961
Classified - nonaccrual		30,067		29,003		13,655		13,824		37,972		37,441
Classified - doubtful		7,813		9,645		—		—		18,816		35,336
Total	$	2,950,559	$	3,232,970	$	592,348	$	504,625	$	4,519,775	$	4,454,226

Schedule of Recorded Investment in Residential and Consumer Loans Based on Payment Activity

The following table presents the recorded investment in residential and consumer loans based on payment activity at September 30, 2019 and December 31, 2018:

			Consumer
			Home
(dollars in thousands)	Residential		Equity		Auto		Other
September 30, 2019
Performing	$	2,215,864	$	551,129	$	1,002,091	$	155,707
Nonperforming		20,759		4,776		3,444		1,196
Total	$	2,236,623	$	555,905	$	1,005,535	$	156,903
December 31, 2018
Performing	$	2,223,450	$	586,235	$	1,057,038	$	153,113
Nonperforming		24,954		3,087		2,595		1,599
Total	$	2,248,404	$	589,322	$	1,059,633	$	154,712

Schedule of Impaired Loans

The following table shows Old National’s impaired loans at September 30, 2019 and December 31, 2018, respectively.  Only purchased loans that have experienced subsequent impairment since the date acquired (excluding loans acquired with deteriorated credit quality) are included in the table below.

			Unpaid
	Recorded		Principal		Related
(dollars in thousands)	Investment		Balance		Allowance
September 30, 2019
With no related allowance recorded:
Commercial	$	19,154	$	19,462	$	—
Commercial Real Estate - Construction		10,890		10,890		—
Commercial Real Estate - Other		38,517		39,942		—
Residential		1,783		1,803		—
Consumer		1,137		1,303		—
With an allowance recorded:
Commercial		21,116		21,169		7,855
Commercial Real Estate - Construction		2,764		2,764		1,183
Commercial Real Estate - Other		21,456		21,456		3,302
Residential		990		990		39
Consumer		1,065		1,065		53
Total	$	118,872	$	120,844	$	12,432
December 31, 2018
With no related allowance recorded:
Commercial	$	22,031	$	22,292	$	—
Commercial Real Estate - Other		41,126		41,914		—
Residential		2,276		2,296		—
Consumer		362		535		—
With an allowance recorded:
Commercial		13,379		13,432		6,035
Commercial Real Estate - Construction		13,824		13,824		1,830
Commercial Real Estate - Other		28,154		28,154		6,476
Residential		889		889		44
Consumer		2,013		2,013		101
Total	$	124,054	$	125,349	$	14,486

Schedule of Average Balance of Impaired Loans

The average balance of impaired loans during the three and nine months ended September 30, 2019 and 2018 are included in the table below.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in thousands)		2019		2018		2019		2018
Average Recorded Investment
With no related allowance recorded:
Commercial	$	20,147	$	19,960	$	20,593	$	20,445
Commercial Real Estate - Construction		10,964		—		5,445		—
Commercial Real Estate - Other		34,073		45,302		39,821		42,209
Residential		2,066		2,303		2,145		2,289
Consumer		1,166		1,392		1,096		1,617
With an allowance recorded:
Commercial		19,866		14,771		17,248		10,393
Commercial Real Estate - Construction		2,764		11,307		8,294		7,537
Commercial Real Estate - Other		21,019		24,305		24,806		26,537
Residential		924		863		907		887
Consumer		1,204		1,909		1,260		2,013
Total	$	114,193	$	122,112	$	121,615	$	113,927

Schedule of Past Due Financing Receivables

Old National’s past due loans at September 30, 2019 and December 31, 2018 were as follows:

					Past Due
					90 Days or
	30-59 Days		60-89 Days		More and				Total
(dollars in thousands)	Past Due		Past Due		Accruing		Nonaccrual (1)		Past Due		Current
September 30, 2019
Commercial	$	2,218	$	1,181	$	100	$	37,880	$	41,379	$	2,909,180
Commercial Real Estate:
Construction		—		300		—		13,655		13,955		578,393
Other		549		90		—		56,788		57,427		4,462,348
Residential		8,620		3,546		64		20,759		32,989		2,203,634
Consumer:
Home equity		1,008		118		233		4,776		6,135		549,770
Auto		6,069		769		190		3,444		10,472		995,063
Other		695		105		116		1,196		2,112		154,791
Total loans	$	19,159	$	6,109	$	703	$	138,498	$	164,469	$	11,853,179
December 31, 2018
Commercial	$	3,627	$	279	$	52	$	38,648	$	42,606	$	3,190,364
Commercial Real Estate:
Construction		—		—		—		13,824		13,824		490,801
Other		1,633		500		40		72,777		74,950		4,379,276
Residential		25,947		3,437		258		24,954		54,596		2,193,808
Consumer:
Home equity		1,434		960		456		3,087		5,937		583,385
Auto		7,091		1,903		377		2,595		11,966		1,047,667
Other		711		210		170		1,599		2,690		152,022
Total loans	$	40,443	$	7,289	$	1,353	$	157,484	$	206,569	$	12,037,323

(1) Includes purchased credit impaired loans of $11.0 million at September 30, 2019 and $20.5 million at December 31, 2018 that are categorized as nonaccrual for credit analysis purposes because the collection of principal or interest is doubtful.  However, these loans are accounted for under FASB ASC 310-30 and accordingly treated as performing assets.

Schedule of Activity in Trouble Debt Restructurings

The following table presents activity in TDRs for the three and nine months ended September 30, 2019 and 2018:

				Commercial
(dollars in thousands)	Commercial			Real Estate			Residential			Consumer			Total
Three Months Ended September 30, 2019
Balance at beginning of period	$	18,872		$	19,363		$	3,080		$	2,516		$	43,831
(Charge-offs)/recoveries		12			13			—			7			32
(Payments)/disbursements		(2,303	)		(1,057	)		(865	)		(322	)		(4,547	)
Additions		530			—			557			—			1,087
Balance at end of period	$	17,111		$	18,319		$	2,772		$	2,201		$	40,403
Three Months Ended September 30, 2018
Balance at beginning of period	$	9,043		$	34,927		$	3,771		$	3,398		$	51,139
(Charge-offs)/recoveries		(7	)		753			—			3			749
(Payments)/disbursements		453			(6,601	)		(75	)		(200	)		(6,423	)
Additions		1,954			—			—			—			1,954
Balance at end of period	$	11,443		$	29,079		$	3,696		$	3,201		$	47,419
Nine Months Ended September 30, 2019
Balance at beginning of period	$	10,275		$	27,671		$	3,390		$	2,374		$	43,710
(Charge-offs)/recoveries		(89	)		(58	)		—			8			(139	)
(Payments)/disbursements		(3,307	)		(19,321	)		(1,175	)		(497	)		(24,300	)
Additions		10,232			10,027			557			316			21,132
Balance at end of period	$	17,111		$	18,319		$	2,772		$	2,201		$	40,403
Nine Months Ended September 30, 2018
Balance at beginning of period	$	12,088		$	34,705		$	3,315		$	3,895		$	54,003
(Charge-offs)/recoveries		(158	)		731			23			(19	)		577
(Payments)/disbursements		(3,525	)		(7,570	)		(144	)		(1,107	)		(12,346	)
Additions		3,038			1,213			502			432			5,185
Balance at end of period	$	11,443		$	29,079		$	3,696		$	3,201		$	47,419

Schedule of Loans by Class Modified as Troubled Debt Restructuring

The following table presents loans by class modified as TDRs that occurred during the nine months ended September 30, 2019 and 2018:

		Pre-modification		Post-modification
		Outstanding		Outstanding
	Number	Recorded		Recorded
(dollars in thousands)	of Loans	Investment		Investment
Nine Months Ended September 30, 2019
TDR:
Commercial	8	$	10,232	$	10,232
Commercial Real Estate - Other	4		10,027		10,027
Residential	1		557		557
Consumer	1		316		316
Total	14	$	21,132	$	21,132
Nine Months Ended September 30, 2018
TDR:
Commercial	5	$	3,038	$	3,038
Commercial Real Estate - Other	2		1,213		1,213
Residential	1		502		502
Consumer	1		432		432
Total	9	$	5,185	$	5,185

Schedule of Activity of Purchased Impaired Loans

The carrying amount of those loans was as follows:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Commercial	$	5,438		$	6,193
Commercial real estate		22,139			25,391
Residential		7,658			9,257
Consumer		2,642			3,552
Carrying amount		37,877			44,393
Allowance for loan losses		(345	)		(478	)
Carrying amount, net of allowance	$	37,532		$	43,915

Schedule of Accretable Yield of PCI Loans, or Income Expected to be Collected

Accretable yield of PCI loans, or income expected to be collected, was as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)	2019			2018			2019			2018
Balance at beginning of period	$	22,414		$	24,249		$	25,051		$	27,835
Accretion of income		(4,848	)		(1,854	)		(8,988	)		(8,927	)
Reclassifications from (to) nonaccretable difference		620			1,599			2,202			5,065
Disposals/other adjustments		118			1			39			22
Balance at end of period	$	18,304		$	23,995		$	18,304		$	23,995

Schedule of Receivables for which Contractually Required Payments would not be Collected

PCI loans purchased during 2018 for which it was probable at acquisition that all contractually required payments would not be collected were as follows:

(dollars in thousands)	Klein (1)
Contractually required payments	$	18,568
Nonaccretable difference		(4,521	)
Cash flows expected to be collected at acquisition		14,047
Accretable yield		(2,384	)
Fair value of acquired loans at acquisition	$	11,663

(1) Old National acquired Klein effective November 1, 2018.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 21 – COMMITMENTS AND CONTINGENCIES

Litigation

In the normal course of business, Old National Bancorp and its subsidiaries have been named, from time to time, as defendants in various legal actions.  Certain of the actual or threatened legal actions may include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages.

Old National contests liability and/or the amount of damages as appropriate in each pending matter.  In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases where claimants seek substantial or indeterminate damages or where investigations and proceedings are in the early stages, Old National cannot predict with certainty the loss or range of loss, if any, related to such matters, how or if such matters will be resolved, when they will ultimately be resolved, or what the eventual settlement, or other relief, if any, might be. Subject to the foregoing, Old National believes, based on current knowledge and after consultation with counsel, that the outcome of such pending matters will not have a material adverse effect on the consolidated financial condition of Old National, although the outcome of such matters could be material to Old National’s operating results and cash flows for a particular future period, depending on, among other things, the level of Old National’s revenues or income for such period.  Old National will accrue for a loss contingency if (1) it is probable that a future event will occur and confirm the loss and (2) the amount of the loss can be reasonably estimated.

Old National is not currently involved in any material litigation.

Credit-Related Financial Instruments

In the normal course of business, Old National’s banking affiliates have entered into various agreements to extend credit, including loan commitments of $2.891 billion and standby letters of credit of $93.3 million at September 30, 2019.  At September 30, 2019, approximately $2.650 billion of the loan commitments had fixed rates and $241.2 million had floating rates, with the floating interest rates ranging from 1% to 15%.  At December 31, 2018, loan commitments totaled $3.566 billion and standby letters of credit totaled $319.0 million.  These commitments are not

reflected in the consolidated financial statements.  The allowance for unfunded loan commitments totaled $2.3 million at September 30, 2019 and $2.5 million at December 31, 2018.

Old National had credit extensions with various unaffiliated banks related to letter of credit commitments issued on behalf of Old National’s clients totaling $9.8 million at September 30, 2019 and $15.5 million at December 31, 2018.  Old National provided collateral to the unaffiliated banks to secure credit extensions totaling $7.7 million at September 30, 2019 and $7.8 million at December 31, 2018.  Old National did not provide collateral for the remaining credit extensions.

Visa Class B Restricted Shares

In 2008, Old National received Visa Class B restricted shares as part of Visa’s initial public offering.  These shares are transferable only under limited circumstances until they can be converted into the publicly traded Class A common shares.  This conversion will not occur until the final settlement of certain litigation for which Visa is indemnified by the holders of Visa’s Class B shares, including Old National.  Visa funded an escrow account from its initial public offering to settle these litigation claims.  Increases in litigation claims requiring Visa to fund the escrow account due to insufficient funds will result in a reduction of the conversion ratio of each Visa Class B share to unrestricted Class A shares.  As of September 30, 2019, the conversion ratio was 1.6228.  Based on the existing transfer restriction and the uncertainty of the outcome of the Visa litigation, the 65,466 Class B shares that Old National owns at September 30, 2019 are carried at a zero cost basis and are included in other assets with our equity securities that have no readily determinable fair value.

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Qualified Affordable Housing Projects and Other Tax Credit Investments

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Qualified Affordable Housing Projects and Other Tax Credit Investments

NOTE 13 – QUALIFIED AFFORDABLE HOUSING PROJECTS AND OTHER TAX CREDIT INVESTMENTS

Old National is a limited partner in several tax-advantaged limited partnerships whose purpose is to invest in approved qualified affordable housing, renewable energy, or other renovation or community revitalization projects.  As of September 30, 2019, Old National expects to recover its remaining investments through the use of the tax credits that are generated by the investments.

The following table summarizes Old National’s investments in qualified affordable housing projects and other tax credit investments at September 30, 2019 and December 31, 2018:

(dollars in thousands)		September 30, 2019				December 31, 2018
				Unfunded				Unfunded
Investment	Accounting Method	Investment		Commitment (1)		Investment		Commitment
LIHTC	Proportional amortization	$	30,577	$	3,973	$	28,396	$	2,238
FHTC	Equity		22,403		20,272		16,815		17,945
CReED	Equity		—		—		17		538
Renewable Energy	Equity		8,255		4,951		9,176		17,827
Total		$	61,235	$	29,196	$	54,404	$	38,548

(1) All commitments will be paid by Old National by 2027.

The following table summarizes the amortization expense and tax benefit recognized for Old National’s qualified affordable housing projects and other tax credit investments for the three and nine months ended September 30, 2019 and 2018:

			Tax Expense
	Amortization		(Benefit)
(dollars in thousands)	Expense (1)		Recognized (2)
Three Months Ended September 30, 2019
LIHTC	$	793	$	(992	)
FHTC		1,113		(1,244	)
CReED		13		—
Renewable Energy		85		(70	)
Total	$	2,004	$	(2,306	)
Three Months Ended September 30, 2018
LIHTC	$	640	$	(832	)
FHTC		3,282		(1,258	)
CReED		687		—
Renewable Energy		5,264		(3,109	)
Total	$	9,873	$	(5,199	)
Nine Months Ended September 30, 2019
LIHTC	$	2,376	$	(3,076	)
FHTC		1,113	$	(1,244	)
CReED		13		—
Renewable Energy		913		(847	)
Total	$	4,415	$	(5,167	)
Nine Months Ended September 30, 2018
LIHTC	$	1,923	$	(2,494	)
FHTC		8,727		(5,154	)
CReED		687		—
Renewable Energy		12,393		(9,406	)
Total	$	23,730	$	(17,054	)

(1) The amortization expense for the LIHTC investments is included in our income tax expense. The amortization expense for the FHTC, CReED, and Renewable Energy tax credits is included in noninterest expense.

(2) All of the tax benefits recognized are included in our income tax expense.  The tax benefit recognized for the FHTC and Renewable Energy investments primarily reflects the tax credits generated from the investments and excludes the net tax expense (benefit) of the investments’ income (loss).

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Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

NOTE 17 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes within each classification of AOCI, net of tax, for the three and nine months ended September 30, 2019 and 2018:

(dollars in thousands)	Unrealized Gains and Losses on Available- for-Sale Debt Securities			Unrealized Gains and Losses on Held-to- Maturity Securities			Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Plans			Total
Three Months Ended September 30, 2019
Balance at beginning of period	$	48,701		$	(7,729	)	$	1,220		$	(155	)	$	42,037
Other comprehensive income (loss) before    reclassifications		15,876			—			(58	)		—			15,818
Amounts reclassified from AOCI to income (1)		(335	)		992			(13	)		15			659
Balance at end of period	$	64,242		$	(6,737	)	$	1,149		$	(140	)	$	58,514
Three Months Ended September 30, 2018
Balance at beginning of period	$	(59,356	)	$	(9,335	)	$	2,277		$	(289	)	$	(66,703	)
Other comprehensive income (loss) before    reclassifications		(13,989	)		—			548			—			(13,441	)
Amounts reclassified from AOCI to income (1)		(117	)		482			(171	)		20			214
Balance at end of period	$	(73,462	)	$	(8,853	)	$	2,654		$	(269	)	$	(79,930	)
Nine Months Ended September 30, 2019
Balance at beginning of period	$	(37,348	)	$	(8,515	)	$	1,099		$	(186	)	$	(44,950	)
Other comprehensive income (loss) before    reclassifications		102,737			—			357			—			103,094
Amounts reclassified from AOCI to income (1)		(1,147	)		1,778			(307	)		46			370
Balance at end of period	$	64,242		$	(6,737	)	$	1,149		$	(140	)	$	58,514
Nine Months Ended September 30, 2018
Balance at beginning of period	$	(35,557	)	$	(12,107	)	$	(2,337	)	$	(271	)	$	(50,272	)
Amount reclassified from AOCI to retained       earnings for cumulative effect of       change in accounting principle		—			—			(52	)		—			(52	)
Amounts reclassified from AOCI to retained       earnings related to the Tax Cuts and Jobs       Act of 2017		(7,583	)		(2,600	)		(509	)		(59	)		(10,751	)
Other comprehensive income (loss) before    reclassifications		(28,475	)		4,514			5,135			—			(18,826	)
Amounts reclassified from AOCI to income (1)		(1,847	)		1,340			417			61			(29	)
Balance at end of period	$	(73,462	)	$	(8,853	)	$	2,654		$	(269	)	$	(79,930	)

(1) See tables below for details about reclassifications to income.

The following table summarizes the significant amounts reclassified out of each component of AOCI for the three months ended September 30, 2019 and 2018:

	Amount Reclassified						Affected Line Item in the
Details about AOCI Components	from AOCI						Statement of Income
	Three Months Ended
	September 30,
(dollars in thousands)	2019			2018
Unrealized gains and losses on    available-for-sale debt securities	$	424		$	135		Net debt securities gains (losses)
		(89	)		(18	)	Income tax (expense) benefit
	$	335		$	117		Net income
Unrealized gains and losses on    held-to-maturity securities	$	(1,384	)	$	(628	)	Interest income (expense)
		392			146		Income tax (expense) benefit
	$	(992	)	$	(482	)	Net income
Gains and losses on cash flow hedges    Interest rate contracts	$	21		$	226		Interest income (expense)
		(8	)		(55	)	Income tax (expense) benefit
	$	13		$	171		Net income
Amortization of defined benefit    pension items
Actuarial gains (losses)	$	(20	)	$	(27	)	Salaries and employee benefits
		5			7		Income tax (expense) benefit
	$	(15	)	$	(20	)	Net income
Total reclassifications for the period	$	(659	)	$	(214	)	Net income

The following table summarizes the significant amounts reclassified out of each component of AOCI for the nine months ended September 30, 2019 and 2018:

	Amount Reclassified						Affected Line Item in the
Details about AOCI Components	from AOCI						Statement of Income
	Nine Months Ended
	September 30,
(dollars in thousands)	2019			2018
Unrealized gains and losses on    available-for-sale debt securities	$	1,486		$	2,417		Net debt securities gains (losses)
		(339	)		(570	)	Income tax (expense) benefit
	$	1,147		$	1,847		Net income
Unrealized gains and losses on    held-to-maturity securities	$	(2,405	)	$	(1,740	)	Interest income/(expense)
		627			400		Income tax (expense) benefit
	$	(1,778	)	$	(1,340	)	Net income
Gains and losses on cash flow hedges    Interest rate contracts	$	412		$	(553	)	Interest income/(expense)
		(105	)		136		Income tax (expense) benefit
	$	307		$	(417	)	Net income
Amortization of defined benefit    pension items
Actuarial gains (losses)	$	(61	)	$	(81	)	Salaries and employee benefits
		15			20		Income tax (expense) benefit
	$	(46	)	$	(61	)	Net income
Total reclassifications for the period	$	(370	)	$	29		Net income

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Qualified Affordable Housing Projects and Other Tax Credit Investments (Tables)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Schedule of Qualified Affordable Housing Projects and Other Tax Credit Investments

The following table summarizes Old National’s investments in qualified affordable housing projects and other tax credit investments at September 30, 2019 and December 31, 2018:

(dollars in thousands)		September 30, 2019				December 31, 2018
				Unfunded				Unfunded
Investment	Accounting Method	Investment		Commitment (1)		Investment		Commitment
LIHTC	Proportional amortization	$	30,577	$	3,973	$	28,396	$	2,238
FHTC	Equity		22,403		20,272		16,815		17,945
CReED	Equity		—		—		17		538
Renewable Energy	Equity		8,255		4,951		9,176		17,827
Total		$	61,235	$	29,196	$	54,404	$	38,548

(1) All commitments will be paid by Old National by 2027.

The following table summarizes the amortization expense and tax benefit recognized for Old National’s qualified affordable housing projects and other tax credit investments for the three and nine months ended September 30, 2019 and 2018:

			Tax Expense
	Amortization		(Benefit)
(dollars in thousands)	Expense (1)		Recognized (2)
Three Months Ended September 30, 2019
LIHTC	$	793	$	(992	)
FHTC		1,113		(1,244	)
CReED		13		—
Renewable Energy		85		(70	)
Total	$	2,004	$	(2,306	)
Three Months Ended September 30, 2018
LIHTC	$	640	$	(832	)
FHTC		3,282		(1,258	)
CReED		687		—
Renewable Energy		5,264		(3,109	)
Total	$	9,873	$	(5,199	)
Nine Months Ended September 30, 2019
LIHTC	$	2,376	$	(3,076	)
FHTC		1,113	$	(1,244	)
CReED		13		—
Renewable Energy		913		(847	)
Total	$	4,415	$	(5,167	)
Nine Months Ended September 30, 2018
LIHTC	$	1,923	$	(2,494	)
FHTC		8,727		(5,154	)
CReED		687		—
Renewable Energy		12,393		(9,406	)
Total	$	23,730	$	(17,054	)

(1) The amortization expense for the LIHTC investments is included in our income tax expense. The amortization expense for the FHTC, CReED, and Renewable Energy tax credits is included in noninterest expense.

(2) All of the tax benefits recognized are included in our income tax expense.  The tax benefit recognized for the FHTC and Renewable Energy investments primarily reflects the tax credits generated from the investments and excludes the net tax expense (benefit) of the investments’ income (loss).

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Premises and Equipment (Tables)

9 Months Ended

Sep. 30, 2019

Property Plant And Equipment [Abstract]

Summary of Premises and Equipment

The composition of premises and equipment at September 30, 2019 and December 31, 2018 was as follows:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Land	$	79,967		$	79,231
Buildings		381,028			365,102
Furniture, fixtures, and equipment		107,526			107,862
Leasehold improvements		44,448			42,288
Total		612,969			594,483
Accumulated depreciation		(120,904	)		(108,571	)
Premises and equipment, net	$	492,065		$	485,912

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Income Taxes - Summary of Differences in Taxes from Continuing Operations Computed at Statutory Rate (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Tax Disclosure [Abstract]
Provision at statutory rate	$ 17,437	$ 11,901	$ 48,245	$ 33,171
Tax-exempt interest	(2,511)	(2,179)	(7,645)	(6,607)
Section 291/265 interest disallowance	113	84	346	220
Company-owned life insurance income	(568)	(621)	(1,806)	(1,679)
Tax-exempt income	(2,966)	(2,716)	(9,105)	(8,066)
State income taxes	1,496	2,091	5,053	4,307
Interim period effective rate adjustment	(1,598)	(81)	(557)	944
Tax credit investments - federal	(2,443)	(5,483)	(3,577)	(16,224)
Other, net	1,328	(387)	658	495
Income tax expense	$ 13,254	$ 5,325	$ 40,717	$ 14,627
Effective tax rate	16.00%	9.40%	17.70%	9.30%

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Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Schedule of AOCI

The following table summarizes the changes within each classification of AOCI, net of tax, for the three and nine months ended September 30, 2019 and 2018:

(dollars in thousands)	Unrealized Gains and Losses on Available- for-Sale Debt Securities			Unrealized Gains and Losses on Held-to- Maturity Securities			Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Plans			Total
Three Months Ended September 30, 2019
Balance at beginning of period	$	48,701		$	(7,729	)	$	1,220		$	(155	)	$	42,037
Other comprehensive income (loss) before    reclassifications		15,876			—			(58	)		—			15,818
Amounts reclassified from AOCI to income (1)		(335	)		992			(13	)		15			659
Balance at end of period	$	64,242		$	(6,737	)	$	1,149		$	(140	)	$	58,514
Three Months Ended September 30, 2018
Balance at beginning of period	$	(59,356	)	$	(9,335	)	$	2,277		$	(289	)	$	(66,703	)
Other comprehensive income (loss) before    reclassifications		(13,989	)		—			548			—			(13,441	)
Amounts reclassified from AOCI to income (1)		(117	)		482			(171	)		20			214
Balance at end of period	$	(73,462	)	$	(8,853	)	$	2,654		$	(269	)	$	(79,930	)
Nine Months Ended September 30, 2019
Balance at beginning of period	$	(37,348	)	$	(8,515	)	$	1,099		$	(186	)	$	(44,950	)
Other comprehensive income (loss) before    reclassifications		102,737			—			357			—			103,094
Amounts reclassified from AOCI to income (1)		(1,147	)		1,778			(307	)		46			370
Balance at end of period	$	64,242		$	(6,737	)	$	1,149		$	(140	)	$	58,514
Nine Months Ended September 30, 2018
Balance at beginning of period	$	(35,557	)	$	(12,107	)	$	(2,337	)	$	(271	)	$	(50,272	)
Amount reclassified from AOCI to retained       earnings for cumulative effect of       change in accounting principle		—			—			(52	)		—			(52	)
Amounts reclassified from AOCI to retained       earnings related to the Tax Cuts and Jobs       Act of 2017		(7,583	)		(2,600	)		(509	)		(59	)		(10,751	)
Other comprehensive income (loss) before    reclassifications		(28,475	)		4,514			5,135			—			(18,826	)
Amounts reclassified from AOCI to income (1)		(1,847	)		1,340			417			61			(29	)
Balance at end of period	$	(73,462	)	$	(8,853	)	$	2,654		$	(269	)	$	(79,930	)

(1) See tables below for details about reclassifications to income.

Reclassifications out of Accumulated Other Comprehensive Income (Loss)

The following table summarizes the significant amounts reclassified out of each component of AOCI for the three months ended September 30, 2019 and 2018:

	Amount Reclassified						Affected Line Item in the
Details about AOCI Components	from AOCI						Statement of Income
	Three Months Ended
	September 30,
(dollars in thousands)	2019			2018
Unrealized gains and losses on    available-for-sale debt securities	$	424		$	135		Net debt securities gains (losses)
		(89	)		(18	)	Income tax (expense) benefit
	$	335		$	117		Net income
Unrealized gains and losses on    held-to-maturity securities	$	(1,384	)	$	(628	)	Interest income (expense)
		392			146		Income tax (expense) benefit
	$	(992	)	$	(482	)	Net income
Gains and losses on cash flow hedges    Interest rate contracts	$	21		$	226		Interest income (expense)
		(8	)		(55	)	Income tax (expense) benefit
	$	13		$	171		Net income
Amortization of defined benefit    pension items
Actuarial gains (losses)	$	(20	)	$	(27	)	Salaries and employee benefits
		5			7		Income tax (expense) benefit
	$	(15	)	$	(20	)	Net income
Total reclassifications for the period	$	(659	)	$	(214	)	Net income

The following table summarizes the significant amounts reclassified out of each component of AOCI for the nine months ended September 30, 2019 and 2018:

	Amount Reclassified						Affected Line Item in the
Details about AOCI Components	from AOCI						Statement of Income
	Nine Months Ended
	September 30,
(dollars in thousands)	2019			2018
Unrealized gains and losses on    available-for-sale debt securities	$	1,486		$	2,417		Net debt securities gains (losses)
		(339	)		(570	)	Income tax (expense) benefit
	$	1,147		$	1,847		Net income
Unrealized gains and losses on    held-to-maturity securities	$	(2,405	)	$	(1,740	)	Interest income/(expense)
		627			400		Income tax (expense) benefit
	$	(1,778	)	$	(1,340	)	Net income
Gains and losses on cash flow hedges    Interest rate contracts	$	412		$	(553	)	Interest income/(expense)
		(105	)		136		Income tax (expense) benefit
	$	307		$	(417	)	Net income
Amortization of defined benefit    pension items
Actuarial gains (losses)	$	(61	)	$	(81	)	Salaries and employee benefits
		15			20		Income tax (expense) benefit
	$	(46	)	$	(61	)	Net income
Total reclassifications for the period	$	(370	)	$	29		Net income

XML

Other Borrowings - Summary of Terms of Outstanding Junior Subordinated Debentures (Parenthetical) (Detail) - Trust Preferred Securities [Member] - Junior Subordinated Debt [Member] - London Interbank Offered Rate (LIBOR) [Member]	9 Months Ended
	Sep. 30, 2019
VFSC Capital Trust I [Member]
Debt Instrument [Line Items]
LIBOR rate	3.70%
VFSC Capital Trust II [Member]
Debt Instrument [Line Items]
LIBOR rate	3.45%
VFSC Capital Trust III [Member]
Debt Instrument [Line Items]
LIBOR rate	2.80%
St Joseph Capital Trust II [Member]
Debt Instrument [Line Items]
LIBOR rate	1.75%
Anchor Capital Trust III [Member]
Debt Instrument [Line Items]
LIBOR rate	1.55%
Tower Capital Trust 2 [Member]
Debt Instrument [Line Items]
LIBOR rate	1.34%
Home Federal Statutory Trust I [Member]
Debt Instrument [Line Items]
LIBOR rate	1.65%
Monroe Bancorp Capital Trust I [Member]
Debt Instrument [Line Items]
LIBOR rate	1.60%
Tower Capital Trust 3 [Member]
Debt Instrument [Line Items]
LIBOR rate	1.69%
Monroe Bancorp Statutory Trust II [Member]
Debt Instrument [Line Items]
LIBOR rate	1.60%

XML

Investment Securities - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($) Security	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) Security	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Summary Of Investment Holdings [Line Items]
Held-to-Maturity, Unrecognized Losses					$ 17,211,000
OTTI losses on securities			$ 0	$ 0
Number of securities in security portfolio | Security	1,937		1,937
Number of securities in unrealized loss position | Security	256		256
Total investment securities - available-for-sale	$ 4,916,979,000	$ 3,272,456,000	$ 4,916,979,000	3,272,456,000	4,123,416,000
Unrealized losses	13,573,000		13,573,000		70,573,000
Equity securities recorded at fair value	6,562,000	5,828,000	6,562,000	5,828,000	5,582,000
Gains on equity securities	200,000	$ 200,000	400,000	300,000
Impairments on equity securities without readily determinable fair value			0	0
Downward adjustments on equity securities without readily determinable fair value			0	0
Other Asstes [Member]
Summary Of Investment Holdings [Line Items]
Equity securities without readily determinable fair value	$ 93,300,000		$ 93,300,000		79,200,000
Pooled Trust Preferred Securities [Member]
Summary Of Investment Holdings [Line Items]
Number of pooled trust preferred securities | Security	2		2
Total investment securities - available-for-sale	$ 7,695,000		$ 7,695,000		8,495,000
Unrealized losses	6,130,000		6,130,000		5,366,000
OTTI losses on securities			0	$ 0
Held-to-maturity Securities [Member]
Summary Of Investment Holdings [Line Items]
Held-to-Maturity, Unrecognized Losses	$ 9,400,000		$ 9,400,000		$ 10,700,000

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Leases - Schedule of Maturity Analysis of Tenant Leases (Detail) $ in Thousands	Sep. 30, 2019 USD ($)
Lessor Disclosure [Abstract]
Tenant leases, 2019	$ 588
Tenant leases, 2020	2,034
Tenant leases, 2021	1,740
Tenant leases, 2022	1,431
Tenant leases, 2023	1,298
Tenant leases, Thereafter	3,650
Tenant leases, Total undiscounted lease payments	$ 10,741

XML

Fair Value - Schedule of Difference between the Aggregate Fair Value and the Aggregate Remaining Principal Balance (Detail) - Residential Loans Held for Sale [Member] - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Fair Value, Option, Quantitative Disclosures [Line Items]
Aggregate Fair Value	$ 58,285	$ 14,911
Difference	1,799	475
Contractual Principal	$ 56,486	$ 14,436

XML

Goodwill and Other Intangible Assets - Schedule of Estimated Amortization Expense for Future Years (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Goodwill And Intangible Assets Disclosure [Abstract]
2019 remaining	$ 3,945
2020	14,091
2021	11,336
2022	9,014
2023	7,053
Thereafter	18,612
Net Carrying Amount	$ 64,051	$ 77,016	$ 42,134

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Loans and Allowance for Loan Losses - Schedule of Composition of Loan (Detail) (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	$ 12,017,648		$ 12,243,892	$ 11,292,659
Allowance for loan losses	(56,910)	$ (56,292)	(55,461)	(52,713)	$ (53,660)	$ (50,381)
Net loans	11,960,738		12,188,431	11,239,946
Commercial Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	2,950,559		3,232,970	2,949,277
Allowance for loan losses	(22,129)	$ (22,548)	(21,742)	(19,719)	$ (21,387)	$ (19,246)
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	2,236,623		2,248,404	$ 2,166,203
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	5,112,123		4,958,851
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	1,718,343		1,803,667
Consumer [Member] | Consumer Credit - Home Equity [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	555,905		589,322
Construction [Member] | Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	592,348		504,625
Other [Member] | Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	4,519,775		4,454,226
Other [Member] | Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	156,903		154,712
Consumer Credit - Auto [Member] | Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	$ 1,005,535		$ 1,059,633

XML

Financial Guarantees - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Financial Guarantees [Line Items]
Term of standby letters of credit, years	1 year
Notional amount of standby letters of credit	$ 93,300,000	$ 319,000,000.0
Carrying value of letters of credit	600,000	500,000
Notional amount	567,000,000.0	$ 1,482,000,000
Interest Rate Swap [Member]
Financial Guarantees [Line Items]
Notional amount	$ 38,500,000

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Consolidated Statements of Changes in Shareholders' Equity (unaudited) - USD ($) $ in Thousands	Total	Common Stock [Member]	Capital Surplus [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Cumulative effect of change in accounting principles	$ (4,179)			$ (4,127)	$ (52)
Beginning Balance at Dec. 31, 2017	2,154,397	$ 152,040	$ 1,639,499	413,130	(50,272)
Balance at Dec. 31, 2017	2,150,218	152,040	1,639,499	409,003	(50,324)
Reclassification of certain tax effects related to the Tax Cuts and Jobs Act of 2017				10,751	(10,751)
Net income	47,983			47,983
Other comprehensive income (loss)	(451)				(451)
Dividends - common stock	(19,782)			(19,782)
Common stock issued	105	6	99
Common stock repurchased	(1,115)	(64)	(1,051)
Share-based compensation expense	1,931		1,931
Stock activity under incentive compensation plans	229	190	298	(259)
Ending Balance at Mar. 31, 2018	2,179,118	152,172	1,640,776	447,696	(61,526)
Beginning Balance at Dec. 31, 2017	2,154,397	152,040	1,639,499	413,130	(50,272)
Balance at Dec. 31, 2017	2,150,218	152,040	1,639,499	409,003	(50,324)
Reclassification of certain tax effects related to the Tax Cuts and Jobs Act of 2017					(10,751)
Net income	143,332
Other comprehensive income (loss)	(18,855)
Ending Balance at Sep. 30, 2018	2,220,680	152,352	1,645,111	503,147	(79,930)
Beginning Balance at Mar. 31, 2018	2,179,118	152,172	1,640,776	447,696	(61,526)
Net income	44,001			44,001
Other comprehensive income (loss)	(5,177)				(5,177)
Dividends - common stock	(19,806)			(19,806)
Common stock issued	117	8	109
Common stock repurchased	(634)	(36)	(598)
Share-based compensation expense	1,675		1,675
Stock activity under incentive compensation plans	921	207	828	(114)
Ending Balance at Jun. 30, 2018	2,200,215	152,351	1,642,790	471,777	(66,703)
Net income	51,348			51,348
Other comprehensive income (loss)	(13,227)				(13,227)
Dividends - common stock	(19,806)			(19,806)
Common stock issued	149	8	141
Common stock repurchased	(27)	(2)	(25)
Share-based compensation expense	2,023		2,023
Stock activity under incentive compensation plans	5	(5)	182	(172)
Ending Balance at Sep. 30, 2018	2,220,680	152,352	1,645,111	503,147	(79,930)
Cumulative effect of change in accounting principles					(52)
Cumulative effect of change in accounting principles	6,322			6,322
Beginning Balance at Dec. 31, 2018	2,689,570	175,141	2,031,695	527,684	(44,950)
Balance at Dec. 31, 2018	2,695,892	175,141	2,031,695	534,006	(44,950)
Net income	56,276			56,276
Other comprehensive income (loss)	47,570				47,570
Dividends - common stock	(22,812)			(22,812)
Common stock issued	130	9	121
Common stock repurchased	(27,297)	(1,655)	(25,642)
Share-based compensation expense	1,800		1,800
Stock activity under incentive compensation plans	313	484	(12)	(159)
Ending Balance at Mar. 31, 2019	2,751,872	173,979	2,007,962	567,311	2,620
Beginning Balance at Dec. 31, 2018	2,689,570	175,141	2,031,695	527,684	(44,950)
Balance at Dec. 31, 2018	2,695,892	175,141	2,031,695	534,006	(44,950)
Net income	189,021
Other comprehensive income (loss)	103,464
Ending Balance at Sep. 30, 2019	2,832,530	170,031	1,948,808	655,177	58,514
Beginning Balance at Mar. 31, 2019	2,751,872	173,979	2,007,962	567,311	2,620
Net income	62,964			62,964
Other comprehensive income (loss)	39,417				39,417
Dividends - common stock	(22,476)			(22,476)
Common stock issued	148	10	138
Common stock repurchased	(30,845)	(1,884)	(28,961)
Share-based compensation expense	1,946		1,946
Stock activity under incentive compensation plans	113	126	120	(133)
Ending Balance at Jun. 30, 2019	2,803,139	172,231	1,981,205	607,666	42,037
Net income	69,781			69,781
Other comprehensive income (loss)	16,477				16,477
Dividends - common stock	(22,136)			(22,136)
Common stock issued	141	8	133
Common stock repurchased	(37,072)	(2,206)	(34,866)
Share-based compensation expense	2,200		2,200
Stock activity under incentive compensation plans		(2)	136	(134)
Ending Balance at Sep. 30, 2019	$ 2,832,530	$ 170,031	$ 1,948,808	$ 655,177	$ 58,514

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Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Assets
Cash and due from banks	$ 320,822	$ 284,003	$ 215,024
Money market and other interest-earning investments	99,428	33,162	71,737
Total cash and cash equivalents	420,250	317,165	286,761
Equity securities	6,562	5,582	5,828
Investment securities - available-for-sale, at fair value:
Total investment securities - available-for-sale	4,916,979	4,123,416	3,272,456
Investment securities - held-to-maturity, at amortized cost (fair value $425,588; $506,103; and $505,566, respectively)	407,281	506,334	512,207
Federal Home Loan Bank/Federal Reserve Bank stock, at cost	164,101	142,980	136,206
Loans held for sale, at fair value	58,285	14,911	21,384
Loans:
Total loans	12,017,648	12,243,892	11,292,659
Allowance for loan losses	(56,910)	(55,461)	(52,713)
Net loans	11,960,738	12,188,431	11,239,946
Premises and equipment, net	492,065	485,912	450,253
Operating lease right-of-use assets	102,976	0	0
Accrued interest receivable	80,747	89,464	78,493
Goodwill	1,036,994	1,036,258	828,804
Other intangible assets	64,051	77,016	42,134
Company-owned life insurance	447,110	444,224	405,245
Net deferred tax assets	26,523	87,048	94,667
Loan servicing rights	24,623	24,497	24,336
Other assets	229,503	185,197	169,039
Total assets	20,438,788	19,728,435	17,567,759
Deposits:
Noninterest-bearing demand	3,996,264	3,965,380	3,588,370
Interest-bearing:
Checking and NOW	3,936,318	3,788,339	3,011,544
Savings	2,863,718	2,944,092	2,920,712
Money market	1,821,989	1,627,882	1,185,439
Time	1,830,063	2,024,256	1,892,135
Total deposits	14,448,352	14,349,949	12,598,200
Federal funds purchased and interbank borrowings	240,589	270,135	450,031
Securities sold under agreements to repurchase	337,551	362,294	319,831
Federal Home Loan Bank advances	2,001,960	1,613,481	1,554,515
Other borrowings	251,763	247,883	251,662
Operating lease liabilities	107,272	0	0
Accrued expenses and other liabilities	218,771	195,123	172,840
Total liabilities	17,606,258	17,038,865	15,347,079
Shareholders' Equity
Preferred stock, 2,000 shares authorized, no shares issued or outstanding	0	0	0
Common stock, $1.00 per share stated value, 300,000 shares authorized, 170,031; 175,141; and 152,352 shares issued and outstanding, respectively	170,031	175,141	152,352
Capital surplus	1,948,808	2,031,695	1,645,111
Retained earnings	655,177	527,684	503,147
Accumulated other comprehensive income (loss), net of tax	58,514	(44,950)	(79,930)
Total shareholders' equity	2,832,530	2,689,570	2,220,680
Total liabilities and shareholders' equity	20,438,788	19,728,435	17,567,759
U.S. Treasury [Member]
Investment securities - available-for-sale, at fair value:
Total investment securities - available-for-sale	5,494	5,301	5,237
U.S. Government-Sponsored Entities and Agencies [Member]
Investment securities - available-for-sale, at fair value:
Total investment securities - available-for-sale	486,104	628,151	611,696
Investment securities - held-to-maturity, at amortized cost (fair value $425,588; $506,103; and $505,566, respectively)	33,321	73,986
Mortgage-Backed Securities - Agency [Member]
Investment securities - available-for-sale, at fair value:
Total investment securities - available-for-sale	3,136,180	2,209,295	1,508,692
Investment securities - held-to-maturity, at amortized cost (fair value $425,588; $506,103; and $505,566, respectively)	112,187	127,120
States and Political Subdivisions [Member]
Investment securities - available-for-sale, at fair value:
Total investment securities - available-for-sale	969,475	940,429	792,666
Investment securities - held-to-maturity, at amortized cost (fair value $425,588; $506,103; and $505,566, respectively)	261,773	305,228
Other Debt Securities Including Pooled Trust Preferred Securities [Member]
Investment securities - available-for-sale, at fair value:
Total investment securities - available-for-sale	319,726	340,240	354,165
Commercial Loan [Member]
Loans:
Total loans	2,950,559	3,232,970	2,949,277
Allowance for loan losses	(22,129)	(21,742)	(19,719)
Commercial Real Estate [Member]
Loans:
Total loans	5,112,123	4,958,851	4,481,554
Allowance for loan losses	(24,254)	(23,470)	(22,892)
Consumer Loan [Member]
Loans:
Total loans	1,718,343	1,803,667	1,695,625
Allowance for loan losses	(8,164)	(7,972)	(8,182)
Residential Real Estate [Member]
Loans:
Total loans	$ 2,236,623	$ 2,248,404	$ 2,166,203

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Fair Value - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018	Dec. 31, 2017
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Net carrying amount other real estate owned and other repossessed property	$ 0		$ 0			$ 68,000
Other real estate owned property write-downs	18,000	$ 100,000	39,000	$ 500,000
Valuation allowance for loan servicing rights with impairments	121,000	12,000	121,000	12,000	$ 32,000	15,000	$ 15,000	$ 29,000
Recoveries on loan servicing rights	89,000	(3,000)	$ 106,000	(17,000)
Past due period of mortgage loans held for sale, days			90 days
Interest income for residential loans held for sale	400,000	200,000	$ 900,000	300,000
States and Political Subdivisions [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Transfers out of Level 3			4,000,000.0
Transfers into Level 3				4,100,000
Impaired Commercial and Commercial Real Estate Loans [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Principal amount of impaired commercial and commercial real estate loans	39,700,000		39,700,000			49,300,000
Valuation allowance	11,200,000		11,200,000			$ 12,900,000
Provision for loan losses expensed	$ 300,000	$ 1,200,000	$ 2,600,000	$ 7,700,000

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Leases - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018	Sep. 30, 2019
Lessee Lease Description [Line Items]
Lease expense under operating leases	$ 4.4	$ 13.4
Minimum [Member]
Lessee Lease Description [Line Items]
Operating lease term			10 years
Finance lease term			10 years
Maximum [Member]
Lessee Lease Description [Line Items]
Operating lease term			20 years
Finance lease term			20 years

XML

Derivative Financial Instruments - Summary of collars designated as cash flow hedges (Detail) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Derivative Instruments, Gain (Loss) [Line Items]
Notional amount	$ 567,000,000.0	$ 1,482,000,000
Variable Interest Rate Collar [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Notional amount	$ 300,000,000	$ 200,000,000
Weighted average cap rates	3.21%	3.44%
Weighted average floor rates	2.21%	2.38%
Weighted average rates	2.08%	2.35%
Weighted average maturity (in years)	2 years 1 month 6 days	2 years 9 months 18 days
Unrealized gains (losses)	$ 4,852,000	$ 1,309,000

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Loans and Allowance for Loan Losses - Schedule of Loans by Class Modified as Troubled Debt Restructuring (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($) SecurityLoan	Sep. 30, 2018 USD ($) SecurityLoan
Financing Receivable, Modifications [Line Items]
Number of Loans | SecurityLoan	14	9
Pre-modification Outstanding Recorded Investment	$ 21,132	$ 5,185
Post-modification Outstanding Recorded Investment	$ 21,132	$ 5,185
Commercial Loan [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | SecurityLoan	8	5
Pre-modification Outstanding Recorded Investment	$ 10,232	$ 3,038
Post-modification Outstanding Recorded Investment	$ 10,232	$ 3,038
Other [Member] | Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | SecurityLoan	4	2
Pre-modification Outstanding Recorded Investment	$ 10,027	$ 1,213
Post-modification Outstanding Recorded Investment	$ 10,027	$ 1,213
Residential [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | SecurityLoan	1	1
Pre-modification Outstanding Recorded Investment	$ 557	$ 502
Post-modification Outstanding Recorded Investment	$ 557	$ 502
Consumer - Other [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | SecurityLoan	1	1
Pre-modification Outstanding Recorded Investment	$ 316	$ 432
Post-modification Outstanding Recorded Investment	$ 316	$ 432

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Derivative Financial Instruments - Summary of Fair Value of Derivative Financial Instruments (Parenthetical) (Detail) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Derivative Instruments And Hedging Activities Disclosure [Abstract]
Fair values of counterparty interest rate swaps	$ 0
Interest rate contracts net adjustment	$ 43,800,000	$ 4,800,000

XML

Loans and Allowance for Loan Losses - Schedule of Average Balance (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Financing Receivable Impaired [Line Items]
Impaired Financing Receivable, Average Recorded Investment, Total	$ 114,193	$ 122,112	$ 121,615	$ 113,927
Commercial [Member]
Financing Receivable Impaired [Line Items]
Average Recorded Investment with no related allowance	20,147	19,960	20,593	20,445
Average Recorded Investment with an allowance recorded	19,866	14,771	17,248	10,393
Commercial Real Estate [Member]
Financing Receivable Impaired [Line Items]
Average Recorded Investment with no related allowance	10,964		5,445
Average Recorded Investment with an allowance recorded	2,764	11,307	8,294	7,537
Commercial Real Estate - Other [Member]
Financing Receivable Impaired [Line Items]
Average Recorded Investment with no related allowance	34,073	45,302	39,821	42,209
Average Recorded Investment with an allowance recorded	21,019	24,305	24,806	26,537
Residential [Member]
Financing Receivable Impaired [Line Items]
Average Recorded Investment with no related allowance	2,066	2,303	2,145	2,289
Average Recorded Investment with an allowance recorded	924	863	907	887
Consumer [Member]
Financing Receivable Impaired [Line Items]
Average Recorded Investment with no related allowance	1,166	1,392	1,096	1,617
Average Recorded Investment with an allowance recorded	$ 1,204	$ 1,909	$ 1,260	$ 2,013

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Other Real Estate Owned - Activity in Other Real Estate Owned (Parenthetical) (Detail) - USD ($) $ in Millions	Sep. 30, 2019	Sep. 30, 2018
Regulatory Assets [Abstract]
Repossessed personal property	$ 0.5	$ 0.3

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Loans and Allowance for Loan Losses - Schedule of Accretable Yield of Noncovered PCI Loans, or Income Expected to be Collected (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Financing Receivable, Allowance for Credit Losses [Line Items]
Accretion of income	$ (4,800)	$ (1,900)	$ (9,000)	$ (8,900)
Purchased Credit Impaired Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period	22,414	24,249	25,051	27,835
Accretion of income	(4,848)	(1,854)	(8,988)	(8,927)
Reclassifications from (to) nonaccretable difference	620	1,599	2,202	5,065
Disposals/other adjustments	118	1	39	22
Balance at end of period	$ 18,304	$ 23,995	$ 18,304	$ 23,995

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Loans and Allowance for Loan Losses - Schedule of Recorded Investment in Loans (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	$ 12,340	$ 14,341
Allowance for loan losses, Collectively evaluated for impairment	44,225	40,642
Allowance for loan losses, Loans acquired with deteriorated credit quality	345	478
Total allowance for loan losses	56,910	55,461
Loans and leases outstanding, Individually evaluated for impairment	113,897	118,514
Loans and leases outstanding, Collectively evaluated for impairment	11,865,874	12,080,985
Loans and leases outstanding, Loans acquired with deteriorated credit quality	37,877	44,393
Total loans and leases outstanding	12,017,648	12,243,892	$ 11,292,659
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	7,855	6,035
Allowance for loan losses, Collectively evaluated for impairment	14,273	15,700
Allowance for loan losses, Loans acquired with deteriorated credit quality	1	7
Total allowance for loan losses	22,129	21,742
Loans and leases outstanding, Individually evaluated for impairment	40,270	35,410
Loans and leases outstanding, Collectively evaluated for impairment	2,904,851	3,191,367
Loans and leases outstanding, Loans acquired with deteriorated credit quality	5,438	6,193
Total loans and leases outstanding	2,950,559	3,232,970
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	4,485	8,306
Allowance for loan losses, Collectively evaluated for impairment	19,621	14,845
Allowance for loan losses, Loans acquired with deteriorated credit quality	148	319
Total allowance for loan losses	24,254	23,470
Loans and leases outstanding, Individually evaluated for impairment	73,627	83,104
Loans and leases outstanding, Collectively evaluated for impairment	5,016,357	4,850,356
Loans and leases outstanding, Loans acquired with deteriorated credit quality	22,139	25,391
Total loans and leases outstanding	5,112,123	4,958,851
Residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Collectively evaluated for impairment	2,363	2,276
Allowance for loan losses, Loans acquired with deteriorated credit quality		1
Total allowance for loan losses	2,363	2,277
Loans and leases outstanding, Collectively evaluated for impairment	2,228,965	2,239,147
Loans and leases outstanding, Loans acquired with deteriorated credit quality	7,658	9,257
Total loans and leases outstanding	2,236,623	2,248,404
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Collectively evaluated for impairment	7,968	7,821
Allowance for loan losses, Loans acquired with deteriorated credit quality	196	151
Total allowance for loan losses	8,164	7,972
Loans and leases outstanding, Collectively evaluated for impairment	1,715,701	1,800,115
Loans and leases outstanding, Loans acquired with deteriorated credit quality	2,642	3,552
Total loans and leases outstanding	$ 1,718,343	$ 1,803,667

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Qualified Affordable Housing Projects and Other Tax Credit Investments - Schedule of Qualified Affordable Housing Projects and Other Tax Credit Investments (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Investment Holdings [Line Items]
Total	$ 61,235		$ 61,235		$ 54,404
Total	29,196		29,196		38,548
Amortization Expense	2,004	$ 9,873	4,415	$ 23,730
Tax Expense (Benefit) Recognized	(2,306)	(5,199)	(5,167)	(17,054)
LIHTC [Member]
Investment Holdings [Line Items]
Proportional amortization method of investment	30,577		30,577		28,396
Unfunded commitment, Proportional amortization	3,973		3,973		2,238
Amortization Expense	793	640	2,376	1,923
Tax Expense (Benefit) Recognized	(992)	(832)	(3,076)	(2,494)
FHTC [Member]
Investment Holdings [Line Items]
Equity method investment	22,403		22,403		16,815
Unfunded commitment, Equity	20,272		20,272		17,945
Amortization Expense	1,113	3,282	1,113	8,727
Tax Expense (Benefit) Recognized	(1,244)	(1,258)	(1,244)	(5,154)
CReED [Member]
Investment Holdings [Line Items]
Equity method investment					17
Unfunded commitment, Equity					538
Amortization Expense	13	687	13	687
Renewable Energy [Member]
Investment Holdings [Line Items]
Equity method investment	8,255		8,255		9,176
Unfunded commitment, Equity	4,951		4,951		$ 17,827
Amortization Expense	85	5,264	913	12,393
Tax Expense (Benefit) Recognized	$ (70)	$ (3,109)	$ (847)	$ (9,406)

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Federal Home Loan Bank Advances - Summary of FHLB Advances (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Federal Home Loan Bank, Advances [Line Items]
ASC 815 fair value hedge and other basis adjustments	$ 24,316	$ 9,838
Total other borrowings	2,001,960	1,613,481	$ 1,554,515
Old National Bank [Member]
Federal Home Loan Bank, Advances [Line Items]
FHLB advances (fixed rates 0.68% to 4.96% and variable rates 2.29% to 2.45%) maturing October 2019 to August 2029	$ 1,977,644	$ 1,603,643

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Recent Accounting Pronouncements - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Jan. 02, 2019	Jan. 01, 2019	Dec. 31, 2018	Dec. 31, 2017
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Lease liability	$ 107,272,000	$ 0			$ 0
Lease, right-of-use asset	102,976,000	0			0
Cumulative-effect adjustment, increase in retained earnings					6,322,000	$ (4,179,000)
Derivative notional amount	567,000,000.0				$ 1,482,000,000
Estimated increase in allowance for credit losses	(700,000)	$ 0
Accounting Standards Update 2016-02 [Member]
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Lease liability				$ 122,900,000
Lease, right-of-use asset				$ 118,700,000
Cumulative-effect adjustment, increase in retained earnings			$ 6,300,000
Accounting Standards Update 2018-16 [Member] | LIBOR [Member]
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Derivative notional amount	4,800,000,000
Accounting Standards Update 2016-13 [Member] | Minimum [Member]
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Estimated increase in allowance for credit losses	35,000,000
Expected increase in off balance sheet exposures	3,000,000
Accounting Standards Update 2016-13 [Member] | Maximum [Member]
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Estimated increase in allowance for credit losses	45,000,000
Expected increase in off balance sheet exposures	$ 8,000,000

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Other Borrowings - Other Borrowings (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Aug. 31, 2014
Debt Instrument [Line Items]
Finance lease liabilities	$ 7,527
Other borrowings	251,763	$ 247,883	$ 251,662
Old National Bank [Member]
Debt Instrument [Line Items]
Other basis adjustments	539	(773)
Finance lease liabilities	7,527	5,262
Old National Bancorp [Member]
Debt Instrument [Line Items]
Other basis adjustments	(2,859)	(3,046)
5.75% Fixed Rate Subordinated Debentures [Member] | Old National Bank [Member]
Debt Instrument [Line Items]
Subordinated debentures (fixed rate 5.75%)	12,000	12,000
Senior Unsecured Notes [Member] | Old National Bancorp [Member]
Debt Instrument [Line Items]
Senior unsecured notes (fixed rate 4.125%) maturing August 2024	175,000	175,000		$ 175,000
Unamortized debt issuance costs related to senior unsecured notes	(754)	(870)
Junior Subordinated Debt [Member] | Old National Bancorp [Member]
Debt Instrument [Line Items]
Junior subordinated debentures (variable rates of 3.44% to 6.31%) maturing April 2032 to June 2037	$ 60,310	$ 60,310

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Net Income Per Share - Summary of Table Reconciling Basic and Diluted Net Income Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Share [Abstract]
Net income	$ 69,781	$ 62,964	$ 56,276	$ 51,348	$ 44,001	$ 47,983	$ 189,021	$ 143,332
Basic Net Income Per Share, Weighted average common shares outstanding	170,746			151,930			172,807	151,844
Basic Net Income Per Share	$ 0.41			$ 0.34			$ 1.10	$ 0.95
Effect of dilutive securities: Restricted stock	761			790			672	701
Effect of dilutive securities: Stock options	44			64			48	71
Diluted Net Income Per Share, Weighted average shares outstanding	171,551			152,784			173,527	152,616
Diluted Net Income Per Share	$ 0.41			$ 0.34			$ 1.09	$ 0.94

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Net Income Per Share (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Summary of Table Reconciling Basic and Diluted Net Income Per Share

The following table reconciles basic and diluted net income per share for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended				Nine Months Ended
(dollars and shares in thousands,	September 30,				September 30,
except per share data)	2019		2018		2019		2018
Basic Net Income Per Share
Net income	$	69,781	$	51,348	$	189,021	$	143,332
Weighted average common shares outstanding		170,746		151,930		172,807		151,844
Basic Net Income Per Share	$	0.41	$	0.34	$	1.10	$	0.95
Diluted Net Income Per Share
Net income	$	69,781	$	51,348	$	189,021	$	143,332
Weighted average common shares outstanding		170,746		151,930		172,807		151,844
Effect of dilutive securities:
Restricted stock		761		790		672		701
Stock options (1)		44		64		48		71
Weighted average shares outstanding		171,551		152,784		173,527		152,616
Diluted Net Income Per Share	$	0.41	$	0.34	$	1.09	$	0.94

(1) Options to purchase 14 thousand shares outstanding at September 30, 2019 and 2018 were not included in the computation of net income per diluted share for the three and nine months ended September 30, 2019 and 2018 because the exercise price of these options was greater than the average market price of the common shares and, therefore, the effect would be antidilutive.

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Fair Value

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value

NOTE 24 – FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  There are three levels of inputs that may be used to measure fair values:

• Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

• Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Old National used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Investment securities: The fair values for investment securities are determined by quoted market prices, if available (Level 1).  For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2).  For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).  Discounted cash flows are calculated using swap and LIBOR curves plus spreads that adjust for loss severities, volatility, credit risk, and optionality.  During times when trading is more liquid, broker quotes are used (if available) to validate the model.  Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.

Residential loans held for sale: The fair value of loans held for sale is determined using quoted prices for a similar asset, adjusted for specific attributes of that loan (Level 2).

Derivative financial instruments: The fair values of derivative financial instruments are based on derivative valuation models using market data inputs as of the valuation date (Level 2).

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which we have elected the fair value option, are summarized below:

			Fair Value Measurements at September 30, 2019 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Equity securities	$	6,562	$	6,562	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury		5,494		5,494		—		—
U.S. government-sponsored entities and agencies		486,104		—		486,104		—
Mortgage-backed securities - Agency		3,136,180		—		3,136,180		—
States and political subdivisions		969,475		—		969,435		40
Pooled trust preferred securities		7,695		—		—		7,695
Other securities		312,031		31,317		280,714		—
Residential loans held for sale		58,285		—		58,285		—
Derivative assets		70,346		—		70,346		—
Financial Liabilities
Derivative liabilities		15,484		—		15,484		—

			Fair Value Measurements at December 31, 2018 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Equity securities	$	5,582	$	5,582	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury		5,301		5,301		—		—
U.S. government-sponsored entities and agencies		628,151		—		628,151		—
Mortgage-backed securities - Agency		2,209,295		—		2,209,295		—
States and political subdivisions		940,429		—		936,321		4,108
Pooled trust preferred securities		8,495		—		—		8,495
Other securities		331,745		30,259		301,486		—
Residential loans held for sale		14,911		—		14,911		—
Derivative assets		29,005		—		29,005		—
Financial Liabilities
Derivative liabilities		12,550		—		12,550		—

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

	Pooled Trust			States and
	Preferred			Political
(dollars in thousands)	Securities			Subdivisions
Three Months Ended September 30, 2019
Balance at beginning of period	$	7,836		$	40
Accretion of discount		3			—
Sales/payments received		(14	)		—
Increase (decrease) in fair value of securities		(130	)		—
Balance at end of period	$	7,695		$	40
Three Months Ended September 30, 2018
Balance at beginning of period	$	8,205		$	4,028
Accretion (amortization) of discount		3			(19	)
Sales/payments received		(17	)		—
Increase (decrease) in fair value of securities		881			(30	)
Balance at end of period	$	9,072		$	3,979
Nine Months Ended September 30, 2019
Balance at beginning of period	$	8,495		$	4,108
Accretion of discount		9			—
Sales/payments received		(46	)		(35	)
Increase (decrease) in fair value of securities		(763	)		—
Transfers out of Level 3		—			(4,033	)
Balance at end of period	$	7,695		$	40
Nine Months Ended September 30, 2018
Balance at beginning of period	$	8,448		$	—
Accretion (amortization) of discount		13			(37	)
Sales/payments received		(322	)		—
Increase (decrease) in fair value of securities		933			(45	)
Transfers into Level 3		—			4,061
Balance at end of period	$	9,072		$	3,979

The accretion or amortization of discounts on securities in the table above is included in interest income.  An increase in fair value is reflected in the balance sheet as an increase in the fair value of investment securities available-for-sale, an increase in accumulated other comprehensive income, which is included in shareholders’

equity, and a decrease in other assets related to the tax impact. A decrease in fair value is reflected in the balance sheet as a decrease in the fair value of investment securities available-for-sale, a decrease in accumulated other comprehensive income, which is included in shareholders’ equity, and an increase in other assets related to the tax impact.  During the nine months ended September 30, 2019, Old National received third party pricing on a $4.0 million state and political subdivisions security and transferred it out of Level 3.  Old National transferred a $4.1 million state and political subdivisions security to Level 3 during the nine months ended September 30, 2018 because Old National could no longer obtain evidence of observable inputs.

The table below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy:

			Valuation	Unobservable	Range (Weighted
(dollars in thousands)	Fair Value		Techniques	Input	Average)
September 30, 2019
Pooled trust preferred securities	$	7,695	Discounted cash flow	Constant prepayment rate (a)	0.00%
				Additional asset defaults (b)	6.3% - 9.2% (7.2%)
				Expected asset recoveries (c)	0.00%
State and political subdivisions		40	Discounted cash flow	No observable inputs	N/A
				Local municipality issuance
				Old National owns 100%
				Carried at par
December 31, 2018
Pooled trust preferred securities	$	8,495	Discounted cash flow	Constant prepayment rate (a)	0.00%
				Additional asset defaults (b)	6.8% - 8.5% (7.3%)
				Expected asset recoveries (c)	0.00%
State and political subdivisions		4,108	Discounted cash flow	No observable inputs	N/A
				Local municipality issuance
				Old National owns 100%
				Carried at par

(a) Assuming no prepayments.

(b) Each currently performing pool asset is assigned a default probability based on the banking environment, which is adjusted for specific issuer evaluation, of 0%, 50%, or 100%.

(c) Each currently defaulted pool asset is assigned a recovery probability based on specific issuer evaluation of 0%, 25%, or 100%.

Significant changes in any of the unobservable inputs used in the fair value measurement in isolation would result in a significant change to the fair value measurement.  The pooled trust preferred securities Old National owns are subordinate note classes that rely on an ongoing cash flow stream to support their values.  The senior note classes receive the benefit of prepayments to the detriment of subordinate note classes since the ongoing interest cash flow stream is reduced by the early redemption.  Generally, a change in prepayment rates or additional pool asset defaults has an impact that is directionally opposite from a change in the expected recovery of a defaulted pool asset.

Assets measured at fair value on a non-recurring basis at September 30, 2019 are summarized below:

			Fair Value Measurements at September 30, 2019 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Impaired Loans:
Commercial loans	$	13,261	$	—	$	—	$	13,261
Commercial real estate loans		15,241		—		—		15,241
Loan servicing rights		4,621		—		4,621		—

Impaired commercial and commercial real estate loans that are deemed collateral dependent are valued based on the fair value of the underlying collateral.  These estimates are based on the most recently available appraisals with certain adjustments made based on the type of property, age of appraisal, current status of the property, and other related factors to estimate the current value of the collateral.  These impaired commercial and commercial real estate loans had a principal amount of $39.7 million, with a valuation allowance of $11.2 million at September 30, 2019.  Old National recorded provision expense associated with these loans totaling $0.3 million for the three months

ended September 30, 2019 and $2.6 million for the nine months ended September 30, 2019.  Old National recorded provision expense associated with impaired commercial and commercial real estate loans that were deemed collateral dependent totaling $1.2 million for the three months ended September 30, 2018 and $7.7 million for the nine months ended September 30, 2018.

Other real estate owned and other repossessed property is measured at fair value less costs to sell.  The estimates of fair value are based on the most recently available appraisals with certain adjustments made based on the type of property, age of appraisal, current status of the property, and other related factors to estimate the current value of the collateral.  Old National did not have any other real estate owned or other repossessed property measured at fair value on a non-recurring basis at September 30, 2019. There were write-downs of other real estate owned of $18 thousand for the three months ended September 30, 2019 and $39 thousand for the nine months ended September 30, 2019.  There were write-downs of $0.1 million for the three months ended September 30, 2018 and $0.5 million for the nine months ended September 30, 2018.

Loan servicing rights are evaluated for impairment based upon the fair value of the rights as compared to the carrying amount.  If the carrying amount of an individual tranche exceeds fair value, impairment is recorded on that tranche so that the servicing asset is carried at fair value.  Fair value is determined at a tranche level, based on market prices for comparable mortgage servicing contracts when available, or alternatively based on a valuation model that calculates the present value of estimated future net servicing income.  The valuation model utilizes a discount rate, weighted average prepayment speed, and other economic factors that market participants would use in estimating future net servicing income and that can be validated against available market data (Level 2).  The valuation allowance for loan servicing rights with impairments at September 30, 2019 totaled $0.1 million.  Old National recorded impairments associated with these loan servicing rights totaling $0.1 million during the three months ended September 30, 2019 and the nine months ended September 30, 2019.  There were recoveries associated with loan servicing rights totaling $3 thousand for the three months ended September 30, 2018 and $17 thousand for the nine months ended September 30, 2018.

Assets measured at fair value on a non-recurring basis at December 31, 2018 are summarized below:

			Fair Value Measurements at December 31, 2018 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Impaired Loans:
Commercial loans	$	7,242	$	—	$	—	$	7,242
Commercial real estate loans		29,125		—		—		29,125
Foreclosed Assets:
Residential		68		—		—		68
Loan servicing rights		104		—		104		—

At December 31, 2018, impaired commercial and commercial real estate loans had a principal amount of $49.3 million, with a valuation allowance of $12.9 million.

Other real estate owned and other repossessed property had a net carrying amount of $68 thousand at December 31, 2018.

The valuation allowance for loan servicing rights with impairments at December 31, 2018 totaled $15 thousand.

The table below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy:

			Valuation	Unobservable	Range (Weighted
(dollars in thousands)	Fair Value		Techniques	Input	Average)
September 30, 2019
Collateral Dependent Impaired    Loans
Commercial loans	$	13,261	Fair value of	Discount for type of property,	0% - 90% (31%)
			collateral	age of appraisal, and current
				status
Commercial real estate loans		15,241	Fair value of	Discount for type of property,	35% - 45% (40%)
			collateral	age of appraisal and current
				status
December 31, 2018
Collateral Dependent Impaired    Loans
Commercial loans	$	7,242	Fair value of	Discount for type of property,	0% - 90% (35%)
			collateral	age of appraisal, and current
				status
Commercial real estate loans		29,125	Fair value of	Discount for type of property,	0% - 50% (35%)
			collateral	age of appraisal and current
				status
Foreclosed Assets
Residential		68	Fair value of	Discount for type of property,	15% - 16% (15%)
			collateral	age of appraisal, and current status

Financial instruments recorded using fair value option

Old National may elect to report most financial instruments and certain other items at fair value on an instrument-by instrument basis with changes in fair value reported in net income.  After the initial adoption, the election is made at the acquisition of an eligible financial asset, financial liability, or firm commitment or when certain specified reconsideration events occur.  The fair value election may not be revoked once an election is made.

Residential loans held for sale

Old National has elected the fair value option for residential loans held for sale.  For these loans, interest income is recorded in the consolidated statements of income based on the contractual amount of interest income earned on the financial assets (except any that are on nonaccrual status).  None of these loans are 90 days or more past due, nor are any on nonaccrual status.  Included in the income statement is interest income for loans held for sale totaling $0.4 million for the three months ended September 30, 2019 and $0.9 million for the nine months ended September 30, 2019, compared to $0.2 million for the three months ended September 30, 2018 and $0.3 million for the nine months ended September 30, 2018.

Old National has elected the fair value option for newly originated conforming fixed-rate and adjustable-rate first mortgage loans held for sale.  These loans are intended for sale and are hedged with derivative instruments.  Old National has elected the fair value option to mitigate accounting mismatches in cases where hedge accounting is complex and to achieve operational simplification.  The fair value option was not elected for loans held for investment.

The difference between the aggregate fair value and the aggregate remaining principal balance for loans for which the fair value option has been elected at September 30, 2019 and December 31, 2018 was as follows:

	Aggregate				Contractual
(dollars in thousands)	Fair Value		Difference		Principal
September 30, 2019
Residential loans held for sale	$	58,285	$	1,799	$	56,486
December 31, 2018
Residential loans held for sale	$	14,911	$	475	$	14,436

Accrued interest at period end is included in the fair value of the instruments.

The following table presents the amount of gains and losses from fair value changes included in income before income taxes for financial assets carried at fair value:

									Total Changes
									in Fair Values
	Other								Included in
	Gains and			Interest		Interest			Current Period
(dollars in thousands)	(Losses)			Income		(Expense)			Earnings
Three Months Ended September 30, 2019
Residential loans held for sale	$	137		$	2	$	—		$	139
Three Months Ended September 30, 2018
Residential loans held for sale	$	(368	)	$	3	$	—		$	(365	)
Nine Months Ended September 30, 2019
Residential loans held for sale	$	1,312		$	12	$	—		$	1,324
Nine Months Ended September 30, 2018
Residential loans held for sale	$	54		$	6	$	(4	)	$	56

The carrying amounts and estimated fair values of financial instruments not carried at fair value at September 30, 2019 and December 31, 2018 were as follows:

			Fair Value Measurements at September 30, 2019 Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash, due from banks, money market,    and other interest-earning investments	$	420,250	$	420,250	$	—	$	—
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies		33,321		—		34,446		—
Mortgage-backed securities - Agency		112,187		—		115,767		—
State and political subdivisions		261,773		—		275,375		—
Loans, net:
Commercial		2,928,430		—		—		2,882,142
Commercial real estate		5,087,869		—		—		5,046,715
Residential real estate		2,234,260		—		—		2,246,971
Consumer credit		1,710,179		—		—		1,671,597
Accrued interest receivable		80,747		34		24,183		56,530
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits	$	3,996,264	$	3,996,264	$	—	$	—
Checking, NOW, savings, and money market    interest-bearing deposits		8,622,025		8,622,025		—		—
Time deposits		1,830,063		—		1,842,750		—
Federal funds purchased and interbank borrowings		240,589		240,589		—		—
Securities sold under agreements to repurchase		337,551		337,551		—		—
FHLB advances		2,001,960		—		2,007,228		—
Other borrowings		251,763		—		262,921		—
Accrued interest payable		7,107		—		7,107		—
Standby letters of credit		573		—		—		573
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	5,925

			Fair Value Measurements at December 31, 2018 Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash, due from banks, money market,    and other interest-earning investments	$	317,165	$	317,165	$	—	$	—
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies		73,986		—		72,359		—
Mortgage-backed securities - Agency		127,120		—		124,409		—
State and political subdivisions		305,228		—		309,335		—
Loans, net:
Commercial		3,211,228		—		—		3,161,132
Commercial real estate		4,935,381		—		—		4,781,294
Residential real estate		2,246,127		—		—		2,225,853
Consumer credit		1,795,695		—		—		1,773,352
Accrued interest receivable		89,464		13		27,580		61,871
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits	$	3,965,380	$	3,965,380	$	—	$	—
Checking, NOW, savings, and money market    interest-bearing deposits		8,360,313		8,360,313		—		—
Time deposits		2,024,256		—		2,002,187		—
Federal funds purchased and interbank borrowings		270,135		270,135		—		—
Securities sold under agreements to repurchase		362,294		362,294		—		—
FHLB advances		1,613,481		—		1,611,103		—
Other borrowings		247,883		—		248,065		—
Accrued interest payable		9,871		—		9,871		—
Standby letters of credit		525		—		—		525
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	3,115

The methods utilized to measure the fair value of financial instruments at September 30, 2019 and December 31, 2018 represent an approximation of exit price, however, an actual exit price may differ.

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Acquisition and Divestiture Activity

9 Months Ended

Sep. 30, 2019

Business Combinations [Abstract]

Acquisition and Divestiture Activity

NOTE 3 – ACQUISITION AND DIVESTITURE ACTIVITY

Acquisition

Klein Financial, Inc.

Effective November 1, 2018, Old National completed the acquisition of Minnesota-based Klein through a 100% stock merger.  Klein was a bank holding company with KleinBank as its wholly-owned subsidiary.  Founded in 1907 and headquartered in Chaska, Minnesota with 18 full-service branches, KleinBank was the largest family-owned community bank serving the Twin Cities and its western communities.  Old National believes that it will be able to achieve cost savings by integrating the two companies and combining accounting, data processing, retail and lending support, and other administrative functions, which will enable Old National to achieve economies of scale in these areas.

Pursuant to the merger agreement, each holder of Klein common stock received 7.92 shares of Old National Common Stock per share of Klein common stock such holder owned.  The total fair value of consideration for Klein was $406.5 million, consisting of 22.8 million shares of Old National Common Stock valued at $406.5 million.  Through September 30, 2019, transaction and integration costs of $20.1 million associated with this acquisition have been expensed and remaining integration costs will be expensed as incurred.

During the three months ended September 30, 2019, immaterial adjustments were made to the provisional valuation of assets acquired and liabilities assumed as Old National finalized the valuation.  These adjustments affected goodwill, premises and equipment, and net deferred tax assets.  A summary of the fair values of the acquired assets, liabilities assumed, and resulting goodwill follows (in thousands):

Cash and cash equivalents	$	60,759
Investment securities		697,951
FHLB/Federal Reserve Bank stock		2,637
Loans held for sale		3,371
Loans		1,049,073
Premises and equipment		32,408
Accrued interest receivable		7,896
Company-owned life insurance		36,380
Net deferred tax assets		6,746
Other real estate owned		954
Other assets		10,299
Deposits		(1,713,086	)
Securities sold under agreements to repurchase		(19,481	)
Accrued expenses and other liabilities		(17,506	)
Net tangible assets acquired		158,401
Definite-lived intangible assets acquired		39,017
Loan servicing rights		285
Goodwill		208,771
Total consideration	$	406,474

Goodwill related to this acquisition will not be deductible for tax purposes.

The estimated fair value of the core deposit intangible was $39.0 million and is being amortized over an estimated useful life of 12 years.

Acquired loan data for Klein can be found in the table below:

					Best Estimate at
					Acquisition Date of
	Fair Value		Gross Contractual		Contractual Cash
	of Acquired Loans		Cash Flows at		Flows Not Expected
(in thousands)	at Acquisition Date		Acquisition Date		to be Collected
Acquired receivables subject to    ASC 310-30	$	11,663	$	18,568	$	4,521
Acquired receivables not subject    to ASC 310-30	$	1,037,410	$	1,252,954	$	76,534

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Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2019

Text Block [Abstract]

Loans and Allowance for Loan Losses

NOTE 7 – LOANS AND ALLOWANCE FOR LOAN LOSSES

Old National’s loans consist primarily of loans made to consumers and commercial clients in various industries including manufacturing, agribusiness, transportation, mining, wholesaling, and retailing.  Most of Old National’s lending activity occurs within our principal geographic markets of Indiana, Kentucky, Michigan, Wisconsin, and Minnesota.  Old National manages concentrations of credit exposure by industry, product, geography, customer relationship, and loan size.  While loans to lessors of both residential and non-residential real estate exceed 10% of total loans, no individual sub-segment category within those broader categories reaches the 10% threshold.

The composition of loans by lending classification was as follows:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Commercial (1)	$	2,950,559		$	3,232,970
Commercial real estate:
Construction		592,348			504,625
Other		4,519,775			4,454,226
Residential real estate		2,236,623			2,248,404
Consumer credit:
Home equity		555,905			589,322
Auto		1,005,535			1,059,633
Other		156,903			154,712
Total loans		12,017,648			12,243,892
Allowance for loan losses		(56,910	)		(55,461	)
Net loans	$	11,960,738		$	12,188,431

(1) Includes direct finance leases of $50.0 million at September 30, 2019 and $60.0 million at December 31, 2018.

The risk characteristics of each loan portfolio segment are as follows:

Commercial

Commercial loans are primarily based 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 customers.

Commercial Real Estate

These 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.

At 189%, Old National Bank’s commercial real estate loans as a percentage of its risk-based capital remained well below the regulatory guideline limit of 300% at September 30, 2019.

Residential

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.  Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Consumer

Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles.  Some consumer loans are unsecured such as small installment loans and certain lines of credit.  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 or other collateral values.  Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Allowance for Loan Losses

The allowance for loan losses is maintained at a level believed adequate by management to absorb probable losses incurred in the consolidated loan portfolio.  Management’s evaluation of the adequacy of the allowance is an estimate based on reviews of individual loans, pools of homogeneous loans, assessments of the impact of current and anticipated economic conditions on the portfolio, and historical loss experience.  The allowance is increased through a provision charged to operating expense.  Loans deemed to be uncollectible are charged to the allowance.  Recoveries of loans previously charged-off are added to the allowance.

We utilize a PD and LGD model as a tool to determine the adequacy of the allowance for loan losses for performing commercial and commercial real estate loans.  The PD is forecast using a transition matrix to determine the likelihood of a customer’s AQR migrating from its current AQR to any other status within the time horizon.  Transition rates are measured using Old National’s own historical experience.  The model assumes that recent historical transition rates will continue into the future.  The LGD is defined as credit loss incurred when an obligor

of the bank defaults.  The sum of all net charge-offs for a particular portfolio segment are divided by all loans that have defaulted over a given period of time. The expected loss derived from the model considers the PD, LGD, and exposure at default.  Additionally, qualitative factors, such as changes in lending policies or procedures, and economic business conditions are also considered.

We use historic loss ratios adjusted for economic conditions to determine the appropriate level of allowance for residential real estate and consumer loans.

No allowance was brought forward on any of the acquired loans as any credit deterioration evident in the loans was included in the determination of the fair value of the loans at the acquisition date.  An allowance for loan losses will be established for any subsequent credit deterioration or adverse changes in expected cash flows.

Old National’s activity in the allowance for loan losses for the three and nine months ended September 30, 2019 and 2018 was as follows:

				Commercial
(dollars in thousands)	Commercial			Real Estate			Residential			Consumer			Total
Three Months Ended September 30, 2019
Balance at beginning of period	$	22,548		$	23,311		$	2,269		$	8,164		$	56,292
Charge-offs		(420	)		(191	)		(384	)		(1,721	)		(2,716	)
Recoveries		374			669			26			828			1,897
Provision		(373	)		465			452			893			1,437
Balance at end of period	$	22,129		$	24,254		$	2,363		$	8,164		$	56,910
Three Months Ended September 30, 2018
Balance at beginning of period	$	21,387		$	22,498		$	1,867		$	7,908		$	53,660
Charge-offs		(1,662	)		(241	)		(284	)		(2,074	)		(4,261	)
Recoveries		467			944			45			1,108			2,564
Provision		(473	)		(309	)		292			1,240			750
Balance at end of period	$	19,719		$	22,892		$	1,920		$	8,182		$	52,713
Nine Months Ended September 30, 2019
Balance at beginning of period	$	21,742		$	23,470		$	2,277		$	7,972		$	55,461
Charge-offs		(1,184	)		(815	)		(702	)		(5,784	)		(8,485	)
Recoveries		1,083			2,444			107			2,817			6,451
Provision		488			(845	)		681			3,159			3,483
Balance at end of period	$	22,129		$	24,254		$	2,363		$	8,164		$	56,910
Nine Months Ended September 30, 2018
Balance at beginning of period	$	19,246		$	21,436		$	1,763		$	7,936		$	50,381
Charge-offs		(2,378	)		(675	)		(941	)		(6,006	)		(10,000	)
Recoveries		1,227			2,011			1,890			3,628			8,756
Provision		1,624			120			(792	)		2,624			3,576
Balance at end of period	$	19,719		$	22,892		$	1,920		$	8,182		$	52,713

The following table presents Old National’s recorded investment in loans by portfolio segment at September 30, 2019 and December 31, 2018 and other information regarding the allowance:

			Commercial
(dollars in thousands)	Commercial		Real Estate		Residential		Consumer		Total
September 30, 2019
Allowance for loan losses:
Individually evaluated for impairment	$	7,855	$	4,485	$	—	$	—	$	12,340
Collectively evaluated for impairment		14,273		19,621		2,363		7,968		44,225
Loans acquired with deteriorated    credit quality		1		148		—		196		345
Total allowance for loan losses	$	22,129	$	24,254	$	2,363	$	8,164	$	56,910
Loans and leases outstanding:
Individually evaluated for impairment	$	40,270	$	73,627	$	—	$	—	$	113,897
Collectively evaluated for impairment		2,904,851		5,016,357		2,228,965		1,715,701		11,865,874
Loans acquired with deteriorated    credit quality		5,438		22,139		7,658		2,642		37,877
Total loans and leases outstanding	$	2,950,559	$	5,112,123	$	2,236,623	$	1,718,343	$	12,017,648
December 31, 2018
Allowance for loan losses:
Individually evaluated for impairment	$	6,035	$	8,306	$	—	$	—	$	14,341
Collectively evaluated for impairment		15,700		14,845		2,276		7,821		40,642
Loans acquired with deteriorated    credit quality		7		319		1		151		478
Total allowance for loan losses	$	21,742	$	23,470	$	2,277	$	7,972	$	55,461
Loans and leases outstanding:
Individually evaluated for impairment	$	35,410	$	83,104	$	—	$	—	$	118,514
Collectively evaluated for impairment		3,191,367		4,850,356		2,239,147		1,800,115		12,080,985
Loans acquired with deteriorated    credit quality		6,193		25,391		9,257		3,552		44,393
Total loans and leases outstanding	$	3,232,970	$	4,958,851	$	2,248,404	$	1,803,667	$	12,243,892

Credit Quality

Old National’s management monitors the credit quality of its loans in an on-going manner.  Internally, management assigns an AQR to each non-homogeneous commercial and commercial real estate loan in the portfolio, with the exception of certain FICO-scored small business loans.  The primary determinants of the AQR are based upon 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:

Criticized.  Special mention loans that have a potential weakness that deserves management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Classified – Substandard.  Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Classified – Nonaccrual.  Loans classified as nonaccrual have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection in full, on the basis of currently existing facts, conditions, and values, in doubt.

Classified – Doubtful.  Loans classified as doubtful have all the weaknesses inherent in those classified as nonaccrual, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Pass rated loans are those loans that are other than criticized, classified – substandard, classified – nonaccrual, or classified – doubtful.

The risk category of commercial and commercial real estate loans by class of loans at September 30, 2019 and December 31, 2018 was as follows:

(dollars in thousands)					Commercial				Commercial
					Real Estate -				Real Estate -
Corporate Credit Exposure	Commercial				Construction				Other
Credit Risk Profile by	September 30,		December 31,		September 30,		December 31,		September 30,		December 31,
Internally Assigned Grade	2019		2018		2019		2018		2019		2018
Grade:
Pass	$	2,773,941	$	3,029,130	$	553,854	$	460,158	$	4,251,014	$	4,167,902
Criticized		89,079		98,798		24,839		29,368		119,601		110,586
Classified - substandard		49,659		66,394		—		1,275		92,372		102,961
Classified - nonaccrual		30,067		29,003		13,655		13,824		37,972		37,441
Classified - doubtful		7,813		9,645		—		—		18,816		35,336
Total	$	2,950,559	$	3,232,970	$	592,348	$	504,625	$	4,519,775	$	4,454,226

Old National considers the performance of the loan portfolio and its impact on the allowance for loan losses.  For residential and consumer loan classes, Old National also evaluates credit quality based on the aging status of the loan and by payment activity.  The following table presents the recorded investment in residential and consumer loans based on payment activity at September 30, 2019 and December 31, 2018:

			Consumer
			Home
(dollars in thousands)	Residential		Equity		Auto		Other
September 30, 2019
Performing	$	2,215,864	$	551,129	$	1,002,091	$	155,707
Nonperforming		20,759		4,776		3,444		1,196
Total	$	2,236,623	$	555,905	$	1,005,535	$	156,903
December 31, 2018
Performing	$	2,223,450	$	586,235	$	1,057,038	$	153,113
Nonperforming		24,954		3,087		2,595		1,599
Total	$	2,248,404	$	589,322	$	1,059,633	$	154,712

Impaired Loans

Large commercial credits are subject to individual evaluation for impairment.  Retail credits and other small balance credits that are part of a homogeneous group are not tested for individual impairment unless they are modified as a TDR.  A loan is considered impaired when it is probable that contractual interest and principal payments will not be collected either for the amounts or by the dates as scheduled in the loan agreement.  If a loan is impaired, a portion of the allowance is allocated so that the loan is reported net, at the present value of estimated cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral.  Old National’s policy, for all but PCI loans, is to recognize interest income on impaired loans unless the loan is placed on nonaccrual status.

The following table shows Old National’s impaired loans at September 30, 2019 and December 31, 2018, respectively.  Only purchased loans that have experienced subsequent impairment since the date acquired (excluding loans acquired with deteriorated credit quality) are included in the table below.

			Unpaid
	Recorded		Principal		Related
(dollars in thousands)	Investment		Balance		Allowance
September 30, 2019
With no related allowance recorded:
Commercial	$	19,154	$	19,462	$	—
Commercial Real Estate - Construction		10,890		10,890		—
Commercial Real Estate - Other		38,517		39,942		—
Residential		1,783		1,803		—
Consumer		1,137		1,303		—
With an allowance recorded:
Commercial		21,116		21,169		7,855
Commercial Real Estate - Construction		2,764		2,764		1,183
Commercial Real Estate - Other		21,456		21,456		3,302
Residential		990		990		39
Consumer		1,065		1,065		53
Total	$	118,872	$	120,844	$	12,432
December 31, 2018
With no related allowance recorded:
Commercial	$	22,031	$	22,292	$	—
Commercial Real Estate - Other		41,126		41,914		—
Residential		2,276		2,296		—
Consumer		362		535		—
With an allowance recorded:
Commercial		13,379		13,432		6,035
Commercial Real Estate - Construction		13,824		13,824		1,830
Commercial Real Estate - Other		28,154		28,154		6,476
Residential		889		889		44
Consumer		2,013		2,013		101
Total	$	124,054	$	125,349	$	14,486

The average balance of impaired loans during the three and nine months ended September 30, 2019 and 2018 are included in the table below.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in thousands)		2019		2018		2019		2018
Average Recorded Investment
With no related allowance recorded:
Commercial	$	20,147	$	19,960	$	20,593	$	20,445
Commercial Real Estate - Construction		10,964		—		5,445		—
Commercial Real Estate - Other		34,073		45,302		39,821		42,209
Residential		2,066		2,303		2,145		2,289
Consumer		1,166		1,392		1,096		1,617
With an allowance recorded:
Commercial		19,866		14,771		17,248		10,393
Commercial Real Estate - Construction		2,764		11,307		8,294		7,537
Commercial Real Estate - Other		21,019		24,305		24,806		26,537
Residential		924		863		907		887
Consumer		1,204		1,909		1,260		2,013
Total	$	114,193	$	122,112	$	121,615	$	113,927

Old National does not record interest on nonaccrual loans until principal is recovered.  Interest income recognized on impaired loans during the three and nine months ended September 30, 2019 and 2018 was immaterial.

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 during the current year on such loans is reversed against interest income.  Interest accrued in the prior year, if any, is charged to the allowance for loan losses.  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.

Loans accounted for under FASB ASC Topic 310-30 accrue interest, even though they may be contractually past due, as any nonpayment of contractual principal or interest is considered in the periodic re-estimation of expected cash flows and is included in the resulting recognition of current period loan loss provision or prospective yield adjustments.

Old National’s past due loans at September 30, 2019 and December 31, 2018 were as follows:

					Past Due
					90 Days or
	30-59 Days		60-89 Days		More and				Total
(dollars in thousands)	Past Due		Past Due		Accruing		Nonaccrual (1)		Past Due		Current
September 30, 2019
Commercial	$	2,218	$	1,181	$	100	$	37,880	$	41,379	$	2,909,180
Commercial Real Estate:
Construction		—		300		—		13,655		13,955		578,393
Other		549		90		—		56,788		57,427		4,462,348
Residential		8,620		3,546		64		20,759		32,989		2,203,634
Consumer:
Home equity		1,008		118		233		4,776		6,135		549,770
Auto		6,069		769		190		3,444		10,472		995,063
Other		695		105		116		1,196		2,112		154,791
Total loans	$	19,159	$	6,109	$	703	$	138,498	$	164,469	$	11,853,179
December 31, 2018
Commercial	$	3,627	$	279	$	52	$	38,648	$	42,606	$	3,190,364
Commercial Real Estate:
Construction		—		—		—		13,824		13,824		490,801
Other		1,633		500		40		72,777		74,950		4,379,276
Residential		25,947		3,437		258		24,954		54,596		2,193,808
Consumer:
Home equity		1,434		960		456		3,087		5,937		583,385
Auto		7,091		1,903		377		2,595		11,966		1,047,667
Other		711		210		170		1,599		2,690		152,022
Total loans	$	40,443	$	7,289	$	1,353	$	157,484	$	206,569	$	12,037,323

(1) Includes purchased credit impaired loans of $11.0 million at September 30, 2019 and $20.5 million at December 31, 2018 that are categorized as nonaccrual for credit analysis purposes because the collection of principal or interest is doubtful.  However, these loans are accounted for under FASB ASC 310-30 and accordingly treated as performing assets.

Loan Participations

Old National has loan participations, which qualify as participating interests, with other financial institutions.  At September 30, 2019, these loans totaled $891.9 million, of which $416.0 million had been sold to other financial institutions and $475.9 million 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 among the participating interest holders in proportion to each holder’s share of ownership; and no holder has the right to pledge the entire financial asset unless all participating interest holders agree.

Troubled Debt Restructurings

Old National may choose to restructure the contractual terms of certain loans.  The decision to restructure a loan, versus aggressively enforcing the collection of the loan, may benefit Old National by increasing the ultimate probability of collection.

Any loans that are modified are reviewed by Old National to identify if a TDR has occurred, which is when for economic or legal reasons related to a borrower’s financial difficulties, Old National Bank grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status.  The modification of the terms of such loans include one or a combination of the following:  a reduction of the stated interest rate of the loan, an extension of the maturity date at a stated rate of interest lower than the current market rate of new debt with similar risk, or a permanent reduction of the recorded investment of the loan.

Loans modified in a TDR are typically placed on nonaccrual status until we determine the future collection of principal and interest is reasonably assured, which generally requires that the borrower demonstrate a period of performance according to the restructured terms for six months.

If we are unable to resolve a nonperforming loan issue, the credit will be charged off when it is apparent there will be a loss.  For large commercial type loans, each relationship is individually analyzed for evidence of apparent loss based on quantitative benchmarks or subjectively based upon certain events or particular circumstances.  Generally, Old National charges off small commercial loans scored through our small business credit center with contractual balances under $250,000 that are 90 days or more delinquent and do not have adequate collateral support.  For residential and consumer loans, a charge off is recorded at the time foreclosure is initiated or when the loan becomes 120 to 180 days past due, whichever is earlier.

For commercial TDRs, an allocated reserve is established within the allowance for loan losses for the difference between the carrying value of the loan and its computed value.  To determine the value of the loan, one of the following methods is selected: (1) the present value of expected cash flows discounted at the loan’s original effective interest rate, (2) the loan’s observable market price, or (3) the fair value of the collateral value, if the loan is collateral dependent.  The allocated reserve is established as the difference between the carrying value of the loan and the collectable value.  If there are significant changes in the amount or timing of the loan’s expected future cash flows, impairment is recalculated and the valuation allowance is adjusted accordingly.

When a residential or consumer loan is identified as a TDR, the loan is typically written down to its collateral value less selling costs.

The following table presents activity in TDRs for the three and nine months ended September 30, 2019 and 2018:

				Commercial
(dollars in thousands)	Commercial			Real Estate			Residential			Consumer			Total
Three Months Ended September 30, 2019
Balance at beginning of period	$	18,872		$	19,363		$	3,080		$	2,516		$	43,831
(Charge-offs)/recoveries		12			13			—			7			32
(Payments)/disbursements		(2,303	)		(1,057	)		(865	)		(322	)		(4,547	)
Additions		530			—			557			—			1,087
Balance at end of period	$	17,111		$	18,319		$	2,772		$	2,201		$	40,403
Three Months Ended September 30, 2018
Balance at beginning of period	$	9,043		$	34,927		$	3,771		$	3,398		$	51,139
(Charge-offs)/recoveries		(7	)		753			—			3			749
(Payments)/disbursements		453			(6,601	)		(75	)		(200	)		(6,423	)
Additions		1,954			—			—			—			1,954
Balance at end of period	$	11,443		$	29,079		$	3,696		$	3,201		$	47,419
Nine Months Ended September 30, 2019
Balance at beginning of period	$	10,275		$	27,671		$	3,390		$	2,374		$	43,710
(Charge-offs)/recoveries		(89	)		(58	)		—			8			(139	)
(Payments)/disbursements		(3,307	)		(19,321	)		(1,175	)		(497	)		(24,300	)
Additions		10,232			10,027			557			316			21,132
Balance at end of period	$	17,111		$	18,319		$	2,772		$	2,201		$	40,403
Nine Months Ended September 30, 2018
Balance at beginning of period	$	12,088		$	34,705		$	3,315		$	3,895		$	54,003
(Charge-offs)/recoveries		(158	)		731			23			(19	)		577
(Payments)/disbursements		(3,525	)		(7,570	)		(144	)		(1,107	)		(12,346	)
Additions		3,038			1,213			502			432			5,185
Balance at end of period	$	11,443		$	29,079		$	3,696		$	3,201		$	47,419

TDRs included with nonaccrual loans totaled $21.8 million at September 30, 2019 and $26.3 million at December 31, 2018.  Old National has allocated specific reserves to customers whose loan terms have been modified in TDRs totaling $6.3 million at September 30, 2019 and $3.0 million at December 31, 2018.  At September 30, 2019, Old National had committed to lend an additional $1.8 million to customers with outstanding loans that are classified as TDRs.

The pre-modification and post-modification outstanding recorded investments of loans modified as TDRs during the nine months ended September 30, 2019 and 2018 are the same except for when the loan modifications involve the forgiveness of principal.  The following table presents loans by class modified as TDRs that occurred during the nine months ended September 30, 2019 and 2018:

		Pre-modification		Post-modification
		Outstanding		Outstanding
	Number	Recorded		Recorded
(dollars in thousands)	of Loans	Investment		Investment
Nine Months Ended September 30, 2019
TDR:
Commercial	8	$	10,232	$	10,232
Commercial Real Estate - Other	4		10,027		10,027
Residential	1		557		557
Consumer	1		316		316
Total	14	$	21,132	$	21,132
Nine Months Ended September 30, 2018
TDR:
Commercial	5	$	3,038	$	3,038
Commercial Real Estate - Other	2		1,213		1,213
Residential	1		502		502
Consumer	1		432		432
Total	9	$	5,185	$	5,185

The TDRs that occurred during the nine months ended September 30, 2019 decreased the allowance for loan losses by $0.7 million and resulted in no charge-offs during the nine months ended September 30, 2019.  The TDRs that occurred during the nine months ended September 30, 2018 did not have a material impact on the allowance for loan losses and resulted in no charge-offs during the nine months ended September 30, 2018.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

TDRs for which there was a payment default within twelve months following the modification were insignificant during the nine months ended September 30, 2019 and 2018.

The terms of certain other loans were modified during 2019 and 2018 that did not meet the definition of a TDR.  It is our process to review all classified and criticized loans that, during the period, have been renewed, have entered into a forbearance agreement, have gone from principal and interest to interest only, or have extended the maturity date.  In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on its debt in the foreseeable future without the modification.  The evaluation is performed under our internal underwriting policy.  We also evaluate whether a concession has been granted or if we were adequately compensated through a market interest rate, additional collateral or a bona fide guarantee.  We also consider whether the modification was insignificant relative to the other terms of the agreement or the delay in a payment.

PCI loans are not considered impaired until after the point at which there has been a degradation of cash flows below our expected cash flows at acquisition.  If a PCI loan is subsequently modified, and meets the definition of a TDR, it will be removed from PCI accounting and accounted for as a TDR only if the PCI loan was being accounted for individually.  If the PCI loan is being accounted for as part of a pool, it will not be removed from the pool.  As of September 30, 2019, it has not been necessary to remove any loans from PCI accounting.

In general, once a modified loan is considered a TDR, the loan will always be considered a TDR, and therefore impaired, until it is paid in full, otherwise settled, sold, or charged off.  However, guidance also permits for loans to be removed from TDR status when subsequently restructured under these circumstances: (1) at the time of the subsequent restructuring, the borrower is not experiencing financial difficulties, and this is documented by a current credit evaluation at the time of the restructuring, (2) under the terms of the subsequent restructuring agreement, the institution has granted no concession to the borrower; and (3) the subsequent restructuring agreement includes market terms that are no less favorable than those that would be offered for a comparable new loan.  For loans

subsequently restructured that have cumulative principal forgiveness, the loan should continue to be measured in accordance with ASC 310-10, Receivables – Overall. However, consistent with ASC 310-40-50-2, Troubled Debt Restructurings by Creditors, Creditor Disclosure of Troubled Debt Restructurings, the loan would not be required to be reported in the years following the restructuring if the subsequent restructuring meets both of these criteria: (1) has an interest rate at the time of the subsequent restructuring that is not less than a market interest rate; and (2) is performing in compliance with its modified terms after the subsequent restructuring.

Purchased Credit Impaired Loans

Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date with no carryover of the related allowance for loan and lease losses.  In determining the estimated fair value of purchased loans, management considers a number of factors including, among others, the remaining life of the acquired loans, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral, and net present value of cash flows expected to be received.  Purchased loans are accounted for in accordance with guidance for certain loans acquired in a transfer (ASC 310-30), when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition that the acquirer will not collect all contractually required principal and interest payments.  The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference.  Subsequent decreases to the expected cash flows will generally result in a provision for loan and lease losses.  Subsequent increases in expected cash flows will result in a reversal of the provision for loan losses to the extent of prior charges and then an adjustment to accretable yield, which would have a positive impact on interest income prospectively.

Old National has purchased loans for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.  The carrying amount of those loans was as follows:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Commercial	$	5,438		$	6,193
Commercial real estate		22,139			25,391
Residential		7,658			9,257
Consumer		2,642			3,552
Carrying amount		37,877			44,393
Allowance for loan losses		(345	)		(478	)
Carrying amount, net of allowance	$	37,532		$	43,915

The outstanding balance of loans accounted for under ASC 310-30, including contractual principal, interest, fees and penalties, was $229.8 million at September 30, 2019 and $246.9 million at December 31, 2018.

The accretable difference on PCI loans is the difference between the expected cash flows and the net present value of expected cash flows with such difference accreted into earnings using the effective yield method over the term of the loans.  Accretion recorded as loan interest income totaled $4.8 million during the three months ended September 30, 2019 and $9.0 million during the nine months ended September 30, 2019, compared to $1.9 million during the three months ended September 30, 2018 and $8.9 million during the nine months ended September 30, 2018. Improvement in cash flow expectations has resulted in a reclassification from nonaccretable difference to accretable yield as shown in the table below.

Accretable yield of PCI loans, or income expected to be collected, was as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)	2019			2018			2019			2018
Balance at beginning of period	$	22,414		$	24,249		$	25,051		$	27,835
Accretion of income		(4,848	)		(1,854	)		(8,988	)		(8,927	)
Reclassifications from (to) nonaccretable difference		620			1,599			2,202			5,065
Disposals/other adjustments		118			1			39			22
Balance at end of period	$	18,304		$	23,995		$	18,304		$	23,995

Included in Old National’s allowance for loan losses is $0.3 million related to the purchased loans disclosed above at September 30, 2019 and $0.5 million at December 31, 2018.

PCI loans purchased during 2018 for which it was probable at acquisition that all contractually required payments would not be collected were as follows:

(dollars in thousands)	Klein (1)
Contractually required payments	$	18,568
Nonaccretable difference		(4,521	)
Cash flows expected to be collected at acquisition		14,047
Accretable yield		(2,384	)
Fair value of acquired loans at acquisition	$	11,663

(1) Old National acquired Klein effective November 1, 2018.

Income is not recognized on PCI loans if Old National cannot reasonably estimate cash flows expected to be collected.  Old National had no PCI loans for which it cannot reasonably estimate cash flows expected to be collected.

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

NOTE 11 – GOODWILL AND OTHER INTANGIBLE ASSETS

The following table shows the changes in the carrying amount of goodwill for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in thousands)	2019		2018		2019		2018
Balance at beginning of period	$	1,036,258	$	828,804	$	1,036,258	$	828,051
Acquisition adjustments		736		—		736		753
Balance at end of period	$	1,036,994	$	828,804	$	1,036,994	$	828,804

Old National performed the required annual goodwill impairment test as of August 31, 2019 and there was no impairment.  No events or circumstances since the August 31, 2019 annual impairment test were noted that would indicate it was more likely than not a goodwill impairment exists.  See Note 3 to the consolidated financial statements for detail regarding changes in goodwill associated with acquisitions.

The gross carrying amount and accumulated amortization of other intangible assets at September 30, 2019 and December 31, 2018 were as follows:

	Gross		Accumulated			Net
	Carrying		Amortization			Carrying
(dollars in thousands)	Amount		and Impairment			Amount
September 30, 2019
Core deposit	$	119,051	$	(59,398	)	$	59,653
Customer trust relationships		16,547		(12,149	)		4,398
Total intangible assets	$	135,598	$	(71,547	)	$	64,051
December 31, 2018
Core deposit	$	129,100	$	(57,524	)	$	71,576
Customer trust relationships		16,547		(11,107	)		5,440
Total intangible assets	$	145,647	$	(68,631	)	$	77,016

Other intangible assets consist of core deposit intangibles and customer relationship intangibles and are being amortized primarily on an accelerated basis over their estimated useful lives, generally over a period of 5 to 15 years.

Old National reviews other intangible assets for possible impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable.  No impairment charges were recorded during the nine months ended September 30, 2019 or 2018.  Total amortization expense associated with intangible assets was $4.2 million for the three months ended September 30, 2019 and $13.0 million for the nine months ended September 30, 2019, compared to $3.3 million for the three months ended September 30, 2018 and $10.3 million for the nine months ended September 30, 2018.

Estimated amortization expense for future years is as follows:

(dollars in thousands)
2019 remaining	$	3,945
2020		14,091
2021		11,336
2022		9,014
2023		7,053
Thereafter		18,612
Total	$	64,051

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Federal Home Loan Bank Advances

9 Months Ended

Sep. 30, 2019

Banking And Thrift [Abstract]

Federal Home Loan Bank Advances

NOTE 15 – FEDERAL HOME LOAN BANK ADVANCES

The following table summarizes Old National Bank’s FHLB advances at September 30, 2019 and December 31, 2018:

	September 30,		December 31,
(dollars in thousands)	2019		2018
FHLB advances (fixed rates 0.68% to 4.96%    and variable rates 2.29% to 2.45%) maturing    October 2019 to August 2029	$	1,977,644	$	1,603,643
ASC 815 fair value hedge and other basis adjustments		24,316		9,838
Total other borrowings	$	2,001,960	$	1,613,481

FHLB advances had weighted-average rates of 2.19%  at September 30, 2019 and 2.56% at December 31, 2018.  Investment securities and residential real estate loans collateralize these borrowings up to 140%  of outstanding debt.

Contractual maturities of FHLB advances at September 30, 2019 were as follows:

(dollars in thousands)
Due in 2019	$	200,480
Due in 2020		50,000
Due in 2021		20,000
Due in 2022		157,000
Due in 2023		164
Thereafter		1,550,000
ASC 815 fair value hedge and other basis adjustments		24,316
Total	$	2,001,960

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Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 19 – INCOME TAXES

Following is a summary of the major items comprising the differences in taxes from continuing operations computed at the federal statutory rate and as recorded in the consolidated statements of income:

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
(dollars in thousands)		2019				2018				2019				2018
Provision at statutory rate of 21%	$	17,437			$	11,901			$	48,245			$	33,171
Tax-exempt income:
Tax-exempt interest		(2,511	)			(2,179	)			(7,645	)			(6,607	)
Section 291/265 interest disallowance		113				84				346				220
Company-owned life insurance income		(568	)			(621	)			(1,806	)			(1,679	)
Tax-exempt income		(2,966	)			(2,716	)			(9,105	)			(8,066	)
State income taxes		1,496				2,091				5,053				4,307
Interim period effective rate adjustment		(1,598	)			(81	)			(557	)			944
Tax credit investments - federal		(2,443	)			(5,483	)			(3,577	)			(16,224	)
Other, net		1,328				(387	)			658				495
Income tax expense	$	13,254			$	5,325			$	40,717			$	14,627
Effective tax rate		16.0		%		9.4		%		17.7		%		9.3		%

In accordance with ASC 740-270, Accounting for Interim Reporting, the provision for income taxes was recorded at September 30, 2019 and 2018 based on the current estimate of the effective annual rate.

The higher effective tax rate during the three and nine months ended September 30, 2019 when compared to the three and nine months ended September 30, 2018 is primarily the result of a decrease in federal tax credits available as well as an increase in pre-tax book income.

Unrecognized Tax Benefits

Old National has an immaterial amount of unrecognized tax benefits.  Old National is currently under audit by the Internal Revenue Service.  Old National expects the total amount of unrecognized tax benefits to be reduced to zero after the audit is finalized.

Net Deferred Tax Assets

Significant components of net deferred tax assets (liabilities) were as follows at September 30, 2019 and December 31, 2018:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Deferred Tax Assets
Allowance for loan losses, net of recapture	$	14,651		$	14,514
Benefit plan accruals		17,144			21,754
Alternative minimum tax credit		1,272			2,545
Net operating loss carryforwards		25,369			31,765
Federal tax credits		—			1,779
Deferred gain on securities		1,563			1,976
Acquired loans		18,872			26,956
Operating lease liabilities		28,460			—
Lease exit obligation		—			1,025
Unrealized losses on available-for-sale investment securities		—			11,853
Unrealized losses on held-to-maturity investment securities		1,869			2,497
Tax credit investments and other partnerships		1,501			3,004
Other real estate owned		156			144
Other, net		738			3,167
Total deferred tax assets		111,595			122,979
Deferred Tax Liabilities
Accretion on investment securities		(897	)		(595	)
Purchase accounting		(17,575	)		(18,100	)
Loan servicing rights		(6,104	)		(6,141	)
Premises and equipment		(11,840	)		(8,507	)
Prepaid expenses		(673	)		(681	)
Operating lease right-of-use assets		(27,348	)		—
Unrealized gains on available-for-sale investment securities		(18,152	)		—
Unrealized gains on hedges		(374	)		(358	)
Other, net		(2,109	)		(1,549	)
Total deferred tax liabilities		(85,072	)		(35,931	)
Net deferred tax assets	$	26,523		$	87,048

Through the acquisition of Anchor (WI) in the second quarter of 2016 and Lafayette Savings Bank in the fourth quarter of 2014, both former thrifts, Old National Bank’s retained earnings at September 30, 2019 include base-year bad debt reserves, created for tax purposes prior to 1988, totaling $52.8 million.  Of this total, $50.9 million was acquired from Anchor (WI), and $1.9 million was acquired from Lafayette Savings Bank.  Base-year reserves are subject to recapture in the unlikely event that Old National Bank (1) makes distributions in excess of current and accumulated earnings and profits, as calculated for federal income tax purposes, (2) redeems its stock, or (3) liquidates.  Old National Bank has no intention of making such a nondividend distribution.  Accordingly, under current accounting principles, a related deferred income tax liability of $13.0 million has not been recognized.

No valuation allowance was recorded at September 30, 2019 or December 31, 2018 because, based on current expectations, Old National believes it will generate sufficient income in future years to realize deferred tax assets.  Old National has federal net operating loss carryforwards totaling $78.5 million at September 30, 2019 and $104.5 million at December 31, 2018.  This federal net operating loss was acquired from the acquisition of Anchor (WI) in 2016.  If not used, the federal net operating loss carryforwards will expire from 2029 to 2033.  Old National has alternative minimum tax (“AMT”) credit carryforwards totaling $1.3 million at September 30, 2019 and $10.1 million at December 31, 2018.  The enactment of H.R. 1 eliminates the parallel tax system known as the AMT and allows any existing AMT credits to be used to reduce regular tax or be refunded from 2018 to 2021. ASC 740 allows for the reclassification of the AMT credit from a deferred tax asset to a current tax asset, except for the amount limited by section 382.  Old National has $1.3 million of AMT credit carryforward subject to section 382 limitations, which is included in deferred tax assets.  Old National has recorded state net operating loss carryforwards totaling $148.4 million at September 30, 2019 and $165.6 million at December 31, 2018.  If not used,

the state net operating loss carryforwards will expire from 2024 to 2033.  Old National had federal tax credit carryforwards of $1.8 million at December 31, 2018.

The federal and recorded state net operating loss carryforwards are subject to an annual limitation under Internal Revenue Code section 382.  Old National believes that all of the recorded net operating loss carryforwards will be used prior to expiration.

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Investment Securities - Expected Maturities of Investment Securities Portfolio (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Sep. 28, 2018
Investments Debt And Equity Securities [Abstract]
Available-for-Sale, Maturity, Within one year, Amortized Cost	$ 155,063
Available-for-Sale, Maturity, One to five years, Amortized Cost	2,900,031
Available-for-Sale, Maturity, Five to ten years, Amortized Cost	767,785
Available-for-Sale, Maturity, Beyond ten years, Amortized Cost	1,011,706
Available-for-Sale, Amortized Cost	4,834,585	$ 4,172,617
Held-to-Maturity, Maturity, Within one year, Amortized Cost	3,621
Held-to-Maturity, Maturity, One to five years, Amortized Cost	108,113
Held-to-Maturity, Maturity, Five to ten years, Amortized Cost	106,591
Held-to-Maturity, Maturity, Beyond ten years, Amortized Cost	188,956
Held-to-Maturity, Amortized Cost	407,281	506,334	$ 512,207
Available-for-Sale, Maturity, Within one year, Fair Value	154,941
Available-for-Sale, Maturity, One to five years, Fair Value	2,941,365
Available-for-Sale, Maturity, Five to ten years, Fair Value	787,301
Available-for-Sale, Maturity, Beyond ten years, Fair Value	1,033,372
Available-for-Sale securities, Fair Value	4,916,979	4,123,416	$ 3,272,456
Held-to-Maturity, Maturity, Within one year, Fair Value	3,644
Held-to-Maturity, Maturity, One to five years, Fair Value	111,340
Held-to-Maturity, Maturity, Five to ten years, Fair Value	111,513
Held-to-Maturity, Maturity, Beyond ten years, Fair Value	199,091
Held-to-Maturity, Fair Value	$ 425,588	$ 506,103		$ 505,566
Available-for-Sale, Maturity, Within one year, Weighted Average Yield	2.47%
Available-for-Sale, Maturity, One to five years, Weighted Average Yield	2.78%
Available-for-Sale, Maturity, Five to ten years, Weighted Average Yield	3.17%
Available-for-Sale, Maturity, Beyond ten years, Weighted Average Yield	3.23%
Available-for-Sale, Weighted Average Yield	2.93%
Held-to-Maturity, Maturity, Within one year, Weighted Average Yield	3.66%
Held-to-Maturity, Maturity, One to five years, Weighted Average Yield	3.28%
Held-to-Maturity, Maturity, Five to ten years, Weighted Average Yield	3.96%
Held-to-Maturity, Maturity, Beyond ten years, Weighted Average Yield	4.22%
Held-to-Maturity, Weighted Average Yield	3.90%

XML

Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash Flows From Operating Activities
Net income	$ 189,021	$ 143,332
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation	19,980	17,666
Amortization of other intangible assets	12,965	10,308
Amortization of tax credit investments	2,039	21,807
Net premium amortization on investment securities	13,199	11,290
Accretion income related to acquired loans	(33,465)	(29,525)
Share-based compensation expense	5,946	5,629
Excess tax (benefit) expense on share-based compensation	(1,057)	416
Provision for loan losses	3,483	3,576
Net debt securities (gains) losses	(1,486)	(2,417)
Net (gains) losses on sales of loans and other assets	(3,815)	(215)
Increase in cash surrender value of company-owned life insurance	(8,602)	(7,993)
Residential real estate loans originated for sale	(564,457)	(377,702)
Proceeds from sales of residential real estate loans	528,739	378,849
(Increase) decrease in interest receivable	8,717	5,112
(Increase) decrease in other assets	(1,695)	5,947
Increase (decrease) in accrued expenses and other liabilities	(32,816)	(7,866)
Net cash flows provided by (used in) operating activities	136,696	178,214
Cash Flows From Investing Activities
Purchases of investment securities available-for-sale	(1,713,799)	(446,276)
Purchases of Federal Home Loan Bank/Federal Reserve Bank stock	(21,142)	(16,520)
Proceeds from maturities, prepayments, and calls of investment securities available-for-sale	810,397	316,239
Proceeds from sales of investment securities available-for-sale	295,615	136,648
Proceeds from maturities, prepayments, and calls of investment securities held-to-maturity	99,913	49,520
Proceeds from sales of Federal Home Loan Bank/Federal Reserve Bank stock	21	0
Proceeds from sales of equity securities	130	128
Proceeds from sale of student loan portfolio		70,674
Loan originations and payments, net	257,675	(211,199)
Proceeds from company-owned life insurance death benefits	5,716	6,501
Proceeds from sales of premises and equipment and other assets	3,038	6,013
Purchases of premises and equipment and other assets	(31,095)	(24,704)
Net cash flows provided by (used in) investing activities	(293,531)	(112,976)
Cash Flows From Financing Activities
Deposits	98,403	(7,703)
Federal funds purchased and interbank borrowings	(29,546)	114,998
Securities sold under agreements to repurchase	(24,743)	(64,979)
Other borrowings	3,744	2,427
Payments for maturities of Federal Home Loan Bank advances	(375,999)	(998,801)
Proceeds from Federal Home Loan Bank advances	750,000	945,000
Cash dividends paid on common stock	(67,424)	(59,394)
Common stock repurchased	(95,214)	(1,776)
Proceeds from exercise of stock options	280	948
Common stock issued	419	371
Net cash flows provided by (used in) financing activities	259,920	(68,909)
Net increase (decrease) in cash and cash equivalents	103,085	(3,671)
Cash and cash equivalents at beginning of period	317,165	290,432
Cash and cash equivalents at end of period	420,250	286,761
Supplemental cash flow information:
Total interest paid	101,224	65,880
Total taxes paid (net of refunds)	2,954	1,681
Investment securities purchased but not settled	64,924	2,291
Securities transferred from held-to-maturity to available-for-sale	0	447,026
Securities transferred from available-for-sale to held-to-maturity	0	323,990
Operating lease right-of-use assets obtained in exchange for lease obligations	117,853	0
Finance lease right-of-use assets obtained in exchange for lease obligations	$ 7,871	$ 0

XML

Leases - Schedule of Supplemental Cash Flow Information Related to Leases (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 13,201
Operating cash flows from finance leases	241
Financing cash flows from finance leases	$ 344

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Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($)		3 Months Ended		9 Months Ended
	Aug. 31, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Goodwill [Line Items]
Goodwill impairment	$ 0
Amortization of other intangible assets		$ 4,168,000	$ 3,283,000	$ 12,965,000	$ 10,308,000
Impairment charges				$ 0	$ 0
Core Deposits and Other Intangible Assets [Member] | Minimum [Member]
Goodwill [Line Items]
Estimated useful lives of core deposits and customer relationships				5 years
Core Deposits and Other Intangible Assets [Member] | Maximum [Member]
Goodwill [Line Items]
Estimated useful lives of core deposits and customer relationships				15 years

XML

Loans Held for Sale - Additional Information (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Servicing Assets at Fair Value [Line Items]
Mortgage loans held for sale	$ 58,285	$ 14,911	$ 21,384
Residential Mortgage Loans [Member]
Servicing Assets at Fair Value [Line Items]
Mortgage loans held for sale	$ 58,300	$ 14,900

XML

Fair Value - Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Equity securities	$ 6,562	$ 5,582	$ 5,828
Investment securities available-for-sale	4,916,979	4,123,416	3,272,456
Derivative assets	70,346	29,005
Derivative liabilities	15,484	12,550
U.S. Treasury [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	5,494	5,301	5,237
U.S. Government-Sponsored Entities and Agencies [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	486,104	628,151	611,696
Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	3,136,180	2,209,295	1,508,692
States and Political Subdivisions [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	969,475	940,429	$ 792,666
Pooled Trust Preferred Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	7,695	8,495
Other Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	312,031	331,745
Fair Value on Recurring Basis [Member] | Carrying Value [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Equity securities	6,562	5,582
Residential loans held for sale	58,285	14,911
Derivative assets	70,346	29,005
Derivative liabilities	15,484	12,550
Fair Value on Recurring Basis [Member] | Carrying Value [Member] | U.S. Treasury [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	5,494	5,301
Fair Value on Recurring Basis [Member] | Carrying Value [Member] | U.S. Government-Sponsored Entities and Agencies [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	486,104	628,151
Fair Value on Recurring Basis [Member] | Carrying Value [Member] | Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	3,136,180	2,209,295
Fair Value on Recurring Basis [Member] | Carrying Value [Member] | States and Political Subdivisions [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	969,475	940,429
Fair Value on Recurring Basis [Member] | Carrying Value [Member] | Pooled Trust Preferred Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	7,695	8,495
Fair Value on Recurring Basis [Member] | Carrying Value [Member] | Other Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	312,031	331,745
Fair Value on Recurring Basis [Member] | Estimate of Fair Value Measurement [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Equity securities	6,562	5,582
Fair Value on Recurring Basis [Member] | Estimate of Fair Value Measurement [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Residential loans held for sale	58,285	14,911
Derivative assets	70,346	29,005
Derivative liabilities	15,484	12,550
Fair Value on Recurring Basis [Member] | Estimate of Fair Value Measurement [Member] | U.S. Treasury [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	5,494	5,301
Fair Value on Recurring Basis [Member] | Estimate of Fair Value Measurement [Member] | U.S. Government-Sponsored Entities and Agencies [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	486,104	628,151
Fair Value on Recurring Basis [Member] | Estimate of Fair Value Measurement [Member] | Mortgage-Backed Securities - Agency [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	3,136,180	2,209,295
Fair Value on Recurring Basis [Member] | Estimate of Fair Value Measurement [Member] | States and Political Subdivisions [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	969,435	936,321
Fair Value on Recurring Basis [Member] | Estimate of Fair Value Measurement [Member] | States and Political Subdivisions [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	40	4,108
Fair Value on Recurring Basis [Member] | Estimate of Fair Value Measurement [Member] | Pooled Trust Preferred Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	7,695	8,495
Fair Value on Recurring Basis [Member] | Estimate of Fair Value Measurement [Member] | Other Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	31,317	30,259
Fair Value on Recurring Basis [Member] | Estimate of Fair Value Measurement [Member] | Other Securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	$ 280,714	$ 301,486

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Consolidated Statements of Income (unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Loans including fees:
Taxable	$ 145,417	$ 125,468	$ 432,642	$ 368,467
Nontaxable	3,905	4,075	12,114	11,933
Investment securities:
Taxable	28,884	19,391	86,162	56,562
Nontaxable	7,119	6,295	21,776	19,502
Money market and other interest-earning investments	528	140	1,140	347
Total interest income	185,853	155,369	553,834	456,811
Interest Expense
Deposits	18,707	11,189	53,670	27,583
Federal funds purchased and interbank borrowings	1,484	1,191	5,219	2,855
Securities sold under agreements to repurchase	715	535	2,048	1,328
Federal Home Loan Bank advances	9,123	8,880	29,093	25,484
Other borrowings	2,728	2,732	8,430	8,184
Total interest expense	32,757	24,527	98,460	65,434
Net interest income	153,096	130,842	455,374	391,377
Provision for loan losses	1,437	750	3,483	3,576
Net interest income after provision for loan losses	151,659	130,092	451,891	387,801
Noninterest Income
Wealth management fees	9,160	9,022	27,604	27,794
Service charges on deposit accounts	11,860	11,028	34,201	32,552
Debit card and ATM fees	5,370	4,706	16,292	14,651
Mortgage banking revenue	8,850	4,348	20,996	13,729
Investment product fees	5,244	5,073	16,106	15,170
Capital markets income	4,560	2,700	10,227	4,094
Company-owned life insurance	2,703	2,958	8,602	7,993
Net debt securities gains (losses)	424	135	1,486	2,417
Other income	5,790	5,987	16,077	18,751
Total noninterest income	53,961	45,957	151,591	137,151
Noninterest Expense
Salaries and employee benefits	71,729	63,158	214,478	193,929
Occupancy	11,934	12,578	41,071	38,731
Equipment	3,954	3,652	12,945	10,945
Marketing	4,105	3,406	12,267	11,065
Data processing	8,961	8,628	28,509	26,752
Communication	2,349	2,473	8,252	8,309
Professional fees	5,037	3,235	12,868	8,888
Loan expenses	1,811	1,564	5,380	5,151
FDIC assessment	960	2,722	4,501	8,528
Amortization of intangibles	4,168	3,283	12,965	10,308
Amortization of tax credit investments	1,211	9,233	2,039	21,807
Other expense	6,366	5,444	18,469	22,580
Total noninterest expense	122,585	119,376	373,744	366,993
Income before income taxes	83,035	56,673	229,738	157,959
Income tax expense	13,254	5,325	40,717	14,627
Net income	$ 69,781	$ 51,348	$ 189,021	$ 143,332
Net income per common share - basic	$ 0.41	$ 0.34	$ 1.10	$ 0.95
Net income per common share - diluted	$ 0.41	$ 0.34	$ 1.09	$ 0.94
Weighted average number of common shares outstanding - basic	170,746	151,930	172,807	151,844
Weighted average number of common shares outstanding - diluted	171,551	152,784	173,527	152,616
Dividends per common share	$ 0.13	$ 0.13	$ 0.39	$ 0.39

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Loans and Allowance for Loan Losses - Schedule of Activity in Allowance for Loan Losses (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	$ 56,292	$ 53,660	$ 55,461	$ 50,381
Charge-offs	(2,716)	(4,261)	(8,485)	(10,000)
Recoveries	1,897	2,564	6,451	8,756
Provision	1,437	750	3,483	3,576
Ending balance	56,910	52,713	56,910	52,713
Commercial Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	22,548	21,387	21,742	19,246
Charge-offs	(420)	(1,662)	(1,184)	(2,378)
Recoveries	374	467	1,083	1,227
Provision	(373)	(473)	488	1,624
Ending balance	22,129	19,719	22,129	19,719
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	23,311	22,498	23,470	21,436
Charge-offs	(191)	(241)	(815)	(675)
Recoveries	669	944	2,444	2,011
Provision	465	(309)	(845)	120
Ending balance	24,254	22,892	24,254	22,892
Residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	2,269	1,867	2,277	1,763
Charge-offs	(384)	(284)	(702)	(941)
Recoveries	26	45	107	1,890
Provision	452	292	681	(792)
Ending balance	2,363	1,920	2,363	1,920
Consumer Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	8,164	7,908	7,972	7,936
Charge-offs	(1,721)	(2,074)	(5,784)	(6,006)
Recoveries	828	1,108	2,817	3,628
Provision	893	1,240	3,159	2,624
Ending balance	$ 8,164	$ 8,182	$ 8,164	$ 8,182

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Fair Value - Quantitative Information about Significant Unobservable Inputs Used in Fair Value Measurements (Parenthetical) (Detail)	9 Months Ended
	Sep. 30, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Percentage of adjusted specific issuer evaluation defaults	100.00%
Percentage of adjusted specific issuer evaluation recoveries	100.00%
Pooled Trust Preferred Securities [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Percentage of adjusted specific issuer evaluation defaults	0.00%
Percentage of adjusted specific issuer evaluation recoveries	0.00%
Pooled Trust Preferred Securities [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Percentage of adjusted specific issuer evaluation defaults	50.00%
Percentage of adjusted specific issuer evaluation recoveries	25.00%

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Loan Servicing Rights - Components of Loan Servicing Rights and Valuation Allowance (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Transfers And Servicing [Abstract]
Balance at beginning of period	$ 24,364	$ 24,318	$ 24,512	$ 24,690
Additions	2,097	1,147	4,026	3,098
Amortization	(1,717)	(1,117)	(3,794)	(3,440)
Balance before valuation allowance at end of period	24,744	24,348	24,744	24,348
Valuation allowance:
Balance at beginning of period	(32)	(15)	(15)	(29)
(Additions)/recoveries	(89)	3	(106)	17
Balance at end of period	(121)	(12)	(121)	(12)
Loan servicing rights, net	$ 24,623	$ 24,336	$ 24,623	$ 24,336	$ 24,497

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Federal Home Loan Bank Advances (Tables)

9 Months Ended

Sep. 30, 2019

Banking And Thrift [Abstract]

Summary of FHLB Advances

The following table summarizes Old National Bank’s FHLB advances at September 30, 2019 and December 31, 2018:

	September 30,		December 31,
(dollars in thousands)	2019		2018
FHLB advances (fixed rates 0.68% to 4.96%    and variable rates 2.29% to 2.45%) maturing    October 2019 to August 2029	$	1,977,644	$	1,603,643
ASC 815 fair value hedge and other basis adjustments		24,316		9,838
Total other borrowings	$	2,001,960	$	1,613,481

Summary of Contractual Maturities of FHLB Advances

Contractual maturities of FHLB advances at September 30, 2019 were as follows:

(dollars in thousands)
Due in 2019	$	200,480
Due in 2020		50,000
Due in 2021		20,000
Due in 2022		157,000
Due in 2023		164
Thereafter		1,550,000
ASC 815 fair value hedge and other basis adjustments		24,316
Total	$	2,001,960

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Income Taxes - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Income Taxes [Line Items]
Decrease in unrecognized tax benefits	$ 0
Bad debt reserves, created for tax purposes	52,800,000
Unrecognized deferred income tax liability	13,000,000.0
Valuation allowance recorded	0	$ 0
AMT credit carryforwards	1,300,000	10,100,000
AMT credit carryforwards	$ 1,272,000	2,545,000
Minimum [Member]
Income Taxes [Line Items]
AMT credit carryforwards, expiration year	2018
Maximum [Member]
Income Taxes [Line Items]
AMT credit carryforwards, expiration year	2021
Federal [Member]
Income Taxes [Line Items]
Operating loss carryforwards	$ 78,500,000	104,500,000
Federal tax credit carryforwards		1,800,000
Federal [Member] | Minimum [Member]
Income Taxes [Line Items]
Operating loss carryforwards, expiration year	2029
Federal [Member] | Maximum [Member]
Income Taxes [Line Items]
Operating loss carryforwards, expiration year	2033
State [Member]
Income Taxes [Line Items]
Operating loss carryforwards	$ 148,400,000	$ 165,600,000
State [Member] | Minimum [Member]
Income Taxes [Line Items]
Operating loss carryforwards, expiration year	2024
State [Member] | Maximum [Member]
Income Taxes [Line Items]
Operating loss carryforwards, expiration year	2033
AnchorBank WI [Member]
Income Taxes [Line Items]
Bad debt reserves, created for tax purposes	$ 50,900,000
Lafayette Savings Bank [Member]
Income Taxes [Line Items]
Bad debt reserves, created for tax purposes	$ 1,900,000

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Changes in Carrying Amount of Goodwill

The following table shows the changes in the carrying amount of goodwill for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in thousands)	2019		2018		2019		2018
Balance at beginning of period	$	1,036,258	$	828,804	$	1,036,258	$	828,051
Acquisition adjustments		736		—		736		753
Balance at end of period	$	1,036,994	$	828,804	$	1,036,994	$	828,804

Schedule of Gross Carrying Amounts and Accumulated Amortization of Other Intangible Assets

The gross carrying amount and accumulated amortization of other intangible assets at September 30, 2019 and December 31, 2018 were as follows:

	Gross		Accumulated			Net
	Carrying		Amortization			Carrying
(dollars in thousands)	Amount		and Impairment			Amount
September 30, 2019
Core deposit	$	119,051	$	(59,398	)	$	59,653
Customer trust relationships		16,547		(12,149	)		4,398
Total intangible assets	$	135,598	$	(71,547	)	$	64,051
December 31, 2018
Core deposit	$	129,100	$	(57,524	)	$	71,576
Customer trust relationships		16,547		(11,107	)		5,440
Total intangible assets	$	145,647	$	(68,631	)	$	77,016

Schedule of Estimated Amortization Expense for Future Years

Estimated amortization expense for future years is as follows:

(dollars in thousands)
2019 remaining	$	3,945
2020		14,091
2021		11,336
2022		9,014
2023		7,053
Thereafter		18,612
Total	$	64,051

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Accumulated Other Comprehensive Income (Loss) - Reclassifications out of Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net securities gains	$ (424)			$ (135)			$ (1,486)	$ (2,417)
Interest income (expense)	(153,096)			(130,842)			(455,374)	(391,377)
Salaries and employee benefits	(20)			(27)			(61)	(81)
Income tax (expense) benefit	13,254			5,325			40,717	14,627
Net income	(69,781)	$ (62,964)	$ (56,276)	(51,348)	$ (44,001)	$ (47,983)	(189,021)	(143,332)
Gains and Losses on Cash Flow Hedges [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total reclassifications for the period	13			171			307	(417)
Unrealized Gains and Losses on Available- for-Sale Debt Securities [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total reclassifications for the period	335			117			1,147	1,847
Accumulated Unrealized Gains and Losses on Held-to-Maturity Securities [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total reclassifications for the period	(992)			(482)			(1,778)	(1,340)
Defined Benefit Pension Plans [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total reclassifications for the period	(15)			(20)			(46)	(61)
Accumulated Other Comprehensive Income (Loss) [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total reclassifications for the period	(659)			(214)			(370)	29
Reclassifications out of Accumulated Other Comprehensive Income (Loss) [Member] | Gains and Losses on Cash Flow Hedges [Member] | Interest Rate Contracts [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest income (expense)	21			226			412	(553)
Income tax (expense) benefit	(8)			(55)			(105)	136
Net income	13			171			307	(417)
Reclassifications out of Accumulated Other Comprehensive Income (Loss) [Member] | Unrealized Gains and Losses on Available- for-Sale Debt Securities [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net securities gains	424			135			1,486	2,417
Income tax (expense) benefit	(89)			(18)			(339)	(570)
Net income	335			117			1,147	1,847
Reclassifications out of Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Unrealized Gains and Losses on Held-to-Maturity Securities [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest income (expense)	(1,384)			(628)			(2,405)	(1,740)
Income tax (expense) benefit	392			146			627	400
Net income	(992)			(482)			(1,778)	(1,340)
Reclassifications out of Accumulated Other Comprehensive Income (Loss) [Member] | Defined Benefit Pension Plans [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Salaries and employee benefits	(20)			(27)			(61)	(81)
Income tax (expense) benefit	5			7			15	20
Net income	$ (15)			$ (20)			$ (46)	$ (61)

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Other Borrowings - Additional Information (Detail) - USD ($) $ in Thousands		9 Months Ended
	Nov. 01, 2017	Sep. 30, 2019	Dec. 31, 2018	Aug. 31, 2014
Debt Instrument [Line Items]
Finance Leases, Lease liability		$ 7,527
Old National Bank [Member]
Debt Instrument [Line Items]
Finance Leases, Lease liability		7,527	$ 5,262
Subordinated Debentures [Member] | Anchor Bank (MN) [Member] | Subordinated Fixed-To-Floating Notes [Member]
Debt Instrument [Line Items]
Fixed rates	5.75%
Maturity Date	Oct. 30, 2025
Value of subordinated fixed-to-floating notes assumed	$ 12,000
Subordinated debentures, maturity date	Oct. 29, 2020
Description of LIBOR Rate	three-month LIBOR rate plus 4.356%
LIBOR rate	4.356%
Debt instrument start date	Oct. 30, 2020
Old National Bancorp [Member] | Senior Unsecured Notes [Member]
Debt Instrument [Line Items]
Senior unsecured notes		$ 175,000	$ 175,000	$ 175,000
Fixed rates		4.125%		4.125%
Maturity Date		Aug. 15, 2024

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Securities Sold Under Agreements to Repurchase

9 Months Ended

Sep. 30, 2019

Transfers And Servicing [Abstract]

Securities Sold Under Agreements to Repurchase

NOTE 14 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase are secured borrowings.  Old National pledges investment securities to secure these borrowings. The following table presents securities sold under agreements to repurchase and related weighted-average interest rates at or for the nine months ended September 30:

(dollars in thousands)	2019			2018
Outstanding at September 30,	$	337,551		$	319,831
Average amount outstanding		344,294			342,797
Maximum amount outstanding at any month-end		367,884			364,001
Weighted-average interest rate:
During the nine months ended September 30,		0.80	%		0.52	%
At September 30,		0.74			0.74

The following table presents the contractual maturity of our secured borrowings and class of collateral pledged:

	At September 30, 2019
	Remaining Contractual Maturity of the Agreements
	Overnight and		Up to				Greater Than
(dollars in thousands)	Continuous		30 Days		30-90 Days		90 days		Total
Repurchase Agreements:
U.S. Treasury and agency securities	$	337,551	$	—	$	—	$	—	$	337,551
Total	$	337,551	$	—	$	—	$	—	$	337,551

The fair value of securities pledged to secure repurchase agreements may decline.  Old National has pledged securities valued at 107% of the gross outstanding balance of repurchase agreements at September 30, 2019 to manage this risk.

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Share-Based Compensation

9 Months Ended

Sep. 30, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share-Based Compensation

NOTE 18 – SHARE-BASED COMPENSATION

At September 30, 2019, Old National had 3.7 million shares remaining available for issuance under the Company’s Amended and Restated 2008 Incentive Compensation Plan.  The granting of awards to key employees is typically in the form of restricted stock awards or units.

Restricted Stock Awards

Old National granted 211 thousand time-based restricted stock awards to certain key officers during the nine months ended September 30, 2019, with shares vesting generally over a thirty-six month period.  Compensation expense is recognized on a straight-line basis over the vesting period.  Shares are subject to certain restrictions and risk of forfeiture by the participants.  At September 30, 2019, unrecognized compensation expense was estimated to be $5.1 million for unvested restricted stock awards.  The cost is expected to be recognized over a weighted-average period of 2.0 years.

Old National recorded share-based compensation expense, net of tax, related to restricted stock awards of $0.7 million during the three months ended September 30, 2019 and $1.9 million during the nine months ended September 30, 2019, compared to $0.6 million during the three months ended September 30, 2018 and $1.7 million during the nine months ended September 30, 2018.

Restricted Stock Units

Old National granted 375 thousand shares of performance based restricted stock units to certain key officers during the nine months ended September 30, 2019, with shares vesting at the end of a thirty-six month period based on the achievement of certain targets.  For certain awards, the level of performance could increase or decrease the number of shares earned.  Compensation expense is recognized on a straight-line basis over the vesting period.  Shares are subject to certain restrictions and risk of forfeiture by the participants.  At September 30, 2019, unrecognized compensation expense was estimated to be $5.4 million.  The cost is expected to be recognized over a weighted-average period of 1.8 years.

Old National recorded share-based compensation expense, net of tax, related to restricted stock units of $1.0 million during the three months ended September 30, 2019 and $2.6 million during the nine months ended September 30, 2019, compared to $0.9 million during the three months ended September 30, 2018 and $2.5 million during the nine months ended September 30, 2018.

Stock Options

Old National has not granted stock options since 2009.  However, Old National did acquire stock options through prior year acquisitions.  Old National did not record any share-based compensation expense related to these stock options during the nine months ended September 30, 2019 or 2018.

Stock Appreciation Rights

Old National has never granted stock appreciation rights.  However, Old National did acquire stock appreciation rights through a prior year acquisition.  Old National did not record any incremental expense associated with the conversion of these stock appreciation rights during the nine months ended September 30, 2019 or 2018.  At September 30, 2019, 57 thousand stock appreciation rights remained outstanding.

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Fair Value - Reconciliation of All Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
States and Political Subdivisions [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Transfers out of Level 3			$ 4,000
Transfers into Level 3				$ 4,100
Significant Unobservable Inputs (Level 3) [Member] | Pooled Trust Preferred Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at beginning of period	$ 7,836	$ 8,205	8,495	8,448
Accretion (amortization) of discount	3	3	9	13
Sales/payments received	(14)	(17)	(46)	(322)
Increase (decrease) in fair value of securities	(130)	881	(763)	933
Balance at end of period	7,695	9,072	7,695	9,072
Significant Unobservable Inputs (Level 3) [Member] | States and Political Subdivisions [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at beginning of period	40	4,028	4,108
Accretion (amortization) of discount		(19)		(37)
Sales/payments received			(35)
Increase (decrease) in fair value of securities		(30)		(45)
Transfers out of Level 3			(4,033)
Transfers into Level 3				4,061
Balance at end of period	$ 40	$ 3,979	$ 40	$ 3,979

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Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 69,781	$ 51,348	$ 189,021	$ 143,332
Change in debt securities available-for-sale:
Unrealized holding gains (losses) for the period	19,567	(18,159)	133,081	(51,280)
Reclassification for securities transferred to held-to-maturity	0	0	0	14,007
Reclassification adjustment for securities (gains) losses realized in income	(424)	(135)	(1,486)	(2,417)
Income tax effect	(3,602)	4,188	(30,005)	9,368
Unrealized gains (losses) on available-for-sale debt securities	15,541	(14,106)	101,590	(30,322)
Change in securities held-to-maturity:
Adjustment for securities transferred to available-for-sale	0	0	0	19,412
Adjustment for securities transferred from available-for-sale	0	0	0	(14,007)
Amortization of unrealized losses on securities transferred from available-for-sale	1,384	628	2,405	1,740
Income tax effect	(392)	(146)	(627)	(1,291)
Changes from securities held-to-maturity	992	482	1,778	5,854
Cash flow hedges:
Net unrealized derivative gains (losses) on cash flow hedges	(73)	725	479	6,804
Reclassification adjustment for (gains) losses realized in net income	(21)	(226)	(412)	553
Income tax effect	23	(122)	(17)	(1,805)
Changes from cash flow hedges	(71)	377	50	5,552
Defined benefit pension plans:
Amortization of net loss recognized in income	20	27	61	81
Income tax effect	(5)	(7)	(15)	(20)
Changes from defined benefit pension plans	15	20	46	61
Other comprehensive income (loss), net of tax	16,477	(13,227)	103,464	(18,855)
Comprehensive income	$ 86,258	$ 38,121	$ 292,485	$ 124,477

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Document and Entity Information	9 Months Ended
	Sep. 30, 2019 shares
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Trading Symbol	ONB
Security Exchange Name	NASDAQ
Entity Registrant Name	Old National Bancorp /IN/
Entity Central Index Key	0000707179
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Title of 12(b) Security	Common Stock
Entity Common Stock, Shares Outstanding	170,031,000
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity File Number	1-15817
Entity Incorporation, State or Country Code	IN
Entity Tax Identification Number	35-1539838
Entity Address, Address Line One	One Main Street
Entity Address, City or Town	Evansville
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	47708
City Area Code	800
Local Phone Number	731-2265
Document Quarterly Report	true
Document Transition Report	false

XML

Loans and Allowance for Loan Losses - Schedule of Composition of Loan (Detail) (Parenthetical) (Detail) - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
Commercial Loan [Member] | Direct Finance Leases [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	$ 50.0	$ 60.0

XML

Fair Value - Assets Measured at Fair Value on a Non-Recurring Basis (Detail) - Fair Value on Non-recurring Basis [Member] - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Loan Servicing Rights [Member] | Carrying Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 4,621	$ 104
Loan Servicing Rights [Member] | Estimate of Fair Value Measurement [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	4,621	104
Residential Foreclosed Assets [Member] | Carrying Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		68
Residential Foreclosed Assets [Member] | Estimate of Fair Value Measurement [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		68
Commercial Loan [Member] | Carrying Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	13,261	7,242
Commercial Loan [Member] | Estimate of Fair Value Measurement [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	13,261	7,242
Commercial Real Estate [Member] | Carrying Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	15,241	29,125
Commercial Real Estate [Member] | Estimate of Fair Value Measurement [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 15,241	$ 29,125

XML

Loan Servicing Rights - Additional Information (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Transfers And Servicing [Abstract]
Loan servicing rights	$ 24,623	$ 24,497	$ 24,336
Principal balance of loans serviced for others	3,379,000	3,306,000
Funds held in escrow	$ 43,600	10,700
Percentage of mortgage loan	99.70%
Fair value of servicing rights	$ 25,500	$ 27,400
Fair value at discount rate	12.00%	12.00%
Fair value inputs weighted average prepayment speed	170.00%	119.00%

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Investment Securities - Schedule of Proceeds from Sales or Calls and Realized Gain and Losses of Available-for-sale Investment Securities and Other Securities (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Debt Securities, Available-for-sale [Line Items]
Proceeds from sales of available-for-sale debt securities	$ 27,983	$ 5,327	$ 295,615	$ 136,648
Proceeds from calls of available-for-sale debt securities			810,397	316,239
Total	344,344	8,265	674,091	168,233
Realized gains on sales of available-for-sale debt securities	340		3,443	3,259
Realized losses on sales of available-for-sale debt securities	(2)	(74)	(2,017)	(1,379)
Other securities gains (losses)		216		313
Net debt securities gains (losses)	424	135	1,486	2,417
Calls [Member]
Debt Securities, Available-for-sale [Line Items]
Proceeds from calls of available-for-sale debt securities	316,361	2,938	378,476	31,585
Realized gains on calls of available-for-sale debt securities	$ 86		89	284
Realized losses on calls of available-for-sale debt securities		$ (7)	$ (29)	$ (60)

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Basis of Presentation

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of Old National Bancorp and its wholly-owned affiliates (hereinafter collectively referred to as “Old National”) and have been prepared in conformity with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry.  Such principles require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosures of contingent assets and liabilities at the date of the financial statements and amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  In the opinion of management, the consolidated financial statements contain all the normal and recurring adjustments necessary for a fair statement of the financial position of Old National as of September 30, 2019 and 2018, and December 31, 2018, and the results of its operations for the three and nine months ended September 30, 2019 and 2018.  Interim results do not necessarily represent annual results.  These financial statements should be read in conjunction with Old National’s Annual Report for the year ended December 31, 2018.

All significant intercompany transactions and balances have been eliminated.  Certain prior year amounts have been reclassified to conform to the current presentation.  Such reclassifications had no effect on prior period net income or shareholders’ equity and were insignificant amounts.

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Leases - Schedule of Supplemental Balance Sheet Information Related to Leases (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Operating Leases
Operating lease right-of-use assets	$ 102,976	$ 0	$ 0
Operating lease liabilities	107,272	$ 0	$ 0
Finance Leases
Premises and equipment, net	7,337
Other borrowings	$ 7,527
Weighted-Average Remaining Lease Term (in Years)
Operating leases	10 years 9 months 18 days
Finance leases	11 years 6 months
Weighted-Average Discount Rate
Operating leases	3.45%
Finance leases	4.43%

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Goodwill and Other Intangible Assets - Schedule of Changes in Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Goodwill And Intangible Assets Disclosure [Abstract]
Balance at beginning of period	$ 1,036,258	$ 828,804	$ 1,036,258	$ 828,051
Acquisition adjustments	736	0	736	753
Balance at end of period	$ 1,036,994	$ 828,804	$ 1,036,994	$ 828,804

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Investment Securities - Trust Preferred Securities (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($) Item	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	$ 4,834,585	$ 4,172,617
Available-for-Sale securities, Fair Value	4,916,979	$ 4,123,416	$ 3,272,456
Pooled Trust Preferred Securities One [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	13,825
Available-for-Sale securities, Fair Value	7,695
Available-for-Sale, Unrealized Gain/ (Loss)	$ (6,130)
Pooled Trust Preferred Securities One [Member] | Pretsl XXVII LTD [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Pooled trust preferred securities, Class	B
Lowest Credit Rating	B
Available-for-Sale, Amortized Cost	$ 4,303
Available-for-Sale securities, Fair Value	2,135
Available-for-Sale, Unrealized Gain/ (Loss)	$ (2,168)
# of Issuers Currently Performing | Item	32
# of Issuers Currently Remaining | Item	41
Actual Deferrals and Defaults as a Percent of Original Collateral	14.60%
Expected Defaults as a % of Remaining Performing Collateral	11.30%
Excess Subordination as a % of Current Performing Collateral	26.70%
Pooled Trust Preferred Securities One [Member] | Trapeza Ser 13A [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Pooled trust preferred securities, Class	A2A
Lowest Credit Rating	BBB
Available-for-Sale, Amortized Cost	$ 9,522
Available-for-Sale securities, Fair Value	5,560
Available-for-Sale, Unrealized Gain/ (Loss)	$ (3,962)
# of Issuers Currently Performing | Item	42
# of Issuers Currently Remaining | Item	47
Actual Deferrals and Defaults as a Percent of Original Collateral	4.50%
Expected Defaults as a % of Remaining Performing Collateral	6.70%
Excess Subordination as a % of Current Performing Collateral	49.60%
Single Issuer Trust Preferred Securities [Member] | JP Morgan Chase & Co [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Lowest Credit Rating	BBB-
Available-for-Sale, Amortized Cost	$ 4,795
Available-for-Sale securities, Fair Value	4,325
Available-for-Sale, Unrealized Gain/ (Loss)	(470)
Trust Preferred Securities [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	18,620
Available-for-Sale securities, Fair Value	12,020
Available-for-Sale, Unrealized Gain/ (Loss)	$ (6,600)

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Accumulated Other Comprehensive Income (Loss) - Schedule of AOCI (Detail) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	$ 2,803,139	$ 2,200,215	$ 2,154,397	$ 2,689,570	$ 2,154,397
Amount reclassified from AOCI to retainedearnings for cumulative effect ofchange in accounting principle						$ 6,322	$ (4,179)
Ending Balance	2,832,530	2,220,680	2,179,118	2,832,530	2,220,680
Gains and Losses on Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	1,220	2,277	(2,337)	1,099	(2,337)
Amount reclassified from AOCI to retainedearnings for cumulative effect ofchange in accounting principle		(52)			(52)
Amounts reclassified from AOCI to retainedearnings related to the Tax Cuts and JobsAct of 2017					(509)
Other comprehensive income (loss) before reclassifications	(58)	548		357	5,135
Amounts reclassified from AOCI to income	(13)	(171)		(307)	417
Ending Balance	1,149	2,654		1,149	2,654
Unrealized Gains and Losses on Available- for-Sale Debt Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	48,701	(59,356)	(35,557)	(37,348)	(35,557)
Amounts reclassified from AOCI to retainedearnings related to the Tax Cuts and JobsAct of 2017					(7,583)
Other comprehensive income (loss) before reclassifications	15,876	(13,989)		102,737	(28,475)
Amounts reclassified from AOCI to income	(335)	(117)		(1,147)	(1,847)
Ending Balance	64,242	(73,462)		64,242	(73,462)
Accumulated Unrealized Gains and Losses on Held-to-Maturity Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(7,729)	(9,335)	(12,107)	(8,515)	(12,107)
Amounts reclassified from AOCI to retainedearnings related to the Tax Cuts and JobsAct of 2017					(2,600)
Other comprehensive income (loss) before reclassifications					4,514
Amounts reclassified from AOCI to income	992	482		1,778	1,340
Ending Balance	(6,737)	(8,853)		(6,737)	(8,853)
Defined Benefit Pension Plans [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(155)	(289)	(271)	(186)	(271)
Amounts reclassified from AOCI to retainedearnings related to the Tax Cuts and JobsAct of 2017					(59)
Amounts reclassified from AOCI to income	15	20		46	61
Ending Balance	(140)	(269)		(140)	(269)
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	42,037	(66,703)	(50,272)	(44,950)	(50,272)
Amount reclassified from AOCI to retainedearnings for cumulative effect ofchange in accounting principle		(52)			(52)		$ (52)
Amounts reclassified from AOCI to retainedearnings related to the Tax Cuts and JobsAct of 2017			(10,751)		(10,751)
Other comprehensive income (loss) before reclassifications	15,818	(13,441)		103,094	(18,826)
Amounts reclassified from AOCI to income	659	214		370	(29)
Ending Balance	$ 58,514	$ (79,930)	$ (61,526)	$ 58,514	$ (79,930)

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Other Borrowings - Contractual Maturities of Other Borrowings (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Debt Disclosure [Abstract]
Due in 2019	$ 120
Due in 2020	499
Due in 2021	524
Due in 2022	553
Due in 2023	591
Thereafter	252,550
Unamortized debt issuance costs and other basis adjustments	(3,074)
Total	$ 251,763	$ 247,883	$ 251,662

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Other Borrowings (Tables)

9 Months Ended

Sep. 30, 2019

Other Borrowings

The following table summarizes Old National’s other borrowings at September 30, 2019 and December 31, 2018:

	September 30,			December 31,
(dollars in thousands)	2019			2018
Old National Bancorp:
Senior unsecured notes (fixed rate 4.125%)    maturing August 2024	$	175,000		$	175,000
Unamortized debt issuance costs related to senior    unsecured notes		(754	)		(870	)
Junior subordinated debentures (variable rates of    3.44% to 6.31%) maturing April 2032    to June 2037		60,310			60,310
Other basis adjustments		(2,859	)		(3,046	)
Old National Bank:
Finance lease liabilities		7,527			5,262
Subordinated debentures (fixed rate 5.75%)		12,000			12,000
Other		539			(773	)
Total other borrowings	$	251,763		$	247,883

Contractual Maturities of Other Borrowings

Contractual maturities of other borrowings at September 30, 2019 were as follows:

(dollars in thousands)
Due in 2019	$	120
Due in 2020		499
Due in 2021		524
Due in 2022		553
Due in 2023		591
Thereafter		252,550
Unamortized debt issuance costs and other    basis adjustments		(3,074	)
Total	$	251,763

Junior Subordinated Debt [Member]

Other Borrowings

The following table summarizes the terms of our outstanding junior subordinated debentures at September 30, 2019:

(dollars in thousands)					Rate at
		Issuance			September 30,
Name of Trust	Issuance Date	Amount		Rate	2019	Maturity Date
VFSC Capital Trust I	April 2002	$	3,093	6-month LIBOR plus 3.70%	6.31%	April 22, 2032
VFSC Capital Trust II	October 2002		4,124	3-month LIBOR plus 3.45%	5.61%	November 7, 2032
VFSC Capital Trust III	April 2004		3,093	3-month LIBOR plus 2.80%	4.94%	September 8, 2034
St. Joseph Capital Trust II	March 2005		5,000	3-month LIBOR plus 1.75%	3.89%	March 17, 2035
Anchor Capital Trust III	August 2005		5,000	3-month LIBOR plus 1.55%	3.65%	September 30, 2035
Tower Capital Trust 2	December 2005		8,000	3-month LIBOR plus 1.34%	3.44%	December 30, 2035
Home Federal Statutory    Trust I	September 2006		15,000	3-month LIBOR plus 1.65%	3.77%	September 15, 2036
Monroe Bancorp Capital    Trust I	July 2006		3,000	3-month LIBOR plus 1.60%	3.90%	October 7, 2036
Tower Capital Trust 3	December 2006		9,000	3-month LIBOR plus 1.69%	3.82%	March 1, 2037
Monroe Bancorp Statutory    Trust II	March 2007		5,000	3-month LIBOR plus 1.60%	3.72%	June 15, 2037
Total		$	60,310

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Income Taxes - Summary of Differences in Taxes from Continuing Operations Computed at Statutory Rate (Parenthetical) (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Tax Disclosure [Abstract]
Statutory rate	21.00%	21.00%	21.00%	21.00%

XML

Loan Servicing Rights (Tables)

9 Months Ended

Sep. 30, 2019

Text Block [Abstract]

Components of Loan Servicing Rights and Valuation Allowance

The following table summarizes the carrying values and activity related to loan servicing rights and the related valuation allowance for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)	2019			2018			2019			2018
Balance at beginning of period	$	24,364		$	24,318		$	24,512		$	24,690
Additions		2,097			1,147			4,026			3,098
Amortization		(1,717	)		(1,117	)		(3,794	)		(3,440	)
Balance before valuation allowance at end of period		24,744			24,348			24,744			24,348
Valuation allowance:
Balance at beginning of period		(32	)		(15	)		(15	)		(29	)
(Additions)/recoveries		(89	)		3			(106	)		17
Balance at end of period		(121	)		(12	)		(121	)		(12	)
Loan servicing rights, net	$	24,623		$	24,336		$	24,623		$	24,336

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Loans and Allowance for Credit Losses - Schedule of Past Due Loans (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	$ 164,469	$ 206,569
Past Due 90 Days or More and Accruing	703	1,353
Nonaccrual	138,498	157,484
Current	11,853,179	12,037,323
Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	32,989	54,596
Past Due 90 Days or More and Accruing	64	258
Nonaccrual	20,759	24,954
Current	2,203,634	2,193,808
Consumer Home Equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	6,135	5,937
Past Due 90 Days or More and Accruing	233	456
Nonaccrual	4,776	3,087
Current	549,770	583,385
Consumer Auto [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	10,472	11,966
Past Due 90 Days or More and Accruing	190	377
Nonaccrual	3,444	2,595
Current	995,063	1,047,667
Consumer - Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	2,112	2,690
Past Due 90 Days or More and Accruing	116	170
Nonaccrual	1,196	1,599
Current	154,791	152,022
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	41,379	42,606
Past Due 90 Days or More and Accruing	100	52
Nonaccrual	37,880	38,648
Current	2,909,180	3,190,364
Commercial Real Estate [Member] | Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	13,955	13,824
Nonaccrual	13,655	13,824
Current	578,393	490,801
Commercial Real Estate [Member] | Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	57,427	74,950
Past Due 90 Days or More and Accruing		40
Nonaccrual	56,788	72,777
Current	4,462,348	4,379,276
30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	19,159	40,443
30 to 59 Days Past Due [Member] | Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	8,620	25,947
30 to 59 Days Past Due [Member] | Consumer Home Equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	1,008	1,434
30 to 59 Days Past Due [Member] | Consumer Auto [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	6,069	7,091
30 to 59 Days Past Due [Member] | Consumer - Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	695	711
30 to 59 Days Past Due [Member] | Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	2,218	3,627
30 to 59 Days Past Due [Member] | Commercial Real Estate [Member] | Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	549	1,633
60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	6,109	7,289
60 to 89 Days Past Due [Member] | Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	3,546	3,437
60 to 89 Days Past Due [Member] | Consumer Home Equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	118	960
60 to 89 Days Past Due [Member] | Consumer Auto [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	769	1,903
60 to 89 Days Past Due [Member] | Consumer - Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	105	210
60 to 89 Days Past Due [Member] | Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	1,181	279
60 to 89 Days Past Due [Member] | Commercial Real Estate [Member] | Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	300
60 to 89 Days Past Due [Member] | Commercial Real Estate [Member] | Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	$ 90	$ 500

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Other Real Estate Owned - Additional Information (Detail) - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
Regulatory Assets [Abstract]
Value of foreclosed residential real estate property	$ 1.0	$ 1.3
Value of mortgage loans in process of foreclosure	$ 3.8	$ 4.9

XML

Loans and Allowance for Loan Losses - Schedule of Receivables for which Contractually Required Payments would not be Collected (Detail) - KleinBank [Member] - Minnesota [Member] $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Contractually required payments	$ 18,568
Nonaccretable difference	(4,521)
Cash flows expected to be collected at acquisition	14,047
Accretable yield	(2,384)
Fair value of acquired loans at acquisition	$ 11,663

XML

Loans and Allowance for Loan Losses - Schedule of Risk Category of Commercial and Commercial Real Estate Loans (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Risk Category Of Loans [Line Items]
Total	$ 12,017,648	$ 12,243,892	$ 11,292,659
Commercial Loan [Member]
Risk Category Of Loans [Line Items]
Total	2,950,559	3,232,970	2,949,277
Commercial Real Estate [Member]
Risk Category Of Loans [Line Items]
Total	5,112,123	4,958,851	$ 4,481,554
Commercial Real Estate [Member] | Construction [Member]
Risk Category Of Loans [Line Items]
Total	592,348	504,625
Commercial Real Estate [Member] | Other [Member]
Risk Category Of Loans [Line Items]
Total	4,519,775	4,454,226
Pass [Member] | Commercial Loan [Member]
Risk Category Of Loans [Line Items]
Total	2,773,941	3,029,130
Pass [Member] | Commercial Real Estate [Member] | Construction [Member]
Risk Category Of Loans [Line Items]
Total	553,854	460,158
Pass [Member] | Commercial Real Estate [Member] | Other [Member]
Risk Category Of Loans [Line Items]
Total	4,251,014	4,167,902
Criticized [Member] | Commercial Loan [Member]
Risk Category Of Loans [Line Items]
Total	89,079	98,798
Criticized [Member] | Commercial Real Estate [Member] | Construction [Member]
Risk Category Of Loans [Line Items]
Total	24,839	29,368
Criticized [Member] | Commercial Real Estate [Member] | Other [Member]
Risk Category Of Loans [Line Items]
Total	119,601	110,586
Classified - Substandard [Member] | Commercial Loan [Member]
Risk Category Of Loans [Line Items]
Total	49,659	66,394
Classified - Substandard [Member] | Commercial Real Estate [Member] | Construction [Member]
Risk Category Of Loans [Line Items]
Total		1,275
Classified - Substandard [Member] | Commercial Real Estate [Member] | Other [Member]
Risk Category Of Loans [Line Items]
Total	92,372	102,961
Classified - Nonaccrual [Member] | Commercial Loan [Member]
Risk Category Of Loans [Line Items]
Total	30,067	29,003
Classified - Nonaccrual [Member] | Commercial Real Estate [Member] | Construction [Member]
Risk Category Of Loans [Line Items]
Total	13,655	13,824
Classified - Nonaccrual [Member] | Commercial Real Estate [Member] | Other [Member]
Risk Category Of Loans [Line Items]
Total	37,972	37,441
Classified - Doubtful [Member] | Commercial Loan [Member]
Risk Category Of Loans [Line Items]
Total	7,813	9,645
Classified - Doubtful [Member] | Commercial Real Estate [Member] | Other [Member]
Risk Category Of Loans [Line Items]
Total	$ 18,816	$ 35,336

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Leases - Schedule of Components of Lease Expense (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Finance lease cost:
Total	$ 4,334	$ 13,148
Occupancy/Equipment Expense [Member]
Lessee Lease Description [Line Items]
Operating lease cost	4,280	12,973
Occupancy Expense [Member]
Finance lease cost:
Amortization of right-of-use assets	166	485
Short-term lease cost	1	2
Sub-lease income	(193)	(553)
Interest Expense [Member]
Finance lease cost:
Interest on lease liabilities	$ 80	$ 241

XML

Derivative Financial Instruments - Summary of Interest Rate Swap Designated as Cash Flow Hedges (Detail) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018	Jun. 30, 2019
Derivative [Line Items]
Notional amounts	$ 567,000,000.0	$ 1,482,000,000
Variable Interest Rate Swap [Member]
Derivative [Line Items]
Notional amounts	$ 25,000,000.0	$ 525,000,000.0	$ 25,000,000
Weighted average pay rates	3.52%	2.21%
Weighted average receive rates	2.26%	2.63%
Weighted average maturity (in years)	2 years 3 months 18 days	1 year 4 months 24 days
Unrealized gains (losses)	$ (1,115,000)	$ 146,000

XML

Loans and Allowance for Loan Losses - Schedule of Activity of Purchased Impaired Loans (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Financing Receivable Impaired [Line Items]
Purchased impaired loans	$ 37,877	$ 44,393
Allowance for loan losses	(345)	(478)
Carrying amount, net of allowance	37,532	43,915
Commercial Loan [Member]
Financing Receivable Impaired [Line Items]
Purchased impaired loans	5,438	6,193
Commercial Real Estate [Member]
Financing Receivable Impaired [Line Items]
Purchased impaired loans	22,139	25,391
Residential [Member]
Financing Receivable Impaired [Line Items]
Purchased impaired loans	7,658	9,257
Consumer Loan [Member]
Financing Receivable Impaired [Line Items]
Purchased impaired loans	$ 2,642	$ 3,552

XML

Derivative Financial Instruments - Summary of Fair Value of Derivative Financial Instruments (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Derivative [Line Items]
Total derivative assets	$ 70,346	$ 29,005
Total derivative liabilities	15,484	12,550
Designated as Hedging Instrument [Member]
Derivative [Line Items]
Total derivative assets	8,937	12,741
Total derivative liabilities	1,115	1,603
Designated as Hedging Instrument [Member] | Interest Rate Contracts [Member]
Derivative [Line Items]
Total derivative assets	8,937	12,741
Total derivative liabilities	1,115	1,603
Not Designated as Hedging Instrument [Member]
Derivative [Line Items]
Total derivative assets	61,409	16,264
Total derivative liabilities	14,369	10,947
Not Designated as Hedging Instrument [Member] | Interest Rate Contracts [Member]
Derivative [Line Items]
Total derivative assets	57,695	15,278
Total derivative liabilities	14,214	10,562
Not Designated as Hedging Instrument [Member] | Mortgage Contracts [Member]
Derivative [Line Items]
Total derivative assets	3,510	874
Total derivative liabilities		316
Not Designated as Hedging Instrument [Member] | Foreign Currency Contracts [Member]
Derivative [Line Items]
Total derivative assets	204	112
Total derivative liabilities	$ 155	$ 69

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Revenue from Contracts with Customers (Tables)

9 Months Ended

Sep. 30, 2019

Revenue From Contract With Customer [Abstract]

Revenue Information

The consolidated statements of income include all categories of noninterest income.  The following table reflects only the categories of noninterest income that are within the scope of Topic 606:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in thousands)	2019		2018		2019		2018
Wealth management fees	$	9,160	$	9,022	$	27,604	$	27,794
Service charges on deposit accounts		11,860		11,028		34,201		32,552
Debit card and ATM fees		5,370		4,706		16,292		14,651
Investment product fees		5,244		5,073		16,106		15,170
Other income:
Merchant processing fees		775		779		2,303		2,198
Gain (loss) on other real estate owned		29		260		194		981
Safe deposit box fees		267		221		936		849
Insurance premiums and commissions		194		83		569		265
Total	$	32,899	$	31,172	$	98,205	$	94,460

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Other Borrowings - Other Borrowings (Parenthetical) (Detail)	9 Months Ended
	Sep. 30, 2019	Aug. 31, 2014
Old National Bank [Member] | 5.75% Fixed Rate Subordinated Debentures [Member]
Debt Instrument [Line Items]
Fixed rates	5.75%
Old National Bancorp [Member] | Senior Unsecured Notes [Member]
Debt Instrument [Line Items]
Fixed rates	4.125%	4.125%
Maturity Date	Aug. 15, 2024
Old National Bancorp [Member] | Trust Preferred Securities [Member] | Junior Subordinated Debt [Member]
Debt Instrument [Line Items]
Maturity, Start date	Apr. 22, 2032
Maturity, End date	Jun. 15, 2037
Old National Bancorp [Member] | Trust Preferred Securities [Member] | Junior Subordinated Debt [Member] | Minimum [Member]
Debt Instrument [Line Items]
Variable rates	3.44%
Old National Bancorp [Member] | Trust Preferred Securities [Member] | Junior Subordinated Debt [Member] | Maximum [Member]
Debt Instrument [Line Items]
Variable rates	6.31%

XML

Acquisition and Divestiture Activity - Schedule of Acquired Loan Data (Detail) - KleinBank [Member] - Minnesota [Member] $ in Thousands	Nov. 01, 2018 USD ($)
Loans at Acquisition Date [Line Items]
Fair Value of Acquired Loans at Acquisition Date	$ 1,049,073
Acquired Receivables Subject to ASC 310-30 [Member]
Loans at Acquisition Date [Line Items]
Fair Value of Acquired Loans at Acquisition Date	11,663
Gross Contractual Cash Flows at Acquisition Date	18,568
Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected	4,521
Acquired Receivables Not Subject to ASC 310-30 [Member]
Loans at Acquisition Date [Line Items]
Fair Value of Acquired Loans at Acquisition Date	1,037,410
Gross Contractual Cash Flows at Acquisition Date	1,252,954
Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected	$ 76,534

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Securities Sold Under Agreements to Repurchase - Schedule of Securities Sold under Agreements to Repurchase and Related Weighted-Average Interest Rates (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Securities Sold Under Agreements To Repurchase [Abstract]
Outstanding at end of period	$ 337,551,000	$ 319,831,000	$ 362,294,000
Average amount outstanding	344,294,000	342,797,000
Maximum amount outstanding at any month-end	$ 367,884,000	$ 364,001,000
Weighted average interest rate during period	0.80%	0.52%
Weighted average interest rate at end of period	0.74%	0.74%

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Federal Home Loan Bank Advances - Summary of FHLB Advances (Parenthetical) (Detail) - Old National Bank [Member] - Federal Home Loan Bank Advances [Member]	9 Months Ended
	Sep. 30, 2019
Federal Home Loan Bank, Advances [Line Items]
Maturity, Start date	Oct. 31, 2019
Maturity, End date	Aug. 31, 2029
Minimum [Member]
Federal Home Loan Bank, Advances [Line Items]
Fixed rates	0.68%
Variable rates	2.29%
Maximum [Member]
Federal Home Loan Bank, Advances [Line Items]
Fixed rates	4.96%
Variable rates	2.45%

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Investment Securities (Tables)

9 Months Ended

Sep. 30, 2019

Investments Debt And Equity Securities [Abstract]

Amortized Cost and Fair Value of Available-for-Sale and Held-to-Maturity Investment Securities Portfolio

The following table summarizes the amortized cost and fair value of the available-for-sale and held-to-maturity investment securities portfolio at September 30, 2019 and December 31, 2018 and the corresponding amounts of unrealized gains and losses therein:

	Amortized		Unrealized		Unrealized			Fair
(dollars in thousands)	Cost		Gains		Losses			Value
September 30, 2019
Available-for-Sale
U.S. Treasury	$	5,363	$	133	$	(2	)	$	5,494
U.S. government-sponsored entities and agencies		484,226		1,913		(35	)		486,104
Mortgage-backed securities - Agency		3,092,991		49,135		(5,946	)		3,136,180
States and political subdivisions		932,589		37,226		(340	)		969,475
Pooled trust preferred securities		13,825		—		(6,130	)		7,695
Other securities		305,591		7,560		(1,120	)		312,031
Total available-for-sale securities	$	4,834,585	$	95,967	$	(13,573	)	$	4,916,979

Held-to-Maturity
U.S. government-sponsored entities and agencies	$	33,321	$	1,125	$	—	$	34,446
Mortgage-backed securities - Agency		112,187		3,580		—		115,767
States and political subdivisions		261,773		13,602		—		275,375
Total held-to-maturity securities	$	407,281	$	18,307	$	—	$	425,588

December 31, 2018
Available-for-Sale
U.S. Treasury	$	5,332	$	—	$	(31	)	$	5,301
U.S. government-sponsored entities and agencies		639,458		35		(11,342	)		628,151
Mortgage-backed securities - Agency		2,243,774		9,738		(44,217	)		2,209,295
States and political subdivisions		932,757		11,113		(3,441	)		940,429
Pooled trust preferred securities		13,861		—		(5,366	)		8,495
Other securities		337,435		486		(6,176	)		331,745
Total available-for-sale securities	$	4,172,617	$	21,372	$	(70,573	)	$	4,123,416

Held-to-Maturity
U.S. government-sponsored entities and agencies	$	73,986	$	—	$	(1,627	)	$	72,359
Mortgage-backed securities - Agency		127,120		39		(2,750	)		124,409
States and political subdivisions		305,228		6,208		(2,101	)		309,335
Total held-to-maturity securities	$	506,334	$	6,247	$	(6,478	)	$	506,103

Schedule of Proceeds from Sales or Calls and Realized Gain and Losses of Available-for-Sale Investment Securities and Other Securities

Proceeds from sales or calls of available-for-sale investment securities and the resulting realized gains and realized losses were as follows for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)		2019			2018			2019			2018
Proceeds from sales of available-for-sale debt securities	$	27,983		$	5,327		$	295,615		$	136,648
Proceeds from calls of available-for-sale debt securities		316,361			2,938			378,476			31,585
Total	$	344,344		$	8,265		$	674,091		$	168,233
Realized gains on sales of available-for-sale debt securities	$	340		$	—		$	3,443		$	3,259
Realized gains on calls of available-for-sale debt securities		86			—			89			284
Realized losses on sales of available-for-sale debt securities		(2	)		(74	)		(2,017	)		(1,379	)
Realized losses on calls of available-for-sale debt securities		—			(7	)		(29	)		(60	)
Other securities gains (losses) (1)		—			216			—			313
Net debt securities gains (losses)	$	424		$	135		$	1,486		$	2,417

(1) For the three and nine months ended September 30, 2018, other securities gains (losses) included realized gains and losses of equity securities previously classified as trading securities.  For the three and nine months ended September 30, 2019, gains (losses) on equity securities are included in other income.

Expected Maturities of Investment Securities Portfolio

Weighted average yield is based on amortized cost.

	At September 30, 2019
(dollars in thousands)					Weighted
	Amortized		Fair		Average
Maturity	Cost		Value		Yield
Available-for-Sale
Within one year	$	155,063	$	154,941		2.47	%
One to five years		2,900,031		2,941,365		2.78
Five to ten years		767,785		787,301		3.17
Beyond ten years		1,011,706		1,033,372		3.23
Total	$	4,834,585	$	4,916,979		2.93	%
Held-to-Maturity
Within one year	$	3,621	$	3,644		3.66	%
One to five years		108,113		111,340		3.28
Five to ten years		106,591		111,513		3.96
Beyond ten years		188,956		199,091		4.22
Total	$	407,281	$	425,588		3.90	%

Available-for-Sale and Held-to-Maturity Investment Securities with Unrealized Losses by Aggregated Major Security Type and Length of Time in Continuous Unrealized Loss Position

The following table summarizes the available-for-sale investment securities with unrealized losses at September 30, 2019 and December 31, 2018 by aggregated major security type and length of time in a continuous unrealized loss position:

	Less than 12 months					12 months or longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
September 30, 2019
Available-for-Sale
U.S. Treasury	$	—	$	—		$	1,494	$	(2	)	$	1,494	$	(2	)
U.S. government-sponsored entities    and agencies		50,979		(20	)		5,322		(15	)		56,301		(35	)
Mortgage-backed securities - Agency		484,912		(2,806	)		295,934		(3,140	)		780,846		(5,946	)
States and political subdivisions		66,516		(278	)		8,192		(62	)		74,708		(340	)
Pooled trust preferred securities		—		—			7,695		(6,130	)		7,695		(6,130	)
Other securities		21,626		(25	)		95,483		(1,095	)		117,109		(1,120	)
Total available-for-sale	$	624,033	$	(3,129	)	$	414,120	$	(10,444	)	$	1,038,153	$	(13,573	)
December 31, 2018
Available-for-Sale
U.S. Treasury	$	3,829	$	(12	)	$	1,472	$	(19	)	$	5,301	$	(31	)
U.S. government-sponsored entities    and agencies		54,701		(594	)		519,911		(10,748	)		574,612		(11,342	)
Mortgage-backed securities - Agency		82,289		(742	)		1,172,984		(43,475	)		1,255,273		(44,217	)
States and political subdivisions		99,162		(1,340	)		151,097		(2,101	)		250,259		(3,441	)
Pooled trust preferred securities		—		—			8,495		(5,366	)		8,495		(5,366	)
Other securities		94,607		(1,965	)		143,842		(4,211	)		238,449		(6,176	)
Total available-for-sale	$	334,588	$	(4,653	)	$	1,997,801	$	(65,920	)	$	2,332,389	$	(70,573	)

The following table summarizes the held-to-maturity investment securities with unrecognized losses at September 30, 2019 and December 31, 2018 by aggregated major security type and length of time in a continuous unrecognized loss position:

	Less than 12 months					12 months or longer					Total
	Fair		Unrecognized			Fair		Unrecognized			Fair		Unrecognized
(dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
September 30, 2019
Held-to-Maturity
U.S. government-sponsored entities    and agencies	$	—	$	—		$	—	$	—		$	—	$	—
Mortgage-backed securities - Agency		—		—			—		—			—		—
States and political subdivisions		—		—			—		—			—		—
Total held-to-maturity	$	—	$	—		$	—	$	—		$	—	$	—
December 31, 2018
Held-to-Maturity
U.S. government-sponsored entities    and agencies	$	—	$	—		$	72,359	$	(4,642	)	$	72,359	$	(4,642	)
Mortgage-backed securities - Agency		4,335		(24	)		119,207		(8,006	)		123,542		(8,030	)
States and political subdivisions		24,533		(983	)		70,022		(3,556	)		94,555		(4,539	)
Total held-to-maturity	$	28,868	$	(1,007	)	$	261,588	$	(16,204	)	$	290,456	$	(17,211	)

Trust Preferred Securities

Trust preferred securities													Actual	Expected	Excess
September 30, 2019													Deferrals	Defaults as	Subordination
(dollars in thousands)												# of Issuers	and Defaults	a % of	as a % of
		Lowest					Unrealized			Realized		Currently	as a % of	Remaining	Current
		Credit	Amortized		Fair		Gain/			Losses		Performing/	Original	Performing	Performing
	Class	Rating (1)	Cost		Value		(Loss)			2019		Remaining	Collateral	Collateral	Collateral
Pooled trust preferred securities:
Pretsl XXVII LTD	B	B	$	4,303	$	2,135	$	(2,168	)	$	—	32/41	14.6%	11.3%	26.7%
Trapeza Ser 13A	A2A	BBB		9,522		5,560		(3,962	)		—	42/47	4.5%	6.7%	49.6%
				13,825		7,695		(6,130	)		—
Single Issuer trust preferred securities:
JP Morgan Chase & Co		BBB-		4,795		4,325		(470	)		—
Total			$	18,620	$	12,020	$	(6,600	)	$	—

(1)Lowest rating for the security provided by any nationally recognized credit rating agency.

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Revenue from Contracts with Customers

9 Months Ended

Sep. 30, 2019

Revenue From Contract With Customer [Abstract]

Revenue from Contracts with Customers

NOTE 25 – REVENUE FROM CONTRACTS WITH CUSTOMERS

Old National’s revenue from contracts with customers in the scope of Topic 606 is recognized within noninterest income.  The consolidated statements of income include all categories of noninterest income.  The following table reflects only the categories of noninterest income that are within the scope of Topic 606:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in thousands)	2019		2018		2019		2018
Wealth management fees	$	9,160	$	9,022	$	27,604	$	27,794
Service charges on deposit accounts		11,860		11,028		34,201		32,552
Debit card and ATM fees		5,370		4,706		16,292		14,651
Investment product fees		5,244		5,073		16,106		15,170
Other income:
Merchant processing fees		775		779		2,303		2,198
Gain (loss) on other real estate owned		29		260		194		981
Safe deposit box fees		267		221		936		849
Insurance premiums and commissions		194		83		569		265
Total	$	32,899	$	31,172	$	98,205	$	94,460

Wealth management fees: Old National earns wealth management fees based upon asset custody and investment management services provided to individual and institutional customers.  Most of these customers receive monthly or quarterly billings for services rendered based upon the market value of assets in custody.  Fees that are transaction based are recognized at the point in time that the transaction is executed.

Service charges on deposit accounts: Old National earns fees from deposit customers for transaction-based, account maintenance, and overdraft services.  Transaction-based fees and overdraft fees are recognized at a point in time, since the customer generally has a right to cancel the depository arrangement at any time.  The arrangement is considered a day-to-day contract with ongoing renewals and optional purchases, so the duration of the contract does not extend beyond the services already performed.  Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which Old National satisfies its performance obligation.

Debit card and ATM fees: Debit card and ATM fees include ATM usage fees and debit card interchange income.  As with the transaction-based fees on deposit accounts, the ATM fees are recognized at the point in time that Old National fulfills the customer’s request.  Old National earns interchange fees from cardholder transactions processed through card association networks.  Interchange rates are generally set by the card associations based upon purchase volumes and other factors.  Interchange fees represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder.

Investment product fees: Investment product fees are the commissions and fees received from a registered broker/dealer and investment adviser that provide those services to Old National customers.  Old National acts as an agent in arranging the relationship between the customer and the third-party service provider.  These fees are recognized monthly from the third-party broker based upon services already performed, net of the processing fees charged to Old National by the broker.

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Leases

9 Months Ended

Sep. 30, 2019

Lessee Disclosure [Abstract]

Leases

NOTE 10 – LEASES

Old National adopted FASB Topic 842 as of January 1, 2019.  See Note 2 to the consolidated financial statements regarding transition guidance related to the new standard.

Old National determines if an arrangement is or contains a lease at contract inception.  Operating leases are included in operating lease right-of-use assets and operating lease liabilities in our consolidated balance sheet at September 30, 2019.  Finance leases are included in premises and equipment and other borrowings in our consolidated balance sheets at September 30, 2019 and 2018, and December 31, 2018.

Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.  Right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.  In determining the present value of lease payments, we use the implicit lease rate when readily determinable.  As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date.  The incremental borrowing rate is the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment.

Old National has operating and finance leases for land, office space, banking centers, and equipment.  These leases are generally for periods of 10 to 20 years with various renewal options.  We include certain renewal options in the measurement of our right-of-use assets and lease liabilities if they are reasonably certain to be exercised.  Variable lease payments that are dependent on an index or a rate are initially measured using the index or rate at the commencement date and are included in the measurement of the lease liability. Variable lease payments that are not dependent on an index or a rate are excluded from the measurement of the lease liability and are recognized in profit and loss.  Variable lease payments are defined as payments made for the right to use an asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time.

We have made a policy election to exclude the recognition requirements of Topic 842 to all classes of leases with original terms of 12 months or less.  Instead, the short-term lease payments are recognized in profit or loss on a straight-line basis over the lease term.

Old National has lease agreements with lease and non-lease components, which are generally accounted for separately.  For real estate leases, non-lease components and other non-components, such as common area maintenance charges, real estate taxes, and insurance are not included in the measurement of the lease liability since they are generally able to be segregated.  For certain equipment leases, Old National accounts for the lease and non-lease components as a single lease component using the practical expedient available for that class of assets.

Old National does not have any material sub-lease agreements.

The components of lease expense were as follows:

	Affected Line	Three Months			Nine Months
	Item in the	Ended			Ended
(dollars in thousands)	Statement of Income	September 30, 2019			September 30, 2019
Operating lease cost	occupancy/equipment expense	$	4,280		$	12,973
Finance lease cost:
Amortization of right-of-use assets	occupancy expense		166			485
Interest on lease liabilities	interest expense		80			241
Short-term lease cost	occupancy expense		1			2
Sub-lease income	occupancy expense		(193	)		(553	)
Total		$	4,334		$	13,148

Lease expense for operating leases was $4.4 million for the three months ended September 30, 2018 and $13.4 million for the nine months ended September 30, 2018.

Supplemental balance sheet information related to leases was as follows:

(dollars in thousands)	September 30, 2019
Operating Leases
Operating lease right-of-use assets	$	102,976
Operating lease liabilities		107,272
Finance Leases
Premises and equipment, net		7,337
Other borrowings		7,527
Weighted-Average Remaining Lease Term (in Years)
Operating leases		10.8
Finance leases		11.5
Weighted-Average Discount Rate
Operating leases		3.45	%
Finance leases		4.43	%

Supplemental cash flow information related to leases was as follows:

	Nine Months Ended
(dollars in thousands)	September 30, 2019
Cash paid for amounts included in the measurement of    lease liabilities:
Operating cash flows from operating leases	$	13,201
Operating cash flows from finance leases		241
Financing cash flows from finance leases		344

The following table presents a maturity analysis of the Company’s lease liability by lease classification at September 30, 2019:

	Operating			Finance
(dollars in thousands)	Leases			Leases
2019	$	4,314		$	200
2020		16,772			803
2021		15,698			809
2022		14,138			815
2023		9,682			830
Thereafter		69,091			6,232
Total undiscounted lease payments		129,695			9,689
Amounts representing interest		(22,423	)		(2,162	)
Lease liability	$	107,272		$	7,527

Old National leases certain office space and buildings to unrelated parties in exchange for consideration.  All of these tenant leases are classified as operating leases.  The following table presents a maturity analysis of the Company’s tenant leases at September 30, 2019:

	Tenant
(dollars in thousands)	Leases
2019	$	588
2020		2,034
2021		1,740
2022		1,431
2023		1,298
Thereafter		3,650
Total undiscounted lease payments	$	10,741

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2019

Accounting Changes And Error Corrections [Abstract]

Recent Accounting Pronouncements

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Guidance Adopted in 2019

FASB ASC 842 – In February 2016, the FASB issued its new lease accounting guidance in ASU No. 2016-02, Leases (Topic 842).  Under the new guidance, lessees will be required to recognize the following for all leases, with the exception of short-term leases, at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.  Under the new guidance, lessor accounting is largely unchanged.

In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements.  ASU No. 2018-10 provides improvements related to ASU No. 2016-02 to increase stakeholders’ awareness of the amendments and to expedite the improvements.  The amendments affect narrow aspects of the guidance issued in ASU No. 2016-02.  ASU No. 2018-11 allows entities adopting ASU No. 2016-02 to choose an additional (and optional) transition method, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.  ASU No. 2018-11 also allows lessors to not separate non-lease components from the associated lease component if certain conditions are met.  The amendments in these updates became effective for annual periods and interim periods within those annual periods beginning after December 15, 2018.

Old National elected the optional transition method permitted by ASU No. 2018-11.  Under this method, an entity shall recognize and measure leases that exist at the application date and prior comparative periods are not adjusted.  In addition, Old National elected the package of practical expedients to leases that commenced before the effective date:

1. An entity need not reassess whether any expired or existing contracts contain leases.

2. An entity need not reassess the lease classification for any expired or existing leases.

3. An entity need not reassess initial direct costs for any existing leases.

Old National also elected the practical expedient, which must be applied consistently to all leases, to use hindsight in determining the lease term and in assessing impairment of our right-of-use assets.  We also elected a practical expedient to not assess whether existing or expired land easements that were not previously accounted for as leases under Topic 840 contain a lease under this Topic.  Both of these practical expedients may be elected separately or in conjunction with each other or the package noted above.

Based on both operating and finance leases outstanding at December 31, 2018, the impact of adoption on January 1, 2019 was recording a lease liability of $122.9 million, a right-of-use asset of $118.7 million, and a cumulative-effect adjustment of $6.3 million to increase retained earnings.

FASB ASC 310 – In March 2017, the FASB issued ASU No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.  This update amends the amortization period for certain purchased callable debt securities held at a premium.  FASB is shortening the amortization period for the premium to the earliest call date.  Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument.  Concerns were raised that current GAAP excludes certain callable debt securities from consideration of early repayment of principal even if the holder is certain that the call will be exercised.  As a result, upon the exercise of a call on a callable debt security held at a premium, the unamortized premium is recorded as a loss in earnings.  There is diversity in practice (1) in the amortization period for premiums of callable debt securities and (2) in how the potential for exercise of a call is factored into current impairment assessments.  The amendments in this update became effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods and did not have a material impact on the consolidated financial statements.

FASB ASC 718 – In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.  The amendments in this update expand the scope of Topic 718, Compensation—Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services.  Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned.  The ASU supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees.  The amendments in this update became effective for annual periods beginning after December 15, 2018, including interim periods within that fiscal year and did not have a material impact on the consolidated financial statements.

FASB ASC 958 – In June 2018, the FASB issued ASU No. 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made.  The amendments in this update clarify and improve the scope and accounting guidance around contributions of cash and other assets received and made by not-for-profit organizations and business enterprises.  The ASU clarifies and improves current guidance about whether a transfer of assets, or the reduction, settlement, or cancellation of liabilities, is a contribution or an exchange transaction.  It provides criteria for determining whether the resource provider is receiving commensurate value in return for the resources transferred which, depending on the outcome, determines whether the organization follows contribution guidance or exchange transaction guidance in the revenue recognition and other applicable standards.  It also provides a more robust framework for determining whether a contribution is conditional or unconditional, and for distinguishing a donor-imposed condition from a donor-imposed restriction.  This is important because such classification affects the timing of contribution revenue and expense recognition.  The new ASU does not apply to transfers of assets from governments to businesses.  The amendments in this update became effective for a public business entity for transactions in which the entity serves as a resource recipient to annual periods beginning after June 15, 2018, including interim periods within those annual periods.  The amendments in this update became effective for a public business entity for transactions in which the entity serves as a resource provider to annual periods beginning after December 15, 2018, including interim periods within those annual periods and there was no impact.

FASB ASC 815 – In October 2018, the FASB issued ASU No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting.  In the United States, eligible benchmark interest rates under Topic 815 are interest rates on direct Treasury obligations of the U.S. government (“UST”), the London Interbank Offered Rate (“LIBOR”) swap rate, and the Overnight Index Swap (“OIS”) Rate based on the Fed Funds Effective Rate. When the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, in August 2017, it introduced the Securities Industry and Financial Markets Association (“SIFMA”) Municipal Swap Rate as the fourth permissible U.S. benchmark rate.

The new ASU adds the OIS rate based on SOFR as a U.S. benchmark interest rate to facilitate the LIBOR to SOFR transition and provide sufficient lead time for entities to prepare for changes to interest rate risk hedging strategies for both risk management and hedge accounting purposes.  The amendments in this update became effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years and the financial statement impact immediately upon adoption was immaterial.  The future financial statement impact will depend on

any new contracts entered into using new benchmark rates, as well as any existing contracts that get migrated from LIBOR to new benchmark interest rates.  The Company has formed a working group who is developing a transition plan for all exposed contracts migrating from LIBOR to SOFR.  The Company has identified contracts that reflect exposure associated with LIBOR-indexed financial instruments that mature beyond 2021 in an aggregate notional amount of $4.8 billion.  Additionally, the working group is monitoring industry specific transition guidance around a LIBOR contract’s “fallback” language with the industry goal to minimize or eliminate value transfers resulting from the transition.  The associated risks identified include dependence on third parties for critical decisions regarding SOFR index calculations, spread adjustments, term rate development, and product development, which may impact the bank’s ability to establish more detailed timelines for action.

Codification Updates to SEC Sections – In July 2019, the FASB issued ASU No. 2019-07, Codification Updates to SEC Sections, which amends certain SEC sections or paragraphs within the Accounting Standards Codification to reflect changes in SEC Final Rule Releases No. 33-10532, “Disclosure Update and Simplification,” and 33-10231 and 33-10442, “Investment Company Reporting Modernization.” Other revisions in ASU No. 2019-07 update language in the codification to match the electronic Code of Federal Regulations.  The amendments became effective upon addition to the FASB Codification and there is no impact on the consolidated financial statements.

Accounting Guidance Issued But Not Yet Adopted

FASB ASC 326 – In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”).  The main objective of this amendment is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.  The amendment requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to enhance their credit loss estimates.  The amendment requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio.  In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.  The current expected credit loss measurement will be used to estimate the allowance for credit losses (“ACL”) over the life of the financial assets.  The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2019.  Early adoption will be permitted beginning after December 15, 2018.

As previously disclosed, Old National formed a cross functional committee to oversee the adoption of the ASU at the effective date. A working group was also formed and has developed a project plan focused on understanding the ASU, researching issues, identifying data needs for modeling inputs, technology requirements, modeling considerations, and ensuring overarching governance has been achieved for each objective and milestone.  Currently, the working group has identified seven distinct loan portfolios for which a model has been developed. For all seven loan portfolios, the data sets have been identified, populated, and internally validated.  Old National has completed data and model validation testing.  During the remainder of 2019, the project plan is targeting multiple parallel processing of our existing allowance for loan losses model compared to the CECL model, as well as model sensitivity analysis, determination of qualitative adjustments, supporting analytics, and execution of the governance and approval process.

Currently, our measurements for estimating the current expected life-time credit losses for loans and debt securities (as well as certain beneficial interests classified as held-to-maturity) includes the following major items:

• Initial forecast – using a period of one year for all portfolio segments and off-balance-sheet credit exposures, using forward-looking economic scenarios of expected losses.

• Historical loss forecast – for a period incorporating the remaining contractual life, adjusted for prepayments, and the changes in various economic variables during representative historical and recessionary periods.

• Reversion period – using two years, which links the initial loss forecast to the historical loss forecast based on economic conditions at the measurement date.

• Discounted cash flow (“DCF”) aggregator – using the items above to estimate the life-time credit losses for all portfolios and losses for loans modified as a TDR.

During the remainder of 2019, Old National will continue researching and resolving interpretive accounting issues in the ASU, evaluating and refining processes and related controls, finalizing various related accounting policies, and reporting disclosures.

As of the beginning of the first reporting period in which the new standard is effective, Old National expects to recognize a one-time cumulative effect adjustment increasing the allowance for loan losses, since the ASU covers credit losses over the expected life of a loan as well as considering future changes in macroeconomic conditions.  Old National currently estimates an increase to the allowance for credit losses of approximately $35 million to $45 million upon adoption, which includes a range of $3 million to $8 million for off-balance sheet exposures.  At this point in time, the vast majority of this increase is related to the acquired loan portfolio.  Under the current accounting guidance, any remaining unamortized loan discount on an individual loan can be used to offset a charge-off for that loan, so the allowance for loan losses needed for the acquired loans is reduced by the remaining loan discounts.  The new accounting under the ASU removes the ability to offset a charge-off against the remaining loan discount and requires an allowance for credit losses to be recognized in addition to the loan discount.  The ultimate impact of adopting the ASU will be highly dependent on credit quality, macroeconomic forecasts and conditions, composition of our loans and securities portfolios, and other management judgements at the time of adoption. The transition adjustment to record the allowance for credit losses may fall outside of management’s estimated increase based on material changes in these dependencies, specifically the macroeconomic forecast and conditions, used in calculating the allowance for credit losses upon the adoption of CECL.

Old National does not expect a material allowance for credit losses to be recorded on held-to-maturity securities under the CECL credit impairment model, as the composition of these securities are government agency-backed securities for which the risk the risk of loss is minimal.  Additionally, Old National does not expect a material allowance for credit losses to be recorded on its available-for-sale debt securities under the available-for-sale debt security impairment model, as the majority of these securities are government agency-backed securities for which the risk of loss is minimal.

In December 2018, the OCC, the Board of Governors of the Federal Reserve System, and the FDIC approved a final rule to address changes to credit loss accounting under GAAP, including banking organizations’ implementation of CECL.  The final rule provides banking organizations the option to phase in over a three-year period the day-one adverse effects on regulatory capital that may result from the adoption of the new accounting standard.  Old National is planning on adopting the capital transition relief over the permissible three-year period.

FASB ASC 350 – In January 2017, the FASB issued ASU No. 2017-04, Intangibles: Goodwill and Other: Simplifying the Test for Goodwill Impairment.  To simplify the subsequent measurement of goodwill, the amendments eliminate Step 2 from the goodwill impairment test.  The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount.  An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.  In addition, the income tax effects of tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable.  The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test.  An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the qualitative impairment test is necessary.  The amendments should be applied on a prospective basis.  The nature of and reason for the change in accounting principle should be disclosed upon transition.  The amendments in this update should be adopted for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.  Early adoption is permitted on testing dates after January 1, 2017.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 820 – In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.  The updated guidance improves the disclosure requirements on fair value measurements.  The ASU removes certain disclosures required by Topic 820 related to transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; the valuation processes for Level 3 fair value measurements; and for nonpublic entities, the changes in unrealized gains and losses for the period included in earnings for recurring Level 3 fair value measurements held at the end of the reporting period.  The ASU modifies certain disclosures required by Topic 820 related to disclosure of transfers into and out of Level 3 of the fair value hierarchy and purchases and

issues of Level 3 assets and liabilities for nonpublic entities; the requirement to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly for investments in certain entities that calculate net asset value; and clarification that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date.  The ASU adds certain disclosure requirements related to changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.  For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.  The amendments in this update become effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2019.  Early adoption is permitted.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 715 – In August 2018, the FASB issued ASU No. 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans.  The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.  The amendments in this update become effective for fiscal years ending after December 15, 2020 and will not have a material impact on the consolidated financial statements.

FASB ASC 350 – In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.  The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.  The amendments in this update become effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.  Early adoption is permitted.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements.

FASB ASC 842 – In March 2019, the FASB issued ASU No. 2019-01, Leases (Topic 842): Codification Improvements.  The amendments in ASU No. 2019-01 align the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in Topic 842 with that of existing guidance.  As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value in Topic 820, Fair Value Measurement should be applied.  ASU No. 2019-01 also requires lessors within the scope of Topic 942, Financial Services—Depository and Lending, to present all “principal payments received under leases” within investing activities.  The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2019.  Early adoption is permitted.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 326, 815, and 825 – In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.  The amendments related to Topic 326 address accrued interest, transfers between classifications or categories for loans and debt securities, recoveries, vintage disclosures, and contractual extensions and renewal options and will become effective for annual periods and interim periods within those annual periods beginning after December 15, 2019.  The improvements and clarifications related to Topic 815 address partial-term fair value hedges of interest-rate risk, amortization, and disclosure of fair value hedge basis adjustments and consideration of hedged contractually specified interest rate under the hypothetical method and will become effective for the annual reporting period beginning January 1, 2020.  The amendments related to Topic 825 contain various improvements to ASU 2016-01, including scope; held-to-maturity debt securities fair value disclosures; and remeasurement of equity securities at historical exchange rates and will become effective for fiscal years and interim periods beginning after December 15, 2019.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 326 – In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief.  These amendments provide targeted transition relief allowing entities to irrevocably elect the fair value option, on an instrument-by-instrument basis, for certain financial assets (excluding held-to-maturity debt securities) previously measured at amortized cost.  The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2019.  Old National is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

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Loans Held for Sale

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Loans Held for Sale

NOTE 6 – LOANS HELD FOR SALE

Mortgage loans held for immediate sale in the secondary market were $58.3 million at September 30, 2019, compared to $14.9 million at December 31, 2018.  Residential loans that Old National has originated with the intent to sell are recorded at fair value.  Conventional mortgage production is sold on a servicing retained basis.  Certain loans, such as government guaranteed mortgage loans are sold on servicing released basis.