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Loans and Allowance for Credit Losses (Tables)

3 Months Ended

Mar. 31, 2021

Schedule of Composition of Loans and Impact of Adoption

The composition of loans by portfolio segment as of March 31, 2021 follows:


	March 31, 2021		Segment		March 31, 2021
	Statement		Portfolio		After
(dollars in thousands)	Balance		Reclassifications		Reclassifications
Loans:
Commercial	$	4,068,896	$	(187,967)	$	3,880,929
Commercial real estate	6,074,135		(168,283)		5,905,852
BBCC	N/A		356,250		356,250
Residential real estate	2,203,277		—		2,203,277
Consumer	1,578,953		(1,578,953)		N/A
Indirect	N/A		887,333		887,333
Direct	N/A		150,471		150,471
Home equity	N/A		541,149		541,149
Total	$	13,925,261	$	—	$	13,925,261

Schedule of Composition of Loans

The composition of loans by portfolio segment follows:


(dollars in thousands)	March 31, 2021		December 31, 2020
Commercial (1) (2)	$	3,880,929	$	3,757,700
Commercial real estate	5,905,852		5,774,811
BBCC	356,250		370,423
Residential real estate	2,203,277		2,248,422
Indirect	887,333		913,902
Direct	150,471		164,807
Home equity	541,149		556,414
Total loans	13,925,261		13,786,479
Allowance for credit losses	(114,037)		(131,388)
Net loans	$	13,811,224	$	13,655,091

(1)Includes direct finance leases of $29.9 million at March 31, 2021 and $32.3 million at December 31, 2020.

(2)Includes PPP loans of $1.124 billion at March 31, 2021 and $943.0 million at December 31, 2020.

Schedule of Activity in Allowance for Loan Losses

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


(dollars in thousands)	Balance at Beginning of Period		Impact of Adopting ASC 326		Sub-Total		Charge-offs		Recoveries		Provision for Credit Losses		Balance at End of Period
Three Months Ended March 31, 2021
Commercial	$	30,567	$	—	$	30,567	$	(407)	$	238	$	(5,268)	$	25,130
Commercial real estate	75,810		—		75,810		(1)		73		(5,321)		70,561
BBCC	6,120		—		6,120		(36)		41		(3,588)		2,537
Residential real estate	12,608		—		12,608		(158)		87		(2,272)		10,265
Indirect	3,580		—		3,580		(584)		537		(1,278)		2,255
Direct	855		—		855		(302)		260		(148)		665
Home equity	1,848		—		1,848		(82)		339		519		2,624
Total	$	131,388	$	—	$	131,388	$	(1,570)	$	1,575	$	(17,356)	$	114,037

Three Months Ended March 31, 2020
Commercial	$	21,359	$	7,150	$	28,509	$	(5,042)	$	357	$	7,301	$	31,125
Commercial real estate	20,535		25,548		46,083		(1,292)		669		8,643		54,103
BBCC	2,279		3,702		5,981		(15)		66		(615)		5,417
Residential real estate	2,299		6,986		9,285		(300)		169		483		9,637
Indirect	5,319		(1,669)		3,650		(1,203)		414		805		3,666
Direct	1,863		(1,059)		804		(475)		152		341		822
Home equity	965		689		1,654		(118)		82		(8)		1,610
Total	$	54,619	$	41,347	$	95,966	$	(8,445)	$	1,909	$	16,950	$	106,380

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


	Three Months Ended March 31,
(dollars in thousands)	2021		2020
Allowance for credit losses on unfunded loan commitments:
Balance at beginning of period	$	11,689	$	2,656
Impact of adopting ASC 326	—		4,549
Sub-Total	11,689		7,205
Expense (reversal of expense) for credit losses	(1,324)		1,745
Balance at end of period	$	10,365	$	8,950

Schedule of Risk Category of Loans and Amortized Cost

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


	Risk Rating
(dollars in thousands)	Pass		Criticized		Classified - Substandard		Classified - Nonaccrual		Classified - Doubtful		Total
March 31, 2021
Commercial:
Term Loans at Amortized Cost by Origination Year:
Prior to 2017	$	352,978	$	5,187	$	10,711	$	1,243	$	2,566	$	372,685
2017	216,956		6,726		9,892		6,674		2,540		242,788
2018	125,661		27,901		11,267		3,600		1,705		170,134
2019	374,639		8,053		8,124		1,695		692		393,203
2020	1,201,910		21,742		4,594		3,519		—		1,231,765
2021	762,646		4,788		502		1,236		—		769,172
Revolving Loans	502,589		4,924		3,926		878		—		512,317
Revolving to Term Loans	175,782		3,226		2,691		7,166		—		188,865
Total	$	3,713,161	$	82,547	$	51,707	$	26,011	$	7,503	$	3,880,929

Commercial real estate:
Term Loans at Amortized Cost by Origination Year:
Prior to 2017	$	882,164	$	38,716	$	18,346	$	13,514	$	21,910	$	974,650
2017	657,154		42,544		23,368		7,980		20,770		751,816
2018	737,708		14,260		12,244		3,857		835		768,904
2019	1,012,914		31,909		7,743		2,049		1,788		1,056,403
2020	1,572,509		4,845		13,432		2,448		—		1,593,234
2021	332,598		2,277		370		—		—		335,245
Revolving Loans	15,838		—		13,157		—		—		28,995
Revolving to Term Loans	371,889		23,851		585		280		—		396,605
Total	$	5,582,774	$	158,402	$	89,245	$	30,128	$	45,303	$	5,905,852

BBCC:
Term Loans at Amortized Cost by Origination Year:
Prior to 2017	$	24,250	$	271	$	—	$	—	$	191	$	24,712
2017	34,384		205		239		245		44		35,117
2018	45,832		469		506		489		491		47,787
2019	67,742		1,334		1,442		490		25		71,033
2020	89,186		1,404		230		37		—		90,857
2021	20,540		—		—		—		—		20,540
Revolving Loans	42,521		530		320		—		—		43,371
Revolving to Term Loans	19,818		1,203		673		1,139		—		22,833
Total	$	344,273	$	5,416	$	3,410	$	2,400	$	751	$	356,250


	Risk Rating
(dollars in thousands)	Pass		Criticized		Classified - substandard		Classified - nonaccrual		Classified - doubtful		Total
December 31, 2020
Commercial:
Term Loans at Amortized Cost by Origination Year:
Prior to 2016	$	262,538	$	5,369	$	8,441	$	4,379	$	610	$	281,337
2016	124,041		3,383		2,774		49		296		130,543
2017	227,710		9,508		9,836		6,951		2,748		256,753
2018	171,228		15,003		10,077		4,701		1,016		202,025
2019	420,736		9,603		6,369		3,754		—		440,462
2020	1,675,964		23,982		6,501		2,600		—		1,709,047
Revolving Loans	549,849		10,307		15,344		778		—		576,278
Revolving to Term Loans	148,508		2,685		3,049		7,013		—		161,255
Total	$	3,580,574	$	79,840	$	62,391	$	30,225	$	4,670	$	3,757,700

Commercial real estate:
Term Loans at Amortized Cost by Origination Year:
Prior to 2016	$	513,658	$	33,490	$	8,665	$	12,564	$	3,274	$	571,651
2016	496,086		17,648		5,308		1,635		19,283		539,960
2017	677,119		46,994		26,691		9,456		18,926		779,186
2018	749,102		26,464		13,565		5,393		—		794,524
2019	1,041,305		49,271		4,700		2,054		1,832		1,099,162
2020	1,537,226		6,874		11,451		1,408		—		1,556,959
Revolving Loans	28,122		—		—		—		—		28,122
Revolving to Term Loans	382,219		19,804		2,911		313		—		405,247
Total	$	5,424,837	$	200,545	$	73,291	$	32,823	$	43,315	$	5,774,811

BBCC:
Term Loans at Amortized Cost by Origination Year:
Prior to 2016	$	5,327	$	—	$	—	$	—	$	30	$	5,357
2016	24,946		643		33		—		—		25,622
2017	36,288		414		246		200		70		37,218
2018	49,875		621		195		134		847		51,672
2019	73,913		1,403		1,417		551		3		77,287
2020	94,828		1,599		233		161		—		96,821
Revolving Loans	52,393		868		317		89		—		53,667
Revolving to Term Loans	19,353		1,259		701		1,466		—		22,779
Total	$	356,923	$	6,807	$	3,142	$	2,601	$	950	$	370,423


	Payment Performance
(dollars in thousands)	Performing		Nonperforming		Total
March 31, 2021
Residential real estate:
Term Loans at Amortized Cost by Origination Year:
Prior to 2017	$	709,771	$	19,036	$	728,807
2017	155,099		980		156,079
2018	108,229		597		108,826
2019	380,852		222		381,074
2020	669,921		100		670,021
2021	158,352		—		158,352
Revolving Loans	—		—		—
Revolving to Term Loans	118		—		118
Total	$	2,182,342	$	20,935	$	2,203,277
Indirect:
Term Loans at Amortized Cost by Origination Year:
Prior to 2017	$	54,370	$	533	$	54,903
2017	79,764		639		80,403
2018	115,341		795		116,136
2019	224,114		470		224,584
2020	329,182		349		329,531
2021	81,709		—		81,709
Revolving Loans	—		—		—
Revolving to Term Loans	67		—		67
Total	$	884,547	$	2,786	$	887,333
Direct:
Term Loans at Amortized Cost by Origination Year:
Prior to 2017	$	23,706	$	763	$	24,469
2017	13,194		152		13,346
2018	25,754		163		25,917
2019	25,427		113		25,540
2020	27,595		66		27,661
2021	7,511		—		7,511
Revolving Loans	25,014		5		25,019
Revolving to Term Loans	1,006		2		1,008
Total	$	149,207	$	1,264	$	150,471
Home equity:
Term Loans at Amortized Cost by Origination Year:
Prior to 2017	$	—	$	—	$	—
2017	642		—		642
2018	418		127		545
2019	980		98		1,078
2020	—		—		—
2021	—		—		—
Revolving Loans	515,235		101		515,336
Revolving to Term Loans	18,817		4,731		23,548
Total	$	536,092	$	5,057	$	541,149

Schedule of Past Due Financing Receivables

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


(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Past Due 90 Days or More		Total Past Due		Current		Total Loans
March 31, 2021
Commercial	$	3,141	$	—	$	3,504	$	6,645	$	3,874,284	$	3,880,929
Commercial real estate	2,586		159		32,955		35,700		5,870,152		5,905,852
BBCC	103		84		86		273		355,977		356,250
Residential	9,067		217		6,724		16,008		2,187,269		2,203,277
Indirect	2,124		475		469		3,068		884,265		887,333
Direct	639		134		314		1,087		149,384		150,471
Home equity	352		347		1,912		2,611		538,538		541,149
Total	$	18,012	$	1,416	$	45,964	$	65,392	$	13,859,869	$	13,925,261

December 31, 2020
Commercial	$	2,977	$	664	$	2,100	$	5,741	$	3,751,959	$	3,757,700
Commercial real estate	887		128		27,272		28,287		5,746,524		5,774,811
BBCC	894		882		61		1,837		368,586		370,423
Residential	11,639		3,296		7,666		22,601		2,225,821		2,248,422
Indirect	5,222		960		492		6,674		907,228		913,902
Direct	753		533		426		1,712		163,095		164,807
Home equity	1,075		377		1,663		3,115		553,299		556,414
Total	$	23,447	$	6,840	$	39,680	$	69,967	$	13,716,512	$	13,786,479

Schedule of Nonaccrual and Past Due Loans

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


	March 31, 2021						December 31, 2020
(dollars in thousands)	Nonaccrual Amortized Cost		Nonaccrual With No Related Allowance		Past Due 90 Days or More and Accruing		Nonaccrual Amortized Cost		Nonaccrual With No Related Allowance		Past Due 90 Days or More and Accruing
Commercial	$	33,514	$	1,890	$	49	$	34,895	$	3,394	$	122
Commercial real estate	75,431		42,221		—		76,138		22,152		20
BBCC	3,151		—		—		3,551		—		—
Residential	20,935		—		—		24,794		—		—
Indirect	2,786		—		—		2,529		—		12
Direct	1,264		—		—		1,178		27		13
Home equity	5,057		4		—		4,254		45		—
Total	$	142,138	$	44,115	$	49	$	147,339	$	25,618	$	167

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


	Type of Collateral
(dollars in thousands)	Real Estate		Blanket Lien		Investment Securities/Cash		Auto		Other
March 31, 2021
Commercial	$	7,470	$	20,081	$	5,352	$	165	$	446
Commercial real estate	60,773		381		1,088		—		13,189
BBCC	1,267		1,706		56		122		—
Residential	20,935		—		—		—		—
Indirect	—		—		—		2,786		—
Direct	980		—		2		227		23
Home equity	5,057		—		—		—		—
Total loans	$	96,482	$	22,168	$	6,498	$	3,300	$	13,658

December 31, 2020
Commercial	$	8,976	$	19,253	$	5,379	$	394	$	893
Commercial real estate	60,844		472		1,137		—		13,685
BBCC	1,425		1,929		63		134		—
Residential	24,794		—		—		—		—
Indirect	—		—		—		2,529		—
Direct	901		—		2		235		29
Home equity	4,254		—		—		—		—
Total loans	$	101,194	$	21,654	$	6,581	$	3,292	$	14,607

Schedule of Activity in Trouble Debt Restructurings

The following table presents activity in TDRs:


(dollars in thousands)	Beginning Balance		(Charge-offs)/ Recoveries		(Payments)/ Disbursements		(Removals)/ Additions		Ending Balance
Three Months Ended March 31, 2021
Commercial	$	11,090	$	—	$	(1,448)	$	(1,171)	$	8,471
Commercial real estate	17,606		8		(229)		—		17,385
BBCC	112		3		(10)		—		105
Residential	2,824		—		(221)		—		2,603
Indirect	—		2		(2)		—		—
Direct	739		1		(14)		—		726
Home equity	282		1		(7)		—		276
Total	$	32,653	$	15	$	(1,931)	$	(1,171)	$	29,566

Three Months Ended March 31, 2020
Commercial	$	12,412	$	(695)	$	(789)	$	—	$	10,928
Commercial real estate	14,277		(1,272)		(157)		—		12,848
BBCC	578		—		(16)		—		562
Residential	3,107		—		(67)		—		3,040
Indirect	—		3		(3)		—		—
Direct	983		2		(63)		—		922
Home equity	381		1		(8)		—		374
Total	$	31,738	$	(1,961)	$	(1,103)	$	—	$	28,674

Schedule of Volume of Loan Deferrals

category:


	December 31, 2020		March 31, 2021
(dollars in thousands)	Deferrals Balance		Deferrals Balance (1)		Number of Deferrals
Commercial and commercial real estate	$	53,823	$	32,242	47
Residential real estate	1,855		1,763		8
Consumer	8,224		5,280		250
Total	$	63,902	$	39,285	305

(1) Includes second deferrals between 90 and 180 days totaling $2.2 million of commercial and commercial real estate loans, $0.7 million of residential real estate loans, and $0.7 million of consumer loans.