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Loans and Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2021

Schedule of Composition of Loans and Impact of Adoption

The composition of loans by portfolio segment as of September 30, 2021 follows:


	September 30, 2021		Segment		September 30, 2021
	Statement		Portfolio		After
(dollars in thousands)	Balance		Reclassifications		Reclassifications
Loans:
Commercial	$	3,505,183	$	(192,390)	$	3,312,793
Commercial real estate	6,290,632		(158,297)		6,132,335
BBCC	N/A		350,687		350,687
Residential real estate	2,224,782		—		2,224,782
Consumer	1,564,231		(1,564,231)		N/A
Indirect	N/A		860,785		860,785
Direct	N/A		149,124		149,124
Home equity	N/A		554,322		554,322
Total	$	13,584,828	$	—	$	13,584,828

Schedule of Composition of Loans

The composition of loans by portfolio segment follows:


(dollars in thousands)	September 30, 2021		December 31, 2020
Commercial (1) (2)	$	3,312,793	$	3,757,700
Commercial real estate	6,132,335		5,774,811
BBCC	350,687		370,423
Residential real estate	2,224,782		2,248,422
Indirect	860,785		913,902
Direct	149,124		164,807
Home equity	554,322		556,414
Total loans	13,584,828		13,786,479
Allowance for credit losses	(107,868)		(131,388)
Net loans	$	13,476,960	$	13,655,091

(1)Includes direct finance leases of $26.0 million at September 30, 2021 and $32.3 million at December 31, 2020.

(2)Includes PPP loans of $354.9 million at September 30, 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 September 30, 2021
Commercial	$	25,731	$	—	$	25,731	$	(354)	$	106	$	677	$	26,160
Commercial real estate	65,469		—		65,469		(86)		3,371		(3,657)		65,097
BBCC	2,798		—		2,798		(8)		31		(259)		2,562
Residential real estate	10,419		—		10,419		(85)		79		(887)		9,526
Indirect	2,043		—		2,043		(113)		294		(363)		1,861
Direct	640		—		640		(355)		153		148		586
Home equity	2,344		—		2,344		(214)		218		(272)		2,076
Total	$	109,444	$	—	$	109,444	$	(1,215)	$	4,252	$	(4,613)	$	107,868

Three Months Ended September 30, 2020
Commercial	$	29,618	$	—	$	29,618	$	(128)	$	2,192	$	(3,289)	$	28,393
Commercial real estate	71,069		—		71,069		(2,709)		3,379		4,173		75,912
BBCC	6,332		—		6,332		(10)		—		15		6,337
Residential real estate	14,244		—		14,244		(321)		220		(219)		13,924
Indirect	4,453		—		4,453		(556)		587		(394)		4,090
Direct	835		—		835		(445)		187		248		825
Home equity	1,843		—		1,843		—		598		(534)		1,907
Total	$	128,394	$	—	$	128,394	$	(4,169)	$	7,163	$	—	$	131,388

Nine Months Ended September 30, 2021
Commercial	$	30,567	$	—	$	30,567	$	(940)	$	549	$	(4,016)	$	26,160
Commercial real estate	75,810		—		75,810		(264)		3,555		(14,004)		65,097
BBCC	6,120		—		6,120		(144)		87		(3,501)		2,562
Residential real estate	12,608		—		12,608		(305)		217		(2,994)		9,526
Indirect	3,580		—		3,580		(903)		1,395		(2,211)		1,861
Direct	855		—		855		(913)		622		22		586
Home equity	1,848		—		1,848		(296)		718		(194)		2,076
Total	$	131,388	$	—	$	131,388	$	(3,765)	$	7,143	$	(26,898)	$	107,868

Nine Months Ended September 30, 2020
Commercial	$	21,359	$	7,150	$	28,509	$	(5,303)	$	3,100	$	2,087	$	28,393
Commercial real estate	20,535		25,548		46,083		(5,164)		4,297		30,696		75,912
BBCC	2,279		3,702		5,981		(92)		122		326		6,337
Residential real estate	2,299		6,986		9,285		(637)		431		4,845		13,924
Indirect	5,319		(1,669)		3,650		(2,125)		1,494		1,071		4,090
Direct	1,863		(1,059)		804		(1,326)		571		776		825
Home equity	965		689		1,654		(199)		758		(306)		1,907
Total	$	54,619	$	41,347	$	95,966	$	(14,846)	$	10,773	$	39,495	$	131,388

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2021		2020		2021		2020
Allowance for credit losses on unfunded loan commitments:
Balance at beginning of period	$	10,429	$	11,026	$	11,689	$	2,656
Impact of adopting ASC 326	—		—		—		4,549
Sub-Total	10,429		11,026		11,689		7,205
Expense (reversal of expense) for credit losses	(132)		—		(1,392)		3,821
Balance at end of period	$	10,297	$	11,026	$	10,297	$	11,026

Schedule of Risk Category of Loans and Amortized Cost

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


	Origination Year														Revolving to Term
(dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving				Total
September 30, 2021
Commercial:
Risk Rating:
Pass	$	897,040	$	638,945	$	317,026	$	125,230	$	165,228	$	245,618	$	608,212	$	164,020	$	3,161,319
Criticized	11,262		8,747		2,473		—		7,964		2,901		7,784		11,533		52,664
Classified:
Substandard	8,024		16,399		12,056		11,253		6,874		5,171		7,642		4,857		72,276
Nonaccrual	1,096		3,710		1,031		2,407		4,019		—		188		7,994		20,445
Doubtful	—		148		653		1,296		181		3,811		—		—		6,089
Total	$	917,422	$	667,949	$	333,239	$	140,186	$	184,266	$	257,501	$	623,826	$	188,404	$	3,312,793

Commercial real estate:
Risk Rating:
Pass	$	1,058,090	$	1,561,584	$	902,806	$	580,718	$	558,072	$	711,425	$	22,791	$	430,064	$	5,825,550
Criticized	28,606		5,243		53,705		34,005		18,706		23,259		152		17,012		180,688
Classified:
Substandard	4,878		10,254		7,168		7,201		21,423		13,290		2,291		4,382		70,887
Nonaccrual	306		2,509		—		1,472		6,229		10,089		321		147		21,073
Doubtful	—		—		2,021		1,146		18,201		12,769		—		—		34,137
Total	$	1,091,880	$	1,579,590	$	965,700	$	624,542	$	622,631	$	770,832	$	25,555	$	451,605	$	6,132,335

BBCC:
Risk Rating:
Pass	$	59,605	$	77,065	$	57,928	$	38,168	$	27,380	$	12,867	$	44,982	$	18,622	$	336,617
Criticized	1,189		1,381		1,063		306		—		—		1,449		1,475		6,863
Classified:
Substandard	287		61		1,113		209		912		139		289		576		3,586
Nonaccrual	—		135		—		—		230		—		—		1,335		1,700
Doubtful	—		—		289		1,418		—		214		—		—		1,921
Total	$	61,081	$	78,642	$	60,393	$	40,101	$	28,522	$	13,220	$	46,720	$	22,008	$	350,687


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

Commercial real estate:
Risk Rating:
Pass	$	1,537,226	$	1,041,305	$	749,102	$	677,119	$	496,086	$	513,658	$	28,122	$	382,219	$	5,424,837
Criticized	6,874		49,271		26,464		46,994		17,648		33,490		—		19,804		200,545
Classified:
Substandard	11,451		4,700		13,565		26,691		5,308		8,665		—		2,911		73,291
Nonaccrual	1,408		2,054		5,393		9,456		1,635		12,564		—		313		32,823
Doubtful	—		1,832		—		18,926		19,283		3,274		—		—		43,315
Total	$	1,556,959	$	1,099,162	$	794,524	$	779,186	$	539,960	$	571,651	$	28,122	$	405,247	$	5,774,811

BBCC:
Risk Rating:
Pass	$	94,828	$	73,913	$	49,875	$	36,288	$	24,946	$	5,327	$	52,393	$	19,353	$	356,923
Criticized	1,599		1,403		621		414		643		—		868		1,259		6,807
Classified:
Substandard	233		1,417		195		246		33		—		317		701		3,142
Nonaccrual	161		551		134		200		—		—		89		1,466		2,601
Doubtful	—		3		847		70		—		30		—		—		950
Total	$	96,821	$	77,287	$	51,672	$	37,218	$	25,622	$	5,357	$	53,667	$	22,779	$	370,423

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


	Origination Year														Revolving to Term
(dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving				Total
September 30, 2021
Residential real estate:
Risk Rating:
Performing	$	476,235	$	659,413	$	304,715	$	81,974	$	119,596	$	563,796	$	—	$	110	$	2,205,839
Nonperforming	—		314		168		294		1,030		17,137		—		—		18,943
Total	$	476,235	$	659,727	$	304,883	$	82,268	$	120,626	$	580,933	$	—	$	110	$	2,224,782

Indirect:
Risk Rating:
Performing	$	265,815	$	260,763	$	169,061	$	81,733	$	52,028	$	28,918	$	—	$	22	$	858,340
Nonperforming	195		356		500		560		489		345		—		—		2,445
Total	$	266,010	$	261,119	$	169,561	$	82,293	$	52,517	$	29,263	$	—	$	22	$	860,785

Direct:
Risk Rating:
Performing	$	28,564	$	19,025	$	16,984	$	17,674	$	8,926	$	18,004	$	38,211	$	541	$	147,929
Nonperforming	4		61		129		166		137		691		3		4		1,195
Total	$	28,568	$	19,086	$	17,113	$	17,840	$	9,063	$	18,695	$	38,214	$	545	$	149,124

Home equity:
Risk Rating:
Performing	$	—	$	—	$	628	$	390	$	568	$	436	$	529,967	$	18,695	$	550,684
Nonperforming	—		—		—		59		96		62		193		3,228		3,638
Total	$	—	$	—	$	628	$	449	$	664	$	498	$	530,160	$	21,923	$	554,322

	Origination Year														Revolving to Term
	2020		2019		2018		2017		2016		Prior		Revolving				Total
December 31, 2020
Residential real estate:
Risk Rating:
Performing	$	624,435	$	453,132	$	132,107	$	190,376	$	202,457	$	620,999	$	—	$	122	$	2,223,628
Nonperforming	65		251		680		892		2,131		20,775		—		—		24,794
Total	$	624,500	$	453,383	$	132,787	$	191,268	$	204,588	$	641,774	$	—	$	122	$	2,248,422

Indirect:
Risk Rating:
Performing	$	352,989	$	253,514	$	134,893	$	96,587	$	52,225	$	21,088	$	—	$	77	$	911,373
Nonperforming	22		443		777		666		429		192		—		—		2,529
Total	$	353,011	$	253,957	$	135,670	$	97,253	$	52,654	$	21,280	$	—	$	77	$	913,902

Direct:
Risk Rating:
Performing	$	32,499	$	29,189	$	30,510	$	16,182	$	8,527	$	19,465	$	26,028	$	1,229	$	163,629
Nonperforming	22		141		171		64		247		526		4		3		1,178
Total	$	32,521	$	29,330	$	30,681	$	16,246	$	8,774	$	19,991	$	26,032	$	1,232	$	164,807

Home equity:
Risk Rating:
Performing	$	1	$	997	$	444	$	891	$	238	$	—	$	529,275	$	20,314	$	552,160
Nonperforming	—		37		—		—		11		116		94		3,996		4,254
Total	$	1	$	1,034	$	444	$	891	$	249	$	116	$	529,369	$	24,310	$	556,414

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
September 30, 2021
Commercial	$	509	$	663	$	750	$	1,922	$	3,310,871	$	3,312,793
Commercial real estate	1,401		83		14,869		16,353		6,115,982		6,132,335
BBCC	—		38		300		338		350,349		350,687
Residential	7,592		2,140		5,615		15,347		2,209,435		2,224,782
Indirect	3,160		552		462		4,174		856,611		860,785
Direct	391		175		217		783		148,341		149,124
Home equity	324		586		912		1,822		552,500		554,322
Total	$	13,377	$	4,237	$	23,125	$	40,739	$	13,544,089	$	13,584,828

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:


	September 30, 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	$	26,534	$	2,617	$	96	$	34,895	$	3,394	$	122
Commercial real estate	55,210		27,756		—		76,138		22,152		20
BBCC	3,621		—		—		3,551		—		—
Residential	18,943		—		—		24,794		—		—
Indirect	2,445		—		—		2,529		—		12
Direct	1,195		—		17		1,178		27		13
Home equity	3,638		—		—		4,254		45		—
Total	$	111,586	$	30,373	$	113	$	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
September 30, 2021
Commercial	$	6,762	$	16,299	$	2,984	$	95	$	394
Commercial real estate	41,170		364		1,003		—		12,673
BBCC	1,884		1,579		45		113		—
Residential	18,943		—		—		—		—
Indirect	—		—		—		2,445		—
Direct	998		—		5		149		41
Home equity	3,638		—		—		—		—
Total loans	$	73,395	$	18,242	$	4,037	$	2,802	$	13,108

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 September 30, 2021
Commercial	$	8,264	$	1	$	(156)	$	2,073	$	10,182
Commercial real estate	15,970		58		(369)		—		15,659
BBCC	97		2		(10)		—		89
Residential	2,582		(7)		(108)		—		2,467
Indirect	—		1		(1)		—		—
Direct	665		—		(15)		—		650
Home equity	217		1		(10)		—		208
Total	$	27,795	$	56	$	(669)	$	2,073	$	29,255

Three Months Ended September 30, 2020
Commercial	$	10,598	$	1,326	$	(3,168)	$	—	$	8,756
Commercial real estate	12,706		1,993		(3,950)		5,907		16,656
BBCC	147		(52)		43		—		138
Residential	3,012		—		(171)		—		2,841
Indirect	—		2		(2)		—		—
Direct	779		(11)		(18)		—		750
Home equity	367		1		(77)		—		291
Total	$	27,609	$	3,259	$	(7,343)	$	5,907	$	29,432

Nine Months Ended September 30, 2021
Commercial	$	11,090	$	1	$	(1,810)	$	901	$	10,182
Commercial real estate	17,606		72		(2,019)		—		15,659
BBCC	112		8		(31)		—		89
Residential	2,824		(11)		(346)		—		2,467
Indirect	—		4		(4)		—		—
Direct	739		3		(92)		—		650
Home equity	282		2		(76)		—		208
Total	$	32,653	$	79	$	(4,378)	$	901	$	29,255

Nine Months Ended September 30, 2020
Commercial	$	12,412	$	632	$	(4,288)	$	—	$	8,756
Commercial real estate	14,277		741		(4,269)		5,907		16,656
BBCC	578		(22)		(418)		—		138
Residential	3,107		—		(266)		—		2,841
Indirect	—		7		(7)		—		—
Direct	983		(9)		(224)		—		750
Home equity	381		2		(92)		—		291
Total	$	31,738	$	1,351	$	(9,564)	$	5,907	$	29,432

Schedule of Volume of Loan Deferrals

The table below presents these loan deferrals by loan category:


	December 31, 2020		September 30, 2021
(dollars in thousands)	Deferrals Balance		Deferrals Balance (1)		Number of Deferrals
Commercial and commercial real estate	$	53,823	$	16,641	34
Residential real estate	1,855		767		2
Consumer	8,224		2,763		151
Total	$	63,902	$	20,171	187

(1) Includes second deferrals between 90 and 180 days totaling $4.2 million of commercial and commercial real estate loans, $0.1 million of residential real estate loans, and $0.4 million of consumer loans.