XML 43 R33.htm IDEA: XBRL DOCUMENT

Loans and Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2022

Schedule of Composition of Loans and Impact of Adoption

The portfolio segment reclassifications follow:


			Segment
	Statement		Portfolio		After
(dollars in thousands)	Balance		Reclassifications		Reclassifications
September 30, 2022
Loans:
Commercial	$	9,311,148	$	(197,169)	$	9,113,979
Commercial real estate	12,227,888		(153,784)		12,074,104
BBCC	N/A		350,953		350,953
Residential real estate	6,267,306		—		6,267,306
Consumer	2,722,591		(2,722,591)		N/A
Indirect	N/A		1,004,054		1,004,054
Direct	N/A		674,943		674,943
Home equity	N/A		1,043,594		1,043,594
Total	$	30,528,933	$	—	$	30,528,933

December 31, 2021
Loans:
Commercial	$	3,391,769	$	(191,557)	$	3,200,212
Commercial real estate	6,380,674		(159,190)		6,221,484
BBCC	N/A		350,747		350,747
Residential real estate	2,255,289		—		2,255,289
Consumer	1,574,114		(1,574,114)		N/A
Indirect	N/A		873,139		873,139
Direct	N/A		140,385		140,385
Home equity	N/A		560,590		560,590
Total	$	13,601,846	$	—	$	13,601,846

Schedule of Composition of Loans

The composition of loans by portfolio segment follows:


(dollars in thousands)	September 30, 2022		December 31, 2021
Commercial (1) (2)	$	9,113,979	$	3,200,212
Commercial real estate	12,074,104		6,221,484
BBCC	350,953		350,747
Residential real estate	6,267,306		2,255,289
Indirect	1,004,054		873,139
Direct	674,943		140,385
Home equity	1,043,594		560,590
Total loans	30,528,933		13,601,846
Allowance for credit losses	(302,254)		(107,341)
Net loans	$	30,226,679	$	13,494,505

(1)Includes direct finance leases of $196.7 million at September 30, 2022 and $25.1 million at December 31, 2021.

(2)Includes PPP loans of $43.5 million at September 30, 2022 and $169.0 million at December 31, 2021.

Schedule of Activity in Allowance for Loan Losses

Activity in the allowance for credit losses for loans by portfolio segment was as follows:


(dollars in thousands)	Balance at Beginning of Period		Allowance Established for Acquired PCD Loans (1)		Charge-offs		Recoveries		Provision for Credit Losses		Balance at End of Period
Three Months Ended September 30, 2022
Commercial	$	102,819	$	3,740	$	(2,696)	$	2,206	$	6,344	$	112,413
Commercial real estate	141,802		6,818		(4,772)		287		(45)		144,090
BBCC	2,064		—		—		108		(4)		2,168
Residential real estate	19,729		—		(20)		66		1,481		21,256
Indirect	1,641		—		(624)		379		189		1,585
Direct	14,412		—		(3,299)		442		4,541		16,096
Home equity	5,536		—		(29)		357		(1,218)		4,646
Total	$	288,003	$	10,558	$	(11,440)	$	3,845	$	11,288	$	302,254

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

Nine Months Ended September 30, 2022
Commercial	$	27,232	$	38,780	$	(5,919)	$	3,219	$	49,101	$	112,413
Commercial real estate	64,004		49,419		(5,596)		789		35,474		144,090
BBCC	2,458		—		(48)		256		(498)		2,168
Residential real estate	9,347		136		(344)		636		11,481		21,256
Indirect	1,743		—		(1,636)		921		557		1,585
Direct	528		31		(6,550)		1,712		20,375		16,096
Home equity	2,029		723		(107)		540		1,461		4,646
Total	$	107,341	$	89,089	$	(20,200)	$	8,073	$	117,951	$	302,254

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

(1)During the three months ended September 30, 2022, a measurement period adjustment was made on the allowance for credit losses for acquired PCD loans totaling $10.6 million.

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)	2022		2021		2022		2021
Allowance for credit losses on unfunded loan commitments:
Balance at beginning of period	$	21,966	$	10,429	$	10,879	$	11,689
Provision for credit losses on unfunded commitments for loans acquired during the period	—		—		11,013		—
Expense (reversal of expense) for credit losses	4,203		(132)		4,277		(1,392)
Balance at end of period	$	26,169	$	10,297	$	26,169	$	10,297

Schedule of Risk Category of Loans and Amortized Cost

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


	Origination Year														Revolving to Term
(dollars in thousands)	2022		2021		2020		2019		2018		Prior		Revolving				Total
September 30, 2022
Commercial:
Risk Rating:
Pass	$	1,788,480	$	1,953,811	$	928,908	$	858,442	$	386,870	$	444,404	$	1,981,798	$	277,119	$	8,619,832
Criticized	42,688		27,736		41,026		44,508		10,165		6,293		61,764		4,397		238,577
Classified:
Substandard	40,035		35,516		20,640		13,877		8,661		21,806		31,913		26,566		199,014
Nonaccrual	—		2,158		1,356		1,127		—		—		7,892		7,645		20,178
Doubtful	4,151		6,658		3,280		7,158		5,851		9,280		—		—		36,378
Total	$	1,875,354	$	2,025,879	$	995,210	$	925,112	$	411,547	$	481,783	$	2,083,367	$	315,727	$	9,113,979

Commercial real estate:
Risk Rating:
Pass	$	2,375,092	$	2,864,028	$	2,141,691	$	1,322,839	$	803,056	$	1,209,592	$	54,548	$	597,665	$	11,368,511
Criticized	61,754		28,671		21,462		60,599		68,301		44,349		—		20,431		305,567
Classified:
Substandard	54,427		24,635		26,280		78,029		56,499		31,336		—		4,153		275,359
Nonaccrual	2,358		13,949		5,640		1,162		2,188		26,480		297		3,037		55,111
Doubtful	—		35,581		9,752		218		1,783		22,222		—		—		69,556
Total	$	2,493,631	$	2,966,864	$	2,204,825	$	1,462,847	$	931,827	$	1,333,979	$	54,845	$	625,286	$	12,074,104

BBCC:
Risk Rating:
Pass	$	63,023	$	70,355	$	56,446	$	40,627	$	26,382	$	14,995	$	50,146	$	18,477	$	340,451
Criticized	1,330		633		611		697		263		164		975		1,177		5,850
Classified:
Substandard	342		324		3		343		—		—		837		502		2,351
Nonaccrual	61		—		340		294		283		336		—		723		2,037
Doubtful	—		28		16		93		127		—		—		—		264
Total	$	64,756	$	71,340	$	57,416	$	42,054	$	27,055	$	15,495	$	51,958	$	20,879	$	350,953


	Origination Year														Revolving to Term
(dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving				Total
December 31, 2021
Commercial:
Risk Rating:
Pass	$	918,456	$	563,869	$	271,158	$	98,468	$	156,136	$	235,639	$	667,628	$	130,470	$	3,041,824
Criticized	9,998		7,885		6,660		—		7,809		2,658		14,601		10,076		59,687
Classified:
Substandard	14,773		14,468		10,200		9,849		5,521		945		6,883		10,322		72,961
Nonaccrual	1,069		3,507		1,276		3,721		1,448		—		845		7,796		19,662
Doubtful	—		178		—		288		337		5,275		—		—		6,078
Total	$	944,296	$	589,907	$	289,294	$	112,326	$	171,251	$	244,517	$	689,957	$	158,664	$	3,200,212

Commercial real estate:
Risk Rating:
Pass	$	1,555,880	$	1,474,271	$	846,921	$	481,508	$	462,176	$	611,680	$	42,609	$	451,544	$	5,926,589
Criticized	27,622		24,790		39,914		—		21,614		22,157		—		34,387		170,484
Classified:
Substandard	4,706		12,118		9,933		9,058		18,165		11,351		2,291		4,339		71,961
Nonaccrual	1,620		2,997		—		1,627		3,419		8,905		315		871		19,754
Doubtful	6,653		—		1,970		342		11,218		12,513		—		—		32,696
Total	$	1,596,481	$	1,514,176	$	898,738	$	492,535	$	516,592	$	666,606	$	45,215	$	491,141	$	6,221,484

BBCC:
Risk Rating:
Pass	$	81,710	$	69,749	$	54,580	$	34,461	$	25,113	$	8,296	$	47,571	$	18,778	$	340,258
Criticized	1,320		1,170		841		160		—		—		670		1,578		5,739
Classified:
Substandard	284		24		79		7		187		465		103		239		1,388
Nonaccrual	—		88		—		—		66		162		—		1,136		1,452
Doubtful	—		25		284		1,391		—		210		—		—		1,910
Total	$	83,314	$	71,056	$	55,784	$	36,019	$	25,366	$	9,133	$	48,344	$	21,731	$	350,747

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


	Origination Year														Revolving to Term
(dollars in thousands)	2022		2021		2020		2019		2018		Prior		Revolving				Total
September 30, 2022
Residential real estate:
Risk Rating:
Performing	$	1,070,939	$	1,920,008	$	1,861,893	$	496,062	$	144,400	$	742,078	$	8	$	92	$	6,235,480
Nonperforming	—		423		765		584		717		29,337		—		—		31,826
Total	$	1,070,939	$	1,920,431	$	1,862,658	$	496,646	$	145,117	$	771,415	$	8	$	92	$	6,267,306

Indirect:
Risk Rating:
Performing	$	404,054	$	274,254	$	162,221	$	95,443	$	39,202	$	25,995	$	—	$	45	$	1,001,214
Nonperforming	203		756		548		531		360		442		—		—		2,840
Total	$	404,257	$	275,010	$	162,769	$	95,974	$	39,562	$	26,437	$	—	$	45	$	1,004,054

Direct:
Risk Rating:
Performing	$	120,960	$	185,466	$	86,802	$	67,478	$	52,671	$	65,437	$	89,675	$	1,530	$	670,019
Nonperforming	161		620		647		388		301		2,635		40		132		4,924
Total	$	121,121	$	186,086	$	87,449	$	67,866	$	52,972	$	68,072	$	89,715	$	1,662	$	674,943

Home equity:
Risk Rating:
Performing	$	741	$	992	$	1,863	$	2,035	$	1,008	$	11,171	$	999,869	$	15,370	$	1,033,049
Nonperforming	224		96		231		728		824		4,335		868		3,239		10,545
Total	$	965	$	1,088	$	2,094	$	2,763	$	1,832	$	15,506	$	1,000,737	$	18,609	$	1,043,594

	Origination Year														Revolving to Term
	2021		2020		2019		2018		2017		Prior		Revolving				Total
December 31, 2021
Residential real estate:
Risk Rating:
Performing	$	625,582	$	632,705	$	272,600	$	72,766	$	103,866	$	529,293	$	12	$	105	$	2,236,929
Nonperforming	96		165		166		350		855		16,728		—		—		18,360
Total	$	625,678	$	632,870	$	272,766	$	73,116	$	104,721	$	546,021	$	12	$	105	$	2,255,289

Indirect:
Risk Rating:
Performing	$	361,485	$	231,156	$	146,978	$	68,513	$	41,598	$	20,819	$	—	$	9	$	870,558
Nonperforming	262		524		614		510		430		241		—		—		2,581
Total	$	361,747	$	231,680	$	147,592	$	69,023	$	42,028	$	21,060	$	—	$	9	$	873,139

Direct:
Risk Rating:
Performing	$	34,058	$	16,135	$	14,396	$	14,579	$	7,432	$	15,831	$	36,812	$	192	$	139,435
Nonperforming	13		53		130		133		35		536		42		8		950
Total	$	34,071	$	16,188	$	14,526	$	14,712	$	7,467	$	16,367	$	36,854	$	200	$	140,385

Home equity:
Risk Rating:
Performing	$	—	$	—	$	633	$	349	$	535	$	—	$	539,057	$	16,768	$	557,342
Nonperforming	—		—		16		9		41		1		258		2,923		3,248
Total	$	—	$	—	$	649	$	358	$	576	$	1	$	539,315	$	19,691	$	560,590

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, 2022
Commercial	$	8,575	$	758	$	11,885	$	21,218	$	9,092,761	$	9,113,979
Commercial real estate	23,786		7,235		27,286		58,307		12,015,797		12,074,104
BBCC	78		92		84		254		350,699		350,953
Residential	29,394		7,382		8,851		45,627		6,221,679		6,267,306
Indirect	4,929		1,735		850		7,514		996,540		1,004,054
Direct	4,459		2,926		2,503		9,888		665,055		674,943
Home equity	4,995		1,078		4,589		10,662		1,032,932		1,043,594
Total	$	76,216	$	21,206	$	56,048	$	153,470	$	30,375,463	$	30,528,933

December 31, 2021
Commercial	$	2,723	$	617	$	1,603	$	4,943	$	3,195,269	$	3,200,212
Commercial real estate	1,402		280		7,042		8,724		6,212,760		6,221,484
BBCC	747		162		109		1,018		349,729		350,747
Residential	8,273		2,364		4,554		15,191		2,240,098		2,255,289
Indirect	3,888		867		554		5,309		867,830		873,139
Direct	687		159		162		1,008		139,377		140,385
Home equity	693		199		777		1,669		558,921		560,590
Total	$	18,413	$	4,648	$	14,801	$	37,862	$	13,563,984	$	13,601,846

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, 2022						December 31, 2021
(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	$	56,556	$	3,836	$	—	$	25,740	$	9,574	$	—
Commercial real estate	124,667		35,989		—		52,450		25,139		—
BBCC	2,301		—		—		3,362		—		—
Residential	31,826		—		—		18,360		—		—
Indirect	2,840		—		—		2,581		—		4
Direct	4,924		—		767		950		—		3
Home equity	10,545		—		—		3,248		—		—
Total	$	233,659	$	39,825	$	767	$	106,691	$	34,713	$	7

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, 2022
Commercial	$	7,417	$	43,620	$	2,301	$	134	$	987
Commercial real estate	112,275		—		590		—		6,487
BBCC	1,649		560		64		28		—
Residential	31,826		—		—		—		—
Indirect	—		—		—		2,840		—
Direct	3,861		2		—		198		16
Home equity	10,545		—		—		—		—
Total loans	$	167,573	$	44,182	$	2,955	$	3,200	$	7,490

December 31, 2021
Commercial	$	8,100	$	13,816	$	3,394	$	80	$	302
Commercial real estate	38,657		—		961		—		6,653
BBCC	1,895		1,331		43		93		—
Residential	18,360		—		—		—		—
Indirect	—		—		—		2,581		—
Direct	724		—		1		152		20
Home equity	3,248		—		—		—		—
Total loans	$	70,984	$	15,147	$	4,399	$	2,906	$	6,975

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, 2022
Commercial	$	7,216	$	—	$	(1,620)	$	—	$	5,596
Commercial real estate	27,531		—		(891)		—		26,640
BBCC	87		—		(13)		—		74
Residential	2,378		—		(37)		—		2,341

Direct	2,669		—		(12)		—		2,657
Home equity	131		—		(8)		—		123
Total	$	40,012	$	—	$	(2,581)	$	—	$	37,431

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

Nine Months Ended September 30, 2022
Commercial	$	7,456	$	—	$	(6,363)	$	4,503	$	5,596
Commercial real estate	17,158		4		(10,005)		19,483		26,640
BBCC	87		3		(16)		—		74
Residential	2,435		—		(94)		—		2,341
Indirect	—		1		(1)		—		—
Direct	2,704		—		(47)		—		2,657
Home equity	199		1		(77)		—		123
Total	$	30,039	$	9	$	(16,603)	$	23,986	$	37,431

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

Schedule of Credit Deteriorated Loans

Old National has purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The carrying amount of those loans is as follows:


(dollars in thousands)	First Midwest (1)
Purchase price of loans at acquisition	$	1,390,273
Allowance for credit losses at acquisition	89,089
Non-credit discount/(premium) at acquisition	9,003
Par value of acquired loans at acquisition	$	1,488,365

(1)Old National merged with First Midwest effective February 15, 2022.