Old National reports 4th quarter earnings, announces dividend increase, stock repurchase plan, and ONB Way strategic update

EVANSVILLE, Ind., Jan. 21, 2020 (GLOBE NEWSWIRE) --

Old National Bancorp (NASDAQ: ONB) reports 4Q19 net income of $49.2 million, diluted EPS of $0.29. Adjusted1 net income of $55.2 million, or $0.32 per diluted share.  2019 annual net income of $238.2 million, diluted EPS of $1.38.  Adjusted1 2019 annual net income of $249.9 million, diluted EPS of $1.45.

CEO COMMENTARY:

“Our 4th quarter results capped a strong year of earnings for Old National,” said CEO Jim Ryan. “Full-year 2019 results included three quarters of record net income, stellar credit metrics, well controlled expenses and record commercial loan production, all of which was accomplished while finalizing a new strategic plan – known as  The ONB Way – that will ensure our clients remain at the center of all we do.”

FOURTH QUARTER HIGHLIGHTS²:

Net Income

• Net income of $49.2 million
• Earnings per share of $0.29

Net Interest Income/NIM

• Net interest income on a fully taxable equivalent basis was $152.2 million compared to $156.3 million
• Net interest margin on a fully taxable equivalent basis was 3.46% compared to 3.57%

Operating Performance

• Pre-provision net revenue¹ (“PPNR”) was $65.2 million
• Adjusted PPNR¹ was $73.9 million, up 10.3% over fourth quarter of 2018
• Noninterest expense was $134.7 million
• Adjusted noninterest expense¹ was $125.6 million
• Efficiency ratio¹ was 65.57%
• Adjusted efficiency ratio¹ was 60.97%, a 234 basis point improvement from fourth quarter of 2018

Loans and Credit Quality

• End-of-period total loans³ were $12,164.4 million compared to $12,075.9 million
• Fourth-quarter total commercial production was a record $681 million; December 31 pipeline was a record $2.2 billion
• Provision for loan losses was $1.3 million
• Net charge-offs were $3.6 million, or 0.12% annualized, compared to net charge-offs of $0.8 million
• Non-performing loans were 1.19% of total loans compared to 1.31%

Return Profile & Capital

• Return on average common equity was 6.94%
• Return on average tangible common equity¹ was 12.03%
• Adjusted return on average tangible common equity¹ was 13.44%
• Repurchased 428 thousand shares of common stock during the current quarter

Notable Items

• $0.01 increase in quarterly cash dividend to $0.14 per share
• 7 million share repurchase authorization effective until January 31, 2021
• Current quarter contained $8.2 million in ONB Way charges, $0.2 million in merger and integration charges and $0.7 million in tax credit amortization

¹ Non-GAAP financial measure that Management believes is useful in evaluating the financial results of the Company – please refer to the Non-GAAP reconciliations contained in this release ² Comparisons are on a linked-quarter basis, unless otherwise noted ³ Includes loans held for sale

DIVIDEND AND SHARE REPURCHASE

Old National Bancorp’s Board of Directors declared an increase in its quarterly common stock cash dividend to $0.14 per share on the Company’s outstanding shares of common stock. This new dividend level represents a 7.7% increase over the previous cash dividend level of $0.13 per common share. The dividend is payable March 16, 2020, to shareholders of record on March 2, 2020. For purposes of broker trading, the ex-date of the cash dividend is February 28, 2020.

The Board of Directors has also approved the adoption of a stock repurchase plan that authorizes up to 7.0 million shares of Old National Bancorp stock to be repurchased, as conditions warrant, through January 31, 2021. These shares may be purchased in either the open market or in privately negotiated transactions, in accordance with SEC regulations.

THE ONB WAY: OLD NATIONAL’S NEW STRATEGIC PLAN

Old National is implementing a new strategic plan – and overall way of doing business – designed to keep our clients at the center of all we do. Known as The ONB Way, it includes:

• Realigning the organization into clearly defined segments to align leaders and relationship managers with the client segment they can best serve (while not wavering on our commitment to community).

• Deepening client relationships through integrated Commercial, Community Banking and Wealth teams.

• Simplifying and improving the end-to-end banking/borrowing journey while adhering to strong risk management principles.

• Creating a new Wealth Division that combines wealth management, investments and private banking for a simplified, highly consultative client experience firmly rooted in financial planning.

• Investing in our operational and IT infrastructure to meet our clients “where they are” and ensure that we keep pace with technology and client digital expectations.

ADDITIONS TO THE LEADERSHIP TEAM

As part of The ONB Way, Old National is pleased to welcome four new executive leaders:

• Chady AlAhmar, Wealth Division CEO. Most recently a Senior Executive of Wealth Management at U.S. Bank, Chady is passionate about achieving business growth through driving strategy optimization, team collaboration, sales practices, business development and analytics. Prior to joining U.S. Bank, he held strategy, finance and management consulting positions with GMAC (Ally Bank) and ACG in New York and ran his own management consulting firm for several years. He will be located in Minneapolis.

• Paul Kilroy, Chief Information Officer. Paul brings a wide and impressive array of IT expertise and leadership experience to his role as ONB CIO, including Cloud, data and application rationalization strategies, and robotics and automation. Most recently, he served as SVP, Segment CIO of Enterprise Shared Services, Data and Architecture for Huntington National Bank, where he created a groundbreaking Robotics Center of Excellence. Prior to that, he spent 13 years in IT leadership roles at JP Morgan Chase. Paul will be located in Evansville.
  
  
• Scott Fecteau, Chief Client Services Officer, Operations. Scott is an Operations, Financial and Risk Management executive with nearly 30 years of industry experience.  He most recently served as Managing Director/Global Delivery Lead BPO for Accenture Credit Services in Charlotte, North Carolina. Prior to that, he was Director of Residential Lending at Associated Bank, in Green Bay for 12 years. We are excited to welcome Scott back to Old National as he served in our Mortgage Division in 2003-04. He will be located in Evansville.
  
  
• Malinda Anthony, Treasury Management (TM) President. Malinda joined ONB from Wells Fargo in Indianapolis, where she most recently served as North Division Sales Manager, overseeing TM sales supporting commercial banking in 10 states. In her role as ONB TM President, she is responsible for the entire Treasury Management business line, including sales, operations and support, product and process innovation, and Merchant Services. She will be located in Indianapolis.

BRANCH NETWORK OPTIMIZATION

Another component of The ONB Way is the optimization of our branch network. This optimization, which includes 31 banking centers scattered throughout the footprint that will be consolidated on April 24, 2020, reflects an ongoing shift among our clients toward digital banking solutions. Many of the facilities to be consolidated are in smaller markets, several of which were added in recent years through partnership activity. By state, these consolidations include 10 banking centers in both Wisconsin and Indiana, five in Michigan, four in Minnesota and two in Kentucky.

RESULTS OF OPERATIONS

Old National Bancorp reported fourth-quarter 2019 net income of $49.2 million, or $0.29 per diluted share. 

Included in the fourth quarter were pre-tax charges of $8.2 million for ONB Way and $0.2 million for merger and integration activity. Excluding these charges from the current quarter and netting out debt securities gains, adjusted net income was $55.2 million, or $0.32 per diluted share.

LOANS
Commercial activity remains strong with record high commercial loan production.

• Period-end total loans were $12,164.4 million at December 31, 2019, compared to $12,075.9 million at September 30, 2019.
• Commercial and industrial loans decreased $60.3 million to $2,890.3 million; commercial real estate loans increased $54.7 million to $5,166.8 million; consumer loans increased $7.8 million to $1,726.1 million and residential mortgage loans increased $86.3 million to $2,381.2 million.
• Commercial loan production in the fourth quarter was $681 million; period-end pipeline totaled $2.2 billion.
• On average, total loans in the fourth quarter were $12,069.2 million, down from $12,073.8 million in the third quarter of 2019.

DEPOSITS
A low-cost core deposit franchise continues to be one of Old National’s strengths.

• Period-end total deposits were $14,553.4 million at December 31, 2019, an increase of $105.0 million from the third quarter of 2019.
• On average, total deposits in the fourth quarter were $14,602.9 million, compared to $14,330.5 million in the third quarter of 2019. 

NET INTEREST INCOME AND MARGIN
Net interest income and margin lower with decline in accretion income and mix shift.

• Net interest income decreased to $148.9 million in the fourth quarter of 2019 from $153.1 million in the third quarter of 2019.
• The net interest margin on a fully taxable equivalent basis decreased 11 basis points to 3.46% compared to 3.57% in the third quarter of 2019.
• Accretion income was $9.5 million, or 21 basis points of net interest margin, in the fourth quarter of 2019 compared to $13.4 million, or 31 basis points of net interest margin, in the third quarter of 2019.  In the fourth quarter of 2019, accretion income was 4.8% of adjusted total revenue.
• Interest collected on nonaccrual loans was $2.4 million, or 5 basis points of net interest margin, in the fourth quarter of 2019 compared to $2.0 million, or 5 basis points of net interest margin, in the third quarter of 2019.
• The cost of total deposits declined 9 basis points to 0.43% in the fourth quarter of 2019 while the cost of total interest-bearing deposits decreased 12 basis points to 0.59%.

CREDIT QUALITY AND CECL
Strong credit quality remains a hallmark of the Old National franchise.

• Asset quality remained strong with net charge-offs in the fourth quarter of $3.6 million, or 0.12% of total average loans, and 30-89 day delinquencies of 0.25%.
• Provision expense was $1.3 million in the fourth quarter compared to $1.4 million in the third quarter.
• Non-performing loans decreased as a percentage of total loans to 1.19%.
• In accordance with current accounting practices, the loans acquired from recent acquisitions were recorded at fair value with no allowance recorded at the acquisition date.  As of December 31, 2019, the remaining discount on these acquired loans was $77.8 million.
• The allowance for loan losses was $54.6 million, or 0.45% of total loans at December 31, 2019.
• Estimated day one increase to the allowance for loan losses and unfunded commitment liability of approximately $35 million to $45 million upon adoption of CECL. 

NONINTEREST INCOME
Noninterest income decreased due to normal seasonal patterns in mortgage banking and deposit service charges as well as a decline in capital markets income.

• Total noninterest income for the fourth quarter of 2019 was $47.7 million, a decrease of $6.2 million from the third quarter of 2019.
• Mortgage banking revenue decreased $3.2 million, capital markets income decreased $1.5 million and service charges on deposits declined $1.1 million when compared to the third quarter of 2019.

NONINTEREST EXPENSE
Fourth quarter results demonstrated continued discipline with respect to expense management, helping to drive positive operating leverage¹.

• Noninterest expense for the fourth quarter of 2019 was $134.7 million and included $8.2 million in ONB Way charges, $0.2 million in merger & integration charges and $0.7 million in tax credit amortization.
• Excluding these items, adjusted noninterest expense for the fourth quarter was $125.6 million, compared to the $118.3 million in adjusted noninterest expense in the third quarter of 2019.
• The fourth quarter of 2019 also included $4.0 million in additional incentive compensation which is included in adjusted noninterest expense defined above.
• The fourth quarter efficiency ratio was 65.57%, while the adjusted efficiency ratio was 60.97%.
• For the full-year 2019, the efficiency ratio was 60.35%, while the adjusted efficiency ratio was 57.87%.
• Adjusted operating leverage¹ was +636 basis points for the full-year 2019 as compared to 2018.

INCOME TAXES

• On a fully taxable-equivalent basis, income tax expense in the fourth quarter was $14.7 million, resulting in a 23.0% FTE tax rate.
• Income tax expense included $0.7 million in tax credit benefit.

CAPITAL
Capital ratios remain strong.

• At the end of the fourth quarter, total risk-based capital was 13.0% and regulatory tier 1 capital was 12.1%.
• Tangible common equity to tangible assets was 9.09% at the end of the fourth quarter compared to 8.95% in the third quarter of 2019.
• The Company repurchased 428 thousand shares of common stock during the fourth quarter of 2019 at a weighted average price of $16.78, excluding commissions.   

NON-GAAP RECONCILIATIONS

($ in millions, except EPS, shares in 000s)	4Q19			Adjustments4			Adjusted 4Q19
Total Revenues (FTE)	$199.9			($0.4)			$199.5
Less: Provision for Loan Losses		(1.3)			-			(1.3	)
Less: Noninterest Expenses		(134.7)			8.4			(126.3	)
Income before Income Taxes (FTE)	$63.9			$8.0			$71.9
Income Taxes		14.7			2.0			16.7
Net Income	$49.2			$6.0			$55.2
Average Shares Outstanding		170,186			-			170,186
Earnings Per Share - Diluted	$0.29			$0.03			$0.32

⁴ Tax-effect calculations use the current statutory FTE tax rates (federal + state)

($ in millions, except EPS, shares in 000s)		2019		Adjustments4			Adjusted 2019
Total Revenues (FTE)	$816.5			($1.9		)	$814.6
Less: Provision for Loan Losses		(4.7	)		-			(4.7	)
Less: Noninterest Expenses		(508.5	)		17.4			(491.1	)
Income before Income Taxes (FTE)	$303.3			$15.5			$318.8
Income Taxes		(65.1	)		(3.8	)		(68.9	)
Net Income	$238.2			$11.7			$249.9
Average Shares Outstanding		172,687			-			172,687
Earnings Per Share	$1.38			$0.07			$1.45

⁴ Tax-effect calculations use the current statutory FTE tax rates (federal + state)

($ in millions)	4Q19					3Q19
Net Interest Income	$148.9					$153.1
Add: FTE Adjustment	3.3					3.2
Net Interest Income (FTE)	$152.2					$156.3
Average Earning Assets	$17,577.8					$17,510.5
Net Interest Margin (FTE)	3.46%					3.57%

($ in millions)	4Q19			3Q19
Net Interest Income	$148.9			$153.1
Add: FTE Adjustment	3.3			3.2
Net Interest Income (FTE)	$152.2			$156.3
Add: Total Noninterest Income	47.7			53.9
Less: Noninterest Expense	(134.7)			(122.6		)
Pre-Provision Net Revenue	$65.2			$87.6
Less: Debt Securities Gains/Losses	(0.4)			(0.4		)
Add: ONB Way Charges	8.2			1.8
Add: Merger and Integration Charges	0.2			1.3
Add: Amortization of Tax Credit Investments	0.7			1.2
Adjusted Pre-Provision Net Revenue	$73.9			$91.5

($ in millions)	4Q19			3Q19			4Q18				2019			2018
Noninterest Expense	$134.7			$122.6			$150.3			$508.5			$517.3
Less: ONB Way Charges		(8.2	)		(1.8	)		-			(11.4	)		-
Less: Merger and Integration Charges		(0.2	)		(1.3	)		(14.8	)		(6.0	)		(21.3	)
Less: Branch Action Charges/Foundation Funding		-			-			(7.5	)		-			(12.0	)
Noninterest Expense less Charges	$126.3			$119.5			$128.0			$491.1			$484.0
Less: Amortization of Tax Credit Investments		(0.7	)		(1.2	)		(1.1	)		(2.7	)		(22.9	)
Adjusted Noninterest Expense	$125.6			$118.3			$126.9			$488.4			$461.1
Less: Intangible Amortization		(3.9	)		(4.2	)		(4.1	)		(16.9	)		(14.4	)
Adjusted Noninterest Expense Less Intangible Amortization	$ 121.7			$ 114.1			$ 122.8			$ 471.5			$ 446.7
Net Interest Income	$148.9			$153.1			$146.2			$604.3			$537.5
FTE Adjustment		3.3			3.2			3.1			12.9			11.5
Net Interest Income (FTE)	$152.2			$156.3			$149.3			$617.2			$549.0
Total Noninterest Income		47.7			53.9			58.2			199.3			195.3
Total Revenue (FTE)	$199.9			$210.2			$207.5			$816.5			$744.3
Less: Debt Securities Gains/Losses		(0.4	)		(0.4	)		0.4			(1.9	)		(2.0	)
Less: Gain on Student Loan Sale		-			-			-			-			(2.2	)
Less: Gain on Branch Actions		-			-			(14.0	)		-			(14.5	)
Adjusted Total Revenue (FTE)	$199.5			$209.8			$193.9			$814.6			$725.6
Efficiency Ratio		65.57	%		56.44	%		70.33	%		60.35	%		67.74	%
Adjusted Efficiency Ratio		60.97	%		54.40	%		63.31	%		57.87	%		61.56	%
Operating Leverage5 (basis points)		668									1,140
Adjusted Operating Leverage6 (basis points)		392									636

⁵ Year-over-year basis point change in noninterest expenses plus change in total revenue
⁶ Year-over-year basis point change in adjusted noninterest expense plus change in adjusted total revenue

($ in millions)	4Q19			3Q19
Net Income	$49.2			$69.8
Add: Intangible Amortization (net of tax7)		3.0			3.1
Tangible Net Income	$52.2			$72.9
Less: Securities Gains/Losses (net of tax7)		(0.3	)		(0.3	)
Add: ONB Way Charges (net of tax7)		6.2			1.4
Add: Merger & Integration Charges (net of tax7)		0.1			1.0
Adjusted Tangible Net Income	$58.2			$75.0
Average Total Shareholders’ Equity	$2,832.9			$2,817.5
Less: Average Goodwill		(1,037.0	)		(1,036.3	)
Less: Average Intangibles		(61.9	)		(66.0	)
Average Tangible Shareholders’ Equity	$1,734.0			$1,715.2
Return on Average Tangible Common Equity		12.03	%		17.01	%
Adjusted Return on Average Tangible Common Equity		13.44	%		17.49	%

⁷ Tax-effect calculations use the current statutory FTE tax rates (federal + state)

CONFERENCE CALL AND WEBCAST
Old National will host a conference call and live webcast at 7:00 a.m. Central Time on Tuesday, January 21, 2020, to review fourth-quarter and full-year 2019 financial results. The live audio web cast of the call, along with the corresponding presentation slides, will be available on the Company’s Investor Relations web page at oldnational.com and will be archived there for 12 months. A replay of the call will also be available from 10:00 a.m. Central Time on January 21 through February 4. To access the replay, dial 1-855-859-2056, Conference ID Code 5278346.

ABOUT OLD NATIONAL
Old National Bancorp (NASDAQ: ONB) is the holding company of Old National Bank. Headquartered in Evansville with $20.4 billion in assets, it is a top 100 U.S. bank, the largest Indiana-based bank and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for eight consecutive years. For 185 years, Old National has been a community bank committed to building long-term, highly valued relationships with clients. With locations in Indiana, Kentucky, Michigan, Minnesota and Wisconsin, Old National provides retail and commercial banking services along with comprehensive wealth management, investment and capital markets services. For information and financial data, please visit Investor Relations at oldnational.com.

USE OF NON-GAAP FINANCIAL MEASURES
This earnings release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Old National’s results of operations or financial position.  Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.

FORWARD-LOOKING STATEMENT
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements include, but are not limited to, descriptions of Old National Bancorp’s (“Old National’s”) financial condition, results of operations, asset and credit quality trends and profitability.  Forward-looking statements can be identified by the use of the words “anticipate,” “believe,” “expect,” “intend,” “could” and “should,” and other words of similar meaning.  These forward-looking statements express management’s current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties. There are a number of factors that could cause actual results to differ materially from those in such statements.  Factors that might cause such a difference include, but are not limited to: market, economic, operational, liquidity, credit and interest rate risks associated with Old National’s business; competition; government legislation and policies (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and its related regulations); ability of Old National to execute its business plan, including the anticipated impact from the ONB Way strategic plan that may differ from current estimates; 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; computer hacking and other cybersecurity threats; other matters discussed in this press release; and other factors identified in our Annual Report on Form 10-K and other periodic filings with the SEC. These forward-looking statements are made only as of the date of this press release, and Old National does not undertake an obligation to release revisions to these forward-looking statements to reflect events or conditions after the date of this press release.

Media: Kathy A. Schoettlin [phone]
Investors: Lynell J. Walton [phone]

Financial Highlights (unaudited)
($ and shares in thousands, except per share data)
	Three Months Ended										Twelve Months Ended
	December 31,			September 30,			December 31,				December 31,			December 31,
		2019			2019			2018				2019			2018
Income Statement
Net interest income	$	148,899		$	153,096		$	146,225			$	604,273		$	537,602
Provision for loan losses		1,264			1,437			3,390				4,747			6,966
Noninterest income		47,726			53,961			58,154				199,317			195,305
Noninterest expense		134,743			122,585			150,268				508,487			517,261
Net income		49,185			69,781			47,498				238,206			190,830
Per Common Share Data
Net income (diluted)	$	0.29		$	0.41		$	0.28			$	1.38		$	1.22
Average diluted shares outstanding		170,186			171,551			167,992				172,687			156,539
Book value		16.82			16.66			15.36				16.82			15.36
Stock price		18.29			17.20			15.40				18.29			15.40
Dividend payout ratio		45	%		32	%		46	%			37	%		42	%
Tangible common book value (1)		10.35			10.18			9.00				10.35			9.00
Performance Ratios
Return on average assets		0.97	%		1.39	%		1.01	%			1.19	%		1.07	%
Return on average common equity		6.94	%		9.91	%		7.59	%			8.57	%		8.42	%
Return on average tangible common equity (1)		12.03	%		17.01	%		13.84	%			14.97	%		14.97	%
Net interest margin (FTE)		3.46	%		3.57	%		3.64	%			3.55	%		3.54	%
Efficiency ratio (2)		65.57	%		56.44	%		70.33	%			60.35	%		67.74	%
Net charge-offs (recoveries) to average loans		0.12	%		0.03	%		0.02	%			0.05	%		0.02	%
Allowance for loan losses to ending loans		0.45	%		0.47	%		0.45	%			0.45	%		0.45	%
Non-performing loans to ending loans		1.19	%		1.31	%		1.43	%			1.19	%		1.43	%
Balance Sheet
Total loans	$	12,117,524		$	12,017,648		$	12,243,892			$	12,117,524		$	12,243,892
Total assets		20,411,667			20,438,788			19,728,435				20,411,667			19,728,435
Total deposits		14,553,397			14,448,352			14,349,949				14,553,397			14,349,949
Total borrowed funds		2,744,728			2,831,863			2,493,793				2,744,728			2,493,793
Total shareholders' equity		2,852,453			2,832,530			2,689,570				2,852,453			2,689,570
Capital Ratios (1)
Risk-based capital ratios (EOP):
Tier 1 common equity		12.1	%		12.0	%		11.4	%			12.1	%		11.4	%
Tier 1		12.1	%		12.0	%		11.4	%			12.1	%		11.4	%
Total		13.0	%		13.0	%		12.3	%			13.0	%		12.3	%
Leverage ratio (to average assets)		8.9	%		8.8	%		9.2	%			8.9	%		9.2	%
Total equity to assets (averages)		14.01	%		13.98	%		13.28	%			13.88	%		12.74	%
Tangible common equity to tangible assets		9.09	%		8.95	%		8.47	%			9.09	%		8.47	%
Nonfinancial Data
Full-time equivalent employees		2,709			2,778			2,892				2,709			2,892
Number of branches		192			192			191				192			191
(1) See "Non-GAAP Measures" table.
(2) Efficiency ratio is defined as noninterest expense before amortization of intangibles as a percent of FTE net interest income and noninterest revenues, excluding net gains from debt securities transactions. This presentation excludes amortization of intangibles and net debt securities gains, as is common in other company releases, and better aligns with true operating performance.
FTE - Fully taxable equivalent basis EOP - End of period actual balances

Income Statement (unaudited)
($ and shares in thousands, except per share data)
	Three Months Ended									Twelve Months Ended
	December 31,		September 30,			December 31,				December 31,			December 31,
		2019		2019			2018				2019			2018
Interest income	$	176,553	$	185,853		$	175,234			$	730,387		$	632,045
Less: interest expense		27,654		32,757			29,009				126,114			94,443
Net interest income		148,899		153,096			146,225				604,273			537,602
Provision for loan losses		1,264		1,437			3,390				4,747			6,966
Net interest income after provision for loan losses		147,635		151,659			142,835				599,526			530,636
Wealth management fees		9,468		9,160			9,069				37,072			36,863
Service charges on deposit accounts		10,714		11,860			11,474				44,915			44,026
Debit card and ATM fees		5,360		5,370			5,565				21,652			20,216
Mortgage banking revenue		5,626		8,850			3,928				26,622			17,657
Investment product fees		5,679		5,244			5,369				21,785			20,539
Capital markets income		3,043		4,560			840				13,270			4,934
Company-owned life insurance		2,937		2,703			2,591				11,539			10,584
Other income		4,329		5,900			5,700				20,648			24,402
Net gain on branch divestitures		-		-			13,989				-			13,989
Gains (losses) on sales of debt securities		437		424			(357	)			1,923			2,060
Gains (losses) on derivatives		133		(110	)		(14	)			(109	)		35
Total noninterest income		47,726		53,961			58,154				199,317			195,305
Salaries and employee benefits		74,974		71,729			87,346				289,452			281,275
Occupancy		14,184		11,934			13,210				55,255			51,941
Equipment		3,958		3,954			3,916				16,903			14,861
Marketing		3,631		4,105			4,782				15,898			15,847
Data processing		9,080		8,961			9,418				37,589			36,170
Communication		2,450		2,349			2,537				10,702			10,846
Professional fees		9,986		5,037			5,615				22,854			14,503
Loan expenses		1,873		1,811			1,877				7,253			7,028
FDIC assessment		1,529		960			2,110				6,030			10,638
Amortization of intangibles		3,946		4,168			4,134				16,911			14,442
Amortization of tax credit investments		710		1,211			1,142				2,749			22,949
Other expense		8,422		6,366			14,181				26,891			36,761
Total noninterest expense		134,743		122,585			150,268				508,487			517,261
Income before income taxes		60,618		83,035			50,721				290,356			208,680
Income tax expense		11,433		13,254			3,223				52,150			17,850
Net income	$	49,185	$	69,781		$	47,498			$	238,206		$	190,830
Diluted Earnings Per Share
Net income	$	0.29	$	0.41		$	0.28			$	1.38		$	1.22
Average Common Shares Outstanding
Basic		169,235		170,746			167,044				171,907			155,675
Diluted		170,186		171,551			167,992				172,687			156,539
Common shares outstanding at end of period		169,616		170,031			175,141				169,616			175,141

Balance Sheet (unaudited)
($ in thousands)
		December 31,				September 30,				December 31,
			2019				2019				2018
	Assets
	Federal Reserve Bank account	$	29,141			$	80,018			$	26,182
	Money market investments		12,430				19,410				6,980
	Investments:
	Treasury and government-sponsored agencies		610,666				524,919				707,438
	Mortgage-backed securities		3,183,861				3,248,367				2,336,415
	States and political subdivisions		1,275,643				1,231,248				1,245,657
	Other securities		485,862				490,389				488,802
	Total investments		5,556,032				5,494,923				4,778,312
	Loans held for sale, at fair value		46,898				58,285				14,911
	Loans:
	Commercial		2,890,296				2,950,559				3,232,970
	Commercial and agriculture real estate		5,166,792				5,112,123				4,958,851
	Consumer:
	Home equity		559,021				555,905				589,322
	Other consumer loans		1,167,126				1,162,438				1,214,345
	Subtotal of commercial and consumer loans		9,783,235				9,781,025				9,995,488
	Residential real estate		2,334,289				2,236,623				2,248,404
	Total loans		12,117,524				12,017,648				12,243,892
	Total earning assets		17,762,025				17,670,284				17,070,277
	Allowance for loan losses		(54,619	)			(56,910	)			(55,461	)
	Non-earning Assets:
	Cash and due from banks		234,766				320,822				284,003
	Premises and equipment, net		490,925				492,065				485,912
	Operating lease right-of-use assets		95,477				102,976				-
	Goodwill and other intangible assets		1,097,099				1,101,045				1,113,274
	Company-owned life insurance		448,967				447,110				444,224
	Net deferred tax assets		29,705				26,523				87,048
	Loan servicing rights		25,368				24,623				24,497
	Other assets		281,954				310,250				274,661
	Total non-earning assets		2,704,261				2,825,414				2,713,619
	Total assets	$	20,411,667			$	20,438,788			$	19,728,435
	Liabilities and Equity
	Noninterest-bearing demand deposits	$	4,042,286			$	3,996,264			$	3,965,380
	Interest-bearing:
	Checking and NOW accounts		4,149,639				3,936,318				3,788,339
	Savings accounts		2,845,423				2,863,718				2,944,092
	Money market accounts		1,833,819				1,821,989				1,627,882
	Other time deposits		1,589,988				1,704,238				1,845,149
	Total core deposits		14,461,155				14,322,527				14,170,842
	Brokered CD's		92,242				125,825				179,107
	Total deposits		14,553,397				14,448,352				14,349,949
	Federal funds purchased and interbank borrowings		350,414				240,589				270,135
	Securities sold under agreements to repurchase		327,782				337,551				362,294
	Federal Home Loan Bank advances		1,822,847				2,001,960				1,613,481
	Other borrowings		243,685				251,763				247,883
	Total borrowed funds		2,744,728				2,831,863				2,493,793
	Operating lease liabilities		99,500				107,272				-
	Accrued expenses and other liabilities		161,589				218,771				195,123
	Total liabilities		17,559,214				17,606,258				17,038,865
	Common stock, surplus, and retained earnings		2,796,246				2,774,016				2,734,520
	Accumulated other comprehensive income (loss), net of tax		56,207				58,514				(44,950	)
	Total shareholders' equity		2,852,453				2,832,530				2,689,570
	Total liabilities and shareholders' equity	$	20,411,667			$	20,438,788			$	19,728,435

Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
		Three Months Ended								Three Months Ended								Three Months Ended
		December 31, 2019								September 30, 2019								December 31, 2018
		Average			Income (1)/		Yield/			Average			Income (1)/		Yield/			Average			Income (1)/		Yield/
Earning Assets:		Balance			Expense		Rate			Balance			Expense		Rate			Balance			Expense		Rate
Money market and other interest-earning investments		$	87,835		$	530	2.39	%		$	63,142		$	528	3.32	%		$	39,207		$	205	2.07	%
Investments:
Treasury and government-sponsored agencies			546,266			3,547	2.60	%			682,940			4,341	2.54	%			694,409			3,874	2.23	%
Mortgage-backed securities			3,172,818			18,844	2.38	%			3,019,322			18,589	2.46	%			2,011,275			13,688	2.72	%
States and political subdivisions			1,211,850			11,133	3.67	%			1,172,017			10,896	3.72	%			1,187,404			11,147	3.76	%
Other securities			489,889			3,585	2.93	%			499,308			4,049	3.24	%			493,426			4,017	3.26	%
Total investments			5,420,823			37,109	2.74	%			5,373,587			37,875	2.82	%			4,386,514			32,726	2.98	%
Loans: (2)
Commercial			2,891,641			31,925	4.32	%			3,018,638			35,428	4.59	%			3,133,153			37,358	4.67	%
Commercial and agriculture real estate			5,129,638			66,959	5.11	%			5,037,909			71,604	5.56	%			4,834,589			65,461	5.30	%
Consumer:
Home equity			561,125			6,426	4.54	%			557,607			7,102	5.05	%			562,801			7,159	5.05	%
Other consumer loans			1,153,924			12,245	4.21	%			1,175,900			12,226	4.13	%			1,203,436			11,702	3.86	%
Subtotal commercial and consumer loans			9,736,328			117,555	4.79	%			9,790,054			126,360	5.12	%			9,733,979			121,680	4.96	%
Residential real estate loans			2,332,835			24,641	4.23	%			2,283,704			24,261	4.25	%			2,238,588			23,672	4.23	%
Total loans			12,069,163			142,196	4.64	%			12,073,758			150,621	4.91	%			11,972,567			145,352	4.78	%
Total earning assets		$	17,577,821		$	179,835	4.05	%		$	17,510,487		$	189,024	4.27	%		$	16,398,288		$	178,283	4.30	%
Less: Allowance for loan losses			(57,162	)							(56,894	)							(53,045	)
Non-earning Assets:
Cash and due from banks		$	278,324							$	264,145							$	232,360
Other assets			2,419,792								2,429,466								2,275,907
Total assets		$	20,218,775							$	20,147,204							$	18,853,510
Interest-Bearing Liabilities:
Checking and NOW accounts		$	4,121,021		$	3,812	0.37	%		$	3,895,654		$	4,448	0.45	%		$	3,391,630		$	2,004	0.23	%
Savings accounts			2,842,996			1,586	0.22	%			2,855,401			2,128	0.30	%			2,919,900			2,225	0.30	%
Money market accounts			1,839,258			3,558	0.77	%			1,822,698			4,017	0.87	%			1,482,022			1,922	0.51	%
Other time deposits			1,642,773			6,101	1.47	%			1,733,492			7,016	1.61	%			1,769,243			6,519	1.46	%
Total interest-bearing deposits			10,446,048			15,057	0.57	%			10,307,245			17,609	0.68	%			9,562,795			12,670	0.53	%
Brokered CD's			109,504			637	2.31	%			181,425			1,098	2.40	%			193,455			1,024	2.10	%
Total interest-bearing deposits and CD's			10,555,552			15,694	0.59	%			10,488,670			18,707	0.71	%			9,756,250			13,694	0.56	%
Federal funds purchased and interbank borrowings			95,973			437	1.80	%			254,971			1,484	2.31	%			312,730			1,938	2.46	%
Securities sold under agreements to repurchase			337,786			469	0.55	%			340,158			715	0.83	%			351,392			634	0.72	%
Federal Home Loan Bank advances			1,843,357			8,359	1.80	%			1,889,407			9,123	1.92	%			1,649,304			9,441	2.27	%
Other borrowings			251,565			2,695	4.29	%			251,817			2,728	4.33	%			250,926			3,302	5.26	%
Total borrowed funds			2,528,681			11,960	1.88	%			2,736,353			14,050	2.04	%			2,564,352			15,315	2.37	%
Total interest-bearing liabilities		$	13,084,233		$	27,654	0.84	%		$	13,225,023		$	32,757	0.98	%		$	12,320,602		$	29,009	0.93	%
Noninterest-Bearing Liabilities and Shareholders' Equity
Demand deposits		$	4,047,308							$	3,841,867							$	3,864,302
Other liabilities			254,296								262,862								164,771
Shareholders' equity			2,832,938								2,817,452								2,503,835
Total liabilities and shareholders' equity		$	20,218,775							$	20,147,204							$	18,853,510
Net interest rate spread							3.21	%							3.29	%							3.37	%
Net interest margin (FTE)							3.46	%							3.57	%							3.64	%
FTE adjustment					$	3,282							$	3,171							$	3,049
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.

Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
		Twelve Months Ended								Twelve Months Ended
		December 31, 2019								December 31, 2018
		Average			Income (1)/		Yield/			Average			Income (1)/		Yield/
Earning Assets:		Balance			Expense		Rate			Balance			Expense		Rate
Money market and other interest-earning investments		$	67,069		$	1,670	2.49	%		$	48,240		$	630	1.31	%
Investments:
Treasury and government-sponsored agencies			657,233			16,091	2.45	%			673,171			14,433	2.14	%
Mortgage-backed securities			2,866,600			73,835	2.58	%			1,707,646			41,493	2.43	%
States and political subdivisions			1,202,210			44,716	3.72	%			1,153,315			42,326	3.67	%
Other securities			495,847			16,138	3.25	%			490,464			15,633	3.19	%
Total investments			5,221,890			150,780	2.89	%			4,024,596			113,885	2.83	%
Loans: (2)
Commercial			3,023,421			141,215	4.67	%			2,924,878			131,471	4.49	%
Commercial and agriculture real estate			5,044,623			275,853	5.47	%			4,536,897			235,876	5.20	%
Consumer:
Home equity			566,232			28,515	5.04	%			513,111			25,029	4.88	%
Other consumer loans			1,180,898			48,681	4.12	%			1,258,253			46,660	3.71	%
Subtotal commercial and consumer loans			9,815,174			494,264	5.04	%			9,233,139			439,036	4.76	%
Residential real estate loans			2,281,047			96,613	4.24	%			2,195,078			89,888	4.09	%
Total loans			12,096,221			590,877	4.88	%			11,428,217			528,924	4.63	%
Total earning assets		$	17,385,180		$	743,327	4.28	%		$	15,501,053		$	643,439	4.15	%
Less: Allowance for loan losses			(56,624	)							(52,316	)
Non-earning Assets:
Cash and due from banks		$	251,857							$	210,716
Other assets			2,453,001								2,130,588
Total assets		$	20,033,414							$	17,790,041
Interest-Bearing Liabilities:
Checking and NOW accounts		$	3,902,765		$	15,598	0.40	%		$	3,146,309		$	4,973	0.16	%
Savings accounts			2,878,135			8,142	0.28	%			2,995,484			7,464	0.25	%
Money market accounts			1,789,065			14,130	0.79	%			1,225,220			4,424	0.36	%
Other time deposits			1,748,552			27,400	1.57	%			1,654,548			21,012	1.27	%
Total interest-bearing deposits			10,318,517			65,270	0.63	%			9,021,561			37,873	0.42	%
Brokered CD's			173,439			4,094	2.36	%			185,426			3,404	1.84	%
Total interest-bearing deposits and CD's			10,491,956			69,364	0.66	%			9,206,987			41,277	0.45	%
Federal funds purchased and interbank borrowings			241,618			5,656	2.34	%			238,408			4,793	2.01	%
Securities sold under agreements to repurchase			342,654			2,517	0.73	%			344,964			1,962	0.57	%
Federal Home Loan Bank advances			1,775,987			37,452	2.11	%			1,665,689			34,925	2.10	%
Other borrowings			251,194			11,125	4.43	%			249,832			11,486	4.60	%
Total borrowed funds			2,611,453			56,750	2.17	%			2,498,893			53,166	2.13	%
Total interest-bearing liabilities		$	13,103,409		$	126,114	0.96	%		$	11,705,880		$	94,443	0.81	%
Noninterest-Bearing Liabilities and Shareholders' Equity
Demand deposits		$	3,887,470							$	3,657,234
Other liabilities			261,403								159,600
Shareholders' equity			2,781,132								2,267,327
Total liabilities and shareholders' equity		$	20,033,414							$	17,790,041
Net interest rate spread							3.32	%							3.34	%
Net interest margin (FTE)							3.55	%							3.54	%
FTE adjustment					$	12,940							$	11,394
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.

Asset Quality (EOP) (unaudited)
($ in thousands)
	Three Months Ended										Twelve Months Ended
	December 31,			September 30,			December 31,				December 31,			December 31,
		2019			2019			2018				2019			2018
Beginning allowance for loan losses	$	56,910		$	56,292		$	52,713			$	55,461		$	50,381
Provision for loan losses		1,264			1,437			3,390				4,747			6,966
Gross charge-offs		(6,304	)		(2,716	)		(2,969	)			(14,789	)		(12,969	)
Gross recoveries		2,749			1,897			2,327				9,200			11,083
Net (charge-offs) recoveries		(3,555	)		(819	)		(642	)			(5,589	)		(1,886	)
Ending allowance for loan losses	$	54,619		$	56,910		$	55,461			$	54,619		$	55,461
Net charge-offs (recoveries) / average loans (1)		0.12	%		0.03	%		0.02	%			0.05	%		0.02	%
Average loans outstanding (1)	$	12,058,109		$	12,061,705		$	11,967,241			$	12,087,429		$	11,422,967
EOP loans outstanding (1)		12,117,524		$	12,017,648		$	12,243,892			$	12,117,524		$	12,243,892
Allowance for loan losses / EOP loans (1)		0.45	%		0.47	%		0.45	%			0.45	%		0.45	%
Underperforming Assets:
Loans 90 Days and over (still accruing)	$	570		$	703		$	1,353			$	570		$	1,353
Non-performing loans:
Nonaccrual loans (2)		126,412			138,498			157,484				126,412			157,484
Renegotiated loans		18,338			18,884			17,356				18,338			17,356
Total non-performing loans		144,750			157,382			174,840				144,750			174,840
Foreclosed properties		2,169			2,941			3,232				2,169			3,232
Total underperforming assets	$	147,489		$	161,026		$	179,425			$	147,489		$	179,425
Classified and Criticized Assets:
Nonaccrual loans (2)		126,412			138,498			157,484				126,412			157,484
Substandard accruing loans		169,689			145,987			175,948				169,689			175,948
Loans 90 days and over (still accruing)		570			703			1,353				570			1,353
Total classified loans - "problem loans"	$	296,671		$	285,188		$	334,785			$	296,671		$	334,785
Other classified assets		2,933			2,556			2,820				2,933			2,820
Criticized loans - "special mention loans"		234,841			233,519			238,752				234,841			238,752
Total classified and criticized assets	$	534,445		$	521,263		$	576,357			$	534,445		$	576,357
Non-performing loans / EOP loans (1)		1.19	%		1.31	%		1.43	%			1.19	%		1.43	%
Allowance to non-performing loans (3)		38	%		36	%		32	%			38	%		32	%
Under-performing assets / EOP loans (1)		1.22	%		1.34	%		1.47	%			1.22	%		1.47	%
EOP total assets	$	20,411,667		$	20,438,788		$	19,728,435			$	20,411,667		$	19,728,435
Under-performing assets / EOP assets		0.72	%		0.79	%		0.91	%			0.72	%		0.91	%
EOP - End of period actual balances
(1) Excludes loans held for sale.
(2) Includes renegotiated loans totaling $13.8 million at December 31, 2019, $21.8 million at September 30, 2019, and $26.3 million at December 31, 2018.
(3) Includes acquired loans that were recorded at fair value in accordance with ASC 805 at the date of acquisition. As such, the credit risk was incorporated in the fair value recorded and no allowance for loan losses was recorded on the acquisition date.

Non-GAAP Measures (unaudited)
($ in thousands)
		Three Months Ended										Twelve Months Ended
		December 31,			September 30,			December 31,				December 31,			December 31,
			2019			2019			2018				2019			2018
	Actual End of Period Balances
	GAAP shareholders' equity	$	2,852,453		$	2,832,530		$	2,689,570			$	2,852,453		$	2,689,570
	Deduct:
	Goodwill		1,036,994			1,036,994			1,036,258				1,036,994			1,036,258
	Intangibles		60,105			64,051			77,016				60,105			77,016
			1,097,099			1,101,045			1,113,274				1,097,099			1,113,274
	Tangible shareholders' equity	$	1,755,354		$	1,731,485		$	1,576,296			$	1,755,354		$	1,576,296
	Average Balances
	GAAP shareholders' equity	$	2,832,938		$	2,817,452		$	2,503,835			$	2,781,132		$	2,267,327
	Deduct:
	Goodwill		1,036,994			1,036,306			969,403				1,036,456			864,079
	Intangibles		61,963			66,047			66,927				68,244			52,209
			1,098,957			1,102,353			1,036,330				1,104,700			916,288
	Average tangible shareholders' equity	$	1,733,981		$	1,715,099		$	1,467,505			$	1,676,432		$	1,351,039
	Actual End of Period Balances
	GAAP assets	$	20,411,667		$	20,438,788		$	19,728,435			$	20,411,667		$	19,728,435
	Add:
	Trust overdrafts		31			24			11				31			11
	Deduct:
	Goodwill		1,036,994			1,036,994			1,036,258				1,036,994			1,036,258
	Intangibles		60,105			64,051			77,016				60,105			77,016
			1,097,099			1,101,045			1,113,274				1,097,099			1,113,274
	Tangible assets	$	19,314,599		$	19,337,767		$	18,615,172			$	19,314,599		$	18,615,172
	Risk-weighted assets	$	14,073,929		$	13,975,295		$	14,248,562			$	14,073,929		$	14,248,562
	GAAP net income	$	49,185		$	69,781		$	47,498			$	238,206		$	190,830
	Add:
	Amortization of intangibles (net of tax)		2,976			3,145			3,266				12,756			11,410
	Tangible net income	$	52,161		$	72,926		$	50,764			$	250,962		$	202,240
	Tangible Ratios
	Return on tangible common equity		11.89	%		16.85	%		12.88	%			14.30	%		12.83	%
	Return on average tangible common equity		12.03	%		17.01	%		13.84	%			14.97	%		14.97	%
	Return on tangible assets		1.08	%		1.51	%		1.09	%			1.30	%		1.09	%
	Tangible common equity to tangible assets		9.09	%		8.95	%		8.47	%			9.09	%		8.47	%
	Tangible common equity to risk-weighted assets		12.47	%		12.39	%		11.06	%			12.47	%		11.06	%
	Tangible common book value (1)		10.35			10.18			9.00				10.35			9.00
	Tangible common equity presentation includes other comprehensive income as is common in other company releases.
	(1) Tangible common shareholders' equity divided by common shares issued and outstanding at period-end.
	Tier 1 common equity	$	1,706,727		$	1,681,457		$	1,617,936			$	1,706,727		$	1,617,936
	Risk-weighted assets		14,073,929			13,975,295			14,248,562				14,073,929			14,248,562
	Tier 1 common equity to risk-weighted assets		12.13	%		12.03	%		11.36	%			12.13	%		11.36	%