Regulatory Restrictions

12 Months Ended

Dec. 31, 2020

Compliance With Regulatory Capital Requirements Under Banking Regulations [Abstract]

REGULATORY RESTRICTIONS

Restrictions on Cash and Due from Banks

Prior to March of 2020, Old National’s affiliate bank was required to maintain reserve balances on hand and with the Federal Reserve Bank that are interest-bearing and unavailable for investment purposes. The Federal Reserve Board reduced reserve requirement ratios to 0% effective March 26, 2020. This action eliminated reserve requirements for all depository institutions. The reserve balances were $115.3 million at December 31, 2019. In addition, Old National had cash and due from banks which was held as collateral for collateralized swap positions of $7.8 million at December 31, 2020 and $6.9 million at December 31, 2019.

Restrictions on Transfers from Affiliate Bank

Regulations limit the amount of dividends an affiliate bank can declare in any year without obtaining prior regulatory 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, 2019, or 2020 and is not currently required.

Restrictions on the Payment of Dividends

Old National has traditionally paid a quarterly dividend to common stockholders. The payment of dividends is subject to legal and regulatory restrictions. Any payment of dividends in the future will depend, in large part, on Old National’s earnings, capital requirements, financial condition, and other factors considered relevant by our Board of Directors.

Capital Adequacy

Old National and Old National Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can elicit certain mandatory actions by regulators that, if undertaken, could have a direct material effect on Old National’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Old National and Old National Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies. Quantitative measures established by regulation to ensure capital adequacy require Old National and Old National Bank to maintain minimum amounts and ratios as set forth in the following tables.

At December 31, 2020, Old National and Old National Bank exceeded the regulatory minimums and Old National Bank met the regulatory definition of “well-capitalized” based on the most recent regulatory notification. There have been no conditions or events since that notification that management believes have changed Old National Bank’s category.

The following table summarizes capital ratios for Old National and Old National Bank:


	Actual				Fully Phased-In Regulatory Guidelines Minimum (1)				Prompt Corrective Action “Well Capitalized” Guidelines
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount	Ratio
December 31, 2020
Total capital to risk-weighted assets
Old National Bancorp	$	1,949,757	12.69	%	$	1,613,753	10.50	%	N/A	N/A %
Old National Bank	1,973,180		12.90		1,606,657		10.50		1,530,149	10.00
Common equity Tier 1 capital to risk-weighted assets
Old National Bancorp	1,805,194		11.75		1,075,835		7.00		N/A	N/A
Old National Bank	1,870,617		12.23		1,071,104		7.00		994,597	6.50
Tier 1 capital to risk-weighted assets
Old National Bancorp	1,805,194		11.75		1,306,371		8.50		N/A	N/A
Old National Bank	1,870,617		12.23		1,300,627		8.50		1,224,119	8.00
Tier 1 capital to average assets
Old National Bancorp	1,805,194		8.20		880,845		4.00		N/A	N/A
Old National Bank	1,870,617		8.67		863,087		4.00		1,078,859	5.00
December 31, 2019
Total capital to risk-weighted assets
Old National Bancorp	$	1,828,312	12.99	%	$	1,477,763	10.50	%	N/A	N/A %
Old National Bank	1,891,612		13.50		1,471,122		10.50		1,401,069	10.00
Common equity Tier 1 capital to risk-weighted assets
Old National Bancorp	1,706,727		12.13		985,175		7.00		N/A	N/A
Old National Bank	1,822,337		13.01		980,748		7.00		910,695	6.50
Tier 1 capital to risk-weighted assets
Old National Bancorp	1,706,727		12.13		1,196,284		8.50		N/A	N/A
Old National Bank	1,822,737		13.01		1,190,909		8.50		1,120,855	8.00
Tier 1 capital to average assets
Old National Bancorp	1,706,727		8.88		768,537		4.00		N/A	N/A
Old National Bank	1,822,737		9.62		757,783		4.00		947,228	5.00

(1)As of January 1, 2019, Basel III Capital Rules required banking organizations to maintain: a minimum ratio of common equity Tier 1 to risk-weighted assets of at least 4.5%, plus a 2.5% “capital conservation buffer”; a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the 2.5% capital conservation buffer; a minimum ratio of total capital to risk-weighted assets of at least 8.0%, plus the 2.5% capital conservation buffer; and a minimum ratio of Tier 1 capital to adjusted average consolidated assets of at least 4.0%.

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. In March 2020, the OCC, the Board of Governors of the Federal Reserve System, and the FDIC published an interim final rule to delay the estimated impact on regulatory capital stemming from the implementation of CECL. The interim final rule maintains the three-year transition option in the previous rule and provides banks the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period (five-year transition option). Old National is adopting the capital transition relief over the permissible five-year period.