XML 36 R25.htm IDEA: XBRL DOCUMENT
v3.24.2

Fair Value | 6 Months Ended
--- | ---
Jun. 30, 2024
Fair Value Disclosures [Abstract] |
Fair Value | FAIR VALUE Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: •Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. •Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. •Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. Old National used the following methods and significant assumptions to estimate the fair value of each type of financial instrument: Investment securities and equity securities: The fair values for investment securities and equity securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Discounted cash flows are calculated using swap and SOFR curves plus spreads that adjust for loss severities, volatility, credit risk, and optionality. During times when trading is more liquid, broker quotes are used (if available) to validate the model. Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations. Loans held-for-sale: The fair value of loans held-for-sale is determined using quoted prices for a similar asset, adjusted for specific attributes of that loan (Level 2). Derivative financial instruments: The fair values of derivative financial instruments are based on market quotes developed using observable inputs as of the valuation date (Level 2). Recurring Basis Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which we have elected the fair value option, are summarized below:
|  |  | Fair Value Measurements at June 30, 2024 Using
(dollars in thousands) | Carrying Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Financial Assets |  |  |  |  |  |  |
Equity securities | $ | 85,521 |  |  | $ | 85,521 |  |  | $ | — |  |  | $ | — |
Investment securities available-for-sale: |  |  |  |  |  |  |
U.S. Treasury | 205,308 |  |  | 205,308 |  |  | — |  |  | — |
U.S. government-sponsored entities and agencies | 1,172,294 |  |  | — |  |  | 1,172,294 |  |  | — |
Mortgage-backed securities - Agency | 4,888,456 |  |  | — |  |  | 4,888,456 |  |  | — |
States and political subdivisions | 523,315 |  |  | — |  |  | 523,315 |  |  | — |
Pooled trust preferred securities | 11,298 |  |  | — |  |  | 11,298 |  |  | — |
Other securities | 304,807 |  |  | — |  |  | 304,807 |  |  | — |
Loans held-for-sale | 66,126 |  |  | — |  |  | 66,126 |  |  | — |
Derivative assets | 168,604 |  |  | — |  |  | 168,604 |  |  | — |
Financial Liabilities |  |  |  |  |  |  |
Derivative liabilities | 294,846 |  |  | — |  |  | 294,846 |  |  | — |
|  |  | Fair Value Measurements at December 31, 2023 Using
(dollars in thousands) | Carrying Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Financial Assets |  |  |  |  |  |  |
Equity securities | $ | 80,372 |  |  | $ | 80,372 |  |  | $ | — |  |  | $ | — |
Investment securities available-for-sale: |  |  |  |  |  |  |
U.S. Treasury | 396,733 |  |  | 396,733 |  |  | — |  |  | — |
U.S. government-sponsored entities and agencies | 1,231,264 |  |  | — |  |  | 1,231,264 |  |  | — |
Mortgage-backed securities - Agency | 4,216,560 |  |  | — |  |  | 4,216,560 |  |  | — |
States and political subdivisions | 535,260 |  |  | — |  |  | 535,260 |  |  | — |
Pooled trust preferred securities | 11,337 |  |  | — |  |  | 11,337 |  |  | — |
Other securities | 321,901 |  |  | — |  |  | 321,901 |  |  | — |
Loans held-for-sale | 32,006 |  |  | — |  |  | 32,006 |  |  | — |
Derivative assets | 166,302 |  |  | — |  |  | 166,302 |  |  | — |
Financial Liabilities |  |  |  |  |  |  |
Derivative liabilities | 268,916 |  |  | — |  |  | 268,916 |  |  | — |
Non-Recurring Basis Assets measured at fair value at June 30, 2024 on a non-recurring basis are summarized below:
|  |  | Fair Value Measurements at June 30, 2024 Using
(dollars in thousands) | Carrying Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Collateral Dependent Loans: |  |  |  |  |  |  |
Commercial loans | $ | 20,587 |  |  | $ | — |  |  | $ | — |  |  | $ | 20,587 |
Commercial real estate loans | 111,159 |  |  | — |  |  | — |  |  | 111,159 |
Foreclosed Assets: |  |  |  |  |  |  |
Commercial | 975 |  |  | — |  |  | — |  |  | 975 |
Residential | 65 |  |  | — |  |  | — |  |  | 65 |
Commercial and commercial real estate loans that are deemed collateral dependent are valued using the discounted cash flows. The liquidation amounts are based on the fair value of the underlying collateral using the most recently available appraisals with certain adjustments made based on the type of property, age of appraisal, current status of the property, and other related factors to estimate the current value of the collateral. These commercial and commercial real estate loans had a principal amount of $163.2 million, with a valuation allowance of $31.4 million at June 30, 2024. Old National recorded provision expense associated with these loans totaling $7.4 million and $17.0 million for the three and six months ended June 30, 2024, respectively, compared to $7.9 million and $19.8 million for the three and six months ended June 30, 2023, respectively. Other real estate owned and other repossessed property is measured at fair value less costs to sell on a non-recurring basis. Old National did not have any other real estate owned or other repossessed property measured at fair value on a non-recurring basis at June 30, 2024. There were $0.4 million write-downs on other real estate owned for the three and six months ended June 30, 2024, compared to $0.1 million of write-downs for the three and six months ended June 30, 2023. Assets measured at fair value at December 31, 2023 on a non-recurring basis are summarized below:
|  |  | Fair Value Measurements at December 31, 2023 Using
(dollars in thousands) | Carrying Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Collateral Dependent Loans: |  |  |  |  |  |  |
Commercial loans | $ | 11,017 |  |  | $ | — |  |  | $ | — |  |  | $ | 11,017 |
Commercial real estate loans | 95,457 |  |  | — |  |  | — |  |  | 95,457 |
Foreclosed Assets: |  |  |  |  |  |  |
Commercial real estate | 1,669 |  |  | — |  |  | — |  |  | 1,669 |
At December 31, 2023, commercial and commercial real estate loans that are deemed collateral dependent had a principal amount of $134.3 million, with a valuation allowance of $27.9 million. The table below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy:
(dollars in thousands) | Fair Value |  | Valuation Techniques |  | Unobservable Input |  | Range (Weighted Average) (1)
June 30, 2024 |  |  |  |  |  |  |
Collateral Dependent Loans |  |  |  |  |  |  |
Commercial loans | $ | 20,587 |  |  | Discounted |  | Discount for type of property, |  | 5% - 54% (31%)
|  |  | cash flow |  | age of appraisal, and current status |  |
Commercial real estate loans | 111,159 |  |  | Discounted |  | Discount for type of property, |  | 0% - 34% (11%)
|  |  | cash flow |  | age of appraisal, and current status |  |
Foreclosed Assets |  |  |  |  |  |  |
Commercial real estate (2) | 975 |  |  | Fair value of |  | Discount for type of property, |  | 28%
|  |  | collateral |  | age of appraisal, and current status |  |
Residential (2) | 65 |  |  | Fair value of |  | Discount for type of property, |  | 11%
|  |  | collateral |  | age of appraisal, and current status |  |
December 31, 2023 |  |  |  |  |  |  |
Collateral Dependent Loans |  |  |  |  |  |  |
Commercial loans | $ | 11,017 |  |  | Discounted |  | Discount for type of property, |  | 5% - 37% (27%)
|  |  | cash flow |  | age of appraisal, and current status |  |
Commercial real estate loans | 95,457 |  |  | Discounted |  | Discount for type of property, |  | 2% - 38% (16%)
|  |  | cash flow |  | age of appraisal, and current status |  |
Foreclosed Assets |  |  |  |  |  |  |
Commercial real estate | 1,669 |  |  | Fair value of |  | Discount for type of property, |  | 4% - 8% (4%)
|  |  | collateral |  | age of appraisal, and current status |  |
(1)Unobservable inputs were weighted by the relative fair value of the instruments. (2)There was only one foreclosed commercial real estate property and one foreclosed residential real estate property at June 30, 2024 with write-downs during the six months ended June 30, 2024, so no range or weighted average is reported. Fair Value Option Old National may elect to report most financial instruments and certain other items at fair value on an instrument-by-instrument basis with changes in fair value reported in net income. After the initial adoption, the election is made at the acquisition of an eligible financial asset, financial liability, or firm commitment or when certain specified reconsideration events occur. The fair value election may not be revoked once an election is made. Loans Held-For-Sale Old National has elected the fair value option for loans held-for-sale. For these loans, interest income is recorded in the consolidated statements of income based on the contractual amount of interest income earned on the financial assets (except any that are on nonaccrual status). None of these loans are 90 days or more past due, nor are any on nonaccrual status. Interest income for loans held-for-sale is included in the income statement totaling $0.5 million for three months ended June 30, 2024 and $0.8 million for the six months ended June 30, 2024, compared to $0.3 million and $0.5 million for the three and six months ended June 30, 2023, respectively. Newly originated conforming fixed-rate and adjustable-rate first mortgage loans are intended for sale and are hedged with derivative instruments. Old National has elected the fair value option to mitigate accounting mismatches in cases where hedge accounting is complex and to achieve operational simplification. The fair value option was not elected for loans held for investment. The difference between the aggregate fair value and the aggregate remaining principal balance for loans for which the fair value option has been elected was as follows:
(dollars in thousands) | Aggregate Fair Value |  | Difference |  | Contractual Principal
June 30, 2024 |  |  |  |  |
Loans held-for-sale | $ | 66,126 |  |  | $ | 525 |  |  | $ | 65,601 |
December 31, 2023 |  |  |  |  |
Loans held-for-sale | $ | 32,006 |  |  | $ | 621 |  |  | $ | 31,385 |
Accrued interest at period end is included in the fair value of the instruments. The following table presents the amount of gains and losses from fair value changes included in income before income taxes for financial assets carried at fair value:
(dollars in thousands) | Other Gains and (Losses) |  | Interest Income |  | Interest (Expense) |  | Total Changes in Fair Values Included in Current Period Earnings
Three Months Ended June 30, 2024 |  |  |  |  |  |  |
Loans held-for-sale | $ | 105 |  |  | $ | 6 |  |  | $ | — |  |  | $ | 111 |
Three Months Ended June 30, 2023 |  |  |  |  |  |  |
Loans held-for-sale | $ | 229 |  |  | $ | — |  |  | $ | (7) |  |  | $ | 222 |
Six Months Ended June 30, 2024 |  |  |  |  |  |  |
Loans held-for-sale | $ | (97) |  |  | $ | 6 |  |  | $ | (5) |  |  | $ | (96) |
Six Months Ended June 30, 2023 |  |  |  |  |  |  |
Loans held-for-sale | $ | 176 |  |  | $ | — |  |  | $ | (10) |  |  | $ | 166 |
Financial Instruments Not Carried at Fair Value The carrying amounts and estimated fair values of financial instruments not carried at fair value were as follows:
|  |  | Fair Value Measurements at June 30, 2024 Using
(dollars in thousands) | Carrying Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Financial Assets |  |  |  |  |  |  |
Cash, due from banks, money market, and other interest-earning investments | $ | 1,233,046 |  |  | $ | 1,233,046 |  |  | $ | — |  |  | $ | — |
Investment securities held-to-maturity: |  |  |  |  |  |  |
U.S. government-sponsored entities and agencies | 829,402 |  |  | — |  |  | 662,331 |  |  | — |
Mortgage-backed securities - Agency | 1,001,915 |  |  | — |  |  | 838,289 |  |  | — |
State and political subdivisions | 1,155,132 |  |  | — |  |  | 1,011,882 |  |  | — |
Loans, net: |  |  |  |  |  |  |
Commercial | 10,192,534 |  |  | — |  |  | — |  |  | 10,043,917 |
Commercial real estate | 15,825,787 |  |  | — |  |  | — |  |  | 15,331,416 |
Residential real estate | 6,871,822 |  |  | — |  |  | — |  |  | 5,964,205 |
Consumer credit | 2,894,035 |  |  | — |  |  | — |  |  | 2,861,352 |
Accrued interest receivable | 240,806 |  |  | 882 |  |  | 57,984 |  |  | 181,940 |
Financial Liabilities |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |
Noninterest-bearing demand deposits | $ | 9,336,042 |  |  | $ | 9,336,042 |  |  | $ | — |  |  | $ | — |
Checking, NOW, savings, and money market interest-bearing deposits | 23,614,973 |  |  | 23,614,973 |  |  | — |  |  | — |
Time deposits | 7,048,213 |  |  | — |  |  | 7,013,100 |  |  | — |
Federal funds purchased and interbank borrowings | 250,154 |  |  | 250,154 |  |  | — |  |  | — |
Securities sold under agreements to repurchase | 240,713 |  |  | 240,713 |  |  | — |  |  | — |
FHLB advances | 4,744,560 |  |  | — |  |  | 4,536,762 |  |  | — |
Other borrowings | 849,777 |  |  | — |  |  | 839,834 |  |  | — |
Accrued interest payable | 63,049 |  |  | — |  |  | 63,049 |  |  | — |
Standby letters of credit | 1,504 |  |  | — |  |  | — |  |  | 1,504 |
Off-Balance Sheet Financial Instruments |  |  |  |  |  |  |
Commitments to extend credit | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 3,300 |
|  |  | Fair Value Measurements at December 31, 2023 Using
(dollars in thousands) | Carrying Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Financial Assets |  |  |  |  |  |  |
Cash, due from banks, money market, and other interest-earning investments | $ | 1,175,058 |  |  | $ | 1,175,058 |  |  | $ | — |  |  | $ | — |
Investment securities held-to-maturity: |  |  |  |  |  |  |
U.S. government-sponsored entities and agencies | 825,953 |  |  | — |  |  | 671,126 |  |  | — |
Mortgage-backed securities - Agency | 1,029,131 |  |  | — |  |  | 881,994 |  |  | — |
State and political subdivisions | 1,158,409 |  |  | — |  |  | 1,048,068 |  |  | — |
Loans, net: |  |  |  |  |  |  |
Commercial | 9,392,267 |  |  | — |  |  | — |  |  | 9,258,193 |
Commercial real estate | 13,984,273 |  |  | — |  |  | — |  |  | 13,640,868 |
Residential real estate | 6,678,606 |  |  | — |  |  | — |  |  | 5,579,999 |
Consumer credit | 2,629,171 |  |  | — |  |  | — |  |  | 2,555,121 |
Accrued interest receivable | 225,159 |  |  | 859 |  |  | 54,465 |  |  | 169,835 |
Financial Liabilities |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |
Noninterest-bearing demand deposits | $ | 9,664,247 |  |  | $ | 9,664,247 |  |  | $ | — |  |  | $ | — |
Checking, NOW, savings, and money market interest-bearing deposits | 21,991,789 |  |  | 21,991,789 |  |  | — |  |  | — |
Time deposits | 5,579,144 |  |  | — |  |  | 5,552,538 |  |  | — |
Federal funds purchased and interbank borrowings | 390 |  |  | 390 |  |  | — |  | — |
Securities sold under agreements to repurchase | 285,206 |  |  | 285,206 |  |  | — |  | — |
FHLB advances | 4,280,681 |  |  | — |  |  | 4,090,954 |  |  | — |
Other borrowings | 764,870 |  |  | — |  |  | 755,592 |  |  | — |
Accrued interest payable | 57,094 |  |  | — |  |  | 57,094 |  |  | — |
Standby letters of credit | 1,318 |  |  | — |  |  | — |  |  | 1,318 |
Off-Balance Sheet Financial Instruments |  |  |  |  |  |  |
Commitments to extend credit | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 3,839 |
The methods utilized to measure the fair value of financial instruments at June 30, 2024 and December 31, 2023 represent an approximation of exit price, however, an actual exit price may differ.

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration