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Leases

9 Months Ended

Sep. 30, 2024

Leases [Abstract]

Leases

LEASES

Old National has operating and finance leases for land, office space, banking centers, and equipment. These leases are generally for periods of 5 to 20 years with various renewal options. We include certain renewal options in the measurement of our right-of-use assets and lease liabilities if they are reasonably certain to be exercised. Variable lease payments that are dependent on an index or a rate are initially measured using the index or rate at the commencement date and are included in the measurement of the lease liability. Variable lease payments that are not dependent on an index or a rate are excluded from the measurement of the lease liability and are recognized in profit and loss when incurred. Variable lease payments are defined as payments made for the right to use an asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time.

Old National has lease agreements with lease and non-lease components, which are generally accounted for separately. For real estate leases, non-lease components and other non-components, such as common area maintenance charges, real estate taxes, and insurance are not included in the measurement of the lease liability since they are generally able to be segregated. For certain equipment leases, Old National accounts for the lease and non-lease components as a single lease component using the practical expedient available for that class of assets. Old National does not have any material sub-lease agreements.

The components of lease expense were as follows:

			Affected Line Item in the Statement of Income						Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)									2024						2023						2024						2023
Operating lease cost			Occupancy/Equipment expense						$	8,258					$	7,462					$	24,352					$	23,569
Finance lease cost:
Amortization of right-of-use assets			Occupancy expense						2,188						742						4,427						2,170
Interest on lease liabilities			Interest expense						318						183						752						536
Sub-lease income			Occupancy expense						(110)						(119)						(358)						(281)
Total									$	10,654					$	8,268					$	29,173					$	25,994

Supplemental balance sheet information related to leases was as follows:

(dollars in thousands)			September 30, 2024						December 31, 2023
Operating Leases
Operating lease right-of-use assets			$	188,533					$	185,506
Operating lease liabilities			206,863						204,960
Finance Leases
Premises and equipment, net			32,096						19,820
Other borrowings			33,598						20,955
Weighted-Average Remaining Lease Term (in Years)
Operating leases			8.0						8.5
Finance leases			7.0						10.5
Weighted-Average Discount Rate
Operating leases			3.13		%				3.04		%
Finance leases			3.98		%				3.90		%

Supplemental cash flow information related to leases was as follows:

			Nine Months Ended September 30,
(dollars in thousands)			2024						2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	24,849					$	23,766
Operating cash flows from finance leases			752						536
Financing cash flows from finance leases			4,061						1,893

The following table presents a maturity analysis of the Company’s lease liability by lease classification at September 30, 2024:

(dollars in thousands)			Operating Leases						Finance Leases
2024			$	8,418					$	2,432
2025			34,407						9,215
2026			33,720						6,477
2027			31,985						4,816
2028			28,028						3,210
Thereafter			98,614						12,612
Total undiscounted lease payments			235,172						38,762
Amounts representing interest			(28,309)						(5,164)
Lease liability			$	206,863					$	33,598

Leases

LEASES

Old National has operating and finance leases for land, office space, banking centers, and equipment. These leases are generally for periods of 5 to 20 years with various renewal options. We include certain renewal options in the measurement of our right-of-use assets and lease liabilities if they are reasonably certain to be exercised. Variable lease payments that are dependent on an index or a rate are initially measured using the index or rate at the commencement date and are included in the measurement of the lease liability. Variable lease payments that are not dependent on an index or a rate are excluded from the measurement of the lease liability and are recognized in profit and loss when incurred. Variable lease payments are defined as payments made for the right to use an asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time.

Old National has lease agreements with lease and non-lease components, which are generally accounted for separately. For real estate leases, non-lease components and other non-components, such as common area maintenance charges, real estate taxes, and insurance are not included in the measurement of the lease liability since they are generally able to be segregated. For certain equipment leases, Old National accounts for the lease and non-lease components as a single lease component using the practical expedient available for that class of assets. Old National does not have any material sub-lease agreements.

The components of lease expense were as follows:

			Affected Line Item in the Statement of Income						Three Months Ended September 30,												Nine Months Ended September 30,
(dollars in thousands)									2024						2023						2024						2023
Operating lease cost			Occupancy/Equipment expense						$	8,258					$	7,462					$	24,352					$	23,569
Finance lease cost:
Amortization of right-of-use assets			Occupancy expense						2,188						742						4,427						2,170
Interest on lease liabilities			Interest expense						318						183						752						536
Sub-lease income			Occupancy expense						(110)						(119)						(358)						(281)
Total									$	10,654					$	8,268					$	29,173					$	25,994

Supplemental balance sheet information related to leases was as follows:

(dollars in thousands)			September 30, 2024						December 31, 2023
Operating Leases
Operating lease right-of-use assets			$	188,533					$	185,506
Operating lease liabilities			206,863						204,960
Finance Leases
Premises and equipment, net			32,096						19,820
Other borrowings			33,598						20,955
Weighted-Average Remaining Lease Term (in Years)
Operating leases			8.0						8.5
Finance leases			7.0						10.5
Weighted-Average Discount Rate
Operating leases			3.13		%				3.04		%
Finance leases			3.98		%				3.90		%

Supplemental cash flow information related to leases was as follows:

			Nine Months Ended September 30,
(dollars in thousands)			2024						2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	24,849					$	23,766
Operating cash flows from finance leases			752						536
Financing cash flows from finance leases			4,061						1,893

The following table presents a maturity analysis of the Company’s lease liability by lease classification at September 30, 2024:

(dollars in thousands)			Operating Leases						Finance Leases
2024			$	8,418					$	2,432
2025			34,407						9,215
2026			33,720						6,477
2027			31,985						4,816
2028			28,028						3,210
Thereafter			98,614						12,612
Total undiscounted lease payments			235,172						38,762
Amounts representing interest			(28,309)						(5,164)
Lease liability			$	206,863					$	33,598

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- Definition

The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/842-20/tableOfContent

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- Definition

The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/842-20/tableOfContent

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