Investment Securities

3 Months Ended

Mar. 31, 2025

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair value of the available-for-sale portfolio and the corresponding amounts of gross unrealized gains, unrealized losses, and basis adjustments in accumulated other comprehensive income (loss) (“AOCI”).


(dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Basis Adjustments (1)		Fair Value
March 31, 2025
Available-for-Sale
U.S. Treasury	$	261,345	$	87	$	(10,931)	$	(45,964)	$	204,537
U.S. government-sponsored entities and agencies	1,554,502		238		(161,684)		(68,253)		1,324,803
Mortgage-backed securities - Agency	6,064,171		18,649		(582,801)		—		5,500,019
States and political subdivisions	466,473		213		(29,073)		1,843		439,456
Pooled trust preferred securities	13,809		—		(2,498)		—		11,311
Other securities	282,826		965		(9,946)		—		273,845
Total available-for-sale securities	$	8,643,126	$	20,152	$	(796,933)	$	(112,374)	$	7,753,971

December 31, 2024
Available-for-Sale
U.S. Treasury	$	261,421	$	67	$	(12,659)	$	(49,816)	$	199,013
U.S. government-sponsored entities and agencies	1,521,610		7		(181,360)		(82,351)		1,257,906
Mortgage-backed securities - Agency	5,861,067		6,005		(662,181)		—		5,204,891
States and political subdivisions	510,630		148		(25,881)		647		485,544
Pooled trust preferred securities	13,807		—		(2,485)		—		11,322
Other securities	311,973		760		(12,950)		—		299,783
Total available-for-sale securities	$	8,480,508	$	6,987	$	(897,516)	$	(131,520)	$	7,458,459

(1) Basis adjustments represent the amount of fair value hedging adjustments included in the carrying amounts of fixed-rate investment securities assets designated in fair value hedging arrangements. See Note 15 to the consolidated financial statements for additional information regarding these derivative financial instruments.

The following table summarizes the amortized cost and fair value of the held-to-maturity investment securities portfolio and the corresponding amounts of gross unrecognized gains and losses.


(dollars in thousands)	Amortized Cost		Unrecognized Gains		Unrecognized Losses		Fair Value
March 31, 2025
Held-to-Maturity
U.S. government-sponsored entities and agencies	$	834,830	$	—	$	(145,696)	$	689,134
Mortgage-backed securities - Agency	958,004		—		(150,470)		807,534
States and political subdivisions	1,150,099		23		(161,107)		989,015

Allowance for securities held-to-maturity	(150)		—		—		(150)
Total held-to-maturity securities	$	2,942,783	$	23	$	(457,273)	$	2,485,533

December 31, 2024
Held-to-Maturity
U.S. government-sponsored entities and agencies	$	832,984	$	—	$	(168,653)	$	664,331
Mortgage-backed securities - Agency	970,212		—		(169,546)		800,666
States and political subdivisions	1,151,835		317		(145,861)		1,006,291
Allowance for securities held-to-maturity	(150)		—		—		(150)
Total held-to-maturity securities	$	2,954,881	$	317	$	(484,060)	$	2,471,138

Substantially all of the mortgage-backed securities in the investment portfolio are residential mortgage-backed securities.

Proceeds from sales or calls of available-for-sale investment securities and the resulting realized gains and realized losses were as follows:


	Three Months Ended March 31,
(dollars in thousands)		2025		2024
Proceeds		$	70,959	$	61,250
Realized gains		79		3
Realized losses		(155)		(19)

The table below shows the amortized cost and fair value of the investment securities portfolio by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Weighted average yield is based on amortized cost.


	March 31, 2025
(dollars in thousands)	Amortized Cost		Fair Value		Weighted Average Yield
Maturity
Available-for-Sale
Within one year	$	264,290	$	263,634	3.86	%
One to five years	3,046,912		2,993,580		4.44
Five to ten years	4,122,674		3,545,254		2.47
Beyond ten years	1,209,250		951,503		2.65
Total	$	8,643,126	$	7,753,971	3.23	%
Held-to-Maturity
Within one year	$	18,135	$	17,958	3.21	%
One to five years	9,030		8,439		2.24
Five to ten years	1,386,527		1,198,525		2.58
Beyond ten years	1,529,091		1,260,611		2.74
Total	$	2,942,783	$	2,485,533	2.67	%

The following table summarizes the available-for-sale investment securities with unrealized losses for which an allowance for credit losses has not been recorded by aggregated major security type and length of time in a continuous unrealized loss position:


	Less than 12 months				12 months or longer				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2025
Available-for-Sale
U.S. Treasury	$	1,990	$	(12)	$	181,477	$	(10,919)	$	183,467	$	(10,931)
U.S. government-sponsored entities and agencies	69,755		(407)		1,159,566		(161,277)		1,229,321		(161,684)
Mortgage-backed securities - Agency	341,754		(1,990)		3,389,956		(580,811)		3,731,710		(582,801)
States and political subdivisions	94,378		(1,592)		261,158		(27,481)		355,536		(29,073)
Pooled trust preferred securities	—		—		11,311		(2,498)		11,311		(2,498)
Other securities	16,374		(37)		206,140		(9,909)		222,514		(9,946)
Total available-for-sale	$	524,251	$	(4,038)	$	5,209,608	$	(792,895)	$	5,733,859	$	(796,933)

December 31, 2024
Available-for-Sale
U.S. Treasury	$	3,977	$	(26)	$	177,691	$	(12,633)	$	181,668	$	(12,659)
U.S. government-sponsored entities and agencies	98,280		(1,713)		1,144,618		(179,647)		1,242,898		(181,360)
Mortgage-backed securities - Agency	857,440		(9,172)		3,406,350		(653,009)		4,263,790		(662,181)
States and political subdivisions	133,906		(1,462)		279,121		(24,419)		413,027		(25,881)
Pooled trust preferred securities	—		—		11,322		(2,485)		11,322		(2,485)
Other securities	33,292		(295)		199,631		(12,655)		232,923		(12,950)
Total available-for-sale	$	1,126,895	$	(12,668)	$	5,218,733	$	(884,848)	$	6,345,628	$	(897,516)

The following table summarizes the held-to-maturity investment securities with unrecognized losses aggregated by major security type and length of time in a continuous loss position:


	Less than 12 months				12 months or longer				Total
(dollars in thousands)	Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses
March 31, 2025
Held-to-Maturity
U.S. government-sponsored entities and agencies	$	—	$	—	$	689,134	$	(145,696)	$	689,134	$	(145,696)
Mortgage-backed securities - Agency	—		—		807,534		(150,470)		807,534		(150,470)
States and political subdivisions	57,635		(1,706)		922,383		(159,401)		980,018		(161,107)
Total held-to-maturity	$	57,635	$	(1,706)	$	2,419,051	$	(455,567)	$	2,476,686	$	(457,273)

December 31, 2024
Held-to-Maturity

U.S. government-sponsored entities and agencies	$	—	$	—	$	664,331	$	(168,653)	$	664,331	$	(168,653)
Mortgage-backed securities - Agency	—		—		800,666		(169,546)		800,666		(169,546)
States and political subdivisions	37,007		(430)		937,364		(145,431)		974,371		(145,861)


Total held-to-maturity	$	37,007	$	(430)	$	2,402,361	$	(483,630)	$	2,439,368	$	(484,060)

The unrecognized losses on held-to-maturity investment securities presented in the table above do not include unrecognized losses on securities that were transferred from available-for-sale to held-to-maturity totaling $106.0 million at March 31, 2025 and $110.0 million at December 31, 2024. These unrecognized losses are included as a separate component of shareholders’ equity and are being amortized over the remaining term of the securities.

No allowance for credit losses on available-for-sale debt securities was needed at March 31, 2025 or December 31, 2024.

An allowance on held-to-maturity debt securities is maintained for certain municipal bonds to account for expected lifetime credit losses. Substantially all of the U.S. government-sponsored entities and agencies and agency mortgage-backed securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major credit rating agencies, and have a long history of no credit losses. Therefore, for those securities, we do not record expected credit losses. The allowance for credit losses on held-to-maturity debt securities was $0.2 million at March 31, 2025 and December 31, 2024. Accrued interest receivable on the securities portfolio is excluded from the estimate of credit losses and totaled $44.1 million at March 31, 2025 and $55.3 million at December 31, 2024.

At March 31, 2025, Old National’s securities portfolio consisted of 2,988 securities, 2,524 of which were in an unrealized loss position. The unrealized losses attributable to our U.S. Treasury, U.S. government-sponsored entities and agencies, agency mortgage-backed securities, states and political subdivisions, and other securities are the result of fluctuations in interest rates and market movements. Old National’s pooled trust preferred securities are evaluated using collateral-specific assumptions to estimate the expected future interest and principal cash flows. At March 31, 2025, we had no intent to sell any securities that were in an unrealized loss position nor is it expected that we would be required to sell the securities prior to their anticipated recovery.

Old National’s pooled trust preferred securities have experienced credit defaults. However, we believe that the value of the instruments lies in the full and timely interest payments that will be received through maturity, the steady amortization that will be experienced until maturity, and the full return of principal by the final maturity of the collateralized debt obligations. Old National did not recognize any losses on these securities for the three months ended March 31, 2025 or 2024.

Equity Securities

Equity securities consist of mutual funds for Community Reinvestment Act qualified investments and diversified investment securities held in a grantor trust for participants in the Company’s nonqualified deferred compensation plan. Old National’s equity securities with readily determinable fair values totaled $91.7 million at March 31, 2025 and $92.0 million at December 31, 2024. There were gains on equity securities of $0.1 million and $0.3 million during the three months ended March 31, 2025 and 2024, respectively.

Alternative Investments

Old National has alternative investments without readily determinable fair values that are included in other assets totaling $600.3 million at March 31, 2025 and $609.2 million at December 31, 2024. These investments consisted of $319.1 million of illiquid investments in partnerships, limited liability companies, and other ownership interests that support affordable housing and $281.2 million of economic development and community revitalization initiatives in low-to-moderate income neighborhoods at March 31, 2025, compared to $318.5 million and $290.7 million for the same investment types, respectively, at December 31, 2024. There have been no impairments or adjustments on alternative investments without readily determinable fair values, except for amortization of tax credit investments in the three months ended March 31, 2025 and 2024. See Note 9 to the consolidated financial statements for detail regarding these investments.