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Item 7. Management’s Discussion and Analysis

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
 
 Page 
 General Overview 
 37 
 
 Corporate Developments in 202 4 
 37 
 
 Business Outlook 
 38 
 
 Financial Highlights 
 39 
 
 Non-GAAP Financial Measures 
 41 
 
 Results of Operations 
 44 
 
 Financial Condition 
 50 
 
 Risk Management 
 56 
 
 Material Contractual Obligations, Commitments, and Contingent Liabilities 
 67 
 
 Critical Accounting Estimates 
 68 
 

 The following is an analysis generally discussing our results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023, and financial condition as of December 31, 2024 and 2023. This discussion and analysis should be read in conjunction with our consolidated financial statements and related notes. This discussion contains forward-looking statements concerning our business. Readers are cautioned that, by their nature, forward-looking statements are based on estimates and assumptions and are subject to risks, uncertainties, and other factors. Actual results may differ materially from our expectations that are expressed or implied by any forward-looking statement. The discussion in Item 1A, “Risk Factors,” lists some of the factors that could cause our actual results to vary materially from those expressed or implied by any forward-looking statements, and such discussion is incorporated into this discussion by reference. For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023. 
 
 GENERAL OVERVIEW 
 Old National is the sixth largest commercial bank headquartered in the Midwest by asset size and ranks among the top 30 banking companies headquartered in the United States. The Company’s corporate headquarters and principal executive office are located in Evansville, Indiana with commercial and consumer banking operations headquartered in Chicago, Illinois. Through our wholly owned banking subsidiary and non-bank affiliates, we provide a wide range of services primarily throughout the Midwest and Southeast regions of the United States. In addition to providing extensive services in consumer and commercial banking, Old National offers comprehensive wealth management and capital markets services. 
 
 CORPORATE DEVELOPMENTS IN 2024 
 In 2024, Old National successfully navigated a challenging interest rate environment while remaining on offense with our growth strategy, investing in client-facing and key support talent, and remaining opportunistic for new acquisitions. Our peer-leading deposit franchise, disciplined loan growth, strong credit quality, well-managed expenses, and dedicated team members who are committed to our clients and communities enabled us to exceed our expectations that we set as we began 2024. Highlights experienced in 2024 included: 
 • net income applicable to common shareholders of $523.1 million, or $1.68 per diluted common share; 
 • granular, low-cost deposit franchise; loan to deposit ratio of 89%; 
 • growth in total deposits of 10%; 
 • disciplined loan growth of 10%; 
 • well-managed expenses; and 
 • stable credit metrics, including net charge-offs to average loans of 0.17%. 
 Results for 2024 were impacted by $37.3 million of merger-related expenses, $15.3 million of CECL Day 1 non-PCD provision expense related to the allowance for credit losses established on acquired non-PCD loans, a $13.3 million non-cash, pre-tax expense associated with the distribution of excess pension assets with the resolution of the legacy First Midwest plan, $3.0 million for the FDIC special assessment, $2.6 million of separation expense, and $0.2 million of net securities losses. Excluding these items, net income applicable to common shares for 2024 
 37 

 
 

 was $578.1 million, or $1.86 per diluted common share on an adjusted basis. Refer to the “Non-GAAP Financial Measures” section for reconciliations to GAAP financial measures. 
 Our net interest income increased 2% to $1.5 billion during 2024, driven by loans and securities acquired in the CapStar transaction as well as strong loan growth and the interest rate environment. Provision for credit losses increased compared to 2023, reflective of provision expense associated with the CapStar merger as well as loan growth, credit migration, net charge-offs, and macroeconomic factors. Noninterest income increased from $333.3 million in 2023 to $354.7 million in 2024 primarily due to the impact of the CapStar merger, higher wealth and investment services fees, mortgage banking revenues, and other income, partially offset by a gain on sale of Visa Class B restricted shares totaling $21.6 million in 2023. Noninterest expense increased $68.1 million in 2024 compared to 2023. Noninterest expense in 2024 included $37.3 million of merger-related expenses, a $13.3 million non-cash, pre-tax expense associated with the distribution of excess pension assets with the resolution of the legacy First Midwest plan, $3.0 million for the FDIC special assessment, and $2.6 million of separation expense. Noninterest expense in 2023 included $28.7 million of merger-related expenses, a $19.1 million FDIC special assessment, $4.4 million of a contract termination charge, $3.4 million of expenses related to the Louisville tragedy, and $1.6 million for property optimization. Excluding these expenses, noninterest expense in 2024 increased $68.9 million, reflective of the additional operating costs associated with the impact of the CapStar merger, as well as higher salary and employee benefits reflective of merit increases. 
 On April 1, 2024, Old National completed its acquisition of CapStar, strengthening our presence in Nashville and other high-growth Southeastern markets. All system conversions related to the CapStar transaction were completed in early July 2024. Later in 2024, we announced our pending partnership with Bremer Bank; the definitive merger agreement has been unanimously approved by the Boards of Directors of Bremer and Old National. The transaction is subject to customary closing conditions and regulatory approvals, including the approval of Bremer shareholders. The transaction is anticipated to close in the middle of 2025. 
 
 BUSINESS OUTLOOK 
 We enter 2025 building on the strong foundation we established in 2024 as we successfully navigated a challenging interest rate environment while remaining on offense with our growth strategy, investing in key talent, and remaining opportunistic for new partnerships. Our basic banking strategy continues to serve us well, with a focus on low-cost core deposits, which grew by approximately 10% in 2024, funding a corresponding 10% growth in loans. We continue to focus on full client relationships that align with our risk-adjusted return requirements, and our credit quality remains strong as we continue to adhere to our disciplined underwriting process. During the fourth quarter of 2024, we announced our partnership with Bremer Bank, which is headquartered in St. Paul, Minnesota and which will enhance our presence in the upper Midwest across Minnesota, North Dakota, and Wisconsin, expand our opportunities to acquire new clients and build on existing relationships within this footprint. 
 We are confident in our ability to navigate changes in short-term interest rates, shifts in the yield curve, and overall economic conditions as we have for the past 190 years. We will remain on offense and continue to demonstrate our ability to execute on our strategic priorities. We remain focused on the fundamentals of basic banking, including loan and deposit growth, expansion of revenue-generating businesses, strong credit quality, prudent capital deployment, and disciplined expense management within a sound risk management framework to produce positive operating leverage, which allows us to continue to create value for our shareholders and communities. 
 38 

 
 
 

 FINANCIAL HIGHLIGHTS 
 The following table sets forth certain financial highlights of Old National for the previous five quarters: 
 
 Three Months Ended 
 (dollars and shares in thousands,
except per share data) December 31, September 30, June 30, March 31, December 31, 
 2024 2024 2024 2024 2023 
 Income Statement: 
 Net interest income $ 394,180 $ 391,724 $ 388,421 $ 356,458 $ 364,408 
 Taxable equivalent adjustment (1) (3) 
 5,777 6,144 6,340 6,253 6,100 
 Net interest income – taxable equivalent basis (3) 
 399,957 397,868 394,761 362,711 370,508 
 Provision for credit losses 27,017 28,497 36,214 18,891 11,595 
 Noninterest income 95,766 94,138 87,271 77,522 100,094 
 Noninterest expense 276,824 272,283 282,999 262,317 284,235 
 Net income available to common shareholders 149,839 139,768 117,196 116,250 128,446 
 Per Common Share Data: 
 Weighted average diluted common shares 318,803 317,331 316,461 292,207 292,029 
 Net income (diluted) $ 0.47 $ 0.44 $ 0.37 $ 0.40 $ 0.44 
 Cash dividends 0.14 0.14 0.14 $ 0.14 $ 0.14 
 Common dividend payout ratio (2) 
 30 % 32 % 38 % 35 % 32 % 
 Book value $ 19.11 $ 19.20 $ 18.28 $ 18.24 $ 18.18 
 Stock price 21.71 18.66 17.19 17.41 16.89 
 Tangible common book value (3) 
 11.91 11.97 11.05 11.10 11.00 
 Performance Ratios: 
 Return on average assets 1.14 % 1.08 % 0.92 % 0.98 % 1.09 % 
 Return on average common equity 9.83 9.40 8.17 8.74 10.20 
 
 Return on average tangible common equity (3) 
 16.37 15.96 14.07 14.93 18.11 
 Net interest margin (3) 
 3.30 3.32 3.33 3.28 3.39 
 Efficiency ratio (3) 
 54.37 53.83 57.17 58.34 59.05 
 Net charge-offs to average loans 0.21 0.19 0.16 0.14 0.12 
 Allowance for credit losses on loans to ending loans 1.08 1.05 1.01 0.95 0.93 
 Allowance for credit losses (4) to ending loans 
 1.14 1.12 1.08 1.03 1.03 
 Non-performing loans to ending loans 1.23 1.22 0.94 0.98 0.83 
 Balance Sheet: 
 Total loans $ 36,285,887 $ 36,400,643 $ 36,150,513 $ 33,623,319 $ 32,991,927 
 Total assets 53,552,272 53,602,293 53,119,645 49,534,918 49,089,836 
 Total deposits 40,823,560 40,845,746 39,999,228 37,699,418 37,235,180 
 Total borrowed funds 5,411,537 5,449,096 6,085,204 5,331,161 5,331,147 
 Total shareholders’ equity 6,340,350 6,367,298 6,075,072 5,595,408 5,562,900 
 Capital Ratios: 
 Risk-based capital ratios: 
 Tier 1 common equity 11.38 % 11.00 % 10.73 % 10.76 % 10.70 % 
 Tier 1 11.98 11.60 11.33 11.40 11.35 
 Total 13.37 12.94 12.71 12.74 12.64 
 Leverage ratio (to average assets) 9.21 9.05 8.90 8.96 8.83 
 Total equity to assets (averages) 11.78 11.60 11.31 11.32 10.81 
 Tangible common equity to tangible assets (3) 
 7.41 7.44 6.94 6.86 6.85 
 Nonfinancial Data: 
 Full-time equivalent employees 4,066 4,105 4,267 3,955 3,940 
 Banking centers 280 280 280 258 258 

 (1) Calculated using the federal statutory tax rate in effect of 21% for all periods. 
 (2) Cash dividends per common share divided by net income per common share (basic). 
 (3) Represents a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for reconciliations to GAAP financial measures. 
 (4) Includes the allowance for credit losses on loans and unfunded loan commitments. 
 39 

 
 

 The following table sets forth certain financial highlights of Old National for the year-to-date periods: 
 
 Years Ended December 31, 
 (dollars and shares in thousands, except per share data) 2024 2023 
 Income Statement: 
 Net interest income $ 1,530,783 $ 1,503,153 
 Taxable equivalent adjustment (1) (3) 
 24,514 23,428 
 Net interest income – taxable equivalent basis (3) 
 1,555,297 1,526,581 
 Provision for credit losses 110,619 58,887 
 Noninterest income 354,697 333,342 
 Noninterest expense 1,094,423 1,026,306 
 Net income available to common shareholders 523,053 565,857 
 Per Common Share Data: 
 Weighted average diluted common shares 311,001 291,855 
 Net income (diluted) $ 1.68 $ 1.94 
 Cash dividends $ 0.56 $ 0.56 
 Common dividend payout ratio (2) 
 33 % 29 % 
 Book value $ 19.11 $ 18.18 
 Stock price 21.71 16.89 
 Tangible common book value (3) 
 11.91 11.00 
 Performance Ratios: 
 Return on average assets 1.03 % 1.21 % 
 Return on average common equity 9.06 11.29 
 
 Return on average tangible common equity (3) 
 15.37 20.15 
 Net interest margin (3) 
 3.31 3.54 
 Efficiency ratio (3) 
 55.85 53.70 
 Net charge-offs to average loans 0.17 0.17 
 Allowance for credit losses on loans to ending loans 1.08 0.93 
 Allowance for credit losses (4) to ending loans 
 1.14 1.03 
 Non-performing loans to ending loans 1.23 0.83 
 Balance Sheet: 
 Total loans $ 36,285,887 $ 32,991,927 
 Total assets 53,552,272 49,089,836 
 Total deposits 40,823,560 37,235,180 
 Total borrowed funds 5,411,537 5,331,147 
 Total shareholders’ equity 6,340,350 5,562,900 
 Capital Ratios: 
 Risk-based capital ratios: 
 Tier 1 common equity 11.38 % 10.70 % 
 Tier 1 11.98 11.35 
 Total 13.37 12.64 
 Leverage ratio (to average assets) 9.21 8.83 
 Total equity to assets (averages) 11.51 10.91 
 Tangible common equity to tangible assets (3) 
 7.41 6.85 
 Nonfinancial Data: 
 Full-time equivalent employees 4,066 3,940 
 Banking centers 280 258 

 (1) Calculated using the federal statutory tax rate in effect of 21% for all periods. 
 (2) Cash dividends per common share divided by net income per common share (basic). 
 (3) Represents a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for reconciliations to GAAP financial measures. 
 (4) Includes the allowance for credit losses on loans and unfunded loan commitments. 
 40 

 
 
 

 NON-GAAP FINANCIAL MEASURES 
 The Company’s accounting and reporting policies conform to GAAP and general practices within the banking industry. As a supplement to GAAP, the Company provides non-GAAP performance results, which the Company believes are useful because they assist users of the financial information in assessing the Company’s operating performance. 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 following table. 
 The Company presents net income per common share and net income applicable to common shares, adjusted for certain notable items. These items include merger-related charges associated with completed and pending acquisitions, debt securities gains/losses, separation expense, CECL Day 1 non-PCD provision expense, distribution of excess pension assets expense, FDIC special assessment expense, gain on sale of Visa Class B restricted shares, expenses related to the tragic April 10, 2023 event at our downtown Louisville location (“Louisville expenses”), contract termination charge, and property optimization charges. Management believes excluding these items from net income per common share and net income applicable to common shares may be useful in assessing the Company's underlying operational performance since these items do not pertain to its core business operations and their exclusion may facilitate better comparability between periods. Management believes that excluding merger-related charges from these metrics may be useful to the Company, as well as analysts and investors, since these expenses can vary significantly based on the size, type, and structure of each acquisition. Additionally, management believes excluding these items from these metrics may enhance comparability for peer comparison purposes. 
 The taxable equivalent adjustment to net interest income and net interest margin recognizes the income tax savings when comparing taxable and tax-exempt assets. Interest income and yields on tax-exempt securities and loans are presented using the current federal income tax rate of 21%. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on a fully tax-equivalent basis and that it may enhance comparability for peer comparison purposes. 
 In management’s view, tangible common equity measures are capital adequacy metrics that may be meaningful to the Company, as well as users of the financial information, in assessing the Company’s use of equity and in facilitating comparisons with peers. These non-GAAP measures are valuable indicators of a financial institution’s capital strength since they eliminate intangible assets from shareholders’ equity and retain the effect of AOCI in shareholders’ equity. 
 Although intended to enhance understanding of the Company’s business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. In addition, these non-GAAP financial measures may differ from those used by other financial institutions to assess their business and performance. See the previously provided tables and the following reconciliations in the “Non-GAAP Reconciliations” section for details on the calculation of these measures to the extent presented herein. 
 41 

 
 

 The following table presents GAAP to non-GAAP reconciliations for the previous five quarters: 
 
 Three Months Ended 
 (dollars and shares in thousands,
except per share data) December 31, September 30, June 30, March 31, December 31, 
 2024 2024 2024 2024 2023 
 Net income per common share: 
 Net income applicable to common shares $ 149,839 $ 139,768 $ 117,196 $ 116,250 $ 128,446 
 Adjustments: 
 Merger-related charges 8,117 6,860 19,440 2,908 5,529 
 Debt securities (gains) losses 122 76 (2) 16 825 
 Separation expense — 2,646 — — — 
 CECL Day 1 non-PCD provision expense — — 15,312 — — 
 Distribution of excess pension assets expense — — — 13,318 — 
 FDIC special assessment — — — 2,994 19,052 
 Gain on sale of Visa Class B restricted shares — — — — (21,635) 
 Contract termination charge — — — — 4,413 
 
 
 Less: tax effect on net total adjustments (2) 
 (2,089) (2,134) (7,888) (4,695) (1,988) 
 Net income applicable to common shares, adjusted (1) 
 $ 155,989 $ 147,216 $ 144,058 $ 130,791 $ 134,642 
 Weighted average diluted common shares outstanding 318,803 317,331 316,461 292,207 292,029 
 Net income per common share, diluted $ 0.47 $ 0.44 $ 0.37 $ 0.40 $ 0.44 
 Adjusted net income per common share, diluted (1) 
 $ 0.49 $ 0.46 $ 0.46 $ 0.45 $ 0.46 
 Tangible common book value: 
 Shareholders’ common equity $ 6,096,631 $ 6,123,579 $ 5,831,353 $ 5,351,689 $ 5,319,181 
 Deduct: Goodwill and intangible assets 2,296,098 2,305,084 2,306,204 2,095,511 2,100,966 
 
 Tangible shareholders’ common equity (1) 
 $ 3,800,533 $ 3,818,495 $ 3,525,149 $ 3,256,178 $ 3,218,215 
 Period end common shares 318,980 318,955 318,969 293,330 292,655 
 Tangible common book value (1) 
 11.91 11.97 11.05 11.10 11.00 
 Return on average tangible common equity: 
 Net income applicable to common shares $ 149,839 $ 139,768 $ 117,196 $ 116,250 $ 128,446 
 Add: Intangible amortization (net of tax) (2) 
 5,428 5,558 5,569 4,091 4,402 
 Tangible net income (1) 
 $ 155,267 $ 145,326 $ 122,765 $ 120,341 $ 132,848 
 
 
 
 
 Average shareholders’ common equity $ 6,095,234 $ 5,946,352 $ 5,735,257 $ 5,321,823 $ 5,037,768 
 Deduct: Average goodwill and intangible assets 2,301,177 2,304,597 2,245,405 2,098,338 2,103,935 
 
 Average tangible shareholders’ common equity (1) 
 $ 3,794,057 $ 3,641,755 $ 3,489,852 $ 3,223,485 $ 2,933,833 
 Return on average tangible common equity (1) 
 16.37 % 15.96 % 14.07 % 14.93 % 18.11 % 
 Net interest margin: 
 Net interest income $ 394,180 $ 391,724 $ 388,421 $ 356,458 $ 364,408 
 Taxable equivalent adjustment 5,777 6,144 6,340 6,253 6,100 
 Net interest income – taxable equivalent basis (1) 
 $ 399,957 $ 397,868 $ 394,761 $ 362,711 $ 370,508 
 Average earning assets $ 48,411,803 $ 47,905,463 $ 47,406,849 $ 44,175,079 $ 43,701,283 
 Net interest margin (1) 
 3.30 % 3.32 % 3.33 % 3.28 % 3.39 % 
 Efficiency ratio: 
 Noninterest expense $ 276,824 $ 272,283 $ 282,999 $ 262,317 $ 284,235 
 Deduct: Intangible amortization expense 7,237 7,411 7,425 5,455 5,869 
 Adjusted noninterest expense (1) 
 $ 269,587 $ 264,872 $ 275,574 $ 256,862 $ 278,366 
 Net interest income – taxable equivalent basis (1) 
 (see above) 
 $ 399,957 $ 397,868 $ 394,761 $ 362,711 $ 370,508 
 Noninterest income 95,766 94,138 87,271 77,522 100,094 
 Deduct: Debt securities gains (losses), net (122) (76) 2 (16) (825) 
 Adjusted total revenue (1) 
 $ 495,845 $ 492,082 $ 482,030 $ 440,249 $ 471,427 
 Efficiency ratio (1) 
 54.37 % 53.83 % 57.17 % 58.34 % 59.05 % 
 Tangible common equity to tangible assets: 
 Tangible shareholders’ equity (1) (see above) 
 $ 3,800,533 $ 3,818,495 $ 3,525,149 $ 3,256,178 $ 3,218,215 
 Assets $ 53,552,272 $ 53,602,293 $ 53,119,645 $ 49,534,918 $ 49,089,836 
 
 Deduct: Goodwill and intangible assets 2,296,098 2,305,084 2,306,204 2,095,511 2,100,966 
 
 Tangible assets (1) 
 $ 51,256,174 $ 51,297,209 $ 50,813,441 $ 47,439,407 $ 46,988,870 
 Tangible common equity to tangible assets (1) 
 7.41 % 7.44 % 6.94 % 6.86 % 6.85 % 

 (1) Represents a non-GAAP financial measure. 
 (2) Calculated using management’s estimate of the annual fully taxable equivalent rates (federal and state). 
 42 

 
 

 The following table presents GAAP to non-GAAP reconciliations for the year-to-date periods: 
 
 Years Ended December 31, 
 (dollars and shares in thousands, except per share data) 2024 2023 
 Net income per common share: 
 Net income applicable to common shares $ 523,053 $ 565,857 
 Adjustments: 
 Merger-related charges 37,325 28,716 
 CECL Day 1 non-PCD provision expense 15,312 — 
 Distribution of excess pension assets expense 13,318 — 
 FDIC special assessment 2,994 19,052 
 Separation expense 2,646 — 
 Debt securities (gains) losses 212 6,265 
 Gain on sale of Visa Class B restricted shares — (21,635) 
 Contract termination charge — 4,413 
 Louisville expenses — 3,361 
 Property optimization charges — 1,559 
 Less: tax effect on net total adjustments (2) 
 (16,806) (8,361) 
 Net income applicable to common shares, adjusted (1) 
 $ 578,054 $ 599,227 
 Weighted average diluted common shares outstanding 311,001 291,855 
 Net income per common share, diluted $ 1.68 $ 1.94 
 Adjusted net income per common share, diluted (1) 
 $ 1.86 $ 2.05 
 Tangible common book value: 
 Shareholders’ common equity $ 6,096,631 $ 5,319,181 
 Deduct: Goodwill and intangible assets 2,296,098 2,100,966 
 
 Tangible shareholders’ common equity (1) 
 $ 3,800,533 $ 3,218,215 
 Period end common shares 318,980 292,655 
 Tangible common book value (1) 
 11.91 11.00 
 Return on average tangible common equity: 
 Net income applicable to common shares $ 523,053 $ 565,857 
 Add: Intangible amortization (net of tax) (2) 
 20,646 18,116 
 Tangible net income (1) 
 $ 543,699 $ 583,973 
 
 
 
 
 Average shareholders’ common equity $ 5,776,011 $ 5,010,594 
 Deduct: Average goodwill and intangible assets 2,237,738 2,112,924 
 
 Average tangible shareholders’ common equity (1) 
 $ 3,538,273 $ 2,897,670 
 Return on average tangible common equity (1) 
 15.37 % 20.15 % 
 Net interest margin: 
 Net interest income $ 1,530,783 $ 1,503,153 
 Taxable equivalent adjustment 24,514 23,428 
 Net interest income – taxable equivalent basis (1) 
 $ 1,555,297 $ 1,526,581 
 Average earning assets $ 46,981,267 $ 43,095,730 
 Net interest margin (1) 
 3.31 % 3.54 % 
 Efficiency ratio: 
 Noninterest expense $ 1,094,423 $ 1,026,306 
 Deduct: Intangible amortization expense 27,528 24,155 
 Adjusted noninterest expense (1) 
 $ 1,066,895 $ 1,002,151 
 Net interest income – taxable equivalent basis (1) (see above) 
 $ 1,555,297 $ 1,526,581 
 Noninterest income 354,697 333,342 
 Deduct: Debt securities gains (losses), net (212) (6,265) 
 Adjusted total revenue (1) 
 $ 1,910,206 $ 1,866,188 
 Efficiency ratio (1) 
 55.85 % 53.70 % 
 Tangible common equity to tangible assets: 
 Tangible shareholders’ equity (1) (see above) 
 $ 3,800,533 $ 3,218,215 
 Assets $ 53,552,272 $ 49,089,836 
 
 Deduct: Goodwill and intangible assets 2,296,098 2,100,966 
 
 Tangible assets (1) 
 $ 51,256,174 $ 46,988,870 
 Tangible common equity to tangible assets (1) 
 7.41 % 6.85 % 

 (1) Represents a non-GAAP financial measure. 
 (2) Calculated using management’s estimate of the annual fully taxable equivalent rates (federal and state). 
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 RESULTS OF OPERATIONS 
 The following table sets forth certain income statement information of Old National: 
 
 Years Ended December 31, 
 (dollars in thousands, except per share data) 2024 2023 2022 
 Income Statement Summary: 
 Net interest income $ 1,530,783 $ 1,503,153 $ 1,327,936 
 Provision for credit losses 110,619 58,887 144,799 
 Noninterest income 354,697 333,342 399,779 
 Noninterest expense 1,094,423 1,026,306 1,038,183 
 Net income applicable to common shareholders 523,053 565,857 414,169 
 Net income per common share – diluted 1.68 1.94 1.50 
 Other Data: 
 Return on average common equity 9.06 % 11.29 % 8.92 % 
 
 Return on average tangible common equity (1) 
 15.37 % 20.15 % 16.34 % 
 Efficiency ratio (1) 
 55.85 % 53.70 % 57.97 % 
 
 Tier 1 leverage ratio 9.21 % 8.83 % 8.52 % 
 Net charge-offs (recoveries) to average loans 0.17 % 0.17 % 0.06 % 

 (1) Represents a non-GAAP financial measure. Refer to “Non-GAAP Financial Measures” section for reconciliations to GAAP financial measures. 
 Net Interest Income 
 Net interest income is the most significant component of our earnings, comprising 81% of 2024 revenues. Net interest income and net interest margin are influenced by many factors, primarily the volume and mix of earning assets, funding sources, and interest rate fluctuations. Other factors include the level of accretion income on purchased loans, prepayment risk on mortgage and investment-related assets, and the composition and maturity of interest-earning assets and interest-bearing liabilities. 
 The Federal Reserve decreased its interest rates during 2024. The Federal Reserve’s Federal Funds range is currently in a target range of 4.25% to 4.50%, with the Effective Federal Funds Rate at 4.33% at December 31, 2024, and 5.33% at December 31, 2023. Management actively takes balance sheet restructuring, derivative, and deposit pricing actions to help mitigate interest rate risk. See the section of this Item 7 titled “Market Risk” for additional information regarding this risk. 
 Loans typically generate more interest income than investment securities with similar maturities. Funding from client deposits generally costs less than wholesale funding sources. Factors such as general economic activity, Federal Reserve monetary policy, and price volatility of competing alternative investments can also exert significant influence on our ability to optimize our mix of assets and funding, net interest income, and net interest margin. 
 Net interest income is the excess of interest received from interest-earning assets over interest paid on interest-bearing liabilities. For analytical purposes, net interest income is presented in the table that follows, adjusted to a taxable equivalent basis to reflect what our tax-exempt assets would need to yield in order to achieve the same after-tax yield as a taxable asset. We used the current federal statutory tax rate in effect of 21% for all periods. This analysis portrays the income tax benefits related to tax-exempt assets and helps to facilitate a comparison between taxable and tax-exempt assets. Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully taxable equivalent basis and that it may enhance comparability for peer comparison purposes for both management and investors. 
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 The following table presents a three-year average balance sheet and for each major asset and liability category, its related interest income and yield, or its expense and rate for the years ended December 31. 
 
 2024 2023 2022 
 (Taxable equivalent basis,
dollars in thousands) Average
Balance Income (1) / 
 Expense 
 Yield/
Rate Average
Balance Income (1) / 
 Expense 
 Yield/
Rate Average
Balance Income (1) / 
 Expense 
 Yield/
Rate 
 Earning Assets 
 Money market and other interest-
 earning investments $ 887,771 $ 45,835 5.16 % $ 826,453 $ 39,683 4.80 % $ 812,296 $ 2,814 0.35 % 
 Investment securities: 
 Treasury and government- sponsored agencies 
 2,288,053 87,489 3.82 2,322,792 84,771 3.65 2,290,229 47,932 2.09 
 Mortgage-backed securities 5,829,322 185,633 3.18 5,178,940 136,827 2.64 5,562,442 129,411 2.33 
 States and political subdivisions 1,672,493 56,006 3.35 1,749,722 57,847 3.31 1,805,433 57,688 3.20 
 Other securities 781,969 47,821 6.12 776,456 39,166 5.04 687,926 24,133 3.51 
 Total investment securities 10,571,837 376,949 3.57 10,027,910 318,611 3.18 10,346,030 259,164 2.50 
 Loans: (2) 
 
 Commercial 10,166,184 711,562 7.00 9,570,639 639,131 6.68 8,252,237 397,228 4.81 
 Commercial real estate 15,698,854 1,028,387 6.55 13,405,946 825,053 6.15 11,147,967 489,499 4.39 
 Residential real estate loans 6,823,798 266,116 3.90 6,646,684 243,646 3.67 5,622,901 201,637 3.59 
 Consumer 2,832,823 197,316 6.97 2,618,098 164,125 6.27 2,570,355 122,274 4.76 
 Total loans 35,521,659 2,203,381 6.20 32,241,367 1,871,955 5.81 27,593,460 1,210,638 4.39 
 Total earning assets 46,981,267 $ 2,626,165 5.59 % 43,095,730 $ 2,230,249 5.18 % 38,751,786 $ 1,472,616 3.80 % 
 Less: Allowance for credit losses
 on loans (348,638) (302,486) (261,534) 
 Non-Earning Assets 
 Cash and due from banks 394,350 413,569 355,391 
 Other assets 5,275,427 4,945,394 4,404,057 
 Total assets $ 52,302,406 $ 48,152,207 $ 43,249,700 
 Interest-Bearing Liabilities 
 Checking and NOW accounts $ 7,554,510 $ 112,741 1.49 % $ 7,664,183 $ 94,263 1.23 % $ 8,104,844 $ 21,321 0.26 % 
 Savings accounts 4,919,559 19,922 0.40 5,638,766 14,941 0.26 6,342,697 3,367 0.05 
 Money market accounts 10,905,756 406,739 3.73 7,249,497 206,634 2.85 4,961,159 11,882 0.24 
 Time deposits, excluding brokered
 deposits 5,492,898 230,132 4.19 3,875,984 123,428 3.18 2,312,935 10,801 0.47 
 Brokered deposits 1,447,491 76,728 5.30 913,349 45,094 4.94 45,796 1,722 3.76 
 Total interest-bearing deposits 30,320,214 846,262 2.79 25,341,779 484,360 1.91 21,767,431 49,093 0.23 
 Federal funds purchased and
 interbank borrowings 57,950 3,262 5.63 229,386 11,412 4.98 151,243 5,021 3.32 
 Securities sold under agreements
 to repurchase 258,630 2,752 1.06 332,853 3,299 0.99 440,619 843 0.19 
 FHLB advances 4,473,800 177,317 3.96 4,568,964 161,860 3.54 2,986,006 51,524 1.73 
 Other borrowings 784,994 41,275 5.26 822,471 42,737 5.20 619,659 19,785 3.19 
 Total borrowed funds 5,575,374 224,606 4.03 5,953,674 219,308 3.68 4,197,527 77,173 1.84 
 Total interest-bearing liabilities $ 35,895,588 $ 1,070,868 2.98 % $ 31,295,453 $ 703,668 2.25 % $ 25,964,958 $ 126,266 0.49 % 
 Noninterest-Bearing Liabilities
 and Shareholders’ Equity 
 Demand deposits 9,424,577 10,633,806 11,750,306 
 Other liabilities 962,511 968,635 676,940 
 Shareholders’ equity 6,019,730 5,254,313 4,857,496 
 Total liabilities and shareholders’
 equity $ 52,302,406 $ 48,152,207 $ 43,249,700 
 
 Net interest income - taxable
 equivalent basis $ 1,555,297 3.31 % $ 1,526,581 3.54 % $ 1,346,350 3.47 % 
 Taxable equivalent adjustment (24,514) (23,428) (18,414) 
 Net interest income (GAAP) $ 1,530,783 3.26 % $ 1,503,153 3.49 % $ 1,327,936 3.43 % 

 (1) Interest income is reflected on a fully taxable equivalent basis. 
 (2) Includes loans held-for-sale. 
 45 

 
 

 The following table presents the dollar amount of changes in taxable equivalent net interest income attributable to changes in the average balances of assets and liabilities and the yields earned or rates paid for the years ended December 31. 
 
 From 2023 to 2024 From 2022 to 2023 
 Total Attributed to Total Attributed to 
 (dollars in thousands) Change (1) 
 Volume Rate Change (1) 
 Volume Rate 
 Interest Income 
 Money market and other interest-earning
 investments $ 6,152 $ 3,060 $ 3,092 $ 36,869 $ 386 $ 36,483 
 Investment securities (2) 
 58,338 18,338 40,000 59,447 (9,039) 68,486 
 Loans (3) 
 331,426 196,965 134,461 661,317 236,892 424,425 
 Total interest income 395,916 218,363 177,553 757,633 228,239 529,394 
 Interest Expense 
 Checking and NOW deposits 18,478 (1,399) 19,877 72,942 (3,411) 76,353 
 Savings deposits 4,981 (2,392) 7,373 11,574 (1,049) 12,623 
 Money market deposits 200,105 120,256 79,849 194,752 35,379 159,373 
 Time deposits, excluding brokered
 deposits 106,704 59,488 47,216 112,627 28,646 83,981 
 Brokered deposits 31,634 27,367 4,267 43,372 37,726 5,646 
 Federal funds purchased and interbank
 borrowings (8,150) (9,090) 940 6,391 3,237 3,154 
 Securities sold under agreements to
 repurchase (547) (758) 211 2,456 (637) 3,093 
 Federal Home Loan Bank advances 15,457 (3,551) 19,008 110,336 41,837 68,499 
 Other borrowings (1,462) (1,953) 491 22,952 8,484 14,468 
 Total interest expense 367,200 187,968 179,232 577,402 150,212 427,190 
 Net interest income - taxable equivalent
 basis $ 28,716 $ 30,395 $ (1,679) $ 180,231 $ 78,027 $ 102,204 

 (1) The variance not solely due to rate or volume is allocated equally between the rate and volume variances. 
 (2) Interest on investment securities includes the effect of taxable equivalent adjustments of $11.1 million in 2024, $11.5 million in 2023, and $11.5 million in 2022; using the federal statutory tax rate in effect of 21%. 
 (3) Interest on loans includes the effect of taxable equivalent adjustments of $13.4 million in 2024, $11.9 million in 2023, and $6.9 million, in 2022; using the federal statutory tax rate in effect of 21%. 
 Net interest income in 2024 increased compared to 2023 primarily due to loans and securities acquired in the CapStar transaction as well as strong loan growth, higher rates on loans and investment securities, and higher accretion income, partially offset by higher balances and costs of average interest-bearing liabilities. Accretion income associated with acquired loans and borrowings totaled $50.8 million in 2024, compared to $28.3 million in 2023. 
 The decrease in the net interest margin on a fully taxable equivalent basis in 2024 when compared to 2023 was primarily due to higher balances and costs of average interest-bearing liabilities, partially offset by loan growth as well as higher yields on loans. The yield on average earning assets increased 41 basis points from 5.18% in 2023 to 5.59% in 2024 and the cost of interest-bearing liabilities increased 73 basis points from 2.25% in 2023 to 2.98% in 2024. Average earning assets increased by $3.9 billion, or 9%, primarily due to a $3.3 billion increase in average loans. Average interest-bearing liabilities increased $4.6 billion, or 15%, reflecting a $5.0 billion increase in average interest-bearing deposits, partially offset by a reduction in average borrowed funds. Average noninterest-bearing deposits decreased by $1.2 billion. 
 The increase in average earning assets in 2024 compared to 2023 was primarily due to loans and securities acquired in the CapStar transaction as well as strong loan growth. The loan portfolio, including loans held-for-sale, which generally has an average yield higher than the investment portfolio, was 76% of average interest earning assets in 2024, compared to 75% in 2023. 
 46 

 
 

 Average loans, including loans held-for-sale, increased $3.3 billion in 2024 compared to 2023 primarily due to loans acquired in the CapStar transaction as well as strong commercial real estate loan growth. Loans acquired in the CapStar transaction totaled $2.1 billion at transaction close. 
 Average non-interest-bearing deposits decreased $1.2 billion in 2024 compared to 2023 while average interest-bearing deposits increased $5.0 billion reflecting a mix shift as a result of the current rate environment, deposits assumed in the CapStar transaction, and organic growth. Total deposit growth in 2024 has allowed us to organically fund loan growth. Deposits assumed in the CapStar transaction totaled $2.6 billion at the close of the transaction. 
 Provision for Credit Losses 
 The following table details the components of provision for credit losses: 
 
 Years Ended December 31, % Change From
Prior Year 
 (dollars in thousands) 2024 2023 2022 2024 2023 
 Provision for credit losses on loans $ 120,191 $ 59,849 $ 123,340 100.8 % (51.5) % 
 Provision (release) for credit losses on 
 unfunded loan commitments (9,572) (962) 21,309 895.0 (104.5) 
 Provision for credit losses on held-to-
 maturity securities — — 150 N/A (100.0) 
 Total provision for credit losses $ 110,619 $ 58,887 $ 144,799 87.8 % (59.3) % 
 
 Net (charge-offs) recoveries on non-PCD
 loans $ (44,675) $ (31,432) $ (4,911) 42.1 % 540.0 % 
 Net (charge-offs) recoveries on PCD
 loans (17,329) (24,478) (11,188) (29.2) 118.8 
 Total net (charge-offs) recoveries on
 loans $ (62,004) $ (55,910) $ (16,099) 10.9 % 247.3 % 
 Net charge-offs (recoveries) to average loans 0.17 % 0.17 % 0.06 % — % 183.3 % 

 Total provision for credit losses increased $51.7 million in 2024 compared to 2023 primarily due to loan growth, credit migration, net charge-offs, and macroeconomic factors. In addition, the provision for credit losses on loans in 2024 included $15.3 million to establish an allowance for credit losses on non-PCD loans acquired in the CapStar transaction. Continued loan growth in future periods, a decline in our current level of recoveries, or an increase in charge-offs could result in an increase in provision expense. Additionally, provision expense may be volatile due to changes in CECL model assumptions of credit quality, macroeconomic factors and conditions, and loan composition, which drive the allowance for credit losses balance. For additional information about non-performing loans, charge-offs, and additional items impacting the provision, refer to the “Risk Management – Credit Risk” section of Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 
 Noninterest Income 
 We generate revenues in the form of noninterest income through client fees, sales commissions, and gains and losses from our core banking franchise and other related businesses, such as wealth management, investment consulting, and investment products. This source of revenue as a percentage of total revenue was 19% in 2024 compared to 18% in 2023. 
 47 

 
 

 The following table details the components of noninterest income: 
 
 Years Ended December 31, % Change From
Prior Year 
 (dollars in thousands) 2024 2023 2022 2024 2023 
 Wealth and investment services fees $ 116,791 $ 107,784 $ 100,851 8.4 % 6.9 % 
 Service charges on deposit accounts 78,175 71,945 72,501 8.7 (0.8) 
 Debit card and ATM fees 43,400 42,153 40,227 3.0 4.8 
 Mortgage banking revenue 26,237 16,319 23,015 60.8 (29.1) 
 Capital markets income 20,299 24,419 25,986 (16.9) (6.0) 
 Company-owned life insurance 20,987 15,397 14,564 36.3 5.7 
 Debt securities gains (losses), net (212) (6,265) (88) (96.6) N/M 
 Gain on sale of Visa Class B restricted shares — 21,635 — (100.0) N/A 
 Gain on sale of health savings accounts — — 90,673 N/A (100.0) 
 Other income 49,020 39,955 32,050 22.7 24.7 
 Total noninterest income $ 354,697 $ 333,342 $ 399,779 6.4 % (16.6) % 
 
 

 Noninterest income increased $21.4 million in 2024 compared to 2023. Noninterest income in 2023 was impacted by a gain on sale of Visa Class B restricted shares totaling $21.6 million as well as $6.3 million of net losses on sales of debt securities. Excluding these items, noninterest income grew $36.9 million primarily due to the acquisition of CapStar, higher wealth and investment services fees, mortgage banking revenue, and other income. 
 Wealth and investment services fees increased $9.0 million in 2024 compared to 2023 primarily due to higher wealth management fees as a result of continued sales to new and existing customers as well as favorable market conditions and the impact of the acquisition of CapStar. 
 Mortgage banking revenue increased $9.9 million in 2024 compared to 2023 primarily due to higher mortgage originations and increased loan sales. 
 During the fourth quarter of 2023, the Company recognized a $21.6 million pre-tax gain on sale of Visa Class B restricted shares in noninterest income. Prior to the sale, the shares were carried at zero cost basis due to uncertainty surrounding the ability of the Company to transfer or otherwise liquidate the shares. After the sale, the Company did not hold any remaining Visa Class B restricted shares. See Note 20 to the consolidated financial statements for additional details on the Visa Class B restricted shares. 
 Other income increased $9.1 million in 2024 compared to 2023 primarily due to additional other income associated with the acquisition of CapStar, discrete items in 2024, and higher commercial loan fees. 
 48 

 
 

 Noninterest Expense 
 The following table details the components of noninterest expense: 
 
 Years Ended December 31, % Change From
Prior Year 
 (dollars in thousands) 2024 2023 2022 2024 2023 
 Salaries and employee benefits $ 603,095 $ 546,364 $ 575,626 10.4 % (5.1) % 
 Occupancy 110,429 106,676 100,421 3.5 6.2 
 Equipment 36,588 32,163 27,637 13.8 16.4 
 Marketing 45,607 39,511 32,264 15.4 22.5 
 Technology 88,797 80,343 84,865 10.5 (5.3) 
 Communication 17,337 16,980 18,846 2.1 (9.9) 
 Professional fees 35,291 27,335 39,046 29.1 (30.0) 
 FDIC assessment 44,681 56,730 19,332 (21.2) 193.5 
 Amortization of intangibles 27,528 24,155 25,857 14.0 (6.6) 
 Amortization of tax credit investments 13,329 15,367 10,961 (13.3) 40.2 
 Property optimization — 1,559 26,818 (100.0) (94.2) 
 Other expense 71,741 79,123 76,510 (9.3) 3.4 
 Total noninterest expense $ 1,094,423 $ 1,026,306 $ 1,038,183 6.6 % (1.1) % 

 Noninterest expense increased $68.1 million in 2024 compared to 2023. Noninterest expense in 2024 included $37.3 million of merger-related expenses, a $13.3 million non-cash, pre-tax expense associated with the distribution of excess pension assets with the resolution of the legacy First Midwest plan, $3.0 million for the FDIC special assessment, and $2.6 million of separation expense. Noninterest expense in 2023 included $28.7 million of merger-related expenses, a $19.1 million FDIC special assessment, $4.4 million of a contract termination charge, $3.4 million of expenses related to the Louisville tragedy, and $1.6 million for property optimization. Excluding these expenses, noninterest expense in 2024 increased $68.9 million, reflective of the additional operating costs associated with the acquisition of CapStar, as well as higher salary and employee benefits reflective of merit increases. 
 FDIC assessment expense decreased $12.0 million in 2024 compared to 2023 primarily due to FDIC special assessments totaling $3.0 million and $19.1 million in 2024 and 2023, respectively, partially offset by higher assessment rates and deposit balances. On November 16, 2023, the FDIC finalized a rule that imposes special assessments to recover the losses to the DIF resulting from the FDIC’s use, in March 2023, of the systemic risk exception to the least-cost resolution test under the Federal Deposit Insurance Act in connection with the receiverships of Silicon Valley Bank and Signature Bank. The FDIC estimated in approving the rule that those assessed losses total approximately $16.3 billion. The rule provides that this loss estimate will be periodically adjusted, which will affect the amount of the special assessment. Under the rule, the assessment base is the estimated uninsured deposits that an IDI reported in its December 31, 2022 Call Report, excluding the first $5 billion in estimated uninsured deposits. The special assessments will be collected at an annual rate of approximately 13.4 basis points per year (3.36 basis points per quarter) over eight quarters in 2024 and 2025, with the first assessment period beginning January 1, 2024. Because the estimated loss pursuant to the systemic risk determination will be periodically adjusted, the FDIC retains the ability to cease collection early, extend the special assessment collection period and impose a final shortfall special assessment on a one-time basis. In its December 31, 2022 Call Report, Old National Bank reported estimated uninsured deposits of approximately $12.0 billion. The total of the special assessments for Old National Bank was estimated at $19.1 million, and such amount was recorded as an expense in the year ended December 31, 2023. Old National recorded an additional $3.0 million within FDIC assessment expense for this special assessment in the year ended December 31, 2024. 
 Provision for Income Taxes 
 We record a provision for income taxes currently payable and for income taxes payable or benefits to be received in the future, which arise due to timing differences in the recognition of certain items for financial statement and income tax purposes. The major difference between the effective tax rate applied to our financial statement income and the federal statutory tax rate is caused by a tax benefit from our tax credit investments and interest on tax-exempt securities and loans. The effective tax rate was 20.8% in 2024 compared to 22.5% in 2023. The lower 
 49 

 
 

 effective tax rate in 2024 compared to 2023 reflected decreases in pre-tax book income and state income taxes combined with increases in tax credits and tax-exempt income. The decrease in state income taxes reflected the recognition of previously unrecognized tax benefits due to the expiration of the statute of limitations. See Note 15 to the consolidated financial statements for additional details on Old National’s income tax provision. 
 
 FINANCIAL CONDITION 
 Overview 
 At December 31, 2024, our assets were $53.6 billion, a $4.5 billion increase compared to $49.1 billion at December 31, 2023. The increase was driven primarily by the acquisition of CapStar, as well as disciplined loan growth. 
 Earning Assets 
 Our earning assets are comprised of investment securities, portfolio loans, loans held-for-sale, money market investments, interest-earning accounts with the Federal Reserve, and equity securities. Earning assets were $48.0 billion at December 31, 2024, an increase of $4.1 billion compared to earning assets of $43.9 billion at December 31, 2023. 
 Investment Securities 
 We classify the majority of our investment securities as available-for-sale to give management the flexibility to sell the securities prior to maturity based on fluctuating interest rates or changes in our funding requirements. 
 The investment securities portfolio, including equity securities, was $10.9 billion at December 31, 2024, compared to $10.2 billion at December 31, 2023. The increase was driven primarily by the acquisition of CapStar. Investment securities represented 23% of earning assets at both December 31, 2024 and December 31, 2023. At December 31, 2024, 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. 
 The investment securities available-for-sale portfolio had net unrealized losses of $890.5 million and $869.5 million at December 31, 2024 and December 31, 2023, respectively. The investment securities held-to-maturity portfolio had net unrealized losses of $483.7 million and $412.3 million at December 31, 2024 and December 31, 2023, respectively. 
 The investment securities available-for-sale portfolio including securities hedges had an effective duration of 4.11 at December 31, 2024, compared to 4.24 at December 31, 2023. The total investment securities portfolio had an effective duration of 5.09 at December 31, 2024, compared to 5.35 at December 31, 2023. Effective duration represents the percentage change in the fair value of the portfolio in response to a change in interest rates and is used to evaluate the portfolio’s price volatility at a single point in time. Generally, there is more uncertainty in interest rates over a longer average maturity, resulting in a higher duration percentage. The weighted average yields on investment securities, on a taxable equivalent basis, were 3.57% in 2024 and 3.18% in 2023. 
 Loan Portfolio 
 We lend to commercial and commercial real estate clients in many diverse industries including real estate rental and leasing, manufacturing, healthcare, wholesale trade, construction, and agriculture, among others. Old National manages concentrations of credit exposure by industry, product, geography, client relationship, and loan size. 
 50 

 
 

 The following table presents the composition of the loan portfolio at December 31. 
 
 (dollars in thousands) 2024 2023 $ Change % Change 
 Commercial $ 10,288,560 $ 9,512,230 $ 776,330 8.2 % 
 Commercial real estate 16,307,486 14,140,629 2,166,857 15.3 
 Residential real estate 6,797,586 6,699,443 98,143 1.5 
 Consumer 2,892,255 2,639,625 252,630 9.6 
 Total loans 36,285,887 32,991,927 3,293,960 10.0 
 Allowance for credit losses on loans (392,522) (307,610) (84,912) 27.6 
 Net loans $ 35,893,365 $ 32,684,317 $ 3,209,048 9.8 % 

 The following table presents the contractual maturity distribution and rate sensitivity of loans at December 31, 2024 and an analysis of these loans that have fixed and floating interest rates. The table does not take into account repricing or other forecast assumptions. 
 
 (dollars in thousands) Within
1 Year After 1 - 5
Years After 5 - 15
Years After
15 Years Total % of
Total 
 Commercial 
 Interest rates: 
 Fixed $ 707,228 $ 1,723,046 $ 491,330 $ 166,772 $ 3,088,376 30 % 
 Floating 1,887,785 4,281,241 967,909 63,249 7,200,184 70 
 Total $ 2,595,013 $ 6,004,287 $ 1,459,239 $ 230,021 $ 10,288,560 100 % 
 
 Commercial Real Estate 
 Interest rates: 
 Fixed $ 926,388 $ 4,112,008 $ 901,982 $ 173,643 $ 6,114,021 37 % 
 Floating 2,799,704 6,042,691 1,331,299 19,771 10,193,465 63 
 Total $ 3,726,092 $ 10,154,699 $ 2,233,281 $ 193,414 $ 16,307,486 100 % 
 
 Residential Real Estate 
 Interest rates: 
 Fixed $ 167,532 $ 2,007,874 $ 1,353,280 $ 1,759,147 $ 5,287,833 78 % 
 Floating 33,177 146,638 428,537 901,401 1,509,753 22 
 Total $ 200,709 $ 2,154,512 $ 1,781,817 $ 2,660,548 $ 6,797,586 100 % 
 
 Consumer 
 Interest rates: 
 Fixed $ 348,294 $ 1,040,675 $ 149,201 $ 37,162 $ 1,575,332 54 % 
 Floating 40,794 181,299 168,857 925,973 1,316,923 46 
 Total $ 389,088 $ 1,221,974 $ 318,058 $ 963,135 $ 2,892,255 100 % 

 51 

 
 

 The following table presents the composition of the loan portfolio by state: 
 
 (dollars in thousands) Commercial Commercial
Real Estate Residential
Real Estate Consumer Total
Loans Percent of
Total 
 December 31, 2024 
 Illinois $ 2,806,900 $ 3,729,569 $ 1,373,409 $ 578,009 $ 8,487,887 23 % 
 Indiana 1,572,681 1,829,208 1,064,843 904,224 5,370,956 15 
 Minnesota 945,820 2,188,040 594,585 144,577 3,873,022 11 
 Wisconsin 857,801 2,128,859 477,489 143,734 3,607,883 10 
 Michigan 588,542 1,437,963 654,828 257,585 2,938,918 8 
 Tennessee 391,033 1,247,478 204,366 251,273 2,094,150 6 
 Kentucky 399,139 592,848 264,513 390,503 1,647,003 5 
 Florida 158,941 389,681 380,214 32,173 961,009 3 
 Texas 225,202 272,004 260,126 16,088 773,420 2 
 California 174,993 26,733 417,028 37,807 656,561 2 
 Ohio 300,899 322,350 5,990 16,719 645,958 2 
 Other 1,866,609 2,142,753 1,100,195 119,563 5,229,120 13 
 Total $ 10,288,560 $ 16,307,486 $ 6,797,586 $ 2,892,255 $ 36,285,887 100 % 

 Geographic location in the preceding table is determined by collateral location for real estate loans and borrower location for non-real estate loans. 
 Commercial and Commercial Real Estate Loans 
 Commercial and commercial real estate loans are the largest classifications within earning assets, representing 55% at December 31, 2024, compared to 54% at December 31, 2023. At December 31, 2024, commercial and commercial real estate loans were $26.6 billion, an increase of $2.9 billion compared to December 31, 2023 driven primarily by the acquisition of CapStar, as well as disciplined loan production that was well balanced across our market footprint and product lines. 
 52 

 
 

 The following table provides detail on commercial loans by industry classification (as defined by the North American Industry Classification System) and by loan size at December 31. 
 
 2024 2023 
 (dollars in thousands) Outstanding Exposure (1) 
 Nonaccrual Outstanding Exposure (1) 
 Nonaccrual 
 By Industry: 
 Manufacturing $ 1,724,108 $ 2,884,035 $ 29,886 $ 1,589,727 $ 2,734,935 $ 7,408 
 Health care and social assistance 1,657,229 1,982,352 1,636 1,567,286 1,949,250 7,390 
 Real estate rental and leasing 1,024,315 1,500,570 7,915 686,008 1,035,073 700 
 Wholesale trade 780,643 1,480,859 2,192 748,058 1,541,951 3,789 
 Construction 740,093 1,680,577 11,690 554,312 1,437,025 2,040 
 Finance and insurance 617,151 1,018,320 141 637,630 966,842 1 
 Accommodation and food services 579,424 679,087 7,146 389,591 503,990 705 
 Professional, scientific, and
 technical services 558,589 987,800 7,486 458,133 821,738 3,825 
 Transportation and warehousing 459,988 597,413 21,771 453,630 703,976 1,746 
 Administrative and support and
 waste management and
 remediation services 392,955 573,061 3,363 321,018 487,359 347 
 Retail trade 305,245 554,620 12,781 345,944 620,308 5,273 
 Agriculture, forestry, fishing, 
 and hunting 278,554 391,072 2,822 255,811 392,098 415 
 Educational services 243,843 372,777 5 263,539 406,867 7 
 Other services 236,870 366,265 8,995 208,012 400,195 9,328 
 Public administration 167,410 191,005 — 216,939 285,963 — 
 Other 522,143 852,984 5,975 816,592 1,111,030 1,537 
 Total $ 10,288,560 $ 16,112,797 $ 123,804 $ 9,512,230 $ 15,398,600 $ 44,511 
 
 By Loan Size: 
 Less than $200,000 3 % 3 % 4 % 3 % 3 % 5 % 
 $200,000 to $1,000,000 12 11 14 11 10 20 
 $1,000,000 to $5,000,000 24 24 50 24 25 48 
 $5,000,000 to $10,000,000 14 15 8 16 16 7 
 $10,000,000 to $25,000,000 29 28 24 31 28 20 
 Greater than $25,000,000 18 19 — 15 18 — 
 Total 100 % 100 % 100 % 100 % 100 % 100 % 

 (1) Includes unfunded loan commitments. 
 The following table provides detail on commercial real estate loans classified by property type at December 31. 
 
 2024 2023 
 (dollars in thousands) Outstanding Exposure (1) 
 Nonaccrual Outstanding Exposure (1) 
 Nonaccrual 
 By Property Type: 
 Multifamily $ 5,620,340 $ 6,752,819 $ 85,937 $ 4,794,605 $ 6,422,311 $ 6,050 
 Warehouse / Industrial 3,034,854 3,331,289 8,401 2,704,656 3,308,273 6,459 
 Retail 2,295,808 2,372,912 8,435 1,886,233 1,958,254 29,823 
 Office 2,126,618 2,256,299 46,078 1,948,430 2,112,157 58,111 
 Senior housing 852,376 872,162 50,443 848,903 947,168 41,632 
 Single family 531,679 545,717 6,278 450,560 476,946 3,187 
 Other (2) 1,845,811 2,118,461 28,660 1,507,242 1,824,177 15,530 
 Total $ 16,307,486 $ 18,249,659 $ 234,232 $ 14,140,629 $ 17,049,286 $ 160,792 

 (1) Includes unfunded loan commitments. 
 (2) Other includes commercial development, agriculture real estate, hotels, self-storage, land development, religion, and mixed-use properties. 
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 The mix of properties securing the loans in our commercial real estate portfolio is comprised of owner-occupied and non-owner-occupied categories and is diverse in terms of type and geographic location, generally within the Company’s primary market area. Approximately 27% of the commercial real estate portfolio is owner-occupied as of December 31, 2024, compared to 25% at December 31, 2023. 
 The Company actively reviews its broader loan portfolio in the normal course of business and has performed a targeted review of contractual maturities in its non-owner-occupied commercial real estate portfolio as part of its response to current market conditions to identify exposure to credit risk associated with renewals. At December 31, 2024, the Company held $459.6 million of non-owner-occupied commercial real estate, or 1% of total loans, that mature within 18 months with an interest rate below 4%. 
 Residential Real Estate Loans 
 Residential real estate loans held in our portfolio increased $98.1 million to $6.8 billion at December 31, 2024, compared to December 31, 2023 driven primarily by the acquisition of CapStar, as well as organic growth. Changes in interest rates may impact the number of refinancings and new originations of residential real estate loans. If interest rates decrease in the future, there may be an increase in refinancings and new originations of residential real estate loans. Conversely, future increases in interest rates may result in a decline in the level of refinancings and new originations of residential real estate loans. 
 Consumer Loans 
 Consumer loans, including automobile loans, personal, and home equity loans and lines of credit, increased $252.6 million to $2.9 billion at December 31, 2024 compared to December 31, 2023 driven primarily by the acquisition of CapStar, as well as organic growth. 
 Allowance for Credit Losses on Loans and Unfunded Loan Commitments 
 At December 31, 2024, the allowance for credit losses on loans was $392.5 million, compared to $307.6 million at December 31, 2023. The increase was driven primarily by the acquisition of CapStar, as well as organic loan growth and other factors. Continued loan growth in future periods, a decline in our current level of recoveries, or an increase in charge-offs could result in an increase in provision expense. Additionally, provision expense may be volatile due to changes in CECL model assumptions of credit quality, macroeconomic factors and conditions, and loan composition, which drive the allowance for credit losses balance. 
 We maintain an allowance for credit losses on unfunded loan commitments to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the allowance for credit losses on loans, modified to take into account the probability of a drawdown on the commitment. The allowance for credit losses on unfunded loan commitments is classified as a liability account on the balance sheet within accrued expenses and other liabilities, while the corresponding provision for unfunded loan commitments is included in the provision for credit losses. The allowance for credit losses on unfunded loan commitments totaled $21.7 million at December 31, 2024, compared to $31.2 million at December 31, 2023. 
 Additional information about our Allowance for Credit Losses is included in the “Risk Management – Credit Risk” section of Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 1 and 4 to the consolidated financial statements. 
 Goodwill and Other Intangible Assets 
 Goodwill and other intangible assets at December 31, 2024 totaled $2.3 billion, an increase of $195.1 million compared to December 31, 2023 as a result of goodwill and other intangible assets recorded with the acquisition of CapStar. 
 Other Assets 
 Other assets at December 31, 2024 increased $175.8 million compared to December 31, 2023 primarily due to higher alternative investments. 
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 Funding 
 The following table summarizes Old National’s total funding, comprised of deposits and wholesale borrowings at December 31: 
 
 (dollars in thousands) 2024 2023 $ Change % Change 
 Deposits: 
 Noninterest-bearing demand $ 9,399,019 $ 9,664,247 $ (265,228) (2.7) % 
 Interest-bearing: 
 Checking and NOW 8,040,331 7,331,487 708,844 9.7 
 Savings 4,753,279 5,099,186 (345,907) (6.8) 
 Money market 11,875,192 9,561,116 2,314,076 24.2 
 Time deposits 6,755,739 5,579,144 1,176,595 21.1 
 Total deposits 40,823,560 37,235,180 3,588,380 9.6 
 Wholesale borrowings: 
 Federal funds purchased and interbank borrowings 385 390 (5) (1.3) 
 Securities sold under agreements to repurchase 268,975 285,206 (16,231) (5.7) 
 Federal Home Loan Bank advances 4,452,559 4,280,681 171,878 4.0 
 Other borrowings 689,618 764,870 (75,252) (9.8) 
 Total wholesale borrowings 5,411,537 5,331,147 80,390 1.5 
 Total funding $ 46,235,097 $ 42,566,327 $ 3,668,770 8.6 % 

 The increase in total deposits was primarily due to deposits assumed in the CapStar transaction as well as organic growth. We use wholesale funding to augment deposit funding and to help maintain our desired interest rate risk position. Wholesale funding as a percentage of total funding was 12% at December 31, 2024, compared to 13% at December 31, 2023. See Notes 11, 12, and 13 to the consolidated financial statements for additional details on our financing activities. 
 At December 31, 2024, time deposits in excess of the FDIC insurance limit and estimated time deposits that are otherwise uninsured by maturity were as follows: 
 
 (dollars in thousands) Individual
Instruments in
Denominations that
Meet or Exceed the
FDIC Insurance
Limit Estimated Aggregate
Time Deposits that
Meet or Exceed the
FDIC Insurance
Limit and Otherwise
Uninsured Time
Deposits 
 Three months or less $ 907,864 $ 1,364,074 
 Over three through six months 662,635 1,162,705 
 Over six through 12 months 376,690 535,047 
 Over 12 months 70,738 176,822 
 Total $ 2,017,927 $ 3,238,648 

 At December 31, 2024, the estimated amount of FDIC uninsured deposits for regulatory purposes was $19.6 billion. 
 Capital 
 Shareholders’ equity totaled $6.3 billion, or 12% of total assets, at December 31, 2024 and $5.6 billion, or 11% of total assets, at December 31, 2023. Old National issued 24.0 million shares of Common Stock in conjunction with the acquisition of CapStar on April 1, 2024 adding $417.6 million in shareholders’ equity. Retained earnings were partially offset by dividends during 2024. Old National’s Common Stock is traded on the NASDAQ under the symbol “ONB” with 62,288 shareholders of record at December 31, 2024. 
 Capital Adequacy 
 Old National and the banking industry are subject to various regulatory capital requirements administered by the federal banking agencies. Management routinely analyzes Old National’s capital to ensure an optimized capital 
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 structure. Accordingly, such evaluations may result in Old National taking a capital action. For additional information on capital adequacy see Note 21 to the consolidated financial statements. 
 Management views stress testing as an integral part of the Company’s risk management and strategic planning activities. Old National performs stress testing periodically throughout the year. The primary objective of the stress test is to ensure that Old National has a robust, forward-looking stress testing process and maintains sufficient capital to continue operations throughout times of economic and financial stress. Management also uses the stress testing framework to evaluate decisions relating to pricing, loan concentrations, capital deployment, and mergers and acquisitions to ensure that strategic decisions align with Old National’s risk appetite statement. Old National’s stress testing process incorporates key risks that include strategic, market, liquidity, credit, operational, regulatory, compliance, legal, and reputational risks. Old National’s stress testing policy outlines steps that will be taken if stress test results do not meet internal thresholds under severely adverse economic scenarios. 
 
 RISK MANAGEMENT 
 Overview 
 Old National has adopted a Risk Appetite Statement to enable our Board of Directors, Enterprise Risk Committee of our Board, Executive Leadership Team, and Senior Management to better assess, understand, monitor, and mitigate Old National’s risks. The Risk Appetite Statement addresses the following major risks: strategic, market, liquidity, credit, operational, talent management, compliance and regulatory, legal, and reputational. Our Chief Risk Officer provides quarterly reports to the Board’s Enterprise Risk Committee on various risk topics. The following discussion addresses certain of these major risks including credit, market, liquidity, operational, compliance and regulatory, and legal. Discussion of strategic, talent management, and reputational risks is provided in the section entitled “Risk Factors” in Item 1A of this Form 10-K. 
 Credit Risk 
 Credit risk represents the risk of loss arising from an obligor’s inability or failure to meet contractual payment or performance terms. Our primary credit risks result from our investment and lending activities. 
 Investment Activities 
 All of our mortgage-backed securities are backed by U.S. government-sponsored or federal agencies. Municipal bonds, corporate bonds, and other debt securities are evaluated by reviewing the credit-worthiness of the issuer and general market conditions. See Note 3 to the consolidated financial statements for additional details about our investment security portfolio. 
 Counterparty Exposure 
 Counterparty exposure is the risk that the other party in a financial transaction will not fulfill its obligation. We define counterparty exposure as nonperformance risk in transactions involving federal funds sold and purchased, repurchase agreements, correspondent bank relationships, and derivative contracts with companies in the financial services industry. Old National manages exposure to counterparty risk in connection with its derivatives transactions by generally engaging in transactions with counterparties having ratings of at least “A” by Standard & Poor’s Rating Service or “A2” by Moody’s Investors Service. There are provisions in our agreements with the counterparties that allow for certain unsecured credit exposure up to an agreed threshold. Exposures in excess of the agreed thresholds are collateralized. Total credit exposure is monitored by counterparty and managed within limits that management believes to be prudent. Old National’s net counterparty exposure was an asset of $28.5 million at December 31, 2024. 
 Lending Activities 
 Commercial 
 Commercial and industrial loans are made primarily for the purpose of financing equipment acquisition, borrower expansion, working capital, and other general business purposes. Lease financing consists of direct financing leases and is used by commercial clients to finance capital purchases ranging from computer equipment to transportation equipment. The credit decisions for these transactions are based upon an assessment of the overall financial capacity of the applicant. A determination is made as to the applicant’s ability to repay in accordance with the proposed terms as well as an overall assessment of the risks involved. In addition to an evaluation of the applicant’s financial 
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 condition, a determination is made of the probable adequacy of the primary and secondary sources of repayment, such as additional collateral or personal guarantees, to be relied upon in the transaction. Credit agency reports of the applicant’s credit history supplement the analysis of the applicant’s creditworthiness. 
 Commercial mortgages and construction loans are offered to real estate investors, developers, and builders primarily domiciled in the geographic Midwest and Southeast market areas we serve. These loans are secured by first mortgages on real estate at LTV margins deemed appropriate for the property type, quality, location, and sponsorship. Generally, these LTV ratios do not exceed 80%, although higher levels may be permitted with additional non-real estate collateral, increased guaranties, accelerated amortization, or other mitigating factors. The commercial properties are predominantly multi-family and non-residential properties such as retail centers, industrial properties as well as, to a lesser extent, more specialized properties. Substantially all of our commercial real estate loans are secured by properties located in our primary market area. 
 In the underwriting of our commercial real estate loans, we obtain appraisals for the underlying properties. Decisions to lend are based on the economic viability of the property and the creditworthiness of the borrower. In evaluating a proposed commercial real estate loan, we primarily emphasize the ratio of the property’s projected net cash flows to the loan’s debt service requirement. The debt service coverage ratio normally is not less than 120% and it is computed after deduction for a vacancy factor and property expenses as appropriate. In addition, a personal guarantee of the loan or a portion thereof is often required from the principal(s) of the borrower. In most cases, we require title insurance insuring the priority of our lien, fire and extended coverage casualty insurance, and flood insurance, if appropriate, in order to protect our security interest in the underlying property. In addition, business interruption insurance or other insurance may be required. 
 Construction loans are underwritten against projected cash flows derived from rental income, business income from an owner-occupant, or the sale of the property to an end-user. We may mitigate the risks associated with these types of loans by requiring fixed-price construction contracts, performance and payment bonding, controlled disbursements, and pre-sale contracts or pre-lease agreements. 
 Consumer 
 
 
 We offer a variety of first mortgage and junior lien loans to consumers within our markets, with residential home mortgages comprising our largest consumer loan category. These loans are secured by a primary residence and are underwritten using traditional underwriting systems to assess the credit risks of the consumer. Decisions are primarily based on LTV ratios, DTI ratios, liquidity, and credit scores. A maximum LTV ratio of 90% is generally required, although higher levels may be permitted with mortgage insurance or other mitigating factors. We offer fixed rate mortgages and variable rate mortgages with interest rates that are subject to change every year after the first, third, fifth, or seventh year, depending on the product and are based on indexed rates such as prime. We do not offer payment-option facilities, sub-prime loans, or any product with negative amortization. 
 Home equity loans are secured primarily by second mortgages on residential property of the borrower. The underwriting terms for the home equity product generally permit borrowing availability, in the aggregate, up to 90% of the appraised value of the collateral property at the time of origination. We offer fixed and variable rate home equity loans, with variable rate loans underwritten at fully-indexed rates. Decisions are primarily based on LTV ratios, DTI ratios, and credit scores. We do not offer home equity loan products with reduced documentation. 
 Automobile loans include loans and leases secured by new or used automobiles. We originate automobile loans and leases primarily on an indirect basis through selected dealerships. We require borrowers to maintain collision insurance on automobiles securing consumer loans, with us listed as loss payee. Our procedures for underwriting automobile loans include an assessment of an applicant’s overall financial capacity, including credit history and the ability to meet existing obligations and payments on the proposed loan. Although an applicant’s creditworthiness is the primary consideration, the underwriting process also includes a comparison of the value of the collateral security to the proposed loan amount. 
 Asset Quality 
 Community-based lending personnel, along with region-based independent underwriting and analytic support staff, extend credit under guidelines established and administered by management and overseen by our Enterprise Risk Committee. This committee, which meets quarterly, is made up of independent outside directors. The committee monitors credit quality through its general review of information such as delinquencies, credit exposures, peer comparisons, problem loans, and charge-offs. In addition, the committee provides oversight of loan policy changes 
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 as recommended by management with the objective of maintaining an appropriate lending policy for the current lending environment. 
 We lend to commercial and commercial real estate clients in many diverse industries including, among others, real estate rental and leasing, manufacturing, healthcare, wholesale trade, construction, and agriculture. Old National manages concentrations of credit exposure by industry, product, geography, client relationship, and loan size. At December 31, 2024, our average commercial loan size was approximately $716,000 and our average commercial real estate loan size was approximately $1,567,000. In addition, while loans to lessors of residential and non-residential real estate exceed 10% of total loans, no individual sub-segment category within those broader categories reaches the 10% threshold. At December 31, 2024, we had minimal exposure to foreign borrowers and no sovereign debt. Our policy is to concentrate our lending activity in the geographic market areas we serve, primarily in the Midwest and Southeast regions of the United States. 
 The following table presents a summary of under-performing assets as well as criticized and classified assets at December 31: 
 
 (dollars in thousands) 2024 2023 
 Nonaccrual loans $ 447,979 $ 274,821 
 Past due loans (90 days or more and still accruing) 4,060 961 
 Foreclosed assets 4,294 9,434 
 Total under-performing assets $ 456,333 $ 285,216 
 Classified loans (includes nonaccrual, past due 90 days
 or more, and other problem loans) $ 1,525,452 $ 875,140 
 Other classified assets (1) 
 58,954 48,930 
 Special mention loans 908,630 843,920 
 Total criticized and classified assets $ 2,493,036 $ 1,767,990 
 Asset Quality Ratios: 
 Nonaccrual loans/total loans (2) 
 1.23 % 0.83 % 
 
 Under-performing assets/total loans (2) 
 1.26 0.86 
 Under-performing assets/total assets 0.85 0.58 
 Allowance for credit losses on loans/under-performing assets 86.02 107.85 
 Allowance for credit losses on loans/nonaccrual loans 87.62 111.93 

 (1) Includes investment securities that fell below investment grade rating. 
 (2) Loans exclude loans held-for-sale. 
 Under-performing assets increased to $456.3 million at December 31, 2024, compared to $285.2 million at December 31, 2023. Under-performing assets as a percentage of total loans were 1.26% at December 31, 2024, compared to 0.86% at December 31, 2023. 
 Nonaccrual loans increased $173.2 million from December 31, 2023 to December 31, 2024 including $71.7 million of nonaccrual loans acquired in the CapStar acquisition. Excluding these loans, nonaccrual loans increased $101.5 million reflecting the migration of certain borrowers primarily due to asset quality rating policy changes and the impact of the higher interest rate environment. As a percentage of nonaccrual loans, the allowance for credit losses on loans was 87.62% at December 31, 2024, compared to 111.93% at December 31, 2023. 
 If nonaccrual and renegotiated loans outstanding at December 31, 2024 and 2023, respectively, had been accruing interest throughout the year in accordance with their original terms, interest income of approximately $20.4 million in 2024 and $13.4 million in 2023 would have been recorded on these loans. The amount of interest income actually recorded on nonaccrual and renegotiated loans was $12.1 million in 2024 and $5.0 million in 2023. 
 Total criticized and classified assets were $2.5 billion at December 31, 2024, an increase of $725.0 million from December 31, 2023 including $222.1 million of criticized and classified loans related to the CapStar acquisition. Excluding these loans, total criticized and classified assets increased $503.0 million reflecting the migration of certain borrowers primarily due to asset quality rating policy changes and the impact of the higher interest rate environment. Other classified assets include investment securities that fell below investment grade rating totaling $59.0 million at December 31, 2024, compared to $48.9 million at December 31, 2023. 
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 Allowance for Credit Losses on Loans and Unfunded Loan Commitments 
 Credit quality within the loans held for investment portfolio is continuously monitored by management and is reflected within the allowance for credit losses on loans. The allowance for credit losses is an estimate of expected losses inherent within the Company’s loans held for investment portfolio. Credit quality is assessed and monitored by evaluating various attributes and the results of those evaluations are utilized in underwriting new loans and in our process for estimating expected credit losses. Expected credit loss inherent in non-cancelable off-balance-sheet credit exposures (unfunded loan commitments) is accounted for as a separate liability included in other liabilities on the balance sheet. The allowance for credit losses on loans held for investment and unfunded loan commitments is adjusted by a credit loss expense, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries. Accrued interest receivable is excluded from the estimate of credit losses. 
 The allowance for credit loss estimation process involves procedures to consider the unique characteristics of our loan portfolio segments. These segments are further disaggregated into loan classes based on the level at which credit risk of the loan is monitored. When computing the level of expected credit losses, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status, and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense in those future periods. 
 The allowance level is influenced by loan volumes, loan AQR migration or delinquency status, changes in historical loss experience, and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions. The methodology for estimating the amount of expected credit losses reported in the allowance for credit losses on loans has two basic components: first, an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans; and second, a pooled component for estimated expected credit losses for pools of loans that share similar risk characteristics. 
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 The loan categories used to monitor and analyze interest income and yields are different than the portfolio segments used to determine the allowance for credit losses on loans. The allowance for credit losses was calculated by pooling loans of similar credit risk characteristics and credit monitoring procedures. The four loan portfolios used to monitor and analyze interest income and yields – commercial, commercial real estate, residential real estate, and consumer – are reclassified into seven segments of loans – commercial, commercial real estate, BBCC, residential real estate, indirect, direct, and home equity for purposes of determining the allowance for credit losses on loans. The commercial and commercial real estate loan categories shown on the balance sheet include the same pool of loans as the commercial, commercial real estate, and BBCC portfolio segments. The consumer loan category shown on the balance sheet is comprised of the same loans in the indirect, direct, and home equity portfolio segments. The portfolio segment reclassifications follow: 
 
 Statement
Balance Portfolio
Segment
Reclassifications Portfolio
Segment After
Reclassifications 
 
 (dollars in thousands) 
 December 31, 2024 
 Commercial $ 10,288,560 $ (232,301) $ 10,056,259 
 Commercial real estate 16,307,486 (174,438) 16,133,048 
 BBCC N/A 406,739 406,739 
 Residential real estate 6,797,586 — 6,797,586 
 Consumer 2,892,255 (2,892,255) N/A 
 Indirect N/A 1,096,778 1,096,778 
 Direct N/A 514,144 514,144 
 Home equity N/A 1,281,333 1,281,333 
 Total $ 36,285,887 $ — $ 36,285,887 
 
 December 31, 2023 
 Commercial $ 9,512,230 $ (232,764) $ 9,279,466 
 Commercial real estate 14,140,629 (169,058) 13,971,571 
 BBCC N/A 401,822 401,822 
 Residential real estate 6,699,443 — 6,699,443 
 Consumer 2,639,625 (2,639,625) N/A 
 Indirect N/A 1,050,982 1,050,982 
 Direct N/A 523,172 523,172 
 Home equity N/A 1,065,471 1,065,471 
 Total $ 32,991,927 $ — $ 32,991,927 

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 The following table details activity in our allowance for credit losses on loans for the years ended December 31: 
 
 (dollars in thousands) 2024 2023 2022 
 Beginning allowance for credit losses on loans $ 307,610 $ 303,671 $ 107,341 
 Allowance established for acquired PCD loans 26,725 — 89,089 
 Loans charged-off: 
 Commercial 36,172 41,451 6,885 
 Commercial real estate 18,565 11,198 6,519 
 BBCC 1,801 1,650 85 
 Residential real estate 14 256 344 
 Indirect 5,610 2,948 2,525 
 Direct 8,672 10,517 10,799 
 Home equity 470 443 124 
 Total charge-offs 71,304 68,463 27,281 
 Recoveries on charged-off loans: 
 Commercial 1,623 4,172 4,610 
 Commercial real estate 2,713 2,417 1,095 
 BBCC 325 275 281 
 Residential real estate 883 1,268 760 
 Indirect 1,274 1,559 1,263 
 Direct 2,152 2,331 2,557 
 Home equity 330 531 616 
 Total recoveries 9,300 12,553 11,182 
 Net charge-offs (recoveries) 62,004 55,910 16,099 
 Provision for credit losses on loans 120,191 59,849 123,340 
 Ending allowance for credit losses on loans $ 392,522 $ 307,610 $ 303,671 
 Beginning allowance for credit losses on unfunded loan commitments $ 31,226 $ 32,188 $ 10,879 
 Provision for credit losses on unfunded loan commitments acquired
 during the period 1,763 — 11,013 
 Provision (release) for provision for credit losses on unfunded loan 
 commitments (11,335) (962) 10,296 
 Ending allowance for credit losses on unfunded loan commitments $ 21,654 $ 31,226 $ 32,188 
 Allowance for credit losses $ 414,176 $ 338,836 $ 335,859 
 Average loans for the year (1) 
 $ 35,506,298 $ 32,233,020 $ 27,582,530 
 Asset Quality Ratios: 
 Allowance for credit losses on loans/year-end loans (1) 
 1.08 % 0.93 % 0.98 % 
 Allowance for credit losses on loans/average loans (1) 
 1.11 0.95 1.10 
 Allowance for credit losses/year-end loans (1) 
 1.14 1.03 1.08 
 Allowance for credit losses/average loans (1) 
 1.17 1.05 1.22 

 (1) Loans exclude loans held-for-sale. 
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 The following table details net charge-offs to average loans outstanding by loan category for the years ended December 31: 
 
 (dollars in thousands) 2024 2023 2022 
 Commercial: 
 Net charge-offs (recoveries) $ 34,549 $ 37,279 $ 2,275 
 Average loans for the year (1) 
 $ 9,807,508 $ 9,338,940 $ 7,755,895 
 Net charge-offs (recoveries)/average loans 0.35 % 0.40 % 0.03 % 
 Commercial real estate: 
 Net charge-offs (recoveries) $ 15,852 $ 8,781 $ 5,424 
 Average loans for the year $ 15,653,383 $ 13,248,587 $ 11,292,033 
 Net charge-offs (recoveries)/average loans 0.10 % 0.07 % 0.05 % 
 BBCC: 
 Net charge-offs (recoveries) $ 1,476 $ 1,375 $ (196) 
 Average loans for the year $ 403,929 $ 385,171 $ 352,276 
 Net charge-offs (recoveries)/average loans 0.37 % 0.36 % (0.06) % 
 Residential real estate: 
 Net charge-offs (recoveries) $ (869) $ (1,012) $ (416) 
 Average loans for the year (1) 
 $ 6,808,655 $ 6,642,224 $ 5,618,883 
 Net charge-offs (recoveries)/average loans (0.01) % (0.02) % (0.01) % 
 Indirect: 
 Net charge-offs (recoveries) $ 4,336 $ 1,389 $ 1,262 
 Average loans for the year $ 1,125,139 $ 1,013,560 $ 1,089,394 
 Net charge-offs (recoveries)/average loans 0.39 % 0.14 % 0.12 % 
 Direct: 
 Net charge-offs (recoveries) $ 6,520 $ 8,186 $ 8,242 
 Average loans for the year $ 478,450 $ 568,345 $ 559,943 
 Net charge-offs (recoveries)/average loans 1.36 % 1.44 % 1.47 % 
 Home equity: 
 Net charge-offs (recoveries) $ 140 $ (88) $ (492) 
 Average loans for the year $ 1,229,234 $ 1,036,193 $ 921,018 
 Net charge-offs (recoveries)/average loans 0.01 % (0.01) % (0.05) % 
 Total loans: 
 Net charge-offs (recoveries) $ 62,004 $ 55,910 $ 16,099 
 Average loans for the year (1) 
 $ 35,506,298 $ 32,233,020 $ 27,589,442 
 Net charge-offs (recoveries)/average loans 0.17 % 0.17 % 0.06 % 

 (1) Average loans exclude loans held-for-sale. 
 The allowance for credit losses on loans was $392.5 million at December 31, 2024, compared to $307.6 million at December 31, 2023. The increase was driven primarily by the acquisition of CapStar, as well as organic loan growth and other factors. Continued loan growth in future periods, a decline in our current level of recoveries, or an increase in charge-offs could result in an increase in provision expense. Additionally, provision expense may be volatile due to changes in CECL model assumptions of credit quality, macroeconomic factors and conditions, and loan composition, which drive the allowance for credit losses balance. 
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 The following table details the allowance for credit losses on loans by loan category and the percent of loans in each category compared to total loans at December 31. 
 
 2024 2023 
 (dollars in thousands) Allowance
Amount % of
Loans
to Total
Loans Allowance
Amount % of
Loans
to Total
Loans 
 Commercial $ 148,722 27.7 % $ 118,333 28.1 % 
 Commercial real estate 200,309 44.5 155,099 42.4 
 BBCC 2,813 1.1 2,887 1.2 
 Residential real estate 22,922 18.8 20,837 20.3 
 Indirect 8,434 3.0 1,236 3.2 
 Direct 2,304 1.4 3,169 1.6 
 Home equity 7,018 3.5 6,049 3.2 
 Total $ 392,522 100.0 % $ 307,610 100.0 % 

 We maintain an allowance for credit losses on unfunded loan commitments to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the allowance for credit losses on loans, modified to take into account the probability of a drawdown on the commitment. The allowance for credit losses on unfunded loan commitments is classified as a liability account on the balance sheet within accrued expenses and other liabilities, while the corresponding provision for unfunded loan commitments is included in the provision for credit losses. The allowance for credit losses on unfunded loan commitments totaled $21.7 million at December 31, 2024, compared to $31.2 million at December 31, 2023. 
 See the section entitled “Risk Factors” in Item 1A of this Form 10-K for further discussion of our credit risk. 
 Market Risk 
 Market risk is the risk that the estimated fair value of our assets, liabilities, and derivative financial instruments will decline as a result of changes in interest rates or financial market volatility, or that our net income will be significantly reduced by interest rate changes. 
 The objective of our interest rate management process is to maximize net interest income while operating within acceptable limits established for interest rate risk and maintaining adequate levels of funding and liquidity. 
 Potential cash flows, sales, or replacement value of many of our assets and liabilities, especially those that earn or pay interest, are sensitive to changes in the general level of interest rates. This interest rate risk arises primarily from our normal business activities of gathering deposits and extending loans. Many factors affect our exposure to changes in interest rates, such as general economic and financial conditions, client preferences, historical pricing relationships, and re-pricing characteristics of financial instruments. Our earnings can also be affected by the monetary and fiscal policies of the U.S. Government and its agencies, particularly the Federal Reserve. 
 In managing interest rate risk, we establish guidelines for asset and liability management, including measurement of short and long-term sensitivities to changes in interest rates, which are reviewed with the Enterprise Risk Committee of our Board of Directors. Based on the results of our analysis, we may use different techniques to manage changing trends in interest rates including: 
 • adjusting balance sheet mix or altering interest rate characteristics of assets and liabilities; 
 • changing product pricing strategies; 
 • modifying characteristics of the investment securities portfolio; or 
 • using derivative financial instruments, to a limited degree. 
 A key element in our ongoing process is to measure and monitor interest rate risk using a model to quantify the likely impact of changing interest rates on Old National’s results of operations. The model quantifies the effects of various possible interest rate scenarios on projected net interest income. The model measures the impact on net interest income relative to a base case scenario over a two-year cumulative horizon resulting from an immediate change in interest rates using multiple rate scenarios. The base case scenario assumes that the balance sheet and interest rates are held at current levels. The model shows our projected net interest income sensitivity based on interest rate changes only and does not consider other forecast assumptions. Due to the dynamics of future interest 
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 rate expectations, we also measure and monitor interest rate risk using the forward curve, which may be a more probable scenario of our interest rate exposure. The forward curve represents the relationship between the price of forward contracts and the time to maturity of the forward contracts at a point in time. 
 The following table illustrates our projected net interest income sensitivity over a two-year cumulative horizon based on the asset/liability model as of December 31, 2024 and 2023: 
 
 Immediate Rate Decrease 12/31/2024
Forward
Curve Immediate Rate Increase 
 (dollars in thousands) -300
Basis Points -200
Basis Points -100
Basis Points Base +100
Basis Points +200
Basis Points +300
Basis Points 
 December 31, 2024 
 Projected interest income: 
 Money market, other
 interest earning
 investments, and
 investment securities $ 756,016 $ 820,128 $ 886,917 $ 932,411 $ 940,953 $ 989,890 $ 1,037,089 $ 1,082,891 
 Loans 3,023,593 3,501,994 3,952,385 4,279,851 4,374,147 4,776,162 5,174,154 5,572,157 
 Total interest
 income 3,779,609 4,322,122 4,839,302 5,212,262 5,315,100 5,766,052 6,211,243 6,655,048 
 Projected interest expense: 
 Deposits 435,080 765,918 1,097,429 1,349,350 1,456,547 1,821,056 2,157,983 2,494,958 
 Borrowings 290,095 377,714 473,141 539,410 562,335 652,442 742,530 832,646 
 Total interest
 expense 725,175 1,143,632 1,570,570 1,888,760 2,018,882 2,473,498 2,900,513 3,327,604 
 Net interest
 income $ 3,054,434 $ 3,178,490 $ 3,268,732 $ 3,323,502 $ 3,296,218 $ 3,292,554 $ 3,310,730 $ 3,327,444 
 Change from base $ (241,784) $ (117,728) $ (27,486) $ 27,284 $ (3,664) $ 14,512 $ 31,226 
 % change from base (7.34) % (3.57) % (0.83) % 0.83 % (0.11) % 0.44 % 0.95 % 
 
 Immediate Rate Decrease Immediate Rate Increase 
 -300
Basis Points -200
Basis Points -100
Basis Points 12/31/2023
Forward
Curve Base +100
Basis Points +200
Basis Points +300
Basis Points 
 December 31, 2023 
 Projected interest income: 
 Money market, other
 interest earning
 investments, and
 investment securities $ 697,457 $ 737,468 $ 790,456 $ 787,252 $ 846,761 $ 908,089 $ 968,265 $ 1,028,281 
 Loans 3,060,287 3,427,292 3,793,581 3,776,274 4,151,614 4,507,231 4,863,048 5,218,843 
 Total interest
 income 3,757,744 4,164,760 4,584,037 4,563,526 4,998,375 5,415,320 5,831,313 6,247,124 
 Projected interest expense: 
 Deposits 585,860 873,808 1,161,723 1,070,772 1,413,934 1,711,857 1,973,015 2,252,553 
 Borrowings 339,574 400,223 482,315 474,785 568,256 648,438 728,744 809,100 
 Total interest
 expense 925,434 1,274,031 1,644,038 1,545,557 1,982,190 2,360,295 2,701,759 3,061,653 
 Net interest
 income $ 2,832,310 $ 2,890,729 $ 2,939,999 $ 3,017,969 $ 3,016,185 $ 3,055,025 $ 3,129,554 $ 3,185,471 
 Change from base $ (183,875) $ (125,456) $ (76,186) $ 1,784 $ 38,840 $ 113,369 $ 169,286 
 % change from base (6.10) % (4.16) % (2.53) % 0.06 % 1.29 % 3.76 % 5.61 % 

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 The following table illustrates the upper bound, Federal Funds Rate assumed in the simulation above at December 31, 2024 and 2023: 
 
 December 31, 2024 December 31, 2023 
 Basis Point Change Scenario Federal Funds 
 Rate (1) 
 Month 12 (2) 
 Federal Funds 
 Rate (1) 
 Month 12 (2) 
 
 +300 4.5 % 7.5 % 5.5 % 8.5 % 
 +200 4.5 % 6.5 % 5.5 % 7.5 % 
 +100 4.5 % 5.5 % 5.5 % 6.5 % 
 Base 4.5 % 4.5 % 5.5 % 5.5 % 
 -100 4.5 % 3.5 % 5.5 % 4.5 % 
 -200 4.5 % 2.5 % 5.5 % 3.5 % 
 -300 4.5 % 1.5 % 5.5 % 2.5 % 

 (1) Represents the upper bound, Federal Funds Rate. 
 (2) Represents the Federal Funds Rate in month 12 given a gradual, parallel “ramp” relative to the base implied forward scenario. 
 Our projected net interest income increased year over year driven by loan growth and asset repricing due to current interest rates and economic conditions. Our overall strategy is consistent period over period, as we continue to manage our balance sheet toward a neutral interest rate risk position in a disciplined manner. 
 A key element in the measurement and modeling of interest rate risk is the re-pricing assumptions of our transaction deposit accounts, which align with our approach to deposit pricing and are consistent period over period. Because the models are driven by expected behavior in various interest rate scenarios and many factors besides market interest rates affect our net interest income, we recognize that model outputs are not guarantees of actual results. For this reason, we model many different combinations of interest rates and balance sheet assumptions to understand our overall sensitivity to market interest rate changes, including shocks, ramps, yield curve flattening, yield curve steepening, as well as forecasts of likely interest rate scenarios tested. 
 We use cash flow and fair value hedges, primarily interest rate swaps, collars, and floors, to mitigate interest rate risk. Derivatives designated as hedging instruments were in a net liability position with a fair value loss of $7.0 million at December 31, 2024, compared to a net asset position with a fair value gain of $4.5 million at December 31, 2023. See Note 19 to the consolidated financial statements for further discussion of derivative financial instruments. 
 Liquidity Risk 
 Liquidity risk arises from the possibility that we may not be able to satisfy current or future financial commitments or may become unduly reliant on alternative funding sources. We establish liquidity risk guidelines that we review with the Enterprise Risk Committee of our Board of Directors and monitor through our Asset/Liability Executive Management Committee. The objective of liquidity management is to ensure we have the ability to fund balance sheet growth and meet deposit and debt obligations in a timely and cost-effective manner. Management monitors liquidity through a regular review of asset and liability maturities, funding sources, and loan and deposit forecasts. We maintain strategic and contingency liquidity plans to ensure sufficient available funding to satisfy requirements for balance sheet growth, to properly manage capital markets’ funding sources, and to address unexpected liquidity requirements. On May 31, 2023, we filed an automatic shelf registration statement with the SEC that permits us to issue an unspecified amount of debt or equity securities. 
 Loan repayments and maturing investment securities are a relatively predictable source of funds. However, deposit flows, calls of investment securities, and prepayments of loans and mortgage-related securities are not as predictable as they are strongly influenced by interest rates, events at other banking organizations, the housing market, general and local economic conditions, and competition in the marketplace. We continually monitor marketplace trends to identify patterns that might improve the predictability of the timing of deposit flows or asset prepayments. 
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 A maturity schedule for Old National Bank’s time deposits is shown in the following table at December 31, 2024. 
 
 (dollars in thousands) 
 Maturity Bucket Amount Rate 
 2025 $ 6,393,304 4.18 % 
 2026 256,770 2.72 
 2027 63,153 1.87 
 2028 17,067 1.53 
 2029 18,861 2.14 
 2030 and beyond 6,584 1.21 
 Total $ 6,755,739 4.09 % 

 Our ability to acquire funding at competitive prices is influenced by rating agencies’ views of our credit quality, liquidity, capital, and earnings. 
 The credit ratings of Old National and Old National Bank at December 31, 2024 are shown in the following table. 
 
 Moody's Investors Service 
 Long-term Short-term 
 Old National Baa1 N/A 
 Old National Bank A1 P-1 

 Old National Bank maintains relationships in capital markets with brokers and dealers to issue certificates of deposit and short-term and medium-term bank notes as well. At December 31, 2024, Old National and its subsidiaries had the following availability of liquid funds and borrowings: 
 
 (dollars in thousands) Parent
Company Subsidiaries 
 Available liquid funds: 
 Cash and due from banks $ 299,179 $ 928,789 
 Unencumbered government-issued debt securities — 2,336,782 
 Unencumbered investment grade municipal securities — 106,740 
 Unencumbered corporate securities — 46,897 
 Availability of borrowings (1) : 
 
 Amount available from Federal Reserve discount window — 4,249,949 
 
 Amount available from Federal Home Loan Bank — 6,917,389 
 Total available funds $ 299,179 $ 14,586,546 

 (1) Based on collateral pledged. 
 Old National Bancorp has routine funding requirements consisting primarily of operating expenses, dividends to shareholders, debt service, net derivative cash flows, and funds used for acquisitions. Old National Bancorp can obtain funding to meet its obligations from dividends and management fees collected from its subsidiaries, operating line of credit, and through the issuance of debt securities. Additionally, Old National Bancorp has a shelf registration in place with the SEC permitting ready access to the public debt and equity markets. At December 31, 2024, Old National Bancorp’s other borrowings outstanding were $329.7 million. Management believes the Company has the ability to generate and obtain adequate amounts of liquidity to meet its requirements in the short-term and the long-term. 
 Federal banking laws regulate the amount of dividends that may be paid by Old National Bank to Old National Bancorp on an unconsolidated basis 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 2023 or 2024 and is not currently required. At December 31, 2024, Old National Bank could pay dividends of $889.2 million without 
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 prior regulatory approval and while maintaining capital levels above regulatory minimum and well-capitalized guidelines. 
 Operational Risk 
 Operational risk is the risk that inadequate information systems, operational issues, breaches in internal controls, information security breaches, fraud, or unforeseen catastrophes will result in unexpected losses and other adverse impacts to Old National, such as reputational harm. We maintain frameworks, programs, and internal controls to prevent or minimize financial loss from failure of systems, people, or processes. This includes specific programs and frameworks intended to prevent or limit the effects of cybersecurity risk including, but not limited to, cyber-attacks or other information security breaches that might allow unauthorized transactions or unauthorized access to client, team member, or company sensitive information. Metrics and measurements are used by our management team in the management of day-to-day operations to ensure effective client service, minimization of service disruptions, and oversight of cybersecurity risk. We continually monitor and internally report on weaknesses in the internal control environment; third party risks; privacy and data governance; cyber-attacks; information security or data breaches; damage to physical assets; employee and workplace safety; execution, delivery, and process management; external and internal fraud; model risk management; and other risks. 
 Compliance and Regulatory Risk 
 Compliance and regulatory risk is the risk that the Company violated or was not in compliance with applicable laws, rules, regulations, regulatory guidance and policies, industry standards, or ethical standards. Compliance with applicable regulatory requirements, internal policies and procedures, and ethical standards is not only the right thing to do, but it is embedded within our culture and mission to assist our clients in achieving financial success. Adherence to this belief is the responsibility of every employee, every day, in everything we do. It is Old National’s policy to comply with the letter and intent of all applicable regulatory requirements. Management, the first line of defense, is responsible for ensuring this expectation is met, with oversight from the second and third lines of defense, the risk and internal audit functions, respectively. Recognizing that inadvertent violations may occur, risk management activities are established to promptly identify, analyze, and, if necessary, remediate compliance and regulatory issues to limit compliance risk exposure. 
 Legal Risk 
 Legal risk generally results from unidentified or unmitigated risks that could result in lawsuits or adverse judgments that negatively affect the operations or financial condition of the Company. Business practices must be executed, as well as products and services delivered, in a manner that is compliant with applicable laws, rules, regulations, and agreements to which we are a party. Corporate governance practices must be compliant with applicable legal requirements and aligned with market practices. The Board of Directors expects that we will perform business in a manner compliant with applicable laws, rules, and regulations and expects issues to be identified, analyzed, and remediated in a timely and complete manner. 
 
 MATERIAL CONTRACTUAL OBLIGATIONS, COMMITMENTS, AND CONTINGENT LIABILITIES 
 The following table presents our material fixed and determinable contractual obligations and significant commitments at December 31, 2024. Further discussion of each obligation or commitment is included in the referenced note to the consolidated financial statements. 
 
 
 Payments Due In 
 (dollars in thousands) Note
Reference One Year
or Less Over
One Year Total 
 Deposits without stated maturity $ 34,067,821 $ — $ 34,067,821 
 Time deposits 10 6,393,304 362,435 6,755,739 
 Securities sold under agreements to repurchase 11 268,975 — 268,975 
 Federal Home Loan Bank advances 12 700,285 3,752,274 4,452,559 
 Other borrowings 13 133,224 556,394 689,618 

 We are party to various derivative contracts as a means to manage the balance sheet and our related exposure to changes in interest rates, to manage our residential real estate loan origination and sale activity, and to provide derivative contracts to our clients. Since the derivative liabilities recorded on the balance sheet change frequently 
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 and do not represent the amounts that may ultimately be paid under these contracts, these liabilities are not included in the table of contractual obligations presented above. Further discussion of derivative instruments is included in Note 19 to the consolidated financial statements. 
 In the normal course of business, various legal actions and proceedings are pending against us and our affiliates which are incidental to the business in which they are engaged. Further discussion of contingent liabilities is included in Note 20 to the consolidated financial statements. 
 In addition, liabilities recorded under FASB ASC 740-10 (FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109 ) are not included in the table because the amount and timing of any cash payments cannot be reasonably estimated. Further discussion of income taxes and liabilities is included in Note 15 to the consolidated financial statements. 
 
 CRITICAL ACCOUNTING ESTIMATES 
 Our most significant accounting policies are described in Note 1 to the consolidated financial statements. Certain of these accounting policies require management to use significant judgment and estimates, which can have a material impact on the carrying value of certain assets and liabilities. We consider these policies to be our critical accounting estimates. The judgment and assumptions made are based upon historical experience, future forecasts, or other factors that management believes to be reasonable under the circumstances. Because of the nature of the judgment and assumptions, actual results could differ from estimates, which could have a material effect on our financial condition and results of operations. 
 The following accounting policies materially affect our reported earnings and financial condition and require significant judgments and estimates. Management has reviewed these critical accounting estimates and related disclosures with our Audit Committee. 
 Business Combinations and Goodwill 
 • Description. For mergers and acquisitions, we are required to record the assets acquired, including identified intangible assets such as core deposit and customer trust relationship intangibles, and the liabilities assumed at their fair value. The difference between consideration and the net fair value of assets acquired is recorded as goodwill. Management uses significant estimates and assumptions to value such items, including projected cash flows, repayment rates, default rates and losses assuming default, discount rates, and realizable collateral values. The allowance for credit losses for PCD loans is recognized within acquisition accounting. The allowance for credit losses for non-PCD assets is recognized as provision for credit losses in the same reporting period as the merger or acquisition. Fair value adjustments are amortized or accreted into the income statement over the estimated life of the acquired assets or assumed liabilities. The purchase date valuations and any subsequent adjustments determine the amount of goodwill recognized in connection with the merger or acquisition. The use of different assumptions could produce significantly different valuation results, which could have material positive or negative effects on our results of operations. The carrying value of goodwill recorded must be reviewed for impairment on an annual basis, as well as on an interim basis if events or changes indicate that the asset might be impaired. An impairment loss must be recognized for any excess of carrying value over fair value of the goodwill. 
 • Judgments and Uncertainties. The determination of fair values is based on valuations using management’s assumptions of future growth rates, future attrition, discount rates, multiples of earnings or other relevant factors. In addition, we engage third party specialists to assist in the development of fair values. Preliminary estimates of fair values may be adjusted for a period of time subsequent to the merger or acquisition date if new information is obtained about facts and circumstances that existed as of the merger or acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. Adjustments recorded during this period are recognized in the current reporting period. Management uses various valuation methodologies to estimate the fair value of these assets and liabilities, and often involves a significant degree of judgment, particularly when liquid markets do not exist for the particular item being valued. Examples of such items include loans, deposits, identifiable intangible assets, and certain other assets and liabilities. 
 • Effect if Actual Results Differ From Assumptions. Changes in these factors, as well as downturns in economic or business conditions, could have a significant adverse impact on the carrying value of assets, 
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 including goodwill and liabilities, which could result in impairment losses affecting our financial statements as a whole and our banking subsidiary in which the goodwill resides. 
 Allowance for Credit Losses on Loans 
 • Description. The allowance for credit losses on loans represents management’s estimate of all expected credit losses over the expected contractual life of our loan portfolio. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the then-existing loan portfolio, in light of the factors then prevailing, may result in significant changes in the allowance for credit losses in those future periods. 
 The allowance for credit losses on loans, as reported in our consolidated statements of financial condition, is adjusted by an expense for credit losses, which is recognized in earnings, and reduced by the charge-off of loan amounts, net of recoveries. 
 • Judgments and Uncertainties. We utilize a discounted cashflow approach to determine the allowance for credit losses for performing loans and nonperforming loans. Expected cashflows are created for each loan and discounted using the effective yield method. The discounted sum of expected cashflows is then compared to the amortized cost and any shortfall is recorded as an allowance. Expected cashflows are created using a combination of contractual payment schedules, calculated PDs, LGD and prepayment assumptions as well as qualitative factors. For commercial and commercial real estate loans, the PD is forecasted using a regression model to determine the likelihood of a loan moving into nonaccrual within the time horizon. For residential and consumer loans, the PD is forecasted using a regression model to determine the likelihood of a loan being charged-off within the time horizon. The regression models use combinations of variables to assess systematic and unsystematic risk. Variables used for unsystematic risk are borrower specific and help to gauge the risk of default from an individual borrower. Variables for systematic risk, risk inherent to all borrowers, come from the use of forward-looking economic forecasts and include variables such as unemployment rate, gross domestic product, home price index, and the BBB ratio. The LGD is defined as credit loss incurred when an obligor of the bank defaults. Qualitative factors include items such as changes in lending policies or procedures and economic uncertainty in forward-looking forecasts. 
 • Effect if Actual Results Differ From Assumptions. The allowance represents management’s best estimate, but significant downturns in circumstances relating to loan quality and economic conditions could result in a requirement for additional allowance. Likewise, an upturn in loan quality and improved economic conditions may allow a reduction in the required allowance. In either instance, unanticipated changes could have a significant impact on results of operations. 
 One of the most significant judgments used in determining the allowance for credit losses is the macroeconomic forecast provided by a third party. The economic indices sourced from the macroeconomic forecast and used in projecting loss rates include the national unemployment rate, changes in home price index, changes in the United States gross domestic product, and changes in the BBB ratio. The economic index used in the calculation to which the calculation may be most sensitive is the national unemployment rate. Each reporting period, several macroeconomic forecast scenarios are considered by management. Management selects the macroeconomic forecast that is most reflective of expectations at that point in time. Changes in the macroeconomic forecast, especially for the national unemployment rate, could significantly impact the calculated estimated credit losses. 
 The expense for credit loss recorded through earnings is the amount necessary to maintain the allowance for credit losses at the amount of expected credit losses inherent within the loans held for investment portfolio. The amount of expense and the corresponding level of allowance for credit losses on loans are based on our evaluation of the collectability of the loan portfolio based on historical loss experience, reasonable and supportable forecasts, and other significant qualitative and quantitative factors. 
 Derivative Financial Instruments 
 • Description. As part of our overall interest rate risk management, we use derivative instruments to reduce exposure to changes in interest rates and market prices for financial instruments. The application of the hedge accounting policy requires judgment in the assessment of hedge effectiveness, identification of similar hedged item groupings and measurement of changes in the fair value of derivative financial instruments and hedged items. To the extent hedging relationships are found to be effective, changes in fair value of the 
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 derivatives are offset by changes in the fair value of the related hedged item or recorded to other comprehensive income (loss). Management believes hedge effectiveness is evaluated properly in preparation of the financial statements. All of the derivative financial instruments we use have an active market and indications of fair value can be readily obtained. We are not using the “short-cut” method of accounting for any fair value derivatives. 
 Credit risk arises from the possible inability of counterparties to meet the terms of their contracts. Old National’s exposure is limited to the termination value of the contracts rather than the notional, principal, or contract amounts. There are provisions in our agreements with the counterparties that allow for certain unsecured credit exposure up to an agreed threshold. Exposures in excess of the agreed thresholds are collateralized. In addition, we minimize credit risk through credit approvals, limits, and monitoring procedures. 
 • Judgments and Uncertainties. The application of the hedge accounting policy requires judgment in the assessment of hedge effectiveness, identification of similar hedged item groupings and measurement of changes in the fair value of derivative financial instruments and hedged items. 
 • Effect if Actual Results Differ From Assumptions. To the extent hedging relationships are found to be effective, changes in fair value of the derivatives are offset by changes in the fair value of the related hedged item or recorded to other comprehensive income (loss). However, if in the future the derivative financial instruments used by us no longer qualify for hedge accounting treatment, all changes in fair value of the derivative would flow through the consolidated statements of income in other noninterest income, resulting in greater volatility in our earnings. 
 Income Taxes 
 • Description. We are subject to the income tax laws of the U.S., its states, and the municipalities in which we operate. These tax laws are complex and subject to different interpretations by the taxpayer and the relevant government taxing authorities. We review income tax expense and the carrying value of deferred tax assets quarterly; and as new information becomes available, the balances are adjusted as appropriate. FASB ASC 740-10 (FIN 48) prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements. See Note 15 to the consolidated financial statements for a further description of our provision and related income tax assets and liabilities. 
 • Judgments and Uncertainties. In establishing a provision for income tax expense, we must make judgments and interpretations about the application of these inherently complex tax laws. We must also make estimates about when in the future certain items will affect taxable income in the various tax jurisdictions. Disputes over interpretations of the tax laws may be subject to review/adjudication by the court systems of the various tax jurisdictions or may be settled with the taxing authority upon examination or audit. 
 • Effect if Actual Results Differ From Assumptions. Although management believes that the judgments and estimates used are reasonable, actual results could differ and we may be exposed to losses or gains that could be material. To the extent we prevail in matters for which reserves have been established or are required to pay amounts in excess of our reserves, our effective income tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement would result in an increase in our effective income tax rate in the period of resolution. A favorable tax settlement would result in a reduction in our effective income tax rate in the period of resolution. 
 Management has discussed the development and selection of these critical accounting estimates with the Audit Committee and the Audit Committee has reviewed our disclosure relating to it in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 
 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 
 The information contained under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk” of this Form 10-K is incorporated herein by reference in response to this item. 
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OLD NATIONAL BANCORP /IN/ 10-K

Item 7. Management’s Discussion and Analysis
