OLD NATIONAL BANCORP /IN/ MANAGEMENT REPORT OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

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The following discussion is an analysis of our results of operations for the
three and nine months ended September 30, 2022 and 2021, and financial condition
as of September 30, 2022, compared to December 31, 2021. This discussion and
analysis should be read in conjunction with the consolidated financial
statements and related notes, as well as our 2021 Annual Report on Form 10-K.

FORWARD-LOOKING STATEMENTS

This report contains certain "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements include,
but are not limited to, descriptions of Old National's financial condition,
results of operations, asset and credit quality trends, profitability and
business plans or opportunities. Forward-looking statements can be identified by
the use of the words "anticipate," "believe," "contemplate," "could,"
"estimate," "expect," "intend," "may," "outlook," "plan," "should," and "will,"
and other words of similar meaning. These forward-looking statements express
management's current expectations or forecasts of future events and, by their
nature, are subject to risks and uncertainties. There are a number of factors
that could cause actual results or outcomes to differ materially from those in
such statements. Factors that might cause such a difference include, but are not
limited to: the duration, extent, and severity of the COVID-19 pandemic and
related variants and mutations, including the continued effects on our business,
operations, and employees as well as the business of our customers; competition;
government legislation, regulations and policies; ability of Old National to
execute its business plan, including the completion of the integration related
to the merger between Old National and First Midwest, and the achievement of the
synergies and other benefits from the merger; unanticipated changes in our
liquidity position, including but not limited to changes in our access to
sources of liquidity and capital to address our liquidity needs; changes in
economic conditions which could materially impact credit quality trends and the
ability to generate loans and gather deposits; market, economic, operational,
liquidity, credit, and interest rate risks associated with our business; our
ability to successfully manage our credit risk and the sufficiency of our
allowance for credit losses; uncertainty about the discontinued use of LIBOR and
the transition to an alternative rate; failure or circumvention of our internal
controls; operational risks or risk management failures by us or critical third
parties, including without limitation with respect to data processing,
information systems, cybersecurity, technological changes, vendor issues,
business interruption, and fraud risks; significant changes in accounting, tax
or regulatory practices or requirements; new legal obligations or liabilities or
unfavorable resolutions of litigation; disruptive technologies in payment
systems and other services traditionally provided by banks; failure or
disruption of our information systems; computer hacking and other cybersecurity
threats; other matters discussed in this report; and other factors identified in
our Annual Report on Form 10-K for the year ended December 31, 2021 and other
filings with the SEC. These forward-looking statements are made only as of the
date of this report and are not guarantees of future results or performance.

Such forward-looking statements are based on assumptions and estimates, which
although believed to be reasonable, may turn out to be incorrect. Therefore,
undue reliance should not be placed upon these estimates and statements. We
cannot assure that any of these statements, estimates, or beliefs will be
realized and actual results or outcomes may differ from those contemplated in
these forward-looking statements. We undertake no obligation to publicly update
any forward-looking statements, whether as a result of new information, future
events, or otherwise after the date of this report. You are advised to consult
further disclosures we may make on related subjects in our filings with the SEC.

Investors should consider these risks, uncertainties and other factors in addition to the risk factors included in this filing and our other filings with the
SECOND.

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FINANCIAL HIGHLIGHTS

The following table presents certain financial highlights of Old National:

                                                       Three Months Ended                                      Nine Months Ended
(dollars and shares in thousands,   September 30,           June 30,            September 30,                    September 30,
except per share data)                  2022                  2022                  2021                  2022                  2021
Income Statement:
Net interest income                $    376,589          $    337,472      

$151,572 $936,846 $449,619
Taxable equivalent adjustment (1) 4,950

                 4,314                 3,501                13,036                10,471
Net interest income - tax
equivalent basis                        381,539               341,786               155,073               949,882               460,090
Provision for credit losses              11,287                 9,245                (4,613)              118,101               (26,898)
Noninterest income                       80,385                89,117                54,515               234,742               162,735
Noninterest expense                     266,647               277,395               121,274               770,798               368,632
Net income available to common
shareholders                            136,119               110,952                71,746               217,468               221,350
Per Common Share Data:
Weighted average diluted common
shares                                  292,483               291,881               165,939               271,123               165,862
Net income (diluted)               $       0.47          $       0.38          $       0.43          $       0.80          $       1.33
Cash dividends                             0.14                  0.14                  0.14                  0.42                  0.42
Common dividend payout ratio (2)             30  %                 37  %                 33  %                 53  %                 31  %
Book value                         $      16.05          $      16.51          $      18.31          $      16.05          $      18.31
Stock price                               16.47                 14.79                 16.95                 16.47                 16.95
Tangible common book value (3)             8.75                  9.23                 11.83                  8.75                 11.83
Performance Ratios:
Return on average assets                   1.22  %               1.01  %               1.20  %               0.72  %               1.25  %
Return on average common equity           11.13                  9.08                  9.48                  6.26                  9.85
Return on tangible common equity
(3)                                       22.07                 17.21                 15.05                 12.05                 15.49
Return on average tangible common
equity (3)                                20.49                 16.93                 15.13                 11.50                 15.84
Net interest margin (3)                    3.71                  3.33                  2.92                  3.34                  2.92
Efficiency ratio (3)                      56.17                 62.70                 56.86                 63.46                 58.14
Net charge-offs (recoveries) to
average loans                              0.10                  0.02                 (0.09)                 0.06                 (0.03)
Allowance for credit losses to
ending loans                               0.99                  0.97                  0.79                  0.99                  0.79
Non-performing loans to ending
loans                                      0.81                  0.78                  0.94                  0.81                  0.94
Balance Sheet:
Total loans                        $ 30,528,933          $ 29,553,648          $ 13,584,828          $ 30,528,933          $ 13,584,828
Total assets                         46,215,526            45,748,355            24,018,733            46,215,526            24,018,733
Total deposits                       36,053,663            35,538,975            18,196,149            36,053,663            18,196,149
Total borrowed funds                  4,264,750             4,384,411             2,536,303             4,264,750             2,536,303
Total shareholders' equity            4,943,383             5,078,783             3,035,892             4,943,383             3,035,892
Capital Ratios:
Risk-based capital ratios:
Tier 1 common equity                       9.88  %               9.90  %              12.08  %               9.88  %              12.08  %
Tier 1                                    10.58                 10.63                 12.08                 10.58                 12.08
Total                                     11.84                 12.03                 12.84                 11.84                 12.84
Leverage ratio (to average assets)         8.26                  8.19                  8.54                  8.26                  8.54
Total equity to assets (averages)         11.18                 11.22                 12.69                 11.43                 12.69
Tangible common equity to tangible
assets (3)                                 5.82                  6.20                  8.55                  5.82                  8.55
Nonfinancial Data:
Full-time equivalent employees            4,008                 4,196                 2,410                 4,008                 2,410
Banking centers                             263                   266                   162                   263                   162


(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.
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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 investors 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 tax-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 analysts and
investors, 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 accumulated other
comprehensive loss in shareholders' equity.

Although intended to enhance investors' 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.

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The following table presents the GAAP and non-GAAP reconciliations.

                                                                                          Three Months Ended                             Nine Months 

Ended

(dollars and shares in thousands, except per                                 September 30,     June 30,      September 30,         September 30,   September 30,
  share data)                                                                    2022            2022            2021                  2022            2021
Tangible common book value:
Shareholders' common equity                                                

$4,699,664 $4,835,064 $3,035,892 $4,699,664 $3,035,892
Deduct: Good will and intangible assets

                                         2,135,792       2,131,815       1,074,245             2,135,792       

1,074,245

Tangible shareholders' common equity (1)                                    

$2,563,872 $2,703,249 $1,961,647 $2,563,872 $1,961,647
Ordinary shares at the end of the period

     292,880         292,893         165,814               292,880        

165,814

Tangible common book value (1)                                                      8.75            9.23           11.83                  8.75          

11.83

Return on tangible common equity:
Net income applicable to common shares                                      

$136,119 $110,952 $71,746 $217,468 $221,350
Add: Intangible amortization (net of tax) (2)

                                      5,317           5,378           2,084                14,302          

6,572

Tangible net income (1)                                                     

$141,436 $116,330 $73,830 $231,770 $227,922
Tangible equity (1)

  (see above)                                                               

$2,563,872 $2,703,249 $1,961,647 $2,563,872 $1,961,647
Return on tangible equity (1)

                                               22.07  %        17.21  %        15.05  %              12.05  %        15.49  %
Return on average tangible common equity:
Tangible net income (1) (see above)                                         

$141,436 $116,330 $73,830 $231,770 $227,922
Average shareholder equity

$4,890,434 $4,886,181 $3,027,935 $4,628,831 $2,997,081
Deduct: Average Goodwill and Intangible Assets

                                 2,129,858       2,136,964       1,075,579             1,941,270       

1,078,441

Average tangible shareholders' common equity (1)                            

$2,760,576 $2,749,217 $1,952,356 $2,687,561 $1,918,640
Return on average tangible equity(1)

                                       20.49  %        16.93  %        15.13  %              11.50  %        15.84  %
Net interest margin:
Net interest income                                                         

$376,589 $337,472 $151,572 $936,846 $449,619
Taxable equivalent adjustment

                                                      4,950           4,314           3,501                13,036          

10,471

Net interest income - taxable equivalent basis (1)                          

$381,539 $341,786 $155,073 $949,882 $460,090
Average earning assets

$41,180,026 $41,003,338 $21,228,590 $37,924,490 $20,977,471
Net interest margin (1)

                                                             3.71  %         3.33  %         2.92  %               3.34  %         2.92  %
Efficiency ratio:
Noninterest expense                                                         

$266,647 $277,395 $121,274 $770,798 $368,632
Deduct: Intangible amortization expense

                                            7,089           7,170           2,779                19,070          

8,763

Adjusted noninterest expense (1)                                            

$259,558 $270,225 $118,495 $751,728 $359,869
Net interest income – equivalent tax base (1)

  (see above)                                                               

$381,539 $341,786 $155,073 $949,882 $460,090
Non-interest income

      80,385          89,117          54,515               234,742        

162,735

Deduct: Debt securities gains (losses), net                                         (172)            (85)          1,207                    85          

3,892

Adjusted total revenue (1)                                                  

$462,096 $430,988 $208,381 $1,184,539 $618,933
Efficiency rate (1)

                                                               56.17  %        62.70  %        56.86  %              63.46  %        58.14  %
Tangible common equity to tangible assets:
Tangible shareholders' common equity (1)
  (see above)                                                               $  2,563,872    $  2,703,249    $  1,961,647          $  2,563,872    $  1,961,647
Assets                                                                      $ 46,215,526    $ 45,748,355    $ 24,018,733          $ 46,215,526    $ 24,018,733
Add:                                     Trust overdrafts                              -               -             116                     -             116
Deduct:                                  Goodwill and intangible assets        2,135,792       2,131,815       1,074,245             2,135,792       1,074,245

Tangible assets (1)                                                         

$44,079,734 $43,616,540 $22,944,604 $44,079,734 $22,944,604
Tangible equity on property, plant and equipment (1)

                                       5.82  %         6.20  %         8.55  %               5.82  %       

8.55%


(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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ABSTRACT

Old National is the sixth largest commercial bank headquartered in the Midwest
by assets. With approximately $46 billion of assets and $27 billion of assets
under management, Old National ranks among the top 35 banking companies based in
the U.S. by assets and has been recognized as a World's Most Ethical Company by
the Ethisphere Institute for eleven consecutive years. Old National Bank has
focused on community banking by building long-term, highly valued partnerships
with clients and in the communities it serves. In addition to providing
extensive services in retail and commercial banking, Old National offers
comprehensive wealth management, investment, and capital market services.

On February 15, 2022, Old National has completed its previously announced merger of equals transaction with First Midwest. Upon closing, Old National acquired
$21.9 billion assets, including $14.3 billion of loans, and assumed
$17.2 billion of deposits. Old National completed branding and all systems conversions in Q3 2022.

On June 27, 2022, Old National entered into a Custodial Transfer and Asset
Purchase Agreement with UMB, pursuant to which UMB will acquire Old National's
business of acting as a qualified custodian for, and administering, health
savings accounts. Old National serves as custodian for health savings accounts
comprised of both investment accounts and deposit accounts. Upon completion of
the sale, UMB will pay Old National a premium on deposit account balances
transferred at closing, or a premium of approximately $95 million based on
September 30, 2022 balances. Regulatory approval for the sale has been received.
Subject to customary closing conditions, the parties anticipate completing the
sale in mid-November of 2022.

Net income applicable to common shareholders for the third quarter of 2022 was
$136.1 million, or $0.47 per diluted common share, compared to $111.0 million,
or $0.38 per diluted common share, for the second quarter of 2022 and $71.7
million, or $0.43 per diluted common share, for the third quarter of 2021.

Results for the three and nine months ended September 30, 2022 were impacted by
$22.7 million and $111.6 million, respectively, of merger-related expenses. The
nine months ended September 30, 2022 merger-related expenses included $11.0
million in the first quarter of 2022 attributable to the provision for credit
losses on unfunded loan commitments. In addition, the first quarter of 2022
provision expense included $96.3 million of provision for credit losses to
establish an allowance for credit losses on non-PCD loans acquired in the First
Midwest merger.

We delivered strong results in the third quarter of 2022, including robust loan growth and increased net interest margin.

Loans: Our loan balances, excluding loans held for sale, increased $1.0 billion,
or 13% annualized, to $30.5 billion at September 30, 2022 compared to June 30,
2022. This was primarily driven by strong commercial and consumer loan
production.

Net Interest Income: Net interest income increased $39.1 million to $376.6
million compared to the second quarter of 2022 driven by higher interest rates,
loan growth, and an additional day in the quarter, partially offset by lower
accretion income on loans.

Noninterest Income: Noninterest income decreased $8.7 million to $80.4 million
compared to the second quarter of 2022. Wealth management fees decreased as a
result of current market conditions and mortgage banking revenue continues to be
impacted by the higher rate environment, as well as lower production and gain on
sale margins. Other income for the second quarter of 2022 was elevated primarily
due to equity investment returns and recoveries on previously charged-off
acquired loans in addition to increased proceeds from company-owned life
insurance.

Noninterest Expense: Noninterest expense decreased $10.7 million compared to the
second quarter of 2022 primarily due to lower merger-related expenses, partially
offset by higher incentive accruals and marketing costs, as well as $4.2 million
in provision for unfunded commitments due to loan growth. Noninterest expense
included $22.7 million of merger-related expenses, compared to $36.6 million in
the second quarter of 2022.

Pandemic Update

As previously disclosed, the COVID-19 pandemic has created economic and
financial disruptions that continued to adversely affect our operations during
the three and nine months ended September 30, 2022. Our historically careful
underwriting practices, diverse and granular portfolios, and Midwest-based
footprint have helped minimize the

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adverse impact to Old National. The pandemic has become less disruptive to the
Company's business, financial condition, results of operations, and its clients
as of September 30, 2022 than in prior periods.

RESULTS OF OPERATIONS

The following table sets forth certain income statement information of Old
National:

                                        Three Months Ended                                        Nine Months Ended
                                           September 30,                                            September 30,
(dollars in thousands, except per                                            %                                                        %
share data)                           2022               2021              Change              2022               2021              Change
Income Statement Summary:
Net interest income               $ 376,589          $ 151,572             148.5     %     $ 936,846          $ 449,619             108.4         %
Provision for credit losses          11,287             (4,613)           (344.7)            118,101            (26,898)           (539.1)
Noninterest income                   80,385             54,515              47.5             234,742            162,735              44.2
Noninterest expense                 266,647            121,274             119.9             770,798            368,632             109.1

Net income applicable to common shares

  shareholders                      136,119             71,746              89.7             217,468            221,350              (1.8)
Net income per common share -
  diluted                              0.47               0.43               9.3                0.80               1.33             (39.8)
Other Data:
Return on average common equity       11.13        %      9.48        %                         6.26        %      9.85        %
Return on tangible common equity
(1)                                   22.07              15.05                                 12.05              15.49

Common Tangible Average Return

  equity (1)                          20.49              15.13                                 11.50              15.84
Efficiency ratio (1)                  56.17              56.86                                 63.46              58.14
Tier 1 leverage ratio                  8.26               8.54                                  8.26               8.54

Net allocations (recoveries) to

  average loans                        0.10              (0.09)                                 0.06              (0.03)


(1)Represents a non-GAAP financial measure. Refer to the “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 80% of revenues for the nine months ended September 30, 2022. 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.

Interest rates increased significantly during the third quarter of 2022 with the
rate on the 2-Year U.S. Treasury increasing from 2.95% to 4.28%. The Federal
Reserve's Federal Funds Rate increased 150 basis points to a target range of
3.00% to 3.25%, with the Effective Federal Funds Rate at 3.08% at September 30,
2022. The Federal Reserve is expected to continue to increase the Federal Funds
Rate throughout 2022 and into 2023. If interest rates increase, our interest
rate spread may improve, which may result in an increase in our net interest
income. If interest rates decline, our interest rate spread could decline, which
may result in a decrease in our net interest income. However, management has
taken balance sheet restructuring, derivative, and deposit pricing actions to
help mitigate 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 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. Therefore, management believes these

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Metrics provide useful information to both management and investors by allowing them to make better comparisons with their peers.

The following tables present the average balance sheet for each major asset and
liability category, its related interest income and yield, or its expense and
rate.

(Tax equivalent basis,                                    Three Months Ended                                            Three Months Ended
dollars in thousands)                                     September 30, 2022                                            September 30, 2021
                                            Average             Income (1)/           Yield/              Average             Income (1)/           Yield/
Earning Assets                              Balance               Expense              Rate               Balance               Expense              Rate

Money market and other sources of interest

  investments                           $    514,362          $        935              0.72  %       $    467,572          $        177              0.15  %
Investment securities:
Treasury and government sponsored
agencies                                   2,326,070                13,212              2.27  %          1,730,553                 6,968              1.61  %
Mortgage-backed securities                 5,891,283                36,157              2.45  %          3,313,027                14,509              1.75  %
States and political subdivisions          1,829,322                14,631              3.20  %          1,586,743                12,609              3.18  %
Other securities                             718,735                 6,781              3.77  %            443,393                 2,638              2.38  %
Total investment securities               10,765,410                70,781              2.63  %          7,073,716                36,724              2.08  %
Loans: (2)
Commercial                                 9,045,009               113,491              5.02  %          3,645,197                36,139              3.88  %
Commercial real estate                    11,929,892               136,780              4.59  %          6,200,144                57,820              3.65  %
Residential real estate loans              6,189,503                56,432              3.65  %          2,274,347                20,529              3.61  %
Consumer                                   2,735,850                33,049              4.79  %          1,567,614                14,138              3.58  %
Total loans                               29,900,254               339,752              4.54  %         13,687,302               128,626              3.70  %
Total earning assets                      41,180,026          $    411,468              3.99  %         21,228,590          $    165,527              3.08  %
Deduct: Allowance for credit losses         (290,215)                                                     (111,216)
Non-Earning Assets
Cash and due from banks                      503,841                                                       272,855
Other assets                               4,522,171                                                     2,479,079
Total assets                            $ 45,915,823                                                  $ 23,869,308

Interest-Bearing Liabilities
Checking and NOW                        $  8,681,392          $      5,751              0.26  %       $  4,873,914          $        484              0.04  %
Savings                                    6,733,465                   547              0.03  %          3,678,944                   500              0.05  %
Money market                               5,344,567                 2,072              0.15  %          2,110,981                   438              0.08  %
Time deposits                              2,508,152                 2,450              0.39  %            998,060                 1,156              0.46  %
Total interest-bearing deposits           23,267,576                10,820              0.18  %         11,661,899                 2,578              0.09  %
Federal funds purchased and interbank
  borrowings                                 122,311                   720              2.34  %                689                     -                 -  %
Securities sold under agreements to
repurchase                                   436,225                   106              0.10  %            384,724                    90              0.09  %
FHLB advances                              3,025,844                13,027              1.71  %          1,890,916                 5,326              1.12  %
Other borrowings                             676,874                 5,256              3.08  %            270,597                 2,460              3.64  %
Total borrowed funds                       4,261,254                19,109              1.78  %          2,546,926                 7,876              1.23  %
Total interest-bearing liabilities      $ 27,528,830          $     29,929              0.43  %       $ 14,208,825          $     10,454              

0.29%

Non-interest bearing liabilities and

  Shareholders' Equity
Demand deposits                         $ 12,575,011                                                  $  6,314,100
Other liabilities                            677,829                                                       318,448
Shareholders' equity                       5,134,153                                                     3,027,935
Total liabilities and shareholders'
equity                                  $ 45,915,823                                                  $ 23,869,308

Net interest income - taxable
equivalent basis                                              $    381,539              3.71  %                             $    155,073              2.92  %
Taxable equivalent adjustment                                       (4,950)                                                       (3,501)
Net interest income (GAAP)                                    $    376,589              3.66  %                             $    151,572              2.86  %

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

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(Tax equivalent basis,                                    Nine Months Ended                                             Nine Months Ended
dollars in thousands)                                     September 30, 2022                                           September 30, 2021
                                            Average            Income (1)/           Yield/              Average             Income (1)/           Yield/
Earning Assets                              Balance              Expense              Rate               Balance               Expense              Rate

Money market and other sources of interest

  investments                           $    976,579          $     3,073              0.42  %       $    357,151          $        313              0.12  %
Investment securities:
Treasury and government sponsored
agencies                                   2,336,897               33,249              1.90  %          1,509,931                17,820              1.57  %
Mortgage-backed securities                 5,593,341               94,067              2.24  %          3,304,200                45,408              1.83  %
States and political subdivisions          1,801,053               42,839              3.17  %          1,523,175                37,174              3.25  %
Other securities                             682,937               16,392              3.20  %            445,298                 8,071              2.42  %
Total investment securities               10,414,228              186,547  
           2.39  %          6,782,604               108,473              2.13  %
Loans: (2)
Commercial                                 7,888,730              264,517              4.47  %          3,878,630               106,421              3.62  %
Commercial real estate                    10,753,988              327,733              4.06  %          6,109,795               171,221              3.70  %
Residential real estate loans              5,369,844              142,105              3.53  %          2,268,142                63,350              3.72  %
Consumer                                   2,521,121               85,442              4.53  %          1,581,149                42,414              3.59  %
Total loans                               26,533,683              819,797              4.12  %         13,837,716               383,406              3.67  %
Total earning assets                      37,924,490          $ 1,009,417              3.55  %         20,977,471          $    492,192              3.11  %
Deduct: Allowance for credit losses         (247,558)                                                    (120,619)
Non-Earning Assets
Cash and due from banks                      350,848                                                      266,543
Other assets                               4,249,986                                                    2,495,512
Total assets                            $ 42,277,766                                                 $ 23,618,907

Interest-Bearing Liabilities
Checking and NOW                        $  7,977,524          $     8,133              0.14  %       $  4,934,367          $      1,622              0.04  %
Savings                                    6,295,628                1,809              0.04  %          3,608,078                 1,479              0.05  %
Money market                               4,819,252                3,791              0.11  %          2,076,808                 1,300              0.08  %
Time deposits                              2,253,711                5,468              0.32  %          1,034,390                 4,068              0.53  %
Total interest-bearing deposits           21,346,115               19,201              0.12  %         11,653,643                 8,469              0.10  %
Federal funds purchased and interbank
  borrowings                                  41,993                  722              2.30  %              1,096                     -                 -  %
Securities sold under agreements to
repurchase                                   450,966                  287              0.09  %            396,495                   305              0.10  %
FHLB advances                              2,891,347               25,915              1.20  %          1,907,322                15,953              1.12  %
Other borrowings                             574,589               13,410              3.12  %            267,650                 7,375              3.67  %
Total borrowed funds                       3,958,895               40,334              1.36  %          2,572,563                23,633              1.23  %
Total interest-bearing liabilities      $ 25,305,010          $    59,535              0.31  %       $ 14,226,206          $     32,102              

0.30%

Non-interest bearing liabilities and

  Shareholders' Equity
Demand deposits                         $ 11,540,293                                                 $  6,072,310
Other liabilities                            601,619                                                      323,310
Shareholders' equity                       4,830,844                                                    2,997,081
Total liabilities and shareholders'
equity                                  $ 42,277,766                                                 $ 23,618,907

Net interest income - taxable
equivalent basis                                              $   949,882              3.34  %                             $    460,090              2.92  %
Taxable equivalent adjustment                                     (13,036)                                                      (10,471)
Net interest income (GAAP)                                    $   936,846              3.29  %                             $    449,619              2.86  %

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

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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.

                                                         From Three Months Ended                                         From Nine Months Ended
                                                       September 30, 2021 to Three                                     September 30, 2021 to Nine
                                                     Months Ended September 30, 2022                                Months Ended September 30, 2022
                                                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                            $        758              $      54          $    704          $      2,760              $   1,246          $  1,514
Investment securities (2)                      34,057                 21,765            12,292                78,074                 61,566            16,508
Loans (2)                                     211,126                166,150            44,976               436,391                369,536            66,855
Total interest income                         245,941                187,969            57,972               517,225                432,348            84,877
Interest Expense
Checking and NOW                                5,267                  1,484             3,783                 6,511                  1,862             4,649
Savings                                            47                    296              (249)                  330                    825              (495)
Money market                                    1,634                    956               678                 2,491                  1,835               656
Time deposits                                   1,294                  1,603              (309)                1,400                  3,938            (2,538)

Federal Purchased and Interbank Funds

  borrowings                                      720                    358               362                   722                    352          

370

Securities transferred under agreements to

  repurchase                                       16                     11                 5                   (18)                    38               (56)
FHLB advances                                   7,701                  4,050             3,651                 9,962                  8,554             1,408
Other borrowings                                2,796                  3,435              (639)                6,035                  7,793            (1,758)
Total interest expense                         19,475                 12,193             7,282                27,433                 25,197             2,236
Net interest income                      $    226,466              $ 175,776          $ 50,690          $    489,792              $ 407,151          $ 82,641


(1)The variance not solely due to rate or volume is allocated equally between
the rate and volume variances.
(2)Interest on investment securities and loans includes the effect of taxable
equivalent adjustments of $2.9 million and $2.0 million, respectively, during
the three months ended September 30, 2022; and $8.5 million and $4.5 million,
respectively, during the nine months ended September 30, 2022 using the federal
statutory rate in effect of 21%.

The increase in net interest income for the three and nine months ended
September 30, 2022 when compared to the same periods in 2021 was primarily due
to higher average earning assets as a result of the merger, loan growth, higher
rates, and higher accretion income. Partially offsetting these increases were
lower interest and fees related to PPP loans, higher average interest-bearing
liabilities as a result of the merger, and higher costs of average
interest-bearing liabilities. Accretion income associated with acquired loans
and borrowings totaled $25.4 million and $76.2 million in the three and nine
months ended September 30, 2022, respectively, compared to $3.0 million and
$12.8 million in the three and nine months ended September 30, 2021,
respectively. Net interest income included interest and net fees on PPP loans
totaling $1.5 million and $6.9 million in the three and nine months ended
September 30, 2022, respectively, compared to $12.2 million and $36.7 million in
the three and nine months ended September 30, 2021, respectively. There were no
unamortized fees on remaining PPP loans at September 30, 2022.

The increase in the net interest margin on a fully taxable equivalent basis for
the three and nine months ended September 30, 2022 when compared to the same
periods in 2021 was primarily due to higher yields on interest earning assets,
partially offset by higher costs of interest-bearing liabilities. The yield on
interest earning assets increased 91 basis points and the cost of
interest-bearing liabilities increased 14 basis points in the quarterly
year-over-year comparison. The yield on interest earning assets increased 44
basis points and the cost of interest-bearing liabilities increased 1 basis
point in the nine months ended September 30, 2022 when compared to the nine
months ended September 30, 2021. Accretion income represented 25 basis points
and 27 basis points of the net interest margin in the three and nine months
ended September 30, 2022, respectively, compared to 6 basis points and 8 basis
points in the three and nine months ended September 30, 2021, respectively.

Average earning assets were $41.2 billion and $21.2 billion for the three months
ended September 30, 2022 and 2021, respectively, an increase of $20.0 billion,
or 94%. Average earning assets were $37.9 billion and $21.0 billion for the nine
months ended September 30, 2022 and 2021, respectively, an increase of $16.9
billion, or 81%. The increases in average earning assets were primarily due to
the merger with First Midwest and strong loan growth.

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Average loans including loans held for sale increased $16.2 billion and $12.7
billion for the three and nine months ended September 30, 2022, respectively,
when compared to the same periods in 2021 primarily due to the First Midwest
merger and strong loan growth.

Average investments increased $3.7 billion and $3.6 billion for the three and
nine months ended September 30, 2022, respectively, when compared to the same
periods in 2021 reflecting the First Midwest merger.

Average noninterest-bearing and interest-bearing deposits increased $6.3 billion
and $11.6 billion, respectively, for the three months ended September 30, 2022
when compared to the same period in 2021. Average noninterest-bearing and
interest-bearing deposits increased $5.5 billion and $9.7 billion, respectively,
for the nine months ended September 30, 2022 when compared to the same period in
2021. This growth was primarily driven by the First Midwest merger.

Average borrowed funds increased $1.7 billion and $1.4 billion, respectively,
for the three and nine months ended September 30, 2022 when compared to the same
periods in 2021, driven by the First Midwest merger.

Provision for credit losses

Old National recorded provision for credit losses of $11.3 million for the three
months ended September 30, 2022, compared to $4.6 million provision for credit
losses recapture for the three months ended September 30, 2021. Net charge-offs
on loans totaled $7.6 million during the three months ended September 30, 2022,
which included $5.9 million of net charge-offs on PCD loans, compared to net
recoveries of $3.0 million for the three months ended September 30, 2021. The
provision for credit losses totaled $118.1 million for the nine months ended
September 30, 2022, compared to $26.9 million provision for credit losses
recapture for the nine months ended September 30, 2021. Net charge-offs on loans
totaled $12.1 million during the nine months ended September 30, 2022, which
included $10.5 million of net charge-offs on PCD loans, compared to net
recoveries of $3.4 million during the nine months ended September 30, 2021. The
provision for credit losses expense in the nine months ended September 30, 2022
included $96.3 million of provision for credit losses to establish an allowance
for credit losses on non-PCD loans acquired in the First Midwest merger.
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.

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. The following table details the components in noninterest
income:

                                       Three Months Ended                                           Nine Months Ended
                                          September 30,                      %                        September 30,                      %
(dollars in thousands)               2022               2021               Change                2022               2021              Change
Wealth management fees           $   17,317          $ 10,134                 70.9    %      $  51,251          $  30,576                67.6    %
Service charges on deposit
accounts                             20,042             8,123                146.7              54,392             23,270               133.7
Debit card and ATM fees              10,608             5,745                 84.6              29,429             17,962                63.8
Mortgage banking revenue              5,360            10,870                (50.7)             19,127             35,222               (45.7)
Investment product fees               8,042             6,475                 24.2              23,932             18,381                30.2
Capital markets income                8,906             6,017                 48.0              20,609             15,603                32.1
Company-owned life insurance          3,361             2,355                 42.7              11,456              7,852                45.9
Debt securities gains (losses),
net                                    (172)            1,207               (114.3)                 85              3,892               (97.8)
Other income                          6,921             3,589                 92.8              24,461              9,977               145.2
Total noninterest income         $   80,385          $ 54,515                 47.5    %      $ 234,742          $ 162,735                44.2    %


Noninterest income increased $25.9 million and $72.0 million, respectively, for
the three and nine months ended September 30, 2022 when compared to the same
periods in 2021 primarily due to the First Midwest merger in February of 2022.
The increases in noninterest income were partially offset by lower mortgage
banking revenue, which was impacted by the higher rate environment, as well as
lower production and gain on sale margins. In addition, wealth management fees
were negatively impacted by current market conditions.

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Non-interest expenses

The following table details the components of non-interest expense:

                                       Three Months Ended                                         Nine Months Ended
                                          September 30,                      %                      September 30,                      %
(dollars in thousands)               2022               2021              Change               2022               2021              Change
Salaries and employee benefits   $ 147,203          $  71,005               107.3    %     $ 433,167          $ 211,762               104.6    %
Occupancy                           26,418             12,757               107.1             73,933             41,683                77.4
Equipment                            7,328              3,756                95.1             20,046             12,231                63.9
Marketing                           10,361              3,267               217.1             23,756              7,961               198.4
Data processing                     20,269             11,508                76.1             64,914             35,558                82.6
Communication                        5,392              2,372               127.3             14,687              7,661                91.7
Professional fees                    6,559              3,416                92.0             32,686             14,668               122.8
FDIC assessment                      6,249              1,628               283.8             13,523              4,461               203.1
Amortization of intangibles          7,089              2,779               155.1             19,070              8,763               117.6
Amortization of tax credit
investments                          2,662              1,736                53.3              5,703              4,751                20.0
Other expense                       27,117              7,050               284.6             69,313             19,133               262.3
Total noninterest expense        $ 266,647          $ 121,274               119.9    %     $ 770,798          $ 368,632               109.1    %


Noninterest expense increased $145.4 million for the three months ended
September 30, 2022 when compared to the same period in 2021 reflective of the
additional operating costs associated with the First Midwest merger, as well as
$22.7 million of merger-related expenses. In addition, higher incentive accruals
resulting from strong performance contributed to the increase. Noninterest
expense for the three months ended September 30, 2021 included $1.4 million of
merger-related expenses.

Noninterest expense increased $402.2 million for the nine months ended September
30, 2022 when compared to the same period in 2021 reflective of the additional
operating costs associated with the First Midwest merger, as well as $111.6
million of merger-related expenses, including $11.0 million of other expenses
attributable to the provision for credit losses on unfunded loan commitments. In
addition, higher incentive accruals resulting from strong performance
contributed to the increase. Noninterest expense for the nine months ended
September 30, 2021 included $7.9 million of merger-related expenses.

Amortization of tax credit investments increased $0.9 million and $1.0 million,
respectively, for the three and nine months ended September 30, 2022 when
compared to the same periods in 2021. The recognition of tax credit amortization
expense is contingent upon the successful completion of the rehabilitation of a
historic building or completion of a solar project within the reporting period.
Many factors including weather, labor availability, building regulations,
inspections, and other unexpected construction delays related to a
rehabilitation project can cause a project to exceed its estimated completion
date. See Note 11 to the consolidated financial statements for additional
information on our tax credit investments.

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 temporary
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 provision for income taxes as a percentage of pre-tax
income was 21.7% for the three months ended September 30, 2022, compared to
19.8% for the same period in 2021. The provision for income taxes as a
percentage of pre-tax income was 19.5% for the nine months ended September 30,
2022, compared to 18.2% for the same period in 2021. In accordance with ASC
740-270, Accounting for Interim Reporting, the provision for income taxes was
recorded at September 30, 2022 based on the current estimate of the effective
annual rate. The higher effective tax rate during the three and nine months
ended September 30, 2022 compared to the same periods in 2021 reflected the
increase in pre-tax book income and higher post-merger estimated state effective
tax rates. See Note 17 to the consolidated financial statements for additional
information.

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FINANCIAL CONDITION

Insight

At September 30, 2022, our assets were $46.2 billion, a $21.8 billion increase
compared to assets of $24.5 billion at December 31, 2021. The increase was
driven primarily by the merger with First Midwest in February of 2022, as well
as 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 $41.2 billion at
September 30, 2022, a $19.3 billion increase compared to earning assets of $21.9
billion at December 31, 2021 driven primarily by the merger with First Midwest,
as well as loan growth.

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 if
needed, based on fluctuating interest rates or changes in our funding
requirements. During the nine months ended September 30, 2022, we transferred
$3.0 billion of securities available-for-sale to held-to-maturity in light of
the rate environment.

Equity interests are recognized at fair value and aggregated $51.8 million at
September 30, 2022 compared to $13.2 million at December 31, 2021. The increase in equity securities is attributable to the merger with First Midwest.

At September 30, 2022, the investment securities portfolio, including equity
securities, was $10.3 billion compared to $7.6 billion at December 31, 2021, an
increase of $2.7 billion driven primarily by the merger with First
Midwest. Investment securities represented 25% of earning assets at
September 30, 2022, compared to 35% at December 31, 2021. Stronger loan demand
in the future could result in management's decision to reduce the securities
portfolio. At September 30, 2022, 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 $860.3 million at September 30, 2022, compared to net unrealized losses of
$6.0 million at December 31, 2021. Net unrealized losses increased from
December 31, 2021 to September 30, 2022 primarily due to an increase in rates
impacting market values for mortgage-backed, U.S. government-sponsored entities
and agencies, and tax exempt municipal securities.

The investment securities available-for-sale portfolio including securities
hedges had an effective duration of 4.64 at September 30, 2022, compared to 4.26
at December 31, 2021. Effective duration measures the percentage change in value
of the portfolio in response to a change in interest rates. Generally, there is
more uncertainty in interest rates over a longer average maturity, resulting in
a higher duration percentage. The annualized average yields on investment
securities, on a taxable equivalent basis, were 2.63% and 2.39% for the three
and nine months ended September 30, 2022, respectively, compared to 2.08% and
2.13% for the three and nine months ended September 30, 2021, respectively.

Commercial loans and commercial real estate

Commercial and commercial real estate loans are the largest classifications
within earning assets, representing 52% of earning assets at September 30, 2022,
compared to 45% at December 31, 2021. At September 30, 2022, commercial and
commercial real estate loans were $21.5 billion, an increase of $11.8 billion
compared to December 31, 2021 driven by the merger with First Midwest and strong
loan production in the nine months ended September 30, 2022.

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The following table provides details of commercial loans by industry classification (as defined by the North American Industry Classification System) and by loan size.

                                                     September 30, 2022                           December 31, 2021
(dollars in thousands)                   Outstanding      Exposure      Nonaccrual    Outstanding      Exposure     Nonaccrual
By Industry:
Manufacturing                           $ 1,763,364    $  2,711,356    $    2,788    $   612,873    $ 1,152,774    $    6,689
Construction                                593,184       1,321,767         1,739        310,649        744,610         1,429
Health care and social assistance         1,511,547       1,889,178        11,773        376,664        550,400           444
Public administration                       226,873         381,541           874        247,770        357,310             -
Wholesale trade                             849,340       1,413,972         2,465        240,618        438,357         1,598
Educational services                        221,992         386,266         3,953        216,384        295,065             -
Other services                              193,737         344,741         2,084        121,577        260,413         2,542
Professional, scientific, and
 technical services                         529,493         808,457         3,761        141,364        279,185           937
Finance and insurance                       422,961         763,438            22        162,920        232,847            44
Retail trade                                308,901         524,397         6,187        131,303        289,478           945
Real estate rental and leasing              612,723         897,883         1,142        204,612        347,991           504
Transportation and warehousing              318,577         485,990         2,035        134,072        243,086         1,594
Administrative and support and

waste management and

 remediation services                       316,467         456,132        15,233         86,307        149,417             -

Agriculture, forestry, fishing,

 and hunting                                230,039         365,527           999        114,699        164,364         1,521
Accommodation and food services             434,010         561,774           842         78,689        108,724         2,399

Other                                       777,940       1,069,952           937        211,268        388,110         4,003
Total                                   $ 9,311,148    $ 14,382,371    $   56,834    $ 3,391,769    $ 6,002,131    $   24,649
By Loan Size:
Less than $200,000                                3  %            3  %          3  %           8  %           6  %          7  %
$200,000 to $1,000,000                           12              12            21             18             16            42
$1,000,000 to $5,000,000                         25              27            30             31             29            51
$5,000,000 to $10,000,000                        16              16            27             15             16             -
$10,000,000 to $25,000,000                       31              27            19             18             18             -
Greater than $25,000,000                         13              15             -             10             15             -
Total                                           100  %          100  %        100  %         100  %         100  %        100  %


The following table provides detail on commercial real estate loans classified
by property type.

                                 September 30, 2022                 December 31, 2021
(dollars in thousands)         Outstanding            %           Outstanding           %
By Property Type:
Multifamily                $        3,972,918        32  %    $       1,995,803        31  %
Retail                              1,850,030        15               1,037,034        16
Office                              1,794,623        15               1,018,973        16
Warehouse / Industrial              1,914,365        16                 851,956        14
Single family                         504,143         4                 333,221         5
Other (1)                           2,191,809        18               1,143,687        18
Total                      $       12,227,888       100  %    $       6,380,674       100  %

(1) Other includes commercial development, agricultural real estate, retirement homes, hotels, self-storage, land development, religious and mixed-use properties.

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Residential real estate loans

At September 30, 2022, residential real estate loans held in our loan portfolio
were $6.3 billion, an increase of $4.0 billion compared to December 31, 2021
driven by the merger with First Midwest and loan growth. Future increases in
interest rates could result in a decline in the level of refinancings and new
originations of residential real estate loans.

Consumer loans

Consumer loans, including automobile loans and personal and home equity loans
and lines of credit, increased $1.1 billion to $2.7 billion at September 30,
2022 compared to December 31, 2021 driven by the merger with First Midwest and
loan growth.

Good will and other intangible assets

Goodwill and other intangible assets at September 30, 2022 totaled $2.1 billion,
an increase of $1.1 billion from December 31, 2021 as a result of goodwill and
other intangible assets recorded with the First Midwest merger.

other assets

Other assets at September 30, 2022 increased $656.5 million from December 31,
2021 primarily due to higher net deferred tax assets related to the market value
adjustments of certain investment securities and $130.3 million of deferred tax
assets related to the First Midwest merger.

Funding

The following table summarizes Old National’s total funding, consisting of wholesale deposits and borrowings:

                                                    September 30,          December 31,
(dollars in thousands)                                   2022                  2021                $ Change         % Change

Deposits:

Noninterest-bearing demand                         $  12,400,077          $  6,303,106          $  6,096,971               97  %
Interest-bearing:
Checking and NOW                                       8,963,014             5,338,022             3,624,992               68  %
Savings                                                6,616,512             3,798,494             2,818,018               74  %
Money market                                           5,602,729             2,169,160             3,433,569              158  %
Time deposits                                          2,471,331               960,413             1,510,918              157  %
Total deposits                                        36,053,663            18,569,195            17,484,468               94  %
Wholesale borrowings:
Federal funds purchased and interbank borrowings         301,031                   276               300,755                 N/M
Securities sold under agreements to repurchase           438,053               392,275                45,778               12  %
Federal Home Loan Bank advances                        2,804,617             1,886,019               918,598               49  %
Other borrowings                                         721,049               296,670               424,379              143  %
Total wholesale borrowings                             4,264,750             2,575,240             1,689,510               66  %
Total funding                                      $  40,318,413          $ 21,144,435          $ 19,173,978               91  %


The increase in total funding was driven by the merger with First Midwest. 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 11% at September 30, 2022 and 12% at December 31, 2021.

Accrued expenses and other liabilities

Accrued expenses and other liabilities at September 30, 2022 increased $525.1
million from December 31, 2021 primarily due to higher derivative liabilities
and accrued expenses and other liabilities associated with the First Midwest
merger.

Capital

Shareholders' equity totaled $4.9 billion at September 30, 2022, compared to
$3.0 billion at December 31, 2021. In relation to the merger of equals
transaction, Old National issued 108,000 shares of Old National Series A
Preferred Stock and 122,500 shares of Old National Series C Preferred Stock. Old
National entered into two deposit

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agreements, each dated as of February 15, 2022, by and among Old National,
Continental Stock Transfer & Trust Company, as depository, and the holders from
time to time of the depositary receipts in connection with the issuance of the
Old National Preferred Stock. Pursuant to the deposit agreements, Old National
issued 4,320,000 depositary shares, each representing a 1/40th interest in a
share of Old National Series A Preferred Stock, and 4,900,000 depositary shares,
each representing a 1/40th interest in a share of Old National Series C
Preferred Stock.

Shareholders' equity at September 30, 2022 included $2.4 billion from the 129.4
million shares of Common Stock that were issued in conjunction with the merger
with First Midwest. The change in unrealized gains (losses) on
available-for-sale investment securities decreased equity by $651.4 million
during the nine months ended September 30, 2022. In addition, available-for-sale
investment securities with a fair value of $3.0 billion were transferred from
the available-for-sale portfolio to the held-to-maturity portfolio during the
nine months ended September 30, 2022. The resulting unrealized holding loss, net
of tax, is included in shareholders' equity and totaled $117.1 million at
September 30, 2022. Old National repurchased 3.5 million shares of Common Stock
in the nine months ended September 30, 2022 under a stock repurchase plan that
was approved by the Company's Board of Directors, which reduced equity by $63.8
million. Old National also paid cash dividends of $0.42 per common share in the
nine months ended September 30, 2022, which reduced equity by $122.6 million.

Capital adequacy

Old National and the banking industry are subject to various regulatory capital
requirements administered by the federal banking agencies. At September 30,
2022, Old National and its bank subsidiary exceeded the regulatory minimums and
Old National Bank met the regulatory definition of "well-capitalized" based on
the most recent regulatory definition.

Old National’s consolidated capital position remains strong, as evidenced by the following comparisons of key industry ratios.

                                                Regulatory                       September 30,                        December 31,
                                                Guidelines
                                                 Minimum                  2022                    2021                    2021
Risk-based capital:
Tier 1 capital to total average assets
(leverage ratio)                                    4.00           %       8.26            %        8.54         %         8.59           %
Common equity Tier 1 capital to
risk-adjusted
  total assets                                      7.00                   9.88                    12.08                  12.04
Tier 1 capital to risk-adjusted total
assets                                              8.50                  10.58                    12.08                  12.04
Total capital to risk-adjusted total assets        10.50                  11.84                    12.84                  12.77
Shareholders' equity to assets                             N/A            10.70                    12.64                  12.32


Former National BankOld National’s banking subsidiary, maintained a strong capital position, as evidenced by the following comparisons of key industry ratios.

                                                                  Prompt
                                                                Corrective                      September 30,                      December 31,
                                         Regulatory            Action "Well
                                         Guidelines            Capitalized"
                                          Minimum               Guidelines               2022                   2021                   2021
Risk-based capital:
Tier 1 capital to total average
assets (leverage
  ratio)                                    4.00           %        5.00           %      8.09            %       8.80        %         8.81           %
Common equity Tier 1 capital to
risk-adjusted
  total assets                              7.00                    6.50                 10.38                   12.34                 12.34
Tier 1 capital to risk-adjusted total
assets                                      8.50                    8.00                 10.38                   12.34                 12.34
Total capital to risk-adjusted total
assets                                     10.50                   10.00                 10.99                   12.84                 12.82


In December 2018, the OCC, the Board of Governors of the Federal Reserve System,
and the FDIC approved a final rule to address changes to credit loss accounting
under GAAP, including banking organizations' implementation of CECL. The final
rule provides banking organizations the option to phase in over a three-year
period the day-one adverse effects on regulatory capital that may result from
the adoption of the new accounting standard. In March 2020, the OCC, the Board
of Governors of the Federal Reserve System, and the FDIC published an interim
final rule

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

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, Executive Leadership Team, and Senior Management to better assess,
understand, monitor, and mitigate the risks of Old National. 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 reports directly to our Chief Executive
Officer, is independent of all other management, and provides quarterly reports
to the Board's Enterprise Risk Committee. 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 the Company's 2021 Annual Report on 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.

Investing activities

We carry a higher exposure to loss in our pooled trust preferred securities,
which are collateralized debt obligations, due to illiquidity in that market and
the performance of the underlying collateral. At September 30, 2022, we had
pooled trust preferred securities with a fair value of $11.3 million, or less
than 1% of the available-for-sale securities portfolio. These securities
remained classified as available-for-sale and the unrealized loss on our pooled
trust preferred securities was $2.5 million at September 30, 2022. The fair
value of these securities is expected to improve as we get closer to maturity
but may be adversely impacted by credit deterioration.

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 creditworthiness of the issuer and general market
conditions. See Note 5 to the consolidated financial statements for additional
details about our investment security portfolio.

Exposure to counterparty

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. 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 $1.1 billion at September 30, 2022.

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Lending activities

Commercial

Commercial and industrial loans are made primarily for the purpose of financing
equipment acquisition, 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 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 market
areas we serve: Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota,
Wisconsin, and Missouri. 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%. The
commercial properties are predominantly non-residential properties such as
retail centers, industrial properties and, 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 80% is generally required,
although higher levels are 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
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As a primary consideration, the underwriting process also includes a comparison of the value of the collateral to the amount of the proposed loan.

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 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 as recommended by management to assure our policy remains
appropriate for the current lending environment.

We lend to commercial and commercial real estate clients in many diverse
industries including, among others, manufacturing, agribusiness, transportation,
mining, wholesaling, and retailing. Old National manages concentrations of
credit exposure by industry, product, geography, client relationship, and loan
size. At September 30, 2022, our average commercial loan size was approximately
$550,000 and our average commercial real estate loan size was approximately
$1,200,000. 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
September 30, 2022, 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 Illinois, Indiana, Iowa, Kentucky,
Michigan, Minnesota, Wisconsin, and Missouri.

On February 15, 2022, Old National closed on its merger with First Midwest. As
of the closing date of the transaction, First Midwest loans totaled $14.3
billion. Old National reviewed the acquired loans and determined that as of
September 30, 2022, $285.0 million met the definition of criticized and $442.7
million were considered classified (of which $157.8 million are reported with
nonaccrual loans). These loans are included in our summary of under-performing,
criticized, and classified assets table below.

The following table presents a summary of under-performing, criticized, and
classified assets:

                                                                     September 30,                   December 31,
(dollars in thousands)                                          2022                2021                 2021
Total nonaccrual loans                                     $   233,659          $ 111,586          $     106,691
TDRs still accruing                                             13,674             16,420                 18,378

Total loans in arrears (90 days or more and still outstanding) 767

           113                      7
Foreclosed assets                                               11,967              1,943                  2,030
Total under-performing assets                              $   260,067          $ 130,062          $     127,106
Classified loans (includes nonaccrual, TDRs still
accruing,
  past due 90 days, and other problem loans)               $   711,150          $ 275,891          $     269,270
Other classified assets (1)                                     24,773              4,300                  4,338
Criticized loans                                               549,994            240,215                235,910
Total criticized and classified assets                     $ 1,285,917          $ 520,406          $     509,518
Asset Quality Ratios:
Nonaccrual loans/total loans (2)                                  0.77    %          0.82    %              0.78    %
Non-performing loans/total loans (2) (3)                          0.81               0.94                   0.92

Underperforming assets/total loans and

  other real estate owned                                         0.85               0.96                   0.93
Under-performing assets/total assets                              0.56               0.54                   0.52
Allowance/under-performing assets                               116.22              82.94                  84.45
Allowance/nonaccrual loans                                      129.36              96.67                 100.61

(1) Includes marketable securities rated below investment grade. (2) Loans exclude loans held for sale. (3) Non-performing loans include non-accrued loans and still-accrued TDRs.

Underperforming assets moved to $260.1 million at September 30, 2022compared to $130.1 million at September 30, 2021 and $127.1 million at
December 31, 2021 due to the First Midwest merger. Underperforming

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assets as a percentage of total loans and other real estate held at
September 30, 2022 were 0.85%, down 11 basis points from 0.96% at
September 30, 2021 and a decline of 8 basis points from 0.93% at December 31, 2021.

Nonaccrual loans increased from December 31, 2021 to September 30, 2022
primarily due to nonaccrual loans related to the First Midwest merger totaling
$157.8 million. As a percentage of nonaccrual loans, the allowance was 129.36%
at September 30, 2022, compared to 96.67% at September 30, 2021 and 100.61% at
December 31, 2021.

Total criticized and classified assets were $1.3 billion at September 30, 2022,
an increase of $765.5 million and $776.4 million from September 30, 2021 and
December 31, 2021, respectively. Criticized and classified assets related to the
First Midwest merger totaled $727.7 million at September 30, 2022. Other
classified assets include investment securities that fell below investment grade
rating totaling $24.8 million at September 30, 2022, compared to $4.3 million at
September 30, 2021 and $4.3 million at December 31, 2021.

Old National may choose to restructure the contractual terms of certain loans. The decision to restructure a loan, rather than aggressively enforce loan collection, can benefit Old National by increasing the ultimate likelihood of collection.

Any loans that are modified are reviewed by Old National to identify if a TDR
has occurred, which is when, for economic or legal reasons related to a
borrower's financial difficulties, Old National Bank grants a concession to the
borrower that it would not otherwise consider. Terms may be modified to fit the
ability of the borrower to repay in line with its current financial status. The
modification of the terms of such loans includes one or a combination of the
following: a reduction of the stated interest rate of the loan, an extension of
the maturity date at a stated rate of interest lower than the current market
rate of new debt with similar risk, or a permanent reduction of the recorded
investment of the loan.

Loans modified in a TDR are generally placed in non-accumulated status until we determine that future collection of principal and interest is reasonably assured, which generally requires the borrower to demonstrate a period of performance under the conditions. restructured for six months.

If we are unable to resolve a nonperforming loan issue, the credit will be
charged off when it is apparent there will be a loss. For large commercial type
loans, each relationship is individually analyzed for evidence of apparent loss
based on quantitative benchmarks or subjectively based upon certain events or
particular circumstances. For residential and consumer loans, a charge off is
recorded at the time foreclosure is initiated or when the loan becomes 120 to
180 days past due, whichever is earlier.

For commercial TDRs, an allocation is established within the allowance for
credit losses for the difference between the carrying value of the loan and its
computed value. To determine the computed value of the loan, one of the
following methods is selected: (1) the present value of expected cash flows
discounted at the loan's original effective interest rate, (2) the loan's
observable market price, or (3) the fair value of the collateral, if the loan is
collateral dependent. The allocation is established as the difference between
the carrying value of the loan and the collectable value. If there are
significant changes in the amount or timing of the loan's expected future cash
flows, the allowance allocation is recalculated and adjusted accordingly.

When a residential or consumer loan is identified as a TDR, the loan is generally written down to its collateral value less costs to sell.

To September 30, 2022RDTs totaled $37.4 million, $23.8 million of which have been included in outstanding loans. To December 31, 2021RDTs totaled
$30.0 million, $11.7 million of which have been included in outstanding loans.

Old National has established specific allowances for credit losses for clients
whose loan terms have been modified as TDRs totaling $5.2 million at
September 30, 2022 and $0.7 million of December 31, 2021. At September 30, 2022,
Old National had committed to lend an additional $3.0 million to clients with
outstanding loans that were classified as TDRs. At December 31, 2021, Old
National had not committed to lend any additional funds to clients with
outstanding loans that were classified as TDRs.

The terms of certain other loans were modified during 2022 and 2021 that did not
meet the definition of a TDR. It is our process to review all classified and
criticized loans that, during the period, have been renewed, have entered into a
forbearance agreement, have gone from principal and interest to interest only,
or have extended the maturity date. In order to determine whether a borrower is
experiencing financial difficulty, an evaluation is performed of the probability
that the borrower will be in payment default on its debt in the foreseeable
future without the modification. The evaluation is performed under our internal
underwriting policy. We also evaluate whether a

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concession has been granted or if we were adequately compensated through a
market interest rate, additional collateral, or a bona fide guarantee. We also
consider whether the modification was insignificant relative to the other terms
of the agreement or the delay in a payment.

In general, once a modified loan is considered a TDR, the loan will always be
considered a TDR until it is paid in full, otherwise settled, sold, or charged
off. However, guidance also permits for loans to be removed from TDR status when
subsequently restructured under these circumstances: (1) at the time of the
subsequent restructuring, the borrower is not experiencing financial
difficulties, and this is documented by a current credit evaluation at the time
of the restructuring, (2) under the terms of the subsequent restructuring
agreement, the institution has granted no concession to the borrower; and (3)
the subsequent restructuring agreement includes market terms that are no less
favorable than those that would be offered for a comparable new loan. For loans
subsequently restructured that have cumulative principal forgiveness, the loan
should continue to be measured in accordance with ASC 310-10, Receivables -
Overall. However, consistent with ASC 310-40-50-2, Troubled Debt Restructurings
by Creditors, Creditor Disclosure of Troubled Debt Restructurings, the loan
would not be required to be reported in the years following the restructuring if
the subsequent restructuring meets both of these criteria: (1) has an interest
rate at the time of the subsequent restructuring that is not less than a market
interest rate; and (2) is performing in compliance with its modified terms after
the subsequent restructuring.

Allowance for credit losses on unfunded loans and commitments

Net charge-offs on loans totaled $7.6 million during the three months ended
September 30, 2022, which included $5.9 million of net charge-offs on PCD loans,
compared to net recoveries of $3.0 million for the same period in 2021.
Annualized, net charge-offs (recoveries) to average loans were 0.10% for the
three months ended September 30, 2022, compared to (0.09)% for the same period
in 2021. Net charge-offs on loans totaled $12.1 million during the nine months
ended September 30, 2022, which included $10.5 million of net charge-offs on PCD
loans, compared to net recoveries of $3.4 million during the same period in
2021. Annualized, net charge-offs (recoveries) to average loans were 0.06% for
the nine months ended September 30, 2022, compared to (0.03)% for the same
period in 2021. Management will continue its efforts to reduce the level of
non-performing loans and may consider the possibility of sales of troubled and
non-performing loans, which could result in additional charge-offs to the
allowance for credit losses on loans.

Credit quality within the loans held for investment portfolio is continuously
monitored by management and is reflected within the allowance for credit losses
for 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 is accounted for as a separate
liability included in other liabilities on the balance sheet. The allowance for
credit losses for loans held for investment 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
appropriately 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 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 allowance for credit losses for loans was $302.3 million at September 30,
2022, compared to $107.3 million at December 31, 2021. The increase reflects
$89.1 million of allowance for credit losses on acquired PCD loans established
through acquisition accounting adjustments on or after the First Midwest merger
date. In addition, the provision for credit losses expense in the nine months
ended September 30, 2022 included $96.3 million of provision for credit losses
to establish an allowance for credit losses on non-PCD loans acquired in the
First Midwest merger. 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 commercial lending
commitments and letters of credit 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 for 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 these credit losses is recorded as a
component of other expense. The allowance for credit losses on unfunded loan
commitments totaled $26.2 million at September 30, 2022, compared to $10.9
million at December 31, 2021. The increase in the allowance for credit losses on
unfunded loan commitments was driven by the merger with First Midwest as well as
organic loan growth.

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 respecting established acceptable limits 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 is 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. 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.
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The following table illustrates the projected sensitivity of our net interest income over a cumulative two-year horizon based on the asset/liability model at
September 30, 2022 and 2021:

                                    Immediate
                                  Rate Decrease                                             Immediate Rate Increase
                                       -50                                       +100                 +200                 +300
(dollars in thousands)            Basis Points              Base             Basis Points         Basis Points         Basis Points
September 30, 2022
Projected interest income:
Money market, other interest
earning
  investments, and investment
  securities                     $    660,169          $   680,882         

$721,850 $762,793 $803,703
Loans

                               2,715,952            2,885,275            3,225,849            3,560,475            3,894,295
Total interest income               3,376,121            3,566,157            3,947,699            4,323,268            4,697,998
Projected interest expense:
Deposits                              106,667              166,603              372,461              578,311              784,154
Borrowings                            263,032              286,909              337,834              388,779              439,751
Total interest expense                369,699              453,512              710,295              967,090            1,223,905
Net interest income              $  3,006,422          $ 3,112,645          $ 3,237,404          $ 3,356,178          $ 3,474,093
Change from base                 $   (106,223)                              $   124,759          $   243,533          $   361,448
% change from base                      (3.41) %                                   4.01  %              7.82  %             11.61  %

September 30, 2021
Projected interest income:
Money market, other interest
earning
  investments, and investment
  securities                     $    272,337          $   290,049          

$326,179 $357,884 $387,685
Loans

                                 845,675              875,583            1,015,477            1,157,274            1,296,748
Total interest income               1,118,012            1,165,632            1,341,656            1,515,158            1,684,433
Projected interest expense:
Deposits                               14,597               23,943              104,651              185,529              266,403
Borrowings                             63,711               71,372              103,309              137,039              174,510
Total interest expense                 78,308               95,315              207,960              322,568              440,913
Net interest income              $  1,039,704          $ 1,070,317          $ 1,133,696          $ 1,192,590          $ 1,243,520
Change from base                 $    (30,613)                              $    63,379          $   122,273          $   173,203
% change from base                      (2.86) %                                   5.92  %             11.42  %             16.18  %

Our expected net interest income increased year over year due to the First Midwest merger, loan growth and rising interest rates.

A key element in the measurement and modeling of interest rate risk is the
re-pricing assumptions of our transaction deposit accounts, which have no
contractual maturity dates. 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. At September 30, 2022, our projected net
interest income sensitivity based on the asset/liability models we utilize was
within the limits of our interest rate risk policy for the 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 $48.7
million at September 30, 2022, compared to a net asset position with a fair
value gain of $1.3 million at December 31, 2021.  See Note 18 to the
consolidated financial statements for further discussion of derivative financial
instruments.
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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 Balance Sheet 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, properly
manage capital markets' funding sources and to address unexpected liquidity
requirements. On June 5, 2020, 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 strongly influenced by
interest rates, 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.

A timeline for Former National Bank term deposits is presented in the following table at September 30, 2022.

(dollars in thousands)
Maturity Bucket               Amount         Rate
2022                       $   796,910       0.34     %
2023                         1,203,358       0.67
2024                           241,239       0.90
2025                           114,953       0.82
2026                            68,339       0.49
2027 and beyond                 46,532       0.56
Total                      $ 2,471,331       0.58     %


Our ability to acquire funding at competitive prices is influenced by rating
agencies' views of our credit quality, liquidity, capital, and earnings. Moody's
Investors Service places us in an investment grade that indicates a low risk of
default. For both Old National and Old National Bank:

•Moody's Investors Service affirmed the Long-Term Rating of "A3" for Old
National's senior unsecured/issuer rating on February 16, 2022.
•Moody's Investors Service affirmed Old National Bank's long-term deposit rating
of "Aa3" on February 16, 2022. The bank's short-term deposit rating was affirmed
at "P-1" and the bank's issuer rating was affirmed at "A3."

Moody’s Investors Service has concluded a rating review of Former National Bank on
February 16, 2022.

The credit ratings of Former National and Former National Bank at September 30, 2022
are shown in the following table.

                      Moody's Investors Service
                        Long-term      Short-term
Old National               A3             N/A
Old National Bank          Aa3            P-1


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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 September 30, 2022, 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                                             $       322,234          $    479,377
Unencumbered government-issued debt securities                                    -             1,758,051
Unencumbered investment grade municipal securities                                -               770,020
Unencumbered corporate securities                                                 -               305,084
Availability of borrowings:
Amount available from Federal Reserve discount window*                            -               555,290
Amount available from Federal Home Loan Bank*                                     -             1,255,645
Total available funds                                               $       

322 234 $5,123,467

* Based on pledged collateral

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
September 30, 2022, Old National Bancorp's other borrowings outstanding were
$486.0 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
banking subsidiaries without prior 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 2021 and is not
currently required.

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; and model risk management.

Compliance and regulatory risk

Compliance and regulatory risk is the risk that the Company violated or was not
in compliance with applicable laws, regulations or practices, 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.
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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
condition of the Company. Business practices must be executed, as well as
products and services delivered, in a manner that is compliant with laws,
regulatory requirements, 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 and/or regulations
and expects issues to be identified, analyzed, and remediated in a timely and
complete manner.

CRITICAL ACCOUNTING ESTIMATES

Our most significant accounting policies are described in Note 1 to the
consolidated financial statements included in our Annual Report on Form 10-K for
the year ended December 31, 2021. 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.

Business combinations and Good will

•Description. For 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 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 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 acquisition date if new information is obtained about
facts and circumstances that existed as of the 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, 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.

•Pandemic. A prolonged COVID-19 pandemic, or any other epidemic that harms the
global economy, U.S. economy, or the economies in which we operate could
adversely affect our operations. Goodwill is especially susceptible to risk of
impairment during prolonged periods of economic downturn.
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For additional information regarding critical accounting estimates, see the
section titled "Critical Accounting Estimates" included in Item 7 of our Annual
Report on Form 10-K for the year ended December 31, 2021. There have been no
material changes in the Company's application of critical accounting estimates
related to allowance for credit losses for loans, derivative financial
instruments, or income taxes since December 31, 2021.

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