Old National reports record 1st quarter net income of $48.0 million, a 33% increase from a year ago

EVANSVILLE, Ind., April 23, 2018 (GLOBE NEWSWIRE) -- Old National Bancorp (NASDAQ:ONB) reports 1Q18 net income of $48.0 million, diluted EPS of $0.31. Adjusted¹ net income of $51.2 million, or $0.34 per share.

CEO COMMENTARY:

“Our record start to 2018 was driven by continued strong commercial loan growth, disciplined expense management, controlled deposit costs and excellent credit quality,” said Old National Bancorp Chairman and CEO Bob Jones. “In keeping with our ongoing focus on improving the operating dynamics of the franchise, we also announced our decision to sell 10 branches and consolidate an additional 10 branches throughout our franchise.” 

FIRST-QUARTER HIGHLIGHTS²: 

Net Income

• Net income of $48.0 million, an increase of 33.3% from first quarter of 2017
• Earnings per share of $0.31, an increase of 14.8% from first quarter of 2017

Net Interest Income/NIM

• Net interest income was $128.5 million, up 8.4%
• Net interest margin on a fully taxable equivalent basis was 3.45% compared to 3.47%

Operating Performance

• Pre-provision net revenue¹ (“PPNR”) was $56.1 million
• Adjusted PPNR¹ was $61.1 million, up 5.9%
• Noninterest expense was $117.6 million
• Adjusted noninterest expense¹ was $111.8 million, compared to $110.2 million
• Efficiency ratio¹ was 65.94%
• Adjusted efficiency ratio¹ was 62.59%, a 118 basis point improvement from first quarter of 2017

Loans and Credit Quality

• End-of-period total loans³ were $11,256.3 million compared to $11,136.1 million
  • Represents 4.3% annualized growth
• End-of-period commercial and commercial real estate loans were $7,261.6 million compared to $7,071.8 million
  • Represents 10.7% annualized growth
• Non-performing loans were 1.28% of total loans compared to 1.30%
• Provision for loan losses was $0.4 million compared to $1.0 million
• Net charge-offs were $0.4 million, or 0.01% annualized, compared to 0.03%

Capital Returns

• Return on average equity was 8.86%
• Return on average tangible common equity¹ was 15.80%
• Adjusted return on average tangible common equity¹ was 16.81%

Notable Items

• $2.3 million in merger and integration charges
• $2.8 million for branch consolidation charges
• $0.7 million in tax credit amortization
• Footprint rationalization continues with 10 branch consolidations and the pending sale of 10 branches

¹ Non-GAAP financial measure that Management believes is useful in evaluating the financial results of the Company. Please refer to the Non-GAAP reconciliations contained in this release     ² Comparisons are on a linked-quarter basis, unless otherwise noted    ³ Includes loans held for sale

RESULTS OF OPERATIONS

Old National Bancorp reported first-quarter 2018 net income of $48.0 million, or $0.31 per diluted share. 

Included in the first quarter were pre-tax charges of $2.3 million for merger and integration and $2.8 million for branch consolidations.  Excluding these items from the current quarter and netting out securities gains, Old National would have reported net income of $51.2 million, or $0.34 per share.

With a continued focus on expense management, 10 branches located throughout the footprint are scheduled to be consolidated; 9 in the second quarter and 1 in the third quarter of this year.  In addition, Old National entered into a branch purchase and assumption agreement for the sale of 10 Old National branches in Wisconsin to Marine Credit Union of La Crosse, Wisconsin.   The branch sale includes the assumption of approximately $274 million in deposits and no loans.  Subject to regulatory approval and other terms and conditions, the sale is expected to close in the third quarter of 2018. 

LOANS
Record first quarter performance was fueled by double-digit commercial loan growth.

• Period-end total loans increased to $11,256.3 million at March 31, 2018, up from $11,136.1 million at December 31, 2017.
• End-of-period total loan growth in the first quarter was $120.2 million, or 4.3% on an annualized basis. 
• End-of-period growth in total commercial and commercial real estate loans was $189.8 million, or 10.7% on an annualized basis.
• On average, total loans in the first quarter were $11,179.3 million, up from $10,516.4 million in the fourth quarter of 2017.
• Average total loans increased $662.9 million, or 25% annualized, benefitting from a full quarter’s impact of loans acquired from the Minnesota partnership, which closed on November 1, 1017.    
• Average total commercial and commercial real estate loan growth was $683.0 million, or 42.2% on an annualized basis, including impact of loans acquired from the Minnesota partnership.

DEPOSITS
A low-cost core deposit franchise continues to be one of Old National’s strengths.

• Period-end total deposits increased to $12,788.6 million at March 31, 2018, up from $12,605.8 million at December 31, 2017.
• End-of-period deposit growth in the first quarter was $182.8 million, or 5.8% on an annualized basis.
• On average, total deposits in the first quarter were $12,579.2 million, increasing from the $11,994.8 million in the fourth quarter of 2017. 
• Average total deposits increased $584.4 million, or 19.5% annualized, benefitting from a full quarter’s impact of deposits assumed from the Minnesota partnership.

NET INTEREST INCOME AND MARGIN
Well-controlled deposit costs and higher accretion income offset lower fully taxable equivalent (FTE) interest income resulting from income tax rate change.

• Net interest income increased to $128.5 million in the first quarter of 2018 from $118.6 million in the fourth quarter of 2017.
• The net interest margin (on a fully taxable equivalent basis) declined just 2 basis points to 3.45% compared to 3.47% in the fourth quarter of 2017.
• Benefiting net interest income and net interest margin during the quarter was the increase in short term rates, strong loan production and accretion income given a full quarter of the Minnesota partnership. Partially offsetting these benefits was higher interest expense, lower interest collected on nonaccrual loans, and a decline in fully taxable equivalent interest income as a result of lower corporate income tax rates.
• Accretion income increased to $11.0 million, or 28 basis points of net interest margin, in the first quarter of 2018 from $7.5 million, or 21 basis points of net interest margin, in the fourth quarter of 2017.  In the first quarter of 2018, accretion income was 6% of adjusted total revenue compared to 8% in the first quarter of 2017.
• The cost of total deposits rose just 3 basis points to 0.23% while the cost of total interest-bearing deposits rose just 4 basis points to 0.33%.

CREDIT QUALITY
Exceptional credit quality remains a hallmark of the Old National franchise.

• Asset quality remained strong with net charge-offs of just $0.4 million, or 0.01% of total average loans, and 30-89 day delinquencies of 0.33%.
• Provision expense for the first quarter was $0.4 million, matching net charge-offs of $0.4 million.
• Non-performing loans as a percentage of total loans continued to decline to 1.28% from 1.30%. 
• In accordance with current accounting practices, the loans acquired from recent acquisitions were recorded at fair value with no allowance recorded at the acquisition date.  As of March 31, 2018, the remaining discount on these acquired loans was $125.6 million.
• The allowance for loan losses was $50.4 million, or 0.45% of total loans at March 31, 2018.

NONINTEREST INCOME
Noninterest income dipped slightly due to seasonality and other factors.

• Total noninterest income for the first quarter of 2018 was $42.4 million, or a decline of $2.4 million from the fourth quarter of 2017.
• Lower capital markets income ($0.4 million), a decline in other income ($0.5 million), a decline in wealth management revenue ($0.8 million) and the seasonal decline in deposit service charges ($0.2 million) were the main drivers of the quarterly decline.
• Securities gains were $0.8 million, down $0.8 million from the fourth quarter of 2017.

NONINTEREST EXPENSE
Disciplined expense management drives positive operating leverage¹.

• Noninterest expense for the first quarter of 2018 was $117.6 million and included $2.3 million in merger and integration charges, $2.8 million in branch charges and $0.7 million in tax credit amortization.
• Excluding these items, adjusted noninterest expense for the first quarter was $111.8 million, slightly higher than the $110.2 million in adjusted noninterest expense in the fourth quarter of 2017.  The first quarter included a full quarterly impact of the Minnesota partnership.
• Adjusted operating leverage¹ improved 184 basis points in the first quarter compared to a year ago.
• First quarter includes typical seasonal factors, including higher snow removal costs ($0.7 million), higher postage costs ($0.4 million) and higher salary expense due to payroll tax reset and annual HSA contribution.
• The first quarter efficiency ratio was 65.94% while the adjusted efficiency ratio was 62.59%.

INCOME TAXES
Changes in the corporate tax rate as well as benefits of tax credits result in lower tax rates.

• On a fully taxable-equivalent basis, income tax expense in the first quarter was $7.7 million, resulting in a 13.9% FTE tax rate.

CAPITAL
Strong quarterly earnings drive capital ratios higher.

• At the end of the first quarter, total risk-based capital was 11.7% and regulatory tier 1 capital was 10.7%.
• Tangible common equity to tangible assets was 7.83% at the end of the first quarter compared to 7.65% in the fourth quarter of 2017.

NON-GAAP RECONCILIATIONS

($ in millions, except EPS, shares in 000s)	1Q18			Adjustments4			Adjusted 1Q18
Total Revenues (FTE)	$	173.7		($	0.8	)	$	172.9
Less: Provision for Loan Losses		(0.4	)		-			(0.4	)
Less: Noninterest Expenses		(117.6	)		5.1			(112.5	)
Income before Income Taxes (FTE)	$	55.7		$	4.3		$	60.0
Income Taxes		(7.7	)		(1.1	)		(8.8	)
Net Income	$	48.0		$	3.2		$	51.2
Average Shares Outstanding		152,370			-			152,370
Earnings Per Share	$	0.31		$	0.03		$	0.34

⁴ Tax-effect calculations use the 2018 statutory FTE tax rates (federal + state)

($ in millions)	1Q18			4Q17
Net Interest Income	$	128.5		$	118.6
FTE Adjustment		2.8			6.1
Net Interest Income (FTE Basis)	$	131.3		$	124.7
Average Earning Assets	$	15,205.9		$	14,389.5
Net Interest Margin		3.45	%		3.47	%

($ in millions)	1Q18			4Q17
Net Interest Income	$	128.5		$	118.6
FTE Adjustment		2.8			6.1
Net Interest Income (FTE Basis)	$	131.3		$	124.7
Total Noninterest Income	$	42.4		$	44.8
Noninterest Expense		117.6			140.4
Pre-Provision Net Revenue	$	56.1		$	29.1
Less: Securities Gains		(0.8	)		(1.6	)
Add: Merger and Integration Charges		2.3			11.9
Add: Branch Consolidations, Severance, Foundation Funding and Client Experience Initiative Charges		2.8			6.6
Add: Amortization of Tax Credit Investments		0.7			11.7
Adjusted Pre-Provision Net Revenue	$	61.1		$	57.7

($ in millions)	1Q18			4Q17			1Q17
Noninterest Expense	$	117.6		$	140.4		$	101.9
Less: Merger and Integration Charges		(2.3	)		(11.9	)		-
Less: Branch Consolidations, Severance, Foundation Funding and Client Experience Initiative Charges		(2.8	)		(6.6	)		(1.4	)
Noninterest Expense less Charges	$	112.5		$	121.9		$	100.5
Less: Amortization of Tax Credit Investments		(0.7	)		(11.7	)		-
Adjusted Noninterest Expense	$	111.8		$	110.2		$	100.5
Less: Intangible Amortization		(3.6	)		(3.4	)		(3.0	)
Adjusted Noninterest Expense Less Intangible Amortization	$	108.2		$	106.8		$	97.5
Net Interest Income	$	128.5		$	118.6		$	105.8
FTE Adjustment		2.8			6.1			5.7
Net Interest Income (FTE)	$	131.3		$	124.7		$	111.5
Total Noninterest Income	$	42.4		$	44.8		$	42.9
Total Revenue (FTE)	$	173.7		$	169.5		$	154.4
Less: Securities Gains		(0.8	)		(1.6	)		(1.5	)
Adjusted Total Revenue (FTE)	$	172.9		$	167.9		$	152.9
Efficiency Ratio		65.94	%		81.60	%		64.66	%
Adjusted Efficiency Ratio		62.59	%		63.58	%		63.77	%
Operating Leverage5 (basis points)		(295	)
Adjusted Operating Leverage6 (basis points)		184

⁵ Year-over-year basis point change in noninterest expenses plus change in total revenue
⁶ Year-over-year basis point change in adjusted noninterest expense plus change in adjusted total revenue

($ in millions)	1Q18			4Q17
Net Income (Loss)	$	48.0		$	(18.5	)
Add: Intangible Amortization (net of tax)		2.8			2.2
Tangible Net Income (Loss)	$	50.8		$	(16.3	)
Less: Securities Gains (net of tax7)		(0.6	)		(1.1	)
Add: Merger & Integration Charges (net of tax7)		1.8			8.4
Add: Branch Consolidations, Severance, Foundation Funding, Client Experience Initiative Charges (net of tax7)		2.1			4.6
Add: Estimated DTA Revaluation		-			39.3
Adjusted Tangible Net Income (Loss)	$	54.1		$	34.9
Average Total Shareholders’ Equity	$	2,166.1		$	2,104.6
Less: Average Goodwill		(828.1	)		(776.9	)
Less: Average Intangibles		(51.1	)		(37.8	)
Average Tangible Shareholders’ Equity	$	1,286.8		$	1,289.9
Return on Average Tangible Common Equity		15.80	%		(5.05	%)
Adjusted Return on Average Tangible Common Equity		16.81	%		10.83	%

⁷ Tax-effect calculations use the 2018 statutory FTE tax rates (federal + state)

CONFERENCE CALL AND WEBCAST
Old National will host a conference call and live webcast at 7:00 a.m. Central Time on Monday, April 23, 2018, to review first-quarter 2018 financial results.  The live audio web cast of the call, along with the corresponding presentation slides, will be available on the Company’s Investor Relations web page at oldnational.com and will be archived there for 12 months.  A replay of the call will also be available from 10:00 a.m. Central Time on April 23 through May 7.  To access the replay, dial 1-855-859-2056, Conference ID Code 7676787.

USE OF NON-GAAP FINANCIAL MEASURES
This earnings release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Old National’s results of operations or financial position.  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 tables of this release.

FORWARD-LOOKING STATEMENT
This press release 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 Bancorp’s (“Old National’s”) financial condition, results of operations, asset and credit quality trends and profitability.  Forward-looking statements can be identified by the use of the words “anticipate,” “believe,” “expect,” “intend,” “could” and “should,” 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 to differ materially from those in such statements.  Factors that might cause such a difference include, but are not limited to: expected cost savings, synergies and other financial benefits from the merger with Anchor-Minnesota that might not be realized within the expected timeframes and costs or difficulties relating to integration matters might be greater than expected;  market, economic, operational, liquidity, credit and interest rate risks associated with Old National’s business; competition; government legislation and policies (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and its related regulations); ability of Old National to execute its business plan; changes in the economy which could materially impact credit quality trends and the ability to generate loans and gather deposits; failure or circumvention of our internal controls; failure or disruption of our information systems; significant changes in accounting, tax or regulatory practices or requirements; new legal obligations or liabilities or unfavorable resolutions of litigations; disruptive technologies in payment systems and other services traditionally provided by banks; computer hacking and other cybersecurity threats; other matters discussed in this press release; and other factors identified in our Annual Report on Form 10-K and other periodic filings with the SEC.  These forward-looking statements are made only as of the date of this press release, and Old National does not undertake an obligation to release revisions to these forward-looking statements to reflect events or conditions after the date of this press release.

ABOUT OLD NATIONAL
Old National Bancorp (NASDAQ:ONB), the holding company of Old National Bank, is the largest financial services holding company headquartered in Indiana. With $17.5 billion in assets, it ranks among the top 100 banking companies in the U.S. and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for six consecutive years.  Since its founding in Evansville in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships with clients. Today, Old National’s footprint includes Indiana, Kentucky, Michigan, Wisconsin and Minnesota. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investments and brokerage services. For more information and financial data, please visit Investor Relations at oldnational.com.

Media: Kathy A. Schoettlin (812) 465-7269
Investors: Lynell J. Walton (812) 464-1366

Financial Highlights (unaudited)
($ and shares in thousands, except per share data)
	Three Months Ended
	March 31,			December 31,			March 31,
	2018			2017			2017
Income Statement
Net interest income	$	128,572		$	118,556		$	105,801
Provision for loan losses		380			1,037			347
Noninterest income		42,389			44,825			42,920
Noninterest expense		117,641			140,432			101,891
Net income (loss)		47,983			(18,493	)		35,992
Per Common Share Data (Diluted)
Net income (loss) available to common shareholders	$	0.31		$	(0.13	)	$	0.27
Average diluted shares outstanding		152,370			146,875			135,431
Book value		14.32			14.17			13.63
Stock price		16.90			17.45			17.35
Dividend payout ratio		41	%		N/M			48	%
Tangible common book value (1)		8.55			8.37			8.54
Performance Ratios
Return on average assets		1.10	%		-0.45	%		0.98	%
Return on average common equity		8.86	%		-3.51	%		7.89	%
Return on average tangible common equity (1)		15.80	%		-5.05	%		13.38	%
Net interest margin (FTE)		3.45	%		3.47	%		3.50	%
Efficiency ratio (2)		65.94	%		81.60	%		64.66	%
Net charge-offs (recoveries) to average loans		0.01	%		0.03	%		0.01	%
Allowance for loan losses to ending loans		0.45	%		0.45	%		0.55	%
Non-performing loans to ending loans		1.28	%		1.30	%		1.43	%
Balance Sheet
Total loans	$	11,238,682		$	11,118,121		$	9,131,773
Total assets		17,496,287			17,518,292			14,869,645
Total deposits		12,788,600			12,605,764			10,821,352
Total borrowed funds		2,371,292			2,578,204			2,066,617
Total shareholders' equity		2,179,118			2,154,397			1,846,359
Capital Ratios (1)
Risk-based capital ratios (EOP):
Tier 1 common equity		10.7	%		10.5	%		11.4	%
Tier 1		10.7	%		10.4	%		11.7	%
Total		11.7	%		11.4	%		12.2	%
Leverage ratio (to average assets)		8.1	%		8.3	%		8.5	%
Total equity to assets (averages)		12.42	%		12.69	%		12.36	%
Tangible common equity to tangible assets		7.83	%		7.65	%		8.16	%
Nonfinancial Data
Full-time equivalent employees		2,721			2,801			2,659
Number of branches		191			191			188
(1) See "Non-GAAP Measures" table.
(2) Efficiency ratio is defined as noninterest expense before amortization of intangibles as a percent of FTE net interest income and
noninterest revenues, excluding net gains from securities transactions.  This presentation excludes amortization of intangibles
and net securities gains, as is common in other company releases, and better aligns with true operating performance.
FTE - Fully taxable equivalent basis          EOP - End of period actual balances          N/M - Not meaningful

Income Statement (unaudited)
($ and shares in thousands, except per share data)
	Three Months Ended
	March 31,		December 31,			March 31,
	2018		2017			2017
Interest income	$	147,706	$	135,134		$	118,468
Less:  interest expense		19,134		16,578			12,667
Net interest income		128,572		118,556			105,801
Provision for loan losses		380		1,037			347
Net interest income after provision for loan losses		128,192		117,519			105,454
Wealth management fees		9,026		9,801			8,999
Service charges on deposit accounts		10,759		10,913			9,843
Debit card and ATM fees		4,865		4,756			4,236
Mortgage banking revenue		4,192		3,933			4,226
Investment product fees		5,515		5,791			4,989
Capital markets income		498		923			1,031
Company-owned life insurance		2,605		2,366			2,149
Other income		4,130		4,676			5,901
Gains (losses) on sales of securities		788		1,588			1,500
Gains (losses) on derivatives		11		78			46
Total noninterest income		42,389		44,825			42,920
Salaries and employee benefits		64,179		74,785			56,564
Occupancy		13,280		12,168			12,134
Equipment		3,565		3,498			3,227
Marketing		3,697		3,803			3,050
Data processing		8,884		8,776			7,608
Communication		3,064		2,419			2,414
Professional fees		2,730		5,523			2,651
Loan expenses		1,744		1,730			1,631
Supplies		722		686			579
FDIC assessment		2,645		2,666			2,487
Other real estate owned expense		349		741			1,115
Amortization of intangibles		3,609		3,399			3,020
Amortization of tax credit investments		716		11,733			-
Other expense		8,457		8,505			5,411
Total noninterest expense		117,641		140,432			101,891
Income before income taxes		52,940		21,912			46,483
Income tax expense		4,957		40,405			10,491
Net income (loss)	$	47,983	$	(18,493	)	$	35,992
Diluted Earnings Per Share
Net income (loss)	$	0.31	$	(0.13	)	$	0.27
Average Common Shares Outstanding
Basic		151,721		146,073			134,912
Diluted		152,370		146,875			135,431
Common shares outstanding at end of period		152,172		152,040			135,435

Balance Sheet (unaudited)
($ in thousands)
		March 31,				December 31,				March 31,
		2018				2017				2017
Assets
	Federal Reserve Bank account	$	73,657			$	54,361			$	24,460
	Money market investments		12,562				13,318				7,601
	Investments:
	Treasury and government sponsored agencies		655,353				669,838				595,172
	Mortgage-backed securities		1,623,554				1,674,584				1,484,561
	States and political subdivisions		1,159,614				1,207,353				1,144,412
	Other securities		458,270				453,765				446,830
	Total investments		3,896,791				4,005,540				3,670,975
	Loans held for sale		17,635				17,930				17,373
	Loans:
	Commercial		2,811,629				2,717,269				1,910,536
	Commercial and agriculture real estate		4,449,980				4,354,552				3,222,865
	Consumer:
	Home equity		487,237				507,509				464,911
	Other consumer loans		1,331,304				1,371,738				1,421,199
	Subtotal of commercial and consumer loans		9,080,150				8,951,068				7,019,511
	Residential real estate		2,158,532				2,167,053				2,112,262
	Total loans		11,238,682				11,118,121				9,131,773
	Total earning assets		15,239,327				15,209,270				12,852,182
Allowance for loan losses			(50,381	)			(50,381	)			(49,834	)
Non-earning Assets:
	Cash and due from banks		192,022				222,753				184,974
	Premises and equipment		453,603				458,074				420,866
	Goodwill and other intangible assets		877,637				881,147				689,675
	Company-owned life insurance		404,561				403,753				353,786
	Net deferred tax assets		88,773				110,857				165,376
	Loan servicing rights		24,380				24,661				25,446
	Other real estate owned		6,735				8,810				12,547
	Other assets		259,630				249,348				214,627
	Total non-earning assets		2,307,341				2,359,403				2,067,297
	Total assets	$	17,496,287			$	17,518,292			$	14,869,645
Liabilities and Equity
	Noninterest-bearing demand deposits	$	3,655,732			$	3,680,807			$	3,024,111
	NOW accounts		3,135,778				3,115,822				2,635,317
	Savings accounts		3,091,101				3,035,622				2,997,919
	Money market accounts		1,130,258				1,139,077				697,287
	Other time deposits		1,573,874				1,470,118				1,349,303
	Total core deposits		12,586,743				12,441,446				10,703,937
	Brokered CD's		201,857				164,318				117,415
	Total deposits		12,788,600				12,605,764				10,821,352
	Federal funds purchased and interbank borrowings		150,026				335,033				61,016
	Securities sold under agreements to repurchase		308,189				384,810				345,550
	Federal Home Loan Bank advances		1,664,179				1,609,579				1,441,030
	Other borrowings		248,898				248,782				219,021
	Total borrowed funds		2,371,292				2,578,204				2,066,617
Accrued expenses and other liabilities			157,277				179,927				135,317
	Total liabilities		15,317,169				15,363,895				13,023,286
Common stock, surplus, and retained earnings			2,240,644				2,204,669				1,894,924
Accumulated other comprehensive income (loss)			(61,526	)			(50,272	)			(48,565	)
	Total shareholders' equity		2,179,118				2,154,397				1,846,359
	Total liabilities and shareholders' equity	$	17,496,287			$	17,518,292			$	14,869,645

Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
		Three Months Ended									Three Months Ended									Three Months Ended
		March 31, 2018									December 31, 2017									March 31, 2017
		Average			Income (1)/		Yield/				Average			Income (1)/		Yield/				Average			Income (1)/		Yield/
Earning Assets:		Balance			Expense		Rate				Balance			Expense		Rate				Balance			Expense		Rate
Money market and other interest-earning
investments		$	66,536		$	90		0.55	%		$	54,611		$	87		0.63	%		$	27,482		$	31		0.46	%
Investments:
Treasury and gov't sponsored agencies			663,096			3,424		2.07	%			611,982			3,031		1.98	%			540,422			2,780		2.06	%
Mortgage-backed securities			1,632,610			9,520		2.33	%			1,573,578			8,139		2.07	%			1,511,388			7,818		2.07	%
States and political subdivisions			1,204,855			10,478		3.48	%			1,178,113			13,312		4.52	%			1,133,373			13,607		4.80	%
Other securities			459,458			3,669		3.19	%			454,824			3,126		2.75	%			445,235			2,828		2.54	%
Total investments			3,960,019			27,091		2.74	%			3,818,497			27,608		2.89	%			3,630,418			27,033		2.98	%
Loans: (2)
Commercial			2,759,688			28,205		4.09	%			2,480,987			26,577		4.19	%			1,887,929			19,088		4.04	%
Commercial and agriculture real estate			4,394,002			55,787		5.08	%			3,989,684			47,683		4.68	%			3,171,005			40,324		5.09	%
Consumer:
Home equity			502,902			5,688		4.59	%			502,837			5,442		4.29	%			476,353			4,659		3.97	%
Other consumer loans			1,346,331			12,140		3.66	%			1,371,986			12,248		3.54	%			1,408,100			11,767		3.39	%
Subtotal commercial and consumer loans			9,002,923			101,820		4.59	%			8,345,494			91,950		4.37	%			6,943,387			75,838		4.43	%
Residential real estate loans			2,176,413			21,472		3.95	%			2,170,900			21,628		3.99	%			2,141,571			21,254		3.97	%
Total loans			11,179,336			123,292		4.42	%			10,516,394			113,578		4.26	%			9,084,958			97,092		4.29	%
Total earning assets		$	15,205,891		$	150,473		3.97	%		$	14,389,502		$	141,273		3.88	%		$	12,742,858		$	124,156		3.91	%
Less: Allowance for loan losses			(50,953	)								(50,601	)								(50,710	)
Non-earning Assets:
Cash and due from banks		$	199,132								$	201,520								$	195,620
Other assets			2,089,790									2,046,544									1,877,849
Total assets		$	17,443,860								$	16,586,965								$	14,765,617
Interest-Bearing Liabilities:
NOW accounts		$	3,067,437		$	819		0.11	%		$	2,905,440		$	714		0.10	%		$	2,585,814		$	456		0.07	%
Savings accounts			3,052,646			1,343		0.18	%			3,010,761			1,324		0.17	%			2,969,866			1,157		0.16	%
Money market accounts			1,159,010			546		0.19	%			994,574			394		0.16	%			706,990			149		0.09	%
Other time deposits			1,561,945			3,900		1.01	%			1,443,050			3,203		0.88	%			1,332,912			2,368		0.72	%
Total interest-bearing deposits			8,841,038			6,608		0.30	%			8,353,825			5,635		0.27	%			7,595,582			4,130		0.22	%
Brokered CD's			175,039			647		1.50	%			154,521			489		1.26	%			107,519			253		0.95	%
Total interest-bearing deposits and CD's			9,016,077			7,255		0.33	%			8,508,346			6,124		0.29	%			7,703,101			4,383		0.23	%
Federal funds purchased and interbank borrowings			261,353			1,017		1.58	%			172,838			533		1.22	%			189,070			356		0.76	%
Securities sold under agreements to repurchase			342,682			359		0.42	%			370,095			400		0.43	%			331,400			256		0.31	%
Federal Home Loan Bank advances			1,675,700			7,780		1.88	%			1,543,690			6,871		1.77	%			1,429,977			5,312		1.51	%
Other borrowings			248,828			2,723		4.38	%			241,695			2,650		4.39	%			218,965			2,360		4.31	%
Total borrowed funds			2,528,563			11,879		1.91	%			2,328,318			10,454		1.78	%			2,169,412			8,284		1.55	%
Total interest-bearing liabilities		$	11,544,640		$	19,134		0.67	%		$	10,836,664		$	16,578		0.61	%		$	9,872,513		$	12,667		0.52	%
Noninterest-Bearing Liabilities
Demand deposits		$	3,563,104								$	3,486,412								$	2,917,053
Other liabilities			170,061									159,243									150,392
Shareholders' equity			2,166,055									2,104,646									1,825,659
Total liabilities and shareholders' equity		$	17,443,860								$	16,586,965								$	14,765,617
Net interest rate spread								3.30	%								3.27	%								3.39	%
Net interest margin (FTE)								3.45	%								3.47	%								3.50	%
FTE adjustment					$	2,767								$	6,139								$	5,688
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.

Asset Quality (EOP) (unaudited)
($ in thousands)
	Three Months Ended
	March 31,			December 31,			March 31,
	2018			2017			2017
Beginning allowance for loan losses	$	50,381		$	50,169		$	49,808
Provision for loan losses		380			1,037			347
Gross charge-offs		(2,685	)		(3,278	)		(3,239	)
Gross recoveries		2,305			2,453			2,918
Net (charge-offs) recoveries		(380	)		(825	)		(321	)
Ending allowance for loan losses	$	50,381		$	50,381		$	49,834
Net charge-offs (recoveries) / average loans (1)		0.01	%		0.03	%		0.01	%
Average loans outstanding (1)	$	11,175,329		$	10,509,552		$	9,078,672
EOP loans outstanding (1)		11,238,682		$	11,118,121		$	9,131,773
Allowance for loan losses / EOP loans (1)		0.45	%		0.45	%		0.55	%
Underperforming Assets:
Loans 90 Days and over (still accruing)	$	328		$	894		$	381
Non-performing loans:
Nonaccrual loans (2)		127,295			124,927			115,377
Renegotiated loans		16,802			19,589			14,969
Total non-performing loans		144,097			144,516			130,346
Foreclosed properties		6,735			8,810			12,547
Total underperforming assets	$	151,160		$	154,220		$	143,274
Classified and Criticized Assets:
Nonaccrual loans (2)		127,295			124,927			115,377
Substandard accruing loans		118,123			100,762			104,171
Loans 90 days and over (still accruing)		328			894			381
Total classified loans - "problem loans"	$	245,746		$	226,583		$	219,929
Other classified assets		2,987			4,556			7,306
Criticized loans - "special mention loans"		174,873			188,085			95,881
Total classified and criticized assets	$	423,606		$	419,224		$	323,116
Non-performing loans / EOP loans (1)		1.28	%		1.30	%		1.43	%
Allowance to non-performing loans (3)		35	%		35	%		38	%
Under-performing assets / EOP loans (1)		1.35	%		1.39	%		1.57	%
EOP total assets	$	17,496,287		$	17,518,292		$	14,869,645
Under-performing assets / EOP assets		0.86	%		0.88	%		0.96	%
EOP - End of period actual balances
(1) Excludes loans held for sale.
(2) Includes renegotiated loans totaling $36.9 million at March 31, 2018, $34.0 million at December 31, 2017, and $34.2 million
at March 31, 2017.
(3) Includes acquired loans that were recorded at fair value in accordance with ASC 805 at the date of acquisition.  As such, the
credit risk was incorporated in the fair value recorded and no allowance for loan losses was recorded on the acquisition date.

Non-GAAP Measures (unaudited)
($ in thousands)
		Three Months Ended
		March 31,			December 31,			March 31,
		2018			2017			2017
	Actual End of Period Balances
	GAAP shareholders' equity	$	2,179,118		$	2,154,397		$	1,846,359
	Deduct:
	Goodwill		828,804			828,051			655,018
	Intangibles		48,833			53,096			34,657
			877,637			881,147			689,675
	Tangible shareholders' equity	$	1,301,481		$	1,273,250		$	1,156,684
	Average Balances
	GAAP shareholders' equity	$	2,166,055		$	2,104,646		$	1,825,659
	Deduct:
	Goodwill		828,141			776,862			655,018
	Intangibles		51,092			37,802			36,097
			879,233			814,664			691,115
	Average tangible shareholders' equity	$	1,286,822		$	1,289,982		$	1,134,544
	Actual End of Period Balances
	GAAP assets	$	17,496,287		$	17,518,292		$	14,869,645
	Add:
	Trust overdrafts		50			59			86
	Deduct:
	Goodwill		828,804			828,051			655,018
	Intangibles		48,833			53,096			34,657
			877,637			881,147			689,675
	Tangible assets	$	16,618,700		$	16,637,204		$	14,180,056
	Risk-weighted assets	$	12,523,432		$	12,491,430		$	10,171,517
	GAAP net income (loss)	$	47,983		$	(18,493	)	$	35,992
	Add:
	Amortization of intangibles (net of tax)		2,851			2,210			1,963
	Tangible net income (loss)	$	50,834		$	(16,284	)	$	37,955
	Tangible Ratios
	Return on tangible common equity		15.62	%		-5.12	%		13.13	%
	Return on average tangible common equity		15.80	%		-5.05	%		13.38	%
	Return on tangible assets		1.22	%		-0.39	%		1.07	%
	Tangible common equity to tangible assets		7.83	%		7.65	%		8.16	%
	Tangible common equity to risk-weighted assets		10.39	%		10.19	%		11.37	%
	Tangible common book value (1)		8.55			8.37			8.54
	Tangible common equity presentation includes other comprehensive income as is common in other company releases.
	(1) Tangible common shareholders' equity divided by common shares issued and outstanding at period-end.
	Tier 1 capital	$	1,341,261		$	1,298,327		$	1,191,735
	Deduct:
	Trust Preferred Securities (2)		-			-			45,000
	Additional Tier 1 capital deductions		-			(10,000	)		(16,100	)
			-			(10,000	)		28,900
	Tier 1 common equity	$	1,341,261		$	1,308,327		$	1,162,835
	Risk-weighted assets		12,523,432			12,491,430			10,171,517
	Tier 1 common equity to risk-weighted assets		10.71	%		10.47	%		11.43	%
	(2) Trust Preferred Securities are now included in Tier 2 capital as a result of exceeding the $15 billion asset threshold from the
	Anchor-Minnesota acquisition.