Financial Performance - Net interest income for Q2 2024 was $388,421,000, an increase from $382,171,000 in Q2 2023, reflecting a growth of 1.3% year-over-year[168] - Noninterest income for Q2 2024 was $87,271,000, compared to $81,629,000 in Q2 2023, representing a growth of 6.5%[168] - Net income available to common shareholders for Q2 2024 was $117,196,000, slightly down from $151,003,000 in Q2 2023, a decrease of 22.4%[168] - Net interest income for the six months ended June 30, 2024, was $744,879, a decrease of 2.9% from $763,659 in 2023[170] - Noninterest income rose to $164,793, an increase of 8.7% compared to $152,310 in the previous year[170] - Net income available to common shareholders decreased to $233,446, down 20.5% from $293,569 in 2023[170] - Net income applicable to common shares for June 30, 2024, was $117,196 thousand, a slight increase from $116,250 thousand in the previous quarter[177] - Adjusted net income per common share, diluted, for June 30, 2024, was $0.46, compared to $0.51 in the previous quarter[177] Loan and Deposit Growth - Total loans increased to $36,150,513,000 in Q2 2024 from $32,432,473,000 in Q2 2023, marking a growth of 11.1%[168] - Total deposits rose to $39,999,228,000 in Q2 2024, compared to $36,231,315,000 in Q2 2023, reflecting a growth of 7.6%[168] - Total loans increased to $36,150,513, up 11.0% from $32,432,473 in 2023[170] - Total deposits increased by $2.3 billion to $40.0 billion at June 30, 2024, including $2.1 billion from the CapStar transaction; excluding this, deposits were up 2.4% annualized[184] - Loan balances increased by $2.5 billion to $36.2 billion at June 30, 2024, including $2.1 billion from the CapStar transaction; excluding this, loans were up 5.9% annualized[185] Credit Losses and Provisions - Provision for credit losses increased to $36,214,000 in Q2 2024 from $14,787,000 in Q2 2023, indicating a significant rise in expected credit losses[168] - Provision for credit losses increased significantly to $55,105, up from $28,224, reflecting a rise of 95.5%[170] - Provision for credit losses was $36.2 million, reflecting net charge-offs and loan growth, compared to $18.9 million in Q1 2024[187] - Total net charge-offs increased by 39.2% to $(14.045) million for the three months ended June 30, 2024, compared to $(10.092) million in the same period in 2023[211] - The allowance for credit losses on loans was $366.3 million at June 30, 2024, an increase from $307.6 million at December 31, 2023, reflecting $23.9 million for acquired PCD loans from the CapStar acquisition[256] Operational Efficiency - The efficiency ratio for June 30, 2024, was 57.17%, compared to 51.66% in the previous quarter, indicating a decline in operational efficiency[177] - The efficiency ratio for Q2 2024 was 57.73%, compared to 52.01% in Q2 2023, indicating increased operational costs[192] - Noninterest expense for the three months ended June 30, 2024, was $282.999 million, a 14.8% increase from $246.584 million in the same period of 2023[215] - Excluding merger-related expenses, noninterest expense increased to $263.6 million for the three months ended June 30, 2024, compared to $240.6 million for the same period in 2023[216] Asset Growth - Total assets reached $53,119,645,000 in Q2 2024, up from $48,496,755,000 in Q2 2023, an increase of 9.3%[168] - Total assets grew to $53,119,645, representing an increase of 9.0% from $48,496,755[170] - Total assets as of June 30, 2024, were $53,119,645 thousand, an increase from $49,534,918 thousand in the previous quarter[177] - Total assets increased to $53.1 billion as of June 30, 2024, up $4.0 billion from $49.1 billion at December 31, 2023, primarily due to the acquisition of CapStar[219] Shareholder Returns - The common dividend payout ratio increased to 38% in Q2 2024 from 27% in Q2 2023, indicating a higher return to shareholders[168] - The common dividend payout ratio increased to 36% from 28% year-over-year[170] Acquisitions and Expansions - The company operates 280 banking centers as of Q2 2024, an increase from 256 in Q2 2023, indicating expansion in physical presence[168] - The acquisition of CapStar on April 1, 2024, added approximately $3.1 billion in total assets, $2.1 billion in total loans, and $2.6 billion in deposits[191] - The company expanded its banking centers to 280, an increase from 256 in the previous year[170] Interest Rate Management - The company’s interest rate management process aims to maximize net interest income while maintaining acceptable limits for interest rate risk[260] - The company’s earnings are sensitive to changes in interest rates, which arise from normal business activities such as gathering deposits and extending loans[261] - The company uses a model to quantify the impact of changing interest rates on projected net interest income over a two-year cumulative horizon[262] - The company may adjust balance sheet mix, change product pricing strategies, or use derivative financial instruments to manage interest rate risk[263] Credit Quality - Total nonaccrual loans increased to $340.2 million, up from $274.8 million, indicating a rise in credit risk[248] - Under-performing assets rose to $353.7 million, representing 0.98% of total loans, a 12 basis point increase from 0.86%[249] - The allowance for credit losses on loans was 107.69% of nonaccrual loans, down from 111.93% at the end of 2023[250] - Total criticized and classified assets increased to $2.2 billion as of June 30, 2024, up by $447.0 million from December 31, 2023, primarily due to higher criticized commercial real estate loans and $73.1 million related to the CapStar acquisition[251] Future Projections - Projected net interest income for June 30, 2024, is $6,920,597 thousand, reflecting a year-over-year increase due to loan growth and rising interest rates[264] - Total interest income is expected to rise from $4,272,879 thousand in 2024 to $6,920,597 thousand in 2026, indicating a growth of approximately 62% over two years[264] - Projected interest expense is anticipated to increase from $1,174,919 thousand in 2024 to $3,698,294 thousand in 2026, representing a growth of about 215%[264] - Net interest income is projected to change from $3,097,960 thousand in 2024 to $3,222,303 thousand in 2026, with a percentage change from base of 4.43%[264]

Financial Performance - Net interest income for Q1 2024 was $356,458,000, a decrease of 2.6% from $364,408,000 in Q4 2023[155] - Noninterest income decreased to $77,522,000 in Q1 2024 from $100,094,000 in Q4 2023, reflecting a decline of 22.5%[155] - Net income available to common shareholders was $116,250,000 in Q1 2024, down from $128,446,000 in Q4 2023, a decrease of 9.1%[155] - Net income applicable to common shares for Q1 2024 was $116.3 million, or $0.40 per diluted common share, down from $128.4 million, or $0.44 per diluted common share in Q4 2023[166] - Adjusted net income for Q1 2024 was $130.8 million, or $0.45 per diluted common share, compared to $134.6 million, or $0.46 per diluted common share in Q4 2023[167] Credit Losses and Provisions - Provision for credit losses increased to $18,891,000 in Q1 2024 from $11,595,000 in Q4 2023, indicating a rise in expected credit losses[155] - Provision for credit losses rose by $7.3 million to $18.9 million, reflecting net charge-offs and loan growth[169] - Total provision for credit losses increased by 40.6% to $18.891 million for the three months ended March 31, 2024, from $13.437 million in the same period in 2023[188] - The allowance for credit losses on loans was $319.7 million at March 31, 2024, compared to $307.6 million at December 31, 2023, indicating a potential increase in provision expense due to loan growth and changes in credit quality[230] Loans and Deposits - Total loans increased to $33,623,319,000 in Q1 2024, up from $32,991,927,000 in Q4 2023, representing a growth of 1.9%[155] - Total deposits rose to $37,699,418,000 in Q1 2024, compared to $37,235,180,000 in Q4 2023, an increase of 1.2%[155] - Loan balances increased by $631.4 million to $33.6 billion, driven by disciplined commercial and commercial real estate loan growth[168] - Total deposits increased by $464.2 million to $37.7 billion, reflecting efforts to attract new client relationships[168] Efficiency and Ratios - The efficiency ratio was 58.34% in Q1 2024, slightly improved from 59.05% in Q4 2023[155] - The return on average assets decreased to 0.98% in Q1 2024 from 1.09% in Q4 2023[155] - The Tier 1 common equity ratio improved to 10.76% in Q1 2024 from 10.70% in Q4 2023[155] - The efficiency ratio increased to 58.34% from 52.81% year-over-year, indicating a decline in operational efficiency[173] Assets and Investments - Assets increased by $445.1 million to $49.5 billion at March 31, 2024, compared to $49.1 billion at December 31, 2023[194] - Earning assets grew by $534.2 million to $44.5 billion at March 31, 2024, compared to $43.9 billion at December 31, 2023[195] - The investment securities portfolio, including equity securities, was $10.2 billion, representing 23% of earning assets at both March 31, 2024, and December 31, 2023[197] Tax and Regulatory Compliance - The effective tax rate was 21.3% for the three months ended March 31, 2024, down from 22.0% for the same period in 2023[193] - The company exceeded regulatory capital requirements, with a Tier 1 capital ratio of 8.96% as of March 31, 2024, compared to 8.83% at the end of 2023[215] Risk Management - The company's stress testing process incorporates key risks including strategic, market, liquidity, credit, operational, regulatory, compliance, legal, and reputational risks[217] - Old National's interest rate risk management aims to maximize net interest income while maintaining adequate levels of funding and liquidity[234] Future Projections - Projected net interest income for March 31, 2024, is $6,360,479 thousand, an increase from $5,504,768 thousand in the previous year, reflecting growth due to loan growth and rising interest rates[239] - Total interest income is expected to rise from $3,155,024 thousand in March 31, 2023, to $6,360,479 thousand in March 31, 2024, indicating a year-over-year increase of approximately 102%[239] - Projected interest expense is anticipated to increase from $680,872 thousand in March 31, 2023, to $3,243,938 thousand in March 31, 2024, representing a significant rise of about 376%[239]

Financial Performance - Net income applicable to common shareholders reached $565.9 million, or $1.94 per diluted common share, representing a significant increase compared to the previous year [224]. - Net income available to common shareholders rose to $565,857, up 36.6% from $414,169 in the previous year [232]. - The diluted net income per share increased to $1.94, compared to $1.50 in 2022, reflecting a growth of 29.3% [232]. - The return on average assets was 1.09% for the fourth quarter of 2023, down from 1.74% in the same quarter of the previous year [230]. - Return on average assets increased to 1.21%, compared to 0.99% in 2022, showing enhanced profitability [232]. - The efficiency ratio improved to 53.70%, down from 57.97% in the previous year, indicating better cost management [232]. - Net charge-offs for the year 2023 totaled $55.9 million, significantly higher than $16.1 million in 2022, reflecting increased credit risk [327]. Revenue and Income Sources - Net interest income increased to $1.5 billion in 2023, up from $1.3 billion in 2022, driven by a higher interest rate environment and disciplined loan growth of 6% [223][224]. - Noninterest income decreased from $399.8 million in 2022 to $333.3 million in 2023, primarily due to a prior year gain on the sale of health savings accounts [225]. - Total interest income for 2023 is projected to be $3,757,744 thousand, compared to $3,285,208 thousand in 2022, reflecting an increase due to loan growth and rising interest rates [337]. - The total interest expense for 2023 is projected to be $925,434 thousand, compared to $719,090 thousand in 2022, indicating an increase in costs associated with funding [337]. Asset and Loan Growth - Old National's total assets reached $49.1 billion as of December 31, 2023, compared to $46.8 billion a year earlier [230]. - Total loans increased to $32,991,927, up 6.0% from $31,123,641 in 2022 [232]. - Total loans reached $32,241,367 in 2023, an increase of $4.6 billion compared to 2022, driven by the First Midwest merger and strong organic growth [258]. - Average loans for the year 2023 amounted to $32.2 billion, compared to $27.6 billion in 2022, showing a growth in the loan portfolio [326]. Credit Quality and Provisions - Provision for credit losses decreased significantly to $58,887 from $144,799, indicating improved credit quality [232]. - The allowance for credit losses on loans was $307.6 million at December 31, 2023, slightly up from $303.7 million at December 31, 2022 [293]. - The allowance for credit losses on loans as a percentage of year-end loans was 0.93% in 2023, slightly down from 0.98% in 2022 [326]. - The net charge-offs to average loans outstanding ratio for total loans was 0.17% in 2023, up from 0.06% in 2022, indicating a rise in credit losses relative to the loan portfolio [327]. Deposits and Funding - Total deposits grew by 6% year-over-year, reflecting a strong deposit franchise [224]. - Total deposits increased to $37,235,180, a rise of 6.4% from $35,000,830 in 2022 [232]. - Noninterest-bearing demand deposits decreased by $2.27 billion, or 19%, while interest-bearing deposits increased by $4.5 billion, reflecting a shift due to the rising rate environment [296]. - Total funding increased by $1.98 billion, or 5%, to $42.57 billion at December 31, 2023, compared to $40.59 billion at December 31, 2022 [296]. Mergers and Acquisitions - The company announced a definitive merger agreement to acquire CapStar, which has approximately $3.3 billion in total assets, expected to close in Q2 2024 [226]. - Noninterest expense decreased by $11.9 million in 2023 compared to 2022, despite including $28.7 million of merger-related expenses [225]. Tax and Regulatory Matters - Effective tax rate increased to 22.5% in 2023 from 21.4% in 2022, reflecting higher pre-tax book income and non-deductible FDIC premiums [272]. - The company is subject to complex U.S. income tax laws, which are reviewed quarterly for tax expense and deferred tax assets [371]. Risk Management and Operational Efficiency - The bank's operational risk management includes frameworks to mitigate cybersecurity risks and ensure effective client service [351]. - The Federal Reserve Bank will cease making new loans under its Term Funding Program as scheduled on March 11, 2024, which may affect liquidity strategies [348].

Financial Performance - Net interest income for Q3 2023 was $375.086 million, a decrease of 4.4% from $391.090 million in Q4 2022[172]. - Net income available to common shareholders for Q3 2023 was $143.842 million, down from $196.701 million in Q4 2022, representing a decline of 26.8%[172]. - Net income applicable to common shareholders for Q3 2023 was $143.8 million, or $0.49 per diluted share, compared to $151.0 million, or $0.52 per diluted share in Q2 2023[191]. - Net income available to common shareholders rose to $437,411, up 101.0% from $217,468 in the previous year[176]. - Return on average assets for Q3 2023 was 1.22%, down from 1.74% in Q4 2022, reflecting a decline in profitability[172]. - Return on average assets improved to 1.25% from 0.72%, while return on average common equity increased to 11.66% from 6.26%[176]. Loan and Asset Growth - Total loans increased to $32.578 billion in Q3 2023, up from $31.124 billion in Q4 2022, indicating a growth of 4.7%[172]. - Total loans increased to $32,577,834, a growth of 6.7% compared to $30,528,933 in 2022[176]. - Total assets reached $49.059 billion as of September 30, 2023, compared to $46.763 billion at the end of 2022, marking an increase of 4.9%[172]. - Total assets grew to $48,660,523 thousand, up from $45,915,823 thousand in the previous year[205]. - The loan portfolio increased by $1.454 billion (4.7%) to $32.577 billion at September 30, 2023, compared to $31.123 billion at December 31, 2022[242]. Credit Quality and Loss Provisions - Provision for credit losses increased to $19.068 million in Q3 2023 from $11.408 million in Q4 2022, reflecting a rise in credit risk[172]. - Provision for credit losses decreased significantly to $47,292 from $133,391, reflecting improved credit quality[176]. - Non-performing loans to ending loans ratio was 0.80% in Q3 2023, a slight improvement from 0.81% in Q4 2022, suggesting better asset quality[172]. - Total provision for credit losses was $19.068 million for the three months ended September 30, 2023, an increase of 23.1% compared to $15.490 million in 2022[221]. - The allowance for credit losses on loans was $300,071 thousand, slightly increased from $290,215 thousand in the previous year[205]. Efficiency and Cost Management - The efficiency ratio for Q3 2023 was 51.66%, slightly higher than 49.12% in Q4 2022, indicating a decrease in operational efficiency[172]. - The efficiency ratio improved to 51.89% from 62.17%, indicating better cost management[176]. - Noninterest expense decreased by $1.8 million compared to Q2 2023, including $6.3 million of merger-related expenses in Q3 2023[197]. - Noninterest expense decreased by $17.7 million (6.7%) for the three months ended September 30, 2023, and by $13.4 million (1.8%) for the nine months ended September 30, 2023, compared to the same periods in 2022[228][229]. Dividends and Shareholder Equity - The company maintained a cash dividend of $0.14 per share for Q3 2023, consistent with previous quarters[172]. - Cash dividends remained stable at $0.42 per share, with a dividend payout ratio reduced to 28% from 53%[176]. - Shareholders' equity totaled $5.2 billion, up from $5.1 billion as of December 31, 2022, driven by retained earnings[254]. Deposits and Funding - Total deposits increased by $1.0 billion, or 3%, to $37.3 billion as of September 30, 2023, reflecting efforts to attract new client relationships[193]. - Total deposits rose to $37.25 billion, an increase of $2.25 billion or 6% from $35.00 billion as of December 31, 2022[253]. - Time deposits increased significantly by $2.56 billion, representing an 85% increase compared to December 31, 2022[253]. - The total funding increased to $42.81 billion, reflecting a growth of $2.22 billion or 5% from $40.59 billion as of December 31, 2022[253]. Risk Management and Capital Adequacy - The Tier 1 common equity ratio improved to 10.41% in Q3 2023 from 10.03% in Q4 2022, indicating stronger capital adequacy[172]. - Old National's Tier 1 capital to total average assets ratio was 8.70% as of September 30, 2023, compared to 8.52% at December 31, 2022[257]. - The company maintains a risk appetite statement to assess and mitigate various risks, including credit, market, and liquidity risks[260]. - Old National's stress testing process incorporates various risks to ensure sufficient capital during economic stress, aligning strategic decisions with the company's risk appetite[259]. Interest Income and Rate Management - Net interest income for the nine months ended September 30, 2023, was $1,138,745 thousand, yielding 3.54%, compared to $936,846 thousand at 3.29% in the same period of 2022[207]. - The company’s interest rate management process aims to maximize net interest income while managing interest rate risk within acceptable limits[275]. - Projected net interest income for September 30, 2023, is $3,688,789 thousand, showing a year-over-year increase due to loan growth and rising interest rates[279]. - Total interest income is projected to reach $5,773,747 thousand with a 4.60% increase from the base in an immediate rate increase scenario of +200 basis points[279].

Financial Performance - Net interest income for Q2 2023 was $382.171 million, a slight increase from $381.488 million in Q1 2023, but down from $391.090 million in Q4 2022[174] - Noninterest income increased to $81.629 million in Q2 2023, compared to $70.681 million in Q1 2023, but decreased from $165.037 million in Q4 2022[174] - Net income available to common shareholders for Q2 2023 was $151.003 million, up from $142.566 million in Q1 2023, but down from $196.701 million in Q4 2022[174] - Net interest income for the six months ended June 30, 2023, was $763,659,000, an increase of 36.3% from $560,257,000 in 2022[178] - Net income available to common shareholders rose to $293,569,000, compared to $81,349,000 in the same period last year, marking a 260.5% increase[178] - For the second quarter of 2023, net income applicable to common shareholders was $151.0 million, or $0.52 per diluted common share, compared to $142.6 million, or $0.49 per diluted common share in the first quarter of 2023, reflecting a 36.1% increase[193] Asset and Loan Growth - Total loans increased to $32.432 billion as of June 30, 2023, from $31.822 billion at the end of Q1 2023[174] - Total assets reached $48.497 billion as of June 30, 2023, compared to $47.843 billion at the end of Q1 2023[174] - Total loans increased to $32,432,473,000, up from $29,553,648,000, representing an increase of 9.5%[178] - Total assets grew to $48,496,755,000, compared to $45,748,355,000, reflecting a growth of 6.0%[178] - Total deposits increased by $1.3 billion, or 4%, to $36.2 billion as of June 30, 2023, driven by efforts to attract new client relationships and seasonal patterns in public funds[195] - Loan balances, excluding loans held for sale, rose by $610.1 million to $32.4 billion at June 30, 2023, primarily due to disciplined commercial real estate loan growth[196] Efficiency and Profitability Ratios - The efficiency ratio improved to 51.22% in Q2 2023, down from 52.81% in Q1 2023, indicating better cost management[174] - Return on average assets for Q2 2023 was 1.29%, an increase from 1.25% in Q1 2023[174] - Return on average assets improved to 1.27% from 0.43%, while return on average common equity increased to 11.80% from 3.62%[178] - The efficiency ratio improved to 52.01% from 66.59%, indicating better cost management[178] - Return on tangible common equity for the six months ended June 30, 2023, was 21.19%, significantly up from 6.84% in the prior year[201] Credit Quality and Risk - Non-performing loans to ending loans ratio increased to 0.91% in Q2 2023, up from 0.74% in Q1 2023, indicating a potential rise in credit risk[174] - Provision for credit losses decreased significantly to $28,224,000 from $117,901,000, reflecting improved credit quality[178] - Non-performing loans to ending loans increased to 0.91% from 0.78%, indicating a slight deterioration in asset quality[178] - The allowance for credit losses on loans was $301,311 thousand as of June 30, 2023, compared to $282,943 thousand a year earlier, indicating a slight increase in provisions[208] - Net charge-offs on loans totaled $10.1 million for the three months ended June 30, 2023, compared to $1.8 million for the same period in 2022, reflecting an increase in annualized net charge-offs to average loans from 0.02% to 0.13%[272] Capital and Liquidity - The Tier 1 common equity ratio was 10.14% as of June 30, 2023, up from 9.98% at the end of Q1 2023[174] - The company maintained a strong capital position with a Common equity Tier 1 capital ratio of 10.14% as of June 30, 2023, compared to the regulatory minimum of 7.00%[262] - Old National's total funding, including deposits and wholesale borrowings, reached $42.27 billion, reflecting a 4% increase from the previous year[256] - Old National Bank's total available funds amount to $10,629,010 thousand as of June 30, 2023, providing a strong liquidity position[292] - The company maintains strategic and contingency liquidity plans to ensure sufficient funding for balance sheet growth and unexpected liquidity requirements[287] Interest Rate Management - The company’s interest rate risk management aims to maximize net interest income while adhering to established limits for interest rate risk[280] - Projected net interest income for June 30, 2023, is $2,785,329 thousand, showing a year-over-year increase due to loan growth and rising interest rates[284] - Total interest income projected for June 30, 2023, is $5,125,214 thousand, with a 5.19% increase from the base in a +100 basis points scenario[284] - The net interest income sensitivity analysis indicates a potential increase of $241,699 thousand (7.79%) in a +300 basis points scenario compared to the base[284] Market and Economic Conditions - The effective tax rate increased to 23.4% for the three months ended June 30, 2023, compared to 17.8% for the same period in 2022[237] - The investment securities portfolio, including equity securities, was $10.0 billion at June 30, 2023, down from $10.2 billion at December 31, 2022[242] - The annualized average yields on investment securities were 3.09% and 3.02% for the three and six months ended June 30, 2023, respectively, compared to 2.37% and 2.26% for the same periods in 2022[245]

Financial Performance - Net interest income for Q1 2023 was $381,488,000, a decrease of 2% from $391,090,000 in Q4 2022[172] - Noninterest income dropped significantly to $70,681,000 in Q1 2023 from $165,037,000 in Q4 2022, reflecting a decline of approximately 57%[172] - Net income available to common shareholders for Q1 2023 was $142,566,000, down 27.5% from $196,701,000 in Q4 2022[172] - Net income applicable to common shareholders for Q1 2023 was $142.6 million, or $0.49 per diluted share, compared to $196.7 million, or $0.67 per diluted share in Q4 2022, and a net loss of $29.6 million, or $(0.13) per diluted share in Q1 2022[185] - The return on average assets decreased to 1.25% in Q1 2023 from 1.74% in Q4 2022, indicating reduced profitability[172] - Return on tangible common equity for Q1 2023 was 20.20%, compared to (3.61)% in Q1 2022[191] Asset and Loan Growth - Total loans increased to $31,822,374,000 as of March 31, 2023, compared to $31,123,641,000 at the end of 2022, marking a growth of 2.2%[172] - Loan balances increased by $698.7 million to $31.8 billion at March 31, 2023, primarily driven by disciplined commercial loan growth[188] - Total loans increased by $10.5 billion for the three months ended March 31, 2023, compared to the same period in 2022, driven by the First Midwest merger and organic loan growth[205] - Commercial and commercial real estate loans reached $22.7 billion, an increase of $694.3 million compared to December 31, 2022[221] - As of March 31, 2023, total outstanding loans reached $12.9 billion, an increase from $12.5 billion as of December 31, 2022, representing a growth of 3.6%[225] Income and Expense Analysis - Noninterest income decreased by $94.4 million to $70.7 million compared to Q4 2022, impacted by $5.2 million in net debt securities losses and a prior gain of $90.7 million on health savings accounts[189] - Noninterest expense decreased by $32.0 million compared to Q4 2022, primarily due to lower merger-related and property optimization expenses[190] - Total noninterest expense increased by $35.1 million to $250.7 million for the three months ended March 31, 2023, reflecting additional operating costs from the First Midwest merger[210] - Salaries and employee benefits rose by 10.6% to $137.4 million, and marketing expenses surged by 120.2% to $9.4 million[210] Capital and Liquidity - The Tier 1 common equity ratio was 9.98% as of March 31, 2023, slightly down from 10.03% at the end of 2022[172] - The company maintained a strong capital position, with Tier 1 capital to total average assets at 8.53% as of March 31, 2023[233] - The allowance for credit losses on loans was $298.7 million at March 31, 2023, down from $303.7 million at December 31, 2022[248] - The allowance for credit losses on unfunded loan commitments increased to $34.2 million at March 31, 2023, from $32.2 million at December 31, 2022[249] - Old National Bank has $5,310,000 thousand available from the Federal Home Loan Bank, enhancing its liquidity options[264] Efficiency and Operational Metrics - The efficiency ratio for Q1 2023 was 52.81%, an increase from 49.12% in Q4 2022, suggesting a decline in operational efficiency[172] - The efficiency ratio improved to 52.81% in Q1 2023 from 72.32% in Q1 2022[191] - The net interest margin for Q1 2023 was 3.69%, down from 3.85% in Q4 2022[191] - The total interest income for the three months ended March 31, 2023, was $501.3 million, compared to $239.3 million for the same period in 2022, marking a significant increase[198] Market and Economic Conditions - Moody's Investors Service affirmed Old National's long-term senior unsecured debt rating at "A3" and changed the outlook to "negative" from "stable" on April 21, 2023[262] - The effective tax rate decreased to 22.0% for the three months ended March 31, 2023, down from 24.0% in the same period of 2022, primarily due to higher tax-exempt income[212] - The fair value loss of derivatives designated as hedging instruments was $25.8 million at March 31, 2023, down from $36.1 million at December 31, 2022[258] Strategic Initiatives - The company maintains strategic and contingency liquidity plans to ensure sufficient funding for balance sheet growth and to address unexpected liquidity requirements[259] - Management continuously monitors marketplace trends to improve the predictability of deposit flows and asset prepayments[260] - The company has a shelf registration with the SEC, allowing for ready access to public debt and equity markets[264]

Financial Performance - Old National's net interest income increased to $1.3 billion in 2022, up from $596.4 million in 2021, driven by the First Midwest merger and loan growth[202]. - Noninterest income rose from $214.2 million in 2021 to $399.8 million in 2022, including a $90.7 million gain from the sale of health savings accounts[202]. - The company reported net income applicable to common shareholders of $414.2 million, or $1.50 per diluted common share[203]. - Net interest income for 2022 reached $1,327,936, a significant increase from $596,400 in 2021, reflecting a growth of 122.3%[216]. - Noninterest income increased to $399,779 in 2022, compared to $214,219 in 2021, representing an increase of 86.5%[216]. - Net income applicable to common shareholders increased to $414,169 in 2022, compared to $277,538 in 2021, marking a growth of approximately 49%[228]. - Return on average assets decreased to 0.99% in 2022 from 1.17% in 2021, indicating a decline in profitability relative to assets[216]. - The return on tangible common equity for 2022 was 15.72%, up from 14.74% in 2021, indicating improved profitability[228]. Loan and Deposit Growth - Total loans reached $31.1 billion as of December 31, 2022, compared to $30.5 billion at the end of the previous quarter[213]. - Total loans grew to $31,123,641 in 2022, up from $13,601,846 in 2021, marking an increase of 128.5%[216]. - Total deposits increased by 88% to $35.0 billion at December 31, 2022, compared to $18.6 billion at December 31, 2021, with significant growth in noninterest-bearing demand deposits, which rose by 89%[280]. - The loan portfolio constituted 71% of average interest-earning assets in 2022, up from 65% in 2021[242]. - The commercial real estate loan portfolio reached $12.5 billion at December 31, 2022, a significant increase from $6.4 billion at December 31, 2021[271]. Merger Impact - Old National completed its merger with First Midwest, acquiring $21.9 billion in assets and assuming $17.2 billion in deposits[204]. - Average earning assets increased to $38,751,786 in 2022 from $21,152,209 in 2021, reflecting growth in the asset base[226]. - Average non-interest-bearing deposits increased by $5.6 billion in 2022 compared to 2021, largely due to the First Midwest merger[244]. - The allowance for credit losses on loans increased to $303.7 million at December 31, 2022, up from $107.3 million at December 31, 2021, reflecting adjustments from the First Midwest merger[274]. - Goodwill and other intangible assets increased to $2.1 billion at December 31, 2022, up by $1.1 billion from December 31, 2021, as a result of the First Midwest merger[277]. Efficiency and Cost Management - The efficiency ratio improved to 49.12% in Q4 2022, down from 55.26% in Q3 2022, indicating better cost management[213]. - The efficiency ratio improved to 57.97% in 2022 from 59.75% in 2021, showing enhanced operational efficiency[216]. - Total noninterest expense rose to $1,038.2 million in 2022, a 107.1% increase from $501.4 million in 2021, reflecting additional operating costs from the First Midwest merger and $120.9 million in merger-related expenses[249]. Credit Quality - The bank's credit quality remained strong, with net charge-offs to average loans at 0.06%[203]. - Provision for credit losses was $144,799 in 2022, compared to a reversal of $(29,622) in 2021, reflecting a significant shift in credit quality assessment[216]. - The total allowance for credit losses on unfunded loan commitments was $32.2 million at December 31, 2022, compared to $10.9 million at December 31, 2021, driven by the merger and organic loan growth[275]. - Nonaccrual loans increased by $131.5 million from December 31, 2021, to December 31, 2022, with an allowance for credit losses on loans at 127.50%[304]. Tax and Regulatory Matters - The effective tax rate increased to 21.4% in 2022 from 18.1% in 2021, attributed to higher pre-tax book income and increased state effective tax rates post-merger[252]. - The company is subject to various legal actions and proceedings incidental to its business operations, which may affect its financial condition[343]. - The effective income tax rate may be materially affected by favorable or unfavorable tax settlements, impacting the company's financial results[357]. Strategic Outlook - Old National plans to focus on organic loan growth and maintain disciplined underwriting as it enters 2023[211]. - The Federal Reserve's Federal Funds Rate target range was 4.25% to 4.50% at year-end 2022, with expectations for further increases in 2023[231].