OLD NATIONAL BAN(ONBPP) - 2023 Q2 - Quarterly Report

Financial Performance - Net interest income for Q2 2023 was $382,171,000, a slight increase from $381,488,000 in Q1 2023, but down from $391,090,000 in Q4 2022[174] - Noninterest income for Q2 2023 was $81,629,000, compared to $70,681,000 in Q1 2023 and $165,037,000 in Q4 2022, indicating a significant drop from the previous quarter[174] - Net income available to common shareholders for Q2 2023 was $151,003,000, up from $142,566,000 in Q1 2023 but down from $196,701,000 in Q4 2022[174] - 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] - Net income applicable to common shareholders for Q2 2023 was $151.0 million, or $0.52 per diluted common share, compared to $142.6 million, or $0.49 per diluted common share in Q1 2023, reflecting a 36.1% increase[193] Asset and Loan Growth - Total loans increased to $32,432,473,000 in Q2 2023 from $31,822,374,000 in Q1 2023, reflecting a growth trend[174] - Total loans increased to $32,432,473,000, up from $29,553,648,000, representing an increase of 9.5%[178] - Total assets reached $48,496,755,000 in Q2 2023, up from $47,842,644,000 in Q1 2023[174] - Total assets grew to $48,496,755,000, compared to $45,748,355,000, reflecting a growth of 6.0%[178] - Total earning assets increased to $43,097,198 thousand in Q2 2023, up from $41,003,338 thousand in Q2 2022, representing a growth of 5.1%[208] - The loan portfolio totaled $32.4 billion at June 30, 2023, an increase of $1.3 billion or 4% from $31.1 billion at December 31, 2022[246] Efficiency and Cost Management - The efficiency ratio improved to 51.22% in Q2 2023 from 52.81% in Q1 2023, indicating better cost management[174] - The efficiency ratio improved to 52.01% from 66.59%, indicating better cost management[178] - Noninterest expense decreased by $4.1 million compared to Q1 2023, with significant reductions in merger-related expenses[199] - Noninterest expense decreased by $30.9 million for the three months ended June 30, 2023, compared to the same period in 2022, with total noninterest expense at $246.6 million[231] Credit Quality and Risk - Non-performing loans to ending loans ratio increased to 0.91% in Q2 2023 from 0.74% in Q1 2023, indicating a rise in credit risk[174] - Provision for credit losses decreased significantly to $28,224,000 from $117,901,000, reflecting improved credit quality[178] - Total provision for credit losses increased by $14.8 million (61.3%) for the three months ended June 30, 2023, compared to the same period in 2022[223] - The allowance for credit losses on loans was $300.6 million at June 30, 2023, slightly down from $303.7 million at December 31, 2022[276] - The allowance for credit losses on unfunded loan commitments increased to $37.0 million at June 30, 2023, compared to $32.2 million at December 31, 2022[277] Capital and Dividends - The Tier 1 common equity ratio was 10.14% in Q2 2023, up from 9.98% in Q1 2023, showing improved capital strength[174] - Cash dividends remained stable at $0.28 per share, with a dividend payout ratio decreasing to 28% from 90%[178] - Shareholders' equity increased to $5.3 billion, up from $5.1 billion, driven by retained earnings and unrealized gains[258] - The Tier 1 capital to total average assets ratio was 8.59% as of June 30, 2023, exceeding the regulatory minimum of 4%[261] Deposits and Funding - 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] - Total deposits rose to $36.2 billion, an increase of $1.2 billion or 4% from $35.0 billion as of December 31, 2022[256] - Old National's total funding increased to $42.3 billion, reflecting a growth of 4% from $40.6 billion[256] Interest Rate and Liquidity Management - The interest rate risk management process aims to maximize net interest income while adhering to established limits for interest rate risk[280] - Liquidity management strategies include maintaining strategic and contingency liquidity plans to ensure sufficient funding for balance sheet growth[287] - The company recognizes that interest rate risk modeling is influenced by various factors beyond market interest rates, affecting net interest income[285] Market Ratings and Securities - Moody's Investors Service rates Old National with a long-term rating of A3 and its banking subsidiary with Aa3 negative outlook as of June 30, 2023[291] - The investment securities portfolio, including equity securities, was $10.0 billion at June 30, 2023, compared to $10.2 billion at December 31, 2022[242]