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].
OLD NATIONAL BAN(ONBPO) - 2022 Q4 - Annual Report