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]
OLD NATIONAL BAN(ONBPO) - 2023 Q1 - Quarterly Report