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]
OLD NATIONAL BAN(ONBPO) - 2023 Q2 - Quarterly Report