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].
OLD NATIONAL BAN(ONBPO) - 2023 Q3 - Quarterly Report