Financial Performance - Net income applicable to common shareholders reached $565.9 million, or $1.94 per diluted common share, representing a significant increase compared to the previous year [224]. - Net income available to common shareholders rose to $565,857, up 36.6% from $414,169 in the previous year [232]. - The diluted net income per share increased to $1.94, compared to $1.50 in 2022, reflecting a growth of 29.3% [232]. - The return on average assets was 1.09% for the fourth quarter of 2023, down from 1.74% in the same quarter of the previous year [230]. - Return on average assets increased to 1.21%, compared to 0.99% in 2022, showing enhanced profitability [232]. - The efficiency ratio improved to 53.70%, down from 57.97% in the previous year, indicating better cost management [232]. - Net charge-offs for the year 2023 totaled $55.9 million, significantly higher than $16.1 million in 2022, reflecting increased credit risk [327]. Revenue and Income Sources - Net interest income increased to $1.5 billion in 2023, up from $1.3 billion in 2022, driven by a higher interest rate environment and disciplined loan growth of 6% [223][224]. - Noninterest income decreased from $399.8 million in 2022 to $333.3 million in 2023, primarily due to a prior year gain on the sale of health savings accounts [225]. - Total interest income for 2023 is projected to be $3,757,744 thousand, compared to $3,285,208 thousand in 2022, reflecting an increase due to loan growth and rising interest rates [337]. - The total interest expense for 2023 is projected to be $925,434 thousand, compared to $719,090 thousand in 2022, indicating an increase in costs associated with funding [337]. Asset and Loan Growth - Old National's total assets reached $49.1 billion as of December 31, 2023, compared to $46.8 billion a year earlier [230]. - Total loans increased to $32,991,927, up 6.0% from $31,123,641 in 2022 [232]. - Total loans reached $32,241,367 in 2023, an increase of $4.6 billion compared to 2022, driven by the First Midwest merger and strong organic growth [258]. - Average loans for the year 2023 amounted to $32.2 billion, compared to $27.6 billion in 2022, showing a growth in the loan portfolio [326]. Credit Quality and Provisions - Provision for credit losses decreased significantly to $58,887 from $144,799, indicating improved credit quality [232]. - The allowance for credit losses on loans was $307.6 million at December 31, 2023, slightly up from $303.7 million at December 31, 2022 [293]. - The allowance for credit losses on loans as a percentage of year-end loans was 0.93% in 2023, slightly down from 0.98% in 2022 [326]. - The net charge-offs to average loans outstanding ratio for total loans was 0.17% in 2023, up from 0.06% in 2022, indicating a rise in credit losses relative to the loan portfolio [327]. Deposits and Funding - Total deposits grew by 6% year-over-year, reflecting a strong deposit franchise [224]. - Total deposits increased to $37,235,180, a rise of 6.4% from $35,000,830 in 2022 [232]. - Noninterest-bearing demand deposits decreased by $2.27 billion, or 19%, while interest-bearing deposits increased by $4.5 billion, reflecting a shift due to the rising rate environment [296]. - Total funding increased by $1.98 billion, or 5%, to $42.57 billion at December 31, 2023, compared to $40.59 billion at December 31, 2022 [296]. Mergers and Acquisitions - The company announced a definitive merger agreement to acquire CapStar, which has approximately $3.3 billion in total assets, expected to close in Q2 2024 [226]. - Noninterest expense decreased by $11.9 million in 2023 compared to 2022, despite including $28.7 million of merger-related expenses [225]. Tax and Regulatory Matters - Effective tax rate increased to 22.5% in 2023 from 21.4% in 2022, reflecting higher pre-tax book income and non-deductible FDIC premiums [272]. - The company is subject to complex U.S. income tax laws, which are reviewed quarterly for tax expense and deferred tax assets [371]. Risk Management and Operational Efficiency - The bank's operational risk management includes frameworks to mitigate cybersecurity risks and ensure effective client service [351]. - The Federal Reserve Bank will cease making new loans under its Term Funding Program as scheduled on March 11, 2024, which may affect liquidity strategies [348].
OLD NATIONAL BAN(ONBPO) - 2023 Q4 - Annual Report