Old National Bancorp(US:ONB)2023-02-22 19:57Financial 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 [201]. - 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 [201]. - Net income applicable to common shareholders was $414.2 million, or $1.50 per diluted common share, reflecting strong performance [201]. - The net interest margin expanded by 58 basis points, supported by robust loan growth of 12% [201]. - Net interest income for 2022 reached $1,327,936, a significant increase from $596,400 in 2021, representing a growth of approximately 122.3% [215]. - Noninterest income increased to $399,779 in 2022, up from $214,219 in 2021, reflecting an increase of about 86.5% [215]. - Net income applicable to common shareholders increased to $414,169 in 2022, compared to $277,538 in 2021, marking a growth of approximately 49% [227]. - The return on tangible common equity for 2022 was 15.72%, up from 14.74% in 2021, indicating improved profitability [227]. Asset and Loan Growth - Total assets reached $46.76 billion as of December 31, 2022, compared to $46.22 billion in the previous quarter [212]. - Old National's total loans increased to $31.12 billion, up from $30.53 billion in the previous quarter [212]. - Total loans grew to $31,123,641 in 2022, compared to $13,601,846 in 2021, marking an increase of approximately 129.0% [215]. - Average earning assets increased to $38,751,786 in 2022 from $21,152,209 in 2021, reflecting growth in the asset base [225]. - The loan portfolio totaled $31.1 billion at December 31, 2022, compared to $13.6 billion at December 31, 2021, with significant increases in commercial and commercial real estate loans [265]. - Commercial and commercial real estate loans increased to $22.0 billion at December 31, 2022, up $12.2 billion from the previous year, representing 53% of earning assets [267]. Merger Impact - Old National completed its merger with First Midwest, acquiring $21.9 billion in assets and assuming $17.2 billion in deposits [202]. - Average non-interest-bearing deposits increased by $5.6 billion in 2022 compared to 2021, largely due to the First Midwest merger [243]. - Total deposits rose to $35.0 billion at December 31, 2022, an increase of $16.4 billion or 88% compared to $18.6 billion in 2021 [279]. - Goodwill and other intangible assets totaled $2.1 billion at December 31, 2022, an increase of $1.1 billion due to the First Midwest merger [276]. - Total under-performing assets increased to $267.0 million at December 31, 2022, compared to $127.1 million at December 31, 2021, largely due to the First Midwest merger [303]. Credit Quality and Losses - The 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 [215]. - The allowance for credit losses on loans increased to $303.7 million at December 31, 2022, compared to $107.3 million in 2021, reflecting adjustments from the First Midwest merger [273]. - Net charge-offs for the year 2022 totaled $16.1 million, compared to a recovery of $4.8 million in 2021 [316]. - The allowance for credit losses on loans as a percentage of year-end loans was 1.08% at December 31, 2022, compared to 0.87% in 2021 [315]. - The company may experience volatility in provision expense due to changes in credit quality and macroeconomic conditions [317]. Operational Efficiency - The efficiency ratio improved to 49.12% in Q4 2022, down from 55.26% in Q3 2022 [212]. - The efficiency ratio improved to 57.97% in 2022 from 59.75% in 2021, showing enhanced operational efficiency [215]. - 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 [248]. Tax and Regulatory Compliance - 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 [251]. - The company is subject to various legal actions and proceedings incidental to its business operations [341]. - Compliance with applicable regulatory requirements is embedded within the company's culture and mission [336]. Shareholder and Equity Information - Cash dividends remained stable at $0.56 per share for both 2022 and 2021, with the common dividend payout ratio increasing to 37% from 33% [215]. - Shareholders' equity increased to $5.1 billion, representing 11% of total assets, up from $3.0 billion or 12% of total assets in 2021 [282]. - The company repurchased 3.5 million shares of Common Stock in 2022, reducing equity by $63.8 million [283].