Old National Bancorp(US:ONB)2025-07-22 15:02Financial Data and Key Metrics Changes - The company reported GAAP 2Q earnings per share of $0.34, with adjusted earnings per share of $0.53, reflecting an 18% increase over the prior quarter and a 15% increase year over year [9] - The CET1 ratio was better than expected at 10.74%, and tangible book value increased by 14% year over year [6][20] - Net charge-offs were within expected ranges, with total net charge-offs at 24 basis points [18] Business Line Data and Key Metrics Changes - Period-end loans increased by $11.5 billion, with total loans growing 3.7% annualized from last quarter [12] - The investment portfolio increased by $3.4 billion from the prior quarter, primarily due to the Bremer acquisition [12] - Adjusted noninterest income was $112 million for the quarter, with growth in wealth, mortgage, and capital markets [17] Market Data and Key Metrics Changes - Total deposits increased by $13.3 billion, with core deposits (excluding brokered) up $11.6 billion [14] - Noninterest-bearing deposits represented 25% of core deposits, up 2% from first quarter levels [14] - The loan-to-deposit ratio was 88%, down 1% from last quarter [15] Company Strategy and Development Direction - The company is focused on organic growth and maintaining a strong capital position, with a commitment to controlling expenses and improving fee-based businesses [5][8] - The partnership with Bremer Bank is expected to enhance the company's market position and financial metrics [7][21] - The company is exploring technology investments and enhancing its IT capabilities to better serve clients [100][102] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding client sentiment, noting increased competition in the commercial real estate sector [33][36] - The company anticipates continued growth in net interest income and net interest margin in the second half of 2025 [24][27] - There is a recognition of global economic uncertainties that could impact growth and rates, but the larger balance sheet from the Bremer partnership is seen as a positive offset [27][28] Other Important Information - The company appointed Tim Burke as the new president and COO, effective immediately [3][4] - The systems conversion for Bremer is scheduled for mid-October [5] - The company is actively managing its portfolio, with a focus on reducing classified and criticized loans [19] Q&A Session Summary Question: Client sentiment and loan growth outlook - Management noted that while there is economic optimism, competition is increasing, particularly in commercial real estate, leading to a cautious loan growth outlook [33][34][36] Question: Increase in non-performing assets (NPAs) - The increase in NPAs was attributed to the merger with Bremer, but overall NPAs as a percentage of total loans are down [42] Question: Spot rates on loans and bonds - Current spot rates are approximately seven basis points higher for securities and five basis points higher for loans compared to previous averages [48] Question: Capital deployment and buyback expectations - Management indicated a preference for building capital at this time, with potential for buybacks being considered in the future [51] Question: Deregulatory environment impact - The management expressed a positive outlook on the deregulatory environment, which could facilitate growth opportunities [58][60] Question: Active portfolio management - Active portfolio management involves reducing classified and criticized loans through payoffs and refinancing, with a focus on maintaining loan quality [71] Question: Fee income outlook - Fee income is expected to remain strong, driven by growth in mortgage and wealth management services [89]