Old National Bancorp Q2 FY2025 earnings call

• Jim Ryan introduced Tim Burke as new president and COO, noting Mark Sanders retired. - Second quarter results met/exceeded guidance, driven by strong fundamentals, balance sheet growth, fee-based businesses, and controlled expenses. - Closed Bremer Bank partnership ahead of schedule, systems conversion in mid-October. - Made progress in portfolio management, reducing legacy criticized and classified assets by 9%, CET1 ratio at 10.74%, tangible book value up 14% despite Bremer partnership. - Repositioned Bremer's investments, improving portfolio yield, duration, and risk-weighted assets.

GAAP 2Q earnings per share were $0.34, with adjusted earnings per share at $0.53 (an 18% increase over prior quarter and 15% year over year). Period-end loans increased $11.5 billion. Total deposits increased $13.3 billion, core deposits ex-brokered up $11.6 billion. Net interest income and margin increased. Adjusted non-interest income was $112 million. Adjusted non-interest expenses were $344 million. Net charge-offs were 24 basis points. Tangible book value increased 14% year over year. Loan deposit ratio was 88%, down 1% from prior quarter.

• Full-year loan growth expected 4%-6%, likely lower end due to competition, geopolitical uncertainty, and active portfolio management. - Increased NII and fee income guidance, other lines unchanged. - Expect full-year EPS in line with analyst consensus, positive operating leverage, good fee growth, controlled expenses, and normalized credit.

• Uncertainties surrounding global economic and trade, macroeconomic outlook could widen growth and rate ranges. - Increased competition, particularly in the commercial real estate market, impacting loan growth expectations.

Q: Scott Siefers asked about client sentiment and loan growth outlook.

A: Jim Ryan and Jim Sandgren discussed client sentiment being cautiously optimistic but competition in commercial real estate shading loan growth outlook. John Moran added it's a math equation due to loan sale impact.

Q: Ben Gerlinger asked about loan yield.

A: John Moran said spot rate on loans/bonds was higher with new money yields in loans high 6s and securities mid-5s.

Q: Chris McGratty asked about deregulatory environment.

A: Jim Ryan said it's constructive, positive trajectory, but rules still apply.

Q: Jon Arfstrom asked about active portfolio management and deposit maturity.

A: John Moran discussed active portfolio management in legacy book and deposit maturity details, including brokered deposits.

Q: Brian Foran asked about EPS and deal accretion.

A: John Moran said EPS was modestly better due to $2.4 billion CRE loans offsetting and better rate market.

Q: Jared Shaw asked about fee income outlook.

A: John Moran said mortgage, wealth, and capital markets were strong.

Q: Terry McEvoy asked about CRE loans and technology investments.

A: John Moran explained CRE loans offset lower marks, and Jim Ryan discussed hiring Matt Keane as CIO and technology investments for better client systems.