Old National Bancorp Q2 FY2025 earnings call

• Jim Ryan announced Tim Burke as new president and COO, Mark Sanders' retirement. - Met or exceeded second quarter guidance due to focus on fundamentals, growing balance sheet, improving fee-based businesses, and controlling expenses. - Closed Bremer partnership ahead of schedule on May 1st, systems conversion in mid-October. - Tangible book value increased 14% year over year; CET1 ratio 10.74% better than expected. - Loan growth: Period-end loans increased $11.5 billion; excluding Bremer, total loans grew 3.7% annualized; CRE book down, C&I strong. - Deposit growth: Total deposits increased $13.3 billion; core deposits ex-brokered up $11.6 billion; non-interest-bearing deposits 25% of core deposits. - Repositioned Bremer's $3.4 billion securities box, improving yield, duration, and RWA density.

GAAP 2Q earnings per share were $0.34. Excluding net merger-related expenses, adjusted earnings per share were $0.53, an 18% increase over the prior quarter and 15% year over year. Net interest income and margin increased driven by Bremer, organic loan growth, and repositioning of Bremer securities portfolio. Adjusted non-interest income was $112 million for the quarter with all line items increasing. Adjusted non-interest expenses were $344 million, with run rate expenses well controlled and positive operating leverage. Credit: Total net charge-offs 24 basis points (21 basis points excluding PCD loans); criticized and classified loans decreased $254 million (9% excluding Bremer); allowance for credit losses 124 basis points, up 8 basis points from prior quarter.

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

• Competition heating up, especially in commercial real estate, impacting loan growth. - Uncertainties surrounding global economic and trade, macroeconomic outlook, widening growth and rate ranges.

Q: Scott Siefers asked about client sentiment and loan growth outlook A: Jim Ryan and John Moran discussed competition, client optimism, and loan growth expectations, noting loan growth likely toward lower end due to competitive environment Q: Ben Gerlinger asked about new loan yield vs back book A: John Moran provided details on spot rates, with new money yields on loans around high 6% range and securities mid-5% range Q: Chris McGratty asked about deregulatory environment A: Jim Ryan discussed constructive tone with regulators, positive trajectory for industry, and focus on deposit churn reform Q: Jon Arfstrom asked about active portfolio management and CRE loans A: John Moran talked about active management of classified and criticized loans and characteristics of the $2.4 billion CRE loans not sold, similar to Old National's underwriting standards Q: Brian Foran asked about EPS and deal accretion A: John Moran discussed EPS assumptions and how the $2.4 billion CRE sale offsets marks, keeping EPS in line with expectations Q: Jared Shaw asked about fee income guide A: John Moran mentioned strength in mortgage, wealth, and capital markets, with fee income outlook relatively unchanged for the back half of the year Q: Terry McEvoy asked about net interest income outlook and technology investments A: John Moran discussed CRE loans offsetting lower marks and Jim Ryan talked about hiring Matt Keane as CIO and technology investments in infrastructure, AI, and client systems