Earnings call transcript Q4 2022

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Operator

Welcome to the Old National Bancorp’s Fourth Quarter 2022 Earnings Conference Call. This call is being recorded and has been made accessible to the public in accordance with the SEC’s Regulation FD. Corresponding presentation slides can be found on the Investor Relations page at oldnational.com and will be archived there for 12 months.

Management would like to remind everyone that certain statements on today’s call may be forward-looking in nature and are subject to certain risks, uncertainties, and other factors that could cause actual results or outcomes to differ from those discussed. The company refers you to its forward-looking statement legend in the earnings release and presentation slides. are and factors SEC within risk filings. company’s fully discussed disclosed its The

slides which presentation. to non-GAAP more addition, the for contain In certain contained are measures, of trends. These within measures these numbers understanding of appropriate non-GAAP management are investors’ intended the assist appendix performance Reconciliations comparisons. provide believes

ahead. Jim opening remarks. Mr. I’d now call the for turn over to please Ryan go like to Old National’s CEO, Ryan,

James C. Ryan III

exclamation point Good the this an earnings, we which Old strong for reported closing transformational merger saw quarter an morning. with successful fourth on National, systems related First client Earlier in the outlined X. morning, conversions, talent $X.XX all our common ROATCE EPS strong that growth, Slide year incredible Midwest, put one retention per respectively. of results tremendous completion was attraction. and Adjusted and ROA strong a representing of quarter-over-quarter of with and X.XX% increase evident XX.X% a our adjusted XX% share, strength on and is The combined franchise of

Our rate efficiency we expense merger of savings. quarterly XX.X%. achieved our the was share run low pleased expense to I'm to million of that fulfill XXX modeled a necessary ratio record

X, common entire for GAAP reported of $X.XX year per Slide earnings to share. Moving we the

of while our to management. with balances execution remained growing share, relatively XX% deposit our Our results low-cost robust focused year, consistent increase beta quarterly strong driven discipline successful recent excluding adjusted with the We were a strong also representing policy and HSA merger, maintaining date. deposit with and the our flat franchise, peer per EPS on credit were was deposits, over standards, $X.XX cycle pricing low a common by annual XX% disciplined sale pleased maintaining deposit a XXXX. These loans leading expense for that the returns

our of talent highlight in revenue continual is investment our year across top footprint. the Another generating

well remains pipeline resonates robust. and individuals with story Our these our talent

of our franchises launch release net wealth last our talent a leverage recent recent management worth official and week is You brand. with combined the seen press strength our to This XXXX may have investments. high opportunity fantastic

already new are adding We to XXXX. clients

XXXX pace. be As we continue XXXX management deposit a areas, we look expect it In at to in good a loan the to growth on disciplined a other management. albeit costs wealth grow, and same, below base, not our funding should feel more portfolios drive more that advantage, client continued focus peer organic expense forward, about

Thank as client offense, economy our ahead. In the further on challenges that While attention portfolio, we for details. to worse. meaningful any to management will on that the words, granular cause us we lie don't see stay selection, will gives to are their know over we consistent to horizon Brendon and now underwriting turn positioned we I us but anything that concern if serve the active credit, call turns guidelines approach credit on new as intend well other withstand the to well you. for well

Brendon B. Falconer

Thanks Jim.

per income GAAP partially on share. pre-tax and sale to related from million million in charges. million pre-tax by gain shares HSA Reported common the property $XXX quarter’s Slide offset $X.XX X, pre-tax optimization $XX to include was results which million merger of net in or charges our reported Turning $XX business, earnings a we of applicable the $XX

earnings per as share items was securities $X.XX. as losses, well these Excluding debt adjusted our

cash of due commercial $XXX support million. loan growth. total to X% commercial grew an flows Both decreased the trend of portfolio loans in growth by in million PPP grew The and consumer million, consumer of Total growth shows loans. annualized excluding by portfolio of led of X and X%. $XXX Slide loan growth $XXX quarter-over-quarter reinvestment investment

total $X.X We the over in investment next months. flows XX billion cash expect

was and X% but loan well loans commercial and pipeline, some our of annualized the in details X% on and organic in demand quarter growth further mid-single-digit healthy the range. growth puts QX growth provides distributed pressure CRE. The with production fourth remains X Slide we in pipeline. loan C&I continued strong expect

pricing, production have Turning increased discipline XX to points X.XX% briefly C&I maintained from new our X.XX%. XXX yields pleased points money up with stable. new that are yields basis cycle rate QX We've to our on to the throughout basis pricing CRE spreads and remained

our markets. was details of all well X The of Slide commercial billion major production product lines balanced production. shows across $X.X QX and

segments In growth. posted product sheet addition, quarter-over-quarter balance all of our

quarter. from are with LPO newest We almost in markets, pleased contribution contributed this our the million production which $XXX

sale with sale related the were Moving HSA quarter-over-quarter XX, HSA the of End impacted interest XX%. deposits of Slide period our deposits stable End were seasonal of million million into public X% down of mix at the the to also outflows. from average $XXX time and the $XXX deposits period fund to excluding in shift an bearing deposits accounts bearing deposits. to reflect beginning additional transaction mix non-interest

capacity That through with of of indirect are exceptions. pricing actively the provides liquidity and funding to competitive we loan this combined rates in deposit said, and deposit and ratio form competitive asset defending investment market. deposit flexibility Our in books our wholesale us balances

also offense footprint. playing throughout deposit are through We our various specialists

deposit overall able stable to our deposit with upward put We to basis cycle are pleased today Market to strategy of points, bearing industry-leading XX maintain rates of have basis beta up in resulting XX still generate as XX%. with quarter-over-quarter sufficient Interest a we points. very low this XX increased new date balances. to cost an been average points on conditions total to execution costs pressure have deposit basis deposits

the to this throughout deposit base rate advantage cost give us Our granular cycle. of remainder a funding continue should low

you taking Net of due margin. basis accretion be expectations, Core and six the margin of to is deposit X.XX%, see metrics XX, basis for core XX projected outperformance to margin details basis quarter-over-quarter beta points interest excluding on Both count. income up our exceeded points largely our related additional will liability interest X.XX%. into Slide XX net expanded day to details QX QX Next of margin provides account margin the range. with to assumptions. to margin points Slide expected asset position with line decline XX our and on in

betas Our quarter outlook cycle XX%. first of beta increasing assumes date to a XX% from to today in deposit the

in and X% our included new margin and is guidance we funds average protection, beyond for QX but also assumptions the X% yield XX XXXX. rising including strike Fed QX, on an the repricing the adding this outlook of floor a with quarter we is Specific treasuries year at proactively cost on downgrade quarter. margin the would The back rate Fed have target deposit well of in first end X%. of additional $XXX we of pressure persists, challenging assuming Also, positioned remain been an expect half in of while rates, hedges billion

last approximately impact swap reflect Fees also fees, shows from and discussed we capital implemented given service put conditions adjusted as enhancements. of The which which rate quarter markets were impacted pressure present Slide This mortgage enhancements $X continue was noninterest linked December environment. million rate line the $XX on was quarter. for market for by was demand generally by to were the products in XX million wealth that Again, lower income, interest annual month estimate our quarter. service expectations charge with decrease in revenues. lower impacted also one charge

given our Next, merger historically noninterest processing amortization, for and Expenses strong in million efficiency to earnings and increase salaries charges, $X were XX charges, anticipated tax expense data quarter-over-quarter property noninterest lower due our due credit decreased $XXX optimization the $X higher ratio XX.X%. Slide shows Adjusting million was trend accruals of incentive quarter-over-quarter low adjusted adjusted million and for expenses. expenses. than year. performance the Expenses in to at

incentive synergies. rate with we achieved a adjustments, modeled cost pleased report to Excluding have are we expense our quarterly run consistent that

$XX enhancements. $XX will actions talent funded These and FDIC for would in QX. this provide outlook. helpful incremental million the we $X in annualized approximately your real correct from partially in $XXX strategic amortization, rate investments our XXXX saves to additional an annual tax run $X taken million it investments estate in of be expenses million be increase build of in thought million to XXXX million, models. From We impact of $XX both base, on credit expense merit, quarterly technology We and million $XXX for in approximately anticipate believe the detail with expense off million optimization

portfolios Slide credit trends. our to five modest XX perform consumer conditions were well. charge-offs shows continue exceptionally Credit Net and are and our points. commercial stable, basis

from continuing impact the quarter-to-quarter. carry work Our The be team portfolio variability reserve expense through special increase minimal to approximately X% charge-offs this from our we to expect provision effort assets PCD million with as but $XX or against should book. and this from is loans PCD

for to of million, quarter, allowance should Allowance quarter with the up include complete million see both prior On the a totals expense the at peers reclassified Slide more commitments levels. allowance that current details commitments, view unfunded including allowance, allowance for $XXX will and fourth providing unfunded which noninterest accounting more QX. reserves provision. during over stands consistent and unfunded for credit This metrics XX, is from quarter our at our commitments loss also treatment aim for you comparability. of $X now and we Note

elevated believe credit loan stable, our was The by to growth prudent health remain partly our reserves it the by of while in in our to small offset financial portfolio build and increases clients mix, given economic primarily strong maintain base with forecast. driven Reserve is outlook. relatively are economic due improvement we strong, uncertainty case metrics

GDP reserves and deteriorates reflect materially, of which performance economic to is growth. expense unemployment scenario, the severe of top be portfolio a at XXXX negative economic of provision the relatively including range. end X.X%, Our should outlook limited our Unless supportable and loan current X.X%

discount in in In marks. addition the $XXX acquired loan to carry $XXX also we million reserves, million

Slide ratios the XX improved end. across quarter Capital on capital our details position board. provides at

ratio Total TCE was points healthy is basis TCE XX but grew to still our very impacting and by to XXX Our quarter-over-quarter points. X.XX%. basis ratio CETX stable XX% ratio our increased a OCI

our monitor to very levels. balance comfortable continue and for capital our feel economic We sheet with stress

another my fantastic some and for growth solid with an common organic strong even income of quarter. very Adjusted basis value ratios improved As results cycle-to-date adjusted of better margin average grew a transformational with share of expansion and We equity return improved per an defended of comments, from year quarter interest fourth full quality results We on year well. XX QX the deposit XX% grew tangible base loan core Net Key X.XX%. posted XX%. XX.X% also our with industry-leading key are $XX X% takeaways. and here assets EPS on profitability and ended book quarter. points an I up deposit in wrap return ONB of and million tangible beta

XX.X%. our quarterly pleased a run resulting efficiency consistent We rate synergies, achieved low expense of have in cost to are record also merger with ratio a modeled

on believe thoughts guidance includes our Net our earlier, repricing year-end loan with and mid-single-digit pipeline in with outlook XX We in for sentiment Slide supports be outlined back income margin of from pressure the the half XXXX. should year. growth the and XXXX. deposit commercial interest we consistent

mortgage fee our despite businesses well expect We continue headwinds following industry patterns. to to perform with

be revenue we to business hires subject we've over market the from wealth will our last volatility, strategic months. to momentum beginning XX While the see are made

with was full markets Capital by and $X practice, are implemented in consistent impact best year consistent Service will QX levels. charge largely million. revenue pressure that December with under industry changes XXXX should approximately perform

is consistent with earlier. outlook we expense outlined Our guidance

taxes. to Turning

and million $XX basis. basis tax XX% rate with GAAP core for a expect amortization XX% on a rate year corresponding effective approximately a on We of full FTE XXXX in tax

With I'd team available, John We like call including Sandgren the those full have do Sander, and questions. for open Moran. Jim Mark comments, to the your

Operator

Thank you. [Operator Instructions].

Group. please first Hovde with line from today ahead. Ben the of Our go Ben, Gerlinger comes question

Benjamin Gerlinger

Hey, good morning everyone.

James C. Ryan III

Ben. morning Good

Benjamin Gerlinger

lending and you hires, obviously, about skeptical think guys kind expenses guidance but to you longer lenders on term looking recession want outlook. you hire the I of or because that, you're When than and I When is decades helpful. economic don't you everyone you -- type a possibly taking is investment company, into? little lean into that any there going is in to XXXX, bit the would that rather slow that's priority know in I the think, really of appreciate a necessarily a way gave really waterfall about quarters, more any think

James C. Ryan III

for for opportunities those us story. Ben, to I we're talent. itself. we always this said a When interested, and think top going And are people talent get have place think great really I pay our for top there's well, Sander tell to Mark opportunities will just

to we'll each hire as look So deliberate We're go -- new ahead all diligent going than looks it those today. opportunity of while I outlook when ways about be expenses of the given and and thoughtful marketplaces. about folks. going But again, the the top about if at quartile, the we hires, we'll adding be think I this to we'll at well. thoughtful to decile thoughtful is our different We're and economic mean, really attract to top costs be what looking materially reduce be of

don't to So -- talent is ahead which the time, organization. I but the see the best at this anything and plan, different just we can point in attract possible to than go

Benjamin Gerlinger

Got of in hires front broadly you. just speaking, That's fair. And obviously, then lenders.

fee you when So a big income income obviously, can't here, and mortgage management I you holistically? it, year as and But But a think full wealth we moving you rebounds a lot of about about positive. think think of in income from announced guys know different items, fee out mortgage parts is the the volatile when fee line lot with are of project that. a there's in do the factor recently businesses. floor you

James C. Ryan III

you in. to lot our that of today much balance than doesn't me production not view, the and a the fee mortgage income balance have right. of -- where CFO like the I'll worse line. sheet today, get sheet, doing I'd XX,XXX-foot we're our hits give then a And Let a lot we're think at jump

at wealth XXXX news a level. side. In That's big businesses, the we're I terms is a our big side, heading. a the businesses looking into couple staff that. basically to we but different talent where say the dividing have we're The we good is need XXXX business increase and it is right. of also the off talent both And wealth, and would banking, on news business running not good part and of a all the get management those There's of of the that to needed for one taking commercial high is ground we're

have in that -- we grow required ability there are around high a market organically. be. But high they're going that that to business conditions market what pretty not nonetheless, that, above despite there. what there's expectations big do investment of grow So We kind to will historic expectations norms our be to our conditions going have

Mark G. Sander

before I what wealth over I'd we those Brendon, just that Jim Ben, to of add said, in it were And management. in hires turn put to just XXXX number on a

half we're in wealth. So than of as we were hire -- quarter, to so a sufficiently those a dozen staffed to probably grow more XX Brendon?

Brendon B. Falconer

think to add to margin. year-over-year, sale The year double-click elevated into have XXXX, only that, early we in thing I to at did remember, left include Ben, the mortgage, the on least some part of

So gain I say, in lower we but were aided terms would of first on in sale last a by production, on half of gain margins. today, margins year elevated the at we're sale

year-over-year will numbers. impact that So

James C. Ryan III

different adjust those mean of rates like set emerging. time rising to and offer also it to a different difficult the products, way I'd products quickly. right. of there's particularly markets a in I was capital new with think business, rates if But find very or a businesses view

fourth I business. be that is grow the there'll opportunities quarter a Obviously, quarter business overall. think for tough So that to

Benjamin Gerlinger

if And that to I for more in, overall any support kind on the but deployment, just slowing into you that. you. potential capital recession, I appetite one repurchase a growth, were Got looking sneak if historically thoughts or down is growth know guys can of

James C. Ryan III

Yes.

early I in to jump too to think that. little it's want a

economic related of outlook, credit picture clear there. to out more have to need we think I any issues

much we have jump want to think top of I that. before on we to a need clearer picture

Benjamin Gerlinger

step some Scott Sounds time. ask in good. boring... and the I the queue back appreciate I'll let

James C. Ryan III

am sure I appreciates the time. Thanks Scott Ben.

Operator

question Siefers Please comes ahead, Scott from Sandler. Piper go next Our with Scott.

Scott Siefers

everybody. morning Good

James C. Ryan III

hear you. from Scott. Good morning to Good

Scott Siefers

you, you things to half. order maybe so seemed a second thought magnitude can for The probably event exciting about Brendon, a most lower settle Do Thank everyone's that where in the you pressure understand for do -- of. -- the just could think the I margin certainly that let's I -- bound the a the have start sort topic gratuitous give of and in of but degrade? you, margin talked sense margins

Brendon B. Falconer

to It's really hard, pinpoint Scott, something.

Fed keeps So If does. strong, while remains foot pause margin gas, deposits I of depends of what we this pressure. that a -- would demand maybe on on the even they the expansion. their worst-case much and see kind terms Fed could If to reprice, the relatively continue marginal kind the of loan margin think the in for scenario be of

think ourselves Just hard have betas to talk whatever one to to I where thing that about know competitive is, fall those deposit advantage. continue out. we a The we is

expect Our the significant cycle. a deposit this in cycle have was beta over can industry last half advantage I and industry the we

Scott Siefers

something degradation reference, XXX second that or know words, for for is potential you're due Perfect. in hesitant more stay does the largely down beyond thoughts bounce guess starting appropriate, just or other go best back the is equal? else like to mid-XXXs And we margin low when would but I about in and all point the to in it it goes to the it quarter, day down half, down the offer count, I XQ talk in the first

Brendon B. Falconer

bounce equal, right, would else back. All it

so I QX fall going the impact. deposit to what have down of same is in of year, then not do costs out? back happens where would to And level come the really And think, half the day

James C. Ryan III

direction, the right, Fed deposit thinks And I we're rates can alleviate headed pressure the is -- if heading well. market mean the in absent as on some that

Scott Siefers

perfect. Yeah,

Thank very good. much. Okay, you

Operator

today go ahead. next McEvoy from with comes please Our Terry, Terry question Stephens.

Terence McEvoy

morning Hi, thanks. everyone. Good

James C. Ryan III

Good to hear Terry. from you

Terence McEvoy

XX-year the end with XX-year loan kind today. outlook this how of then about year, XX, just the growth can net follow-up question, that wondering a in growth maybe And at sheet throughout balance you the the interest margin not some growth could we do back Hi, on the and this compression change? since quarter NII, maybe versus progress the impact does XXX if you've of I'm as got Slide And I'm just XXXX? the X% of in as think income even a support half by

Brendon B. Falconer

out don't fixed think huge the a not huge impact little it's the remix going where investment year. NII, dollars total and half rate book, I asset NII, say really will It's the our not help NII the going book bit back certainly what impact support down earning costs does impact. thing with again will guidance. come to but same and to would in moving back the the fall to XX-year It the Terry, a of material I but growth, a Fed around. from of do deposit pricing loan

Terence McEvoy

Okay. And stick quarter. bigger maybe strategy, the of kind Could duration added of lower from you picture, with protecting kind just hedging swaps about additional margin the the and on maybe in the then what's rate, talk the rates? the from here receive more fourth hedges, strategy of

Brendon B. Falconer

is Yes, probably average duration $X.X the around strike is the of on obviously hedges strike higher that. have significantly years. three that X.X%. entire on today The most recent The a billion floor right ones around than been have

will you Fed the if back able that reprice half. costs of as meaningful and And about costs some to when as provide up think starts deposit think to protection. a being support lot it, the in I by deposit to continue we've reduce So got move,

think a a about long more sheet So way positioning the as we towards goal think already. we're position, towards that neutral balance I

Terence McEvoy

and FTE, seems just just few creeping so, I I haven't if higher, it's move behind quarters, on? seems and that the tax if correct gone presentations, one core can is like last it then question, of not, the what's we XX% I like gotten kind higher Maybe past back it rate last that I'm could, to small am over if

Brendon B. Falconer

not of credit obviously, the earnings, novel. we a has No, you're our by added, with SMB had increased correct. partnership business Absolutely. but tax lot We

business, term continue near on strategies forward. to invest and nothing we'll that's change that. in But that going we're look So to that working in to move to the

gave So guidance we feel we good about the you.

Terence McEvoy

Okay, it. questions. Appreciate thanks my for taking

James C. Ryan III

Thanks Terry.

Operator

please Chris go question ahead. Our next KBW. with from Chris, comes McGratty

Christopher McGratty

guys, morning. good Hey

James C. Ryan III

morning Good Chris.

Christopher McGratty

know great or ratio Brendon this that of efficiency settles? one we it's of about the thinking the metric, were Jim, Jim. be directionally morning of being think sides level. good do XX.X% but about a metric, the about equation, balancing both the I should you ratio Hey, talked how we efficiency it trajectory How just kind

Brendon B. Falconer

opportunities this XXXX, expense I tell the out don't have year, Some revenue the that to you think sit. full give obviously, know to we ratio, function efficiency control to largely for where outlook a XX.X% But we ratio strong really do can -- we we're will a can I and the to sort where but continue that be repeat I efficiency on of for expenses. continue you falls of going work

James C. Ryan III

no from that, having being but nice of lot help and are it's there on just through we've said through Chris, costs. expense come there, to a tailwind disciplined process here would a I automation there's which us be should had long driving wins been very help long-term out. obviously technology to bullets, some these Yes. continued of reduce focus around revenue suggest have side to the A history out But that, going base the easy business to no expenses enhancements it's magic and lower. long-term just continue

So driving by going that most management there expense just we're can. wins that reduce teams to continued we our there's make and and our dollars out sure any but to significantly, not leadership quick it efficiently focus it's a are

Christopher McGratty

kind the little something just, you would there's was the bit, million more $X I branch to Jim, I I of coming that math, If deck, we'll one expect bottom in XX, push a call bit could it like earn-back of guess, from I I little guess, with think that line? savings to how The optimization. on this I missing that do wrestle a I'm strategy there fall, it timers, say in

James C. Ryan III

from most of redisposition estate right. this Yes, I real mean was

in something half but was very we than pieces were anticipate we is, around longer normally. these the -- were it five-year small of branches. a think total. than earn it's XX a in reality think right branch the world That's nonetheless, About of which problematic, those But I would back. properties less the So are property little

like like reinvest. something little we less gain us, five-year a So be, to than we'd given a HSA earn over particularly it longer but appropriate back, for the again, had to

Christopher McGratty

could Got And it. then I credit. on maybe Great.

think some pace what's questions build. I I'm getting reserve about of the

guys SMBI's credit. do guess, we How charge-offs more them also put a about, viewed as very, of company? the you I forecast I chunky of little overall, pretty have, history together You on credit. think, very of good bit is been but good kind normalized and your forma kind questions, you based two think pace on this build view of pro the how economic the

Brendon B. Falconer

I really think continuing put spot that the we're a good carried we lot COVID. in a through and reserves scenario our we excess a economic of never to severe released in through We're model. pretty

adverse here difficult it's today to about reality. scenario for coming us more So a to think in through sit

we on I have think charge-offs, to a looks coverage and going economy don't a think limited FNB year know we or had changes do came that but to provision charge-offs run. amount provide X% terms we've to from I PCD book in significant And next us, think to of book. against So portfolio what normalized the of is good growth. I what the over And like. X% reserve might into that

So the merger. will expense go long associated in way a incremental provision that offsetting I think with also

Christopher McGratty

guys like the do with But terms of as but the metric FMBI? what's the -- -- the tracking mark coverage? on view internally in what's can XX bps, you are loaded you what's I -- at helpful. real like the reserve how do That's fully reserve X% the it, Like

Brendon B. Falconer

sure. the not If -- about I'm think you

discount about number. we think a entire $XXX of if it's the X.X% credit overall, the and additional million So

Christopher McGratty

Okay, got it. you. Thank

Operator

Long with David, Our next go James. Raymond from question ahead. comes David please

David Long

expectation funding question Good it potential bit with to you a got for look growth, you'll that do deposit -- securities growth loan get how some the whole a gap? is decent looks there, for little like morning fund first fill that but you've everyone. My that close related XXXX may question and outflows, here not -- pretty loan to growth,

Brendon B. Falconer

to So those asset opportunities addition in liquidity in the have indirect in an book and book the portfolio. to the investment forms we mortgage

a as have hard and we up that to to but out -- deposits, and through, levels. going go wholesale out work we're be also funding certainly capacity. giving we not it's We lot And a of And often. tough are granted, we're fighting said, those hard there still for environment, playing maintain we're there going to we

enough the -- the items going that combination book. we're support it, those of to commercial fund make have confident to sure of liquidity team we and the growth So we're we three how is

James C. Ryan III

Yes, our we're defending of base happened the getting aggressive where I think to. rest deposit consistent ones some repricing The our have well. we this with the saw that quite you quarter, more and adding in raise our large confident of And of and feel to goals one I gathering And business. industry. every ability in Deposit every clients deposits. net lines in business, of is the a component new of we're

to raise need we them, And so our deposits I feel David. ability as in confident

David Long

in, run to that you charges the still in of to rate, is gave XX the a service around right the the run and quarter the into the fourth some baked -- that [ph] then get more rate first products quarter? a there. your bit Is changes million little -- or number great. alright, deposit fully some And commentary little over is of is there Okay, out right it the

Brendon B. Falconer

been Yes, service look that It's the in line baked changes one charge has only NSF I in there. But just than the there. the if you month think have of fee items more related NSF a view at sort charges. view look be stable sort at QX you couple more business quarters -- probably and it's would typical of better service a better of of of if average, back a of

David Long

here. Okay, great. one last And just one then sneak in to

the the million, expense you're the to assuming $XXX on that that it to depends the assuming on are revenue you say can I appreciate there. operating compensation And how what side? guide, But know $XXX color you the about talk but the get On incentive level? you equation, side impacts what I or million revenue of

Brendon B. Falconer

So $XXX great million, Obviously, really year from at target year. target. -- that to this would above were benefited we include we incentives a really as opposed

were year significantly And we're so this projecting... relative higher incentives what to

James C. Ryan III

laid also we out, right. expectations revenue the with consistent It's

incentive the you So other. then we'd if think provided revenue expense outlook consistent but given those have more revenue goes clearly, we the some base, with each significantly, I and up opportunity are

David Long

Appreciate Got thanks a it. it, lot guys.

James C. Ryan III

Thanks hear you. to David, from good

Operator

comes with Arfstrom question RBC. ahead, from next Our Jon Jon. Please go

Jon Arfstrom

Hey, good morning everyone.

James C. Ryan III

morning Good Jon.

Jon Arfstrom

still Question got guys fourth comment, it for decent the seeing of your loan later in quarter I on strong in guys view growth but pipelines, And think the but continued of right, year, us what is Brendon, first the you just pressure the some are slowing? made cadence it give you growth. I the production put on pipeline, is What you that? thoughts some expect your growth. you a you slows growth and quarter and it on expect on second

Mark G. Sander

start and add Jim Sanger a I'll little Jon. Well, can bit

we pipeline is bit strong pipeline And of really down in I normally -- that's of normal growth. a good the of feel QX, little a is quarters so think there three reflection the loan reduction. seasonal certainly, coming reduction about in

at good, strong, And the than cautious there's still So level when digits still that the C&I good. XXXX. balance can business mixed our more are pipeline they're were as the the we term they is is full economy, growth a signals year and think short a the the and are still liquidity in for still mean, strong. Brendon little there and solid sheets there's the They're out much before, I -- provide but clients investing. looks laid mid-single that as out of and

has brought a less so certainly bit. The down the add? pipeline anything expect has there, Jim, there. rate XXXX robust So interest you'd and CRE we slowed environment a

James C. Ryan III

I think that's well really said.

C&I feel customers our good optimistic I are to cautiously and about actually invest. continuing They things. pretty think

plays comments the borrowers pressure the opportunities interest CRE, our But causing to some that on And to how deals stay obviously, rest Mark's are out clients. we'll of the with see and year. to there. rates the have right pipelines we'll close So, about the right do

Jon Arfstrom

Okay.

You also mentioned Can deposit prevalent is couple deposit how comments made what there? talk doing about of and you pricing earlier. exceptions you kind were specials you're a that and of

Mark G. Sander

XX% right about So XX%, pricing we special customers our of have now. and deposit non-time

client, client we're So by negotiating.

account in specials stay have to to every competitive money We to CDs business And of and line new number raise price have as need market mentioned, we tools to to, as checking to our retain a of teams markets given promotion. promotional Brendon deposits. closets from they

Jon Arfstrom

$X.X billion new XX those repurchases you on months. lift us Brendon, a get What on going that? buying securities of give the what of purchases kind Okay. kind you're portfolio on do idea and talked next -- an the duration to think in cash in you the the flows on about over of you're interested and

Brendon B. Falconer

loan of actually lot the right reinvested is A into the cash book. built flow

So the lift material. is

new are the today. the I of yields X% into think yield about runoff moving north loan that

NII going cash a on we flows So meaningful uplift as forward. about think those

Jon Arfstrom

both you'll Thanks. in Jim, you this one, to done you're any of then be market? the And tracking but the things with First do back sides M&A and whatsoever appetite Okay. Midwest, are well, feel love merger,

James C. Ryan III

From concluded. a systems project officially a the perspective, there's not --

culture drive strong a to and last the to our on continuing continuing lot reality really look is team deeper the office. what get building the then to culture. think year to of Leadership in we're we're deeper front now though at both office spending organization. I together. awful And and ways in we're we do the And it ways better at find time an spent back

So to where feel that work Jon, to years, we is stand. continue I good about going But take really to complete.

with joke as come organizations, fact, we we picture painted together. how sure I'm large coming better have organizations of In a ourselves could not two together we two

that. good and results, that feel went the about And feel great feel all so any Obviously, couldn't we results on actually better. this given that we the year so about really

be continue activities whatever we'll come engage have in top same not nonetheless, to wanting the think opportunities to building we and and next these can to But going of and that shareholder At to make right us I to the disciplined our to about dialogues. for respect But future. active are With it's time, important those you, to to will relationship something an to really do mind continue our we're along, now. tell is have sure shareholders do long-term we obligation friendly. conversations

the think of growth we organic our our on then comes to take us, But about before and and a there's out with at new right it. the So focused timing building we'll ifs for a along there doing lot if teams next right in And talent. and we're partnership. going it's look fit stay partner

Jon Arfstrom

you. thank Okay,

James C. Ryan III

to Thanks hear you. Jon, good from

Operator

Please Piper next ahead, go Sandler. is from Our question Siefers follow-up Scott with Scott. a

Scott Siefers

I expenses, of Hey taking just it. back the so just thanks for on to go guys, the kind wanted clear follow-up. am to crystal I

core So amortization $XXX a property credit $X that's the expectation the and $XX the the of the optimization. includes it of million items point, of -- million launching $XXX point from million tax million million in included number. But about $X looks like are that starting not

would call kind So if expenses, million? XXXX be would hit expectation a apples-to-apples other for in $XXX words, adjusted were XXXX, to guide, you this you to $XXX the million of more

Brendon B. Falconer

$XXX We million. exclude call it amortization. credit entire would would We tax the

I exclude... differently. know So of them Many that $XXX asset analysts the Yes. million treat because of

Scott Siefers

Okay.

kind is million for appreciate in that Okay. $XXX clarification, I tax And the then credit underlying talk And XXXX full the core exclude -- year of tax about then does the Brendon. XX% the expectation projection there? FTE you when include So or that benefits?

Brendon B. Falconer

the Include credit Yes. -- benefits. it includes all tax

Scott Siefers

much. Thank perfect. very Okay, guys you

Brendon B. Falconer

Scott. Thanks

Operator

Chris Our is next follow-up from Chris. KBW. a go McGratty question with Please ahead,

Christopher McGratty

we much of ratio. level how get a you're this two Oh, ultimate bond your that's year, I'm $X.X borrowings of you a you probably off it the bond portfolio loan-to-deposit going for question do the loan with coming to I at on about to Brendon, the the ultimately, remix great, into book. and think I that trying have things: guess put think and alluded should the comfort shrink thanks. that book, will the billion to

Brendon B. Falconer

the letting deposit increase with comfortable ratio here. we're loan Yes, from

I think of room. we have plenty

We capacity. of have wholesale funding plenty

be deposits. much for effective of the will is stable maintaining growth of I function loan in used we that of borrowings how think much are how are a -- how

Christopher McGratty

Okay. stable the goal right? roughly But deposit, is

Brendon B. Falconer

Right.

Christopher McGratty

you. Okay, thank

James C. Ryan III

Chris. Thanks

Operator

no like back at to [Operator call Instructions]. turn There are time. the questions to for this I'd further remarks. closing Ryan Jim

James C. Ryan III

all the all questions. Well, for thanks I your attendance. appreciate

to you We around long be Thanks, look day and questions. answer any with all soon. talking follow-up forward to will

Operator

available you presentation for by please This be on will has months for oldnational.com. a the participation available replay XX replay any questions, and your XXX-XXX-XXXX. XXXXXX. call. call. Lynell along will anyone A through website, also today's National's call of the This will of available contact at replay be access conference additional Thank XXX-XXX-XXXX Once in Old Xth. code concludes slides the with again, National's Old If the February Investor dialing page Walton be Relations

Old National Bancorp (ONB) 24 Dec 222022 Q4 Earnings call transcript