OLD NATIONAL BANCORP /IN/ Q4 FY2024 earnings call

Key Points from Jim Ryan:

• Successfully navigated 2024 with offensive growth strategy, focusing on low-cost core deposits (grew ~10% in 2024, funding 10% loan growth; since 2022, 8% CAGR for deposits and loans). Total cost of deposits 1.93% driven by 93% down beta on exception price deposits. Full-year GAAP EPS $1.68, adjusted EPS $1.86. Closed CapStar Bank and announced Bremer Bank partnership, filing S4 with SEC. Leadership changes: Mark Sander to retire, Dan Hermann as lead independent director.

Key Points from John Moran:

• 4Q 2024: GAAP EPS $0.47, adjusted EPS $0.49. Balance sheet stable with liquidity and improved capital position. Loan growth, deposit growth. Net interest income stable, non-interest income $96M (above expectations), non-interest expenses $269M (slightly higher than expected). Credit quality benign, net charge-offs 21 basis points.

Old National Bancorp had strong 2024 results. Core deposits grew approximately 10% in 2024, funding a 10% growth in loans. Since 2022, total deposits and loans have a compounded annual growth rate of 8%. Total cost of deposits finished the year at 1.93%. GAAP earnings per common share for the year were $1.68 with adjusted earnings per common share of $1.86. Adjusted return on average tangible common equity was 16.9% and adjusted return on average assets was 1.14%. The adjusted efficiency ratio stood at 52%, net charge-offs were 17 basis points, and tangible book value per share grew by 8% year-over-year.

2025 Guidance:

• Excluding Bremer, assumes July 1 close. Full-year loan growth expected 4%-6%, expect to meet or exceed industry deposit growth. Adjusted return profile top quartile, adjusted efficiency ratio low-50s, credit resilient. NII expected stable to improving, driven by loan growth, fixed asset repricing, curve steepness. Expenses: merger-related expenses backed out, others fully loaded. NII margin stable to improving, driven by loan growth, fixed asset repricing, curve steepness.

• Regulatory changes, particularly around the $100 billion TLAC threshold. Potential impact of market conditions on loan paydowns and line utilization. Uncertainties in credit quality migration despite current benign trends.

Q: Ben Gerlinger asked about expense guidance and capital allocation.

A: Jim Ryan responded that merger-related expenses are backed out, and capital allocation flexibility exists with more clarity expected mid-year.

Q: Scott Siefers inquired about NII margin outlook.

A: John Moran discussed loan growth, fixed asset repricing, and curve steepness as drivers of NII margin stability to improvement.

Q: Jared Shaw asked about CET1, deposit beta, and NII accretion.

A: Mark Sander and Jim Ryan responded on CET1 flexibility, deposit beta linearity expectations, and accretion schedule details.

Q: Brendan Nosal questioned loan growth guide and non-loan earning assets.

A: Mark Sander talked about loan production, pipeline, and non-loan assets being flat.

Q: Terry McEvoy asked about leadership succession and M&A pricing.

A: Jim Ryan discussed importance of leaders in key markets and M&A pricing considerations, including regulatory changes impact.

Q: Jon Arfstrom asked about payoff trends, credit, and Bremer partnership.

A: Mark Sander and Jim Ryan provided insights on payoff trends, credit quality, and positive feedback on the Bremer partnership.

Q: Chris McGratty inquired about NII quarterly cadence and balance sheet adjustments.

A: Mark Sander and Jim Ryan discussed NII ramp, balance sheet adjustments, and capital allocation for growth prioritization.