OLD NATIONAL BANCORP /IN/ Q1 FY2025 earnings call

• Strong deposit franchise and loan growth drove past quarter results. - Net interest income and margin met expectations. - Noninterest income benefited from gain on sale of loans and higher fees. - Disciplined expense management reflected in efficiency ratio. - Net charge-offs in expected range, allowance for credit loss increased. - Tangible book value increased. - Received regulatory approvals for Bremer Bank partnership, legal close date May 1, conversion mid-October. - Bremer partnership enhances footprint in Upper Midwest, boosts balance sheet and earnings growth.

GAAP 1Q earnings per diluted common share were $0.44, with adjusted earnings per share at $0.45. Net interest income and margin met expectations. Noninterest income benefited from gain on sale of loans and higher fees from mortgages and service charges. Total deposits were up 2.1% annualized, core deposits ex-brokered up nearly 1.7% annualized. End-of-period total loans increased 1.5% annualized. Net charge-offs were in the expected range, and the allowance for credit loss was increased. Tangible book value increased meaningfully. Revenue contribution: Deposit franchise and loan growth were key drivers, noninterest income from various fees and loan sales contributed, expense management kept efficiency ratio in check.

• Net interest income and margin expected to grow in 2025. - Full year earnings per share in line with analyst consensus. - Loan growth expected to ramp up over the year, 4%-6% excluding Bremer impact. - Anticipate meeting or exceeding industry deposit growth in 2025. - Bremer close brings earlier legal close, leading to higher legal day 1 capital levels and significant balance sheet optionality. - Guidance incorporates up to $2.4 billion of loan sales, but balance sheet flexibility from Bremer close creates alternatives.

• Uncertainty surrounding global trade and macroeconomic outlook if prolonged could widen growth and rate ranges. - Impact of CRE loan sales and deposit beta dynamics on financial performance. - Volatility in other fee income due to lumpy quarters.

Q: What impact did better capital at day 1 of Bremer have on NII outlook?

A: Original M&A assumption still includes $2.4 billion of CRE loans, but legal day 1 close capital levels are likely higher, potentially reducing the need for loan sales which would offset foregone purchase accounting accretion.

Q: Does the 40% deposit beta include Bremer?

A: No, it's core ONB. Expect to match uprate beta on downside by end of 2Q, with room to go.

Q: What's a good run rate for other fee income ex-Bremer?

A: Backing out lumpy items, a run rate around $5 million after adjusting for recent quarters, with guidance essentially unchanged except for extra months of Bremer in 2025 guidance.

Q: How do you reconcile loss provision guide with worsening economic forecast?

A: Still feel good about provisioning as 100% weighted against S-2 scenario, with extra for global trade uncertainty, and credit metrics came in as expected.

Q: Any thoughts on restarting buyback post Bremer close?

A: Too early to tell; prefer bigger balance sheet and stronger capital levels now, with buyback considered for back half of year and into 2026.

Q: Update on Nashville expansion plans?

A: Still want to grow and invest there, see it as long-term investment in talent and infrastructure.

Q: Hypothetical impact of holding $2.4 billion CRE loans on NII?

A: Directionally correct, around $34.6 million impact on NII, affecting earnings.

Q: What drives step-up in NII in fourth quarter?

A: Fixed asset repricing, timing of repricing, and back-end loaded growth on core organic basis.