Hello. Welcome to the Old National Bancorp Third Quarter twenty twenty one 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 twelve 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 and uncertainties and other factors that could cause actual results to differ from those discussed. The company’s risk factors are fully disclosed and discussed within its SEC filings. In addition, certain slides contain non-GAAP measures, which management believes provide more appropriate comparisons. The non-GAAP measures are intended to assist investors' understanding of performance trends. Reconciliation for these numbers is contained within the appendix of the presentation. I’d now like to turn the call over to Jim Ryan for opening remarks. Mr. Ryan, you may begin?

Good morning. Starting on slide four, we are pleased to share our third quarter results and an update on our partnership with First Midwest Bank. I would categorize this quarter's results as right on plan. Earnings per share were $0.43, and net income was almost seventy-two million dollars. During the quarter, commercial loans, excluding PPP loans, grew at a strong seven point four percent on an annualized basis with one billion dollars in new production. We also ended the quarter with a robust two point seven billion dollar commercial pipeline. Core deposits grew nicely by three hundred and twenty-seven million dollars during the quarter. Our net interest margin was stable. Capital markets and wealth management revenue were strong and mortgage revenue rebounded from last quarter. Expenses were well managed and down slightly, primarily due to one-time benefits from incentive and real estate tax accruals. Credit quality metrics remain benign with another quarter of net recoveries. Adjusted ROATCE was a strong fifteen point one six percent, and the adjusted efficiency ratio was fifty point four percent. During the quarter, we've worked hard with our clients on the PPP forgiveness process. Ninety-five percent of Round 1 loans have been forgiven by the SBA, and we already have fifty-one percent of Round 2 loans through the forgiveness process. Remaining fees totaled fourteen million dollars. Most of our reported credit quality metrics improved during the quarter. We have reduced our reserves consistent with our modeling as a result of the improving economic conditions. We still have approximately thirty-two percent of reserves supported by qualitative adjustments given the long-term impacts from the pandemic, expectations for higher inflation, persistent labor supply, and supply chain challenges. As we gain additional clarity around these issues, we may develop more confidence in moving our reserve closer to day one CECL levels. A quick update on hiring. We continue to add significant talent during the quarter, especially on our wealth management team. This was highlighted by three key individuals that joined our wealth team from the former Wells, Abbot Downing Group, including Jim Steiner, who started Abbot Downing and who will now assume the role of our Chief Investment Officer. The team will help expand our high net worth and institutional services. They opened a Scottsdale, Arizona wealth management office to better serve the growing number of clients in that area. We also hired two new commercial relationship managers in St. Louis to build upon our recent success in that market. Our talent pipeline remains strong and we will continue to hire talented team members. Moving to slide five, which contains a quick refresher on some of our accomplishments and next steps with our merger with First Midwest. Both companies have tremendous integration history and experience, and as a result, our work is going well. We have decided and communicated most client segment and support areas organizational structures and leadership. We've also settled on our core processing system along with most of the supporting applications. We remain on track for a second quarter twenty twenty two system conversion. You probably saw First Midwest earnings this morning. The results for the quarter were strong and consistent with expectations. We also received ninety-nine percent support from our special shareholder meeting, and First Midwest shareholders provided a similar level of support. We've also received OCC approval. Our application with the Federal Reserve remains pending with the Board in Washington, D.C., along with the merger applications of many other bank holding companies. We stand ready to close quickly once we receive final Fed approval. You may have seen that we were sued by the Fair Housing Center of Central Indiana, a non-profit advocacy organization with a history of filing lawsuits, alleging lending discrimination. We strongly and categorically deny the claims in this lawsuit regarding certain of our lending practices. Old National is committed to engaging in fair and equal lending practices. A testament to this is that we have been named one of the world's most ethical companies for the past decade. As is customary for us and many public companies, I'm unable to comment further on this pending litigation. Lastly, despite potential distractions from the lingering pandemic-related issues and our transformational merger, we have remained focused on serving our clients and communities, and I think our results illustrate the success of those efforts. I will now turn the call over to Brendon.

Thank you, Jim. Turning to slide six. Our GAAP earnings per share and our adjusted earnings per share were both $0.43. Adjusted earnings exclude one point four million dollars in early merger-related charges, which were largely offset by one point two million dollars in debt securities gains. Slide seven shows the trend in commercial loans and the related commercial pipeline and production trends, all excluding the impact of PPP loans. Q3 represents our fifth consecutive quarter for organic loan growth, and over that year, commercial outstandings have grown eleven percent. Our strong commercial production of one billion dollars was once again led by the Louisville and Minnesota markets, with all other regions posting quarter-over-quarter growth. On balance sheet production was also well balanced by product, with a sixty-forty split between CRE and C&I respectively. Commercial activity remained strong throughout the quarter, and we are heading into Q4 with a very healthy two point seven billion dollar pipeline with almost eight hundred million dollars in the accepted category. Turning briefly to pricing, new money yields on commercial loans increased from the prior quarter, which meaningfully narrowed the gap between new production and portfolio yields. The investment portfolio increased two hundred and sixty-three million dollars this quarter as deposit growth once again outpaced total loan growth. We continue to put much of our excess liquidity to work in our investment portfolio with new money yields of one point six two percent and a portfolio duration well within five years. Moving to slide eight, both period end and average deposit balances increased nicely from Q2 levels, with most of the growth coming from business clients in the non-interest bearing demand category. Total cost of deposits for the quarter was unchanged at six basis points, while total interest-bearing liabilities declined one basis point from Q2. Next on slide nine, you will see details of our net interest income and margin. Net interest income increased one point seven million dollars quarter-over-quarter. Excluding the impact of PPP, net interest income increased one point three million dollars, which is the third consecutive quarter we have outperformed our stated objective of holding NII stable through earning asset growth. Net interest margin increased one basis points to two point nine two percent from the prior quarter, and core margin, excluding accretion in PPP, declined just two basis points to two point seven percent. Slide ten shows trends in adjusted non-interest income. Adjusted non-interest income of fifty-three million dollars in Q3 was two million dollars higher than the second quarter. Our wealth management business continued to be a bright spot and is on pace for a record year. Our capital markets business had another strong quarter, and mortgage revenues rebounded nicely following the pipeline valuation decrease in Q2. While mortgage production was down slightly in the quarter, an increase in the size of the pipeline and stabilizing value resulted in a five point four million dollars increase in revenue. This increase was partially offset by a two million dollar decrease in gain on sales income as margins continue to normalize. Next slide eleven shows the trend in adjusted non-interest expenses. Adjusting for merger charge and the tax credit amortization, non-interest expense was one hundred and eighteen million dollars. The quarter-over-quarter improvement was driven by an accrual adjustment to incentive as well as a reduction in real estate taxes. Both of these items are not expected to recur. Turning to PPP loans on slide twelve, you will see a roll forward of those balances, which stood at three hundred and fifty-five million dollars at quarter end. We continue to assist clients to forgiveness and approximately ninety-five percent of Round 1 and fifty-one percent of Round 2 loans are now formally through the FDA forgiveness process. Unamortized fees on the remaining loans totaled fourteen million dollars. We anticipate half of the remaining loans will be forgiven and the related fees recognized in the fourth quarter of twenty twenty-one. Slide thirteen shows our credit trends. The quarter proved to be another good one from a credit performance perspective. Thirty plus delinquencies ticked up one basis point but remained at a near-cycle low of ten basis points. With respect to charge offs, we were fortunate again this to be able to post net recoveries, mostly due to the resolution and full recovery of our previously written down senior living credits. The non-performing loans to total loan ratio is once again at a new cycle low at ninety-four basis points. While this metric remains higher than peers, the net charge-off to NPL ratio is significantly better than peers. We believe our approach to identifying troubled credits early and our patient approach to work out results in better outcomes for our clients, and ultimately lower costs with the bank. On slide fourteen, you will see the details of our third-quarter allowance, which stands at one hundred and eight million dollars, a decline of one point five million dollars from Q2. The improving economic outlook and the positive trends in credit quality support modestly lower reserve levels. And while our outlook on credit remains optimistic, we recognize that the economy has not fully recovered and have made the decision to maintain our higher level of qualitative reserves, which stood at thirty-five million dollars at quarter end. As a reminder, we also continue to carry thirty-eight million dollars in unamortized marks from our acquired portfolios. As I wrap up my comments, here are some key takeaways. We are very pleased with the fundamental results for the quarter. Strong commercial loan growth led to higher core net interest income despite interest rate headwinds. Our fee-based businesses, led by wealth, mortgage, and capital markets, continue to perform well and in line with expectations. Expenses remained well controlled, and our strong credit quality continues to keep credit costs low. Slide fifteen includes thoughts on our outlook for twenty twenty-one. We ended the quarter with a healthy two point seven billion dollar commercial pipeline, which supports our favorable outlook on loan growth. This historically low interest rate environment will continue to put pressure on net interest income, which should be mitigated through continued earning asset growth. The PPP loan forgiveness process continued for our clients. We expect a runoff of approximately half of the Round 2 balances to occur in the fourth quarter, with the recognition of the related unamortized fees to occur at that time. We expect our fee businesses to continue to perform well. We were encouraged by the momentum in our wealth business, and the strong commercial activity should help maintain the high level of performance in our capital markets business. Mortgage revenue should follow industry trends and be seasonally lower in the fourth quarter. Our other fee lines are expected to be stable in the near term. We would expect to see a three million dollars increase in non-interest expenses in the fourth quarter, given the non-recurring items impacting our third-quarter performance. Lastly, a brief update on taxes. We continue to expect a reduction in the volatility caused by our tax credits as we work through the last of the remaining one-year historical tax credit commitments. In total, we're expecting approximately six million dollars in tax credit amortization for the year, with the corresponding full year effective tax rate of approximately twenty-two percent. With that, we are happy to answer any questions that you may have, and we do have the full team here including Jim Sandgren, Daryl Moore, and John Moran.

Thank you. Our first question comes from Ben Gerlinger with Hovde Group. Your line is open.

Hey. Good morning, guys.

Good morning, Ben.

I just wanted to take a moment, let's assume that the deal closes in the fourth quarter, which you probably will. So there's going to be a lot of noise integration over the next, so let's call it six months. So are there any areas in which you feel like there are low-hanging fruits or opportunities to grow loans outside of Chicago? I know that the Minnesota market was an area of pretty healthy growth and that playbook post those two deals a couple of years ago, it seems to be chugging right along. So I was kind of curious if you could talk about some of the opportunities that you see that present themselves right away and kind of what you are focusing on that two to three year goal, either footprint wide or Chicago itself?

Yes, Ben. This is Jim Sandgren. Yes, you're exactly right, Minnesota continues to be a bright spot and we see that as an opportunity to grow in the future. Louisville, Kentucky continues to be really good for us, Indianapolis, and some of those markets. I know Jim talked a little bit about St. Louis, which is a newer market for us, which has seen some nice growth. And then obviously, with our partners for First Midwest, I mean, we see big upside when we get together with them in the Chicago area, which has a bigger balance sheet. So looking forward to really growing throughout the footprint. Yeah. And I think Ben, one of the things that attract us from First Midwest is they have spent more time and they are ahead of the game in terms of building out some niche verticals. I think those niche verticals help us. We can export those across our footprint and maybe give us new opportunities that we weren't looking at today. And I think we can continue to use that bigger balance sheet across the entire footprint to create new opportunities for us.

Got you. That's helpful. And then in terms of the net interest income, it seems like everything was moving in the right direction. If you look at the momentum perspective, mortgage rebounded well and continues to be strong. I was curious is there any areas in which you are kind of doubling down in reinvestment. I know that there are some recent hires in wealth management. Capital markets continues to perform well. Is there any areas in which it's potentially punching above its weight? We could see some reversion to the mean or is everything kind of operating as is, and we should expect similar results for the next year or so?

Long term, we continue to believe wealth management is a source for us as well as the treasury management business coupled with a strong commercial business, which means capital markets as well. I think those are the three areas that we continue to believe. Mortgage will just be cyclical, and it'll just drive along with everybody else's mortgage business, but those three areas in particular, and we really haven't seen the benefits of our new hires in that wealth management business yet. We're carrying the cost for those new hires and it's not only the three new hires we just talked about, but we've been in pretty consistent hiring in that area. And so long term, we believe we're going to drive higher than our trend line kind of growth in those areas.

Got you. Okay. That's helpful color. I will step back in the queue. Congrats on a solid quarter.

Thanks. Good to see you got first again.

Thanks.

Thank you. Our next question comes from the line of Scott Siefers with Piper Sandler. Your line is open.

Jim, I'll just add to the list of ways I've disappointed people. I appreciate your addressing the question. As we consider the strong loan growth you have been achieving, I am curious if you could share some insights regarding what your commercial lenders are observing in terms of pricing and structure and how your team is responding to those factors.

Sure.

Yes, Scott. This is Jim again. It's really competitive out there. But the good news that we've talked on a number of the last few quarterly calls is that we've been out calling and working with our customers and prospects and building really strong relationships. So I’d tell you, credit structure is getting a little crazy. So, we continue to stay disciplined there. Pricing, I think we're doing a good job leading our pricing hurdles quarter-over-quarter. So, it's tough right now. There's no doubt about it. But again, I think because of the strong relationships we've had and in fact, we’ve been out following throughout the pandemic and as we came through it, I feel like that's helped kind of support the growth, and I think we're set up on the fourth quarter with a really nice pipeline and a nice accepted portion of that pipeline as well, so pretty encouraged.

And Scott, you know as well. I mean, we'd gladly give up a few points of growth to stick to our discipline around pricing and structure. So we're going to play a long game here, make sure we stay true to our history and roots.

Perfect. Okay. Thank you. And then just switching gears a little, hiring talent away from some of your competitors has been a big part of this story over the last couple of years. Just was curious if you can maybe add some comments about what you're seeing in terms of costs to attract new talent and if you could speak to sort of the notion of wage inflation overall within the bank?

That's a great question. We're definitely feeling the effects of wage inflation at all levels. We made a conscious decision to raise our minimum salaries last year, which has contributed to our current cost structure. Attracting high-quality talent from other companies is also more costly than the average salaries we currently pay. However, we view these as long-term investments that we believe will yield significant returns. We are committed to making these investments thoughtfully and strategically. We have a compelling narrative that resonates with many potential employees, allowing them to envision a successful career in our organization while caring for clients and performing at their best. We continue to share this story; the costs involved are justifiable, and we believe they benefit the long-term health of our company.

Perfect. All right. Thank you guys very much. I appreciate it.

Thanks, Scott.

Thank you. Our next question comes from the line of Terry McEvoy with Stephens. Your line is open.

Hi. Good morning, everyone. Jim, maybe start with a question for you. You've been involved in a lot of M&A transactions with your time at Old National Bank. Could you just talk about just the level of discussions with regulators? How in-depth are they as it relates to getting First Midwest closed, just given the size and the structure and essentially what I'm getting at is maybe a soft way of asking, what is the risk that the MOE gets postponed given changes in the regulatory landscape?

It's really hard to tell, Terry. There are outstanding questions we have with any regulatory agencies, particularly the Fed. Obviously, we have OCC approval. And I think like many other bank holding companies, we’re in the queue and we're just waiting for that approval process. We think we've answered any questions they have for us, and I really don't have any other feedback, and they're not waiting on any new information from us. So we're just going to continue to be patient and thoughtful. I think the most important point, though, is that we continue to work on integration efforts, which are really scheduled to happen in the second quarter. So, none of that work stops. We continue to build relationships through each other. We continue to strategic planning with each other. So, none of that really stops, we just keep moving forward and we'll wait to be patient and wait for the final regulatory approval, and then as soon as we get that will close shortly thereafter.

I appreciate that. As a follow-up, you used to share the average loan size in the commercial portfolio. I'm curious if that has changed with the ONB approach and industry verticals, and whether you are now competing more in the up-market for larger deals that may be contributing to the growth we’re seeing in the commercial portfolio.

Yes, I'll give some high-level commentary and let Jim get into details. But it's certainly on average higher. Just as we entered larger metropolitan markets, most notably when we entered Wisconsin and Minneapolis specifically, I think we've just seen that trend to move higher. Even having said that, I still think it's pretty granular on average. And today, Jim, we're running – what was the average recently?

So for C&I, we're about three hundred thousand dollars from a portfolio perspective, and commercial real estate about a little over nine hundred thousand dollars. So, to your point, still very granular.

Great. Thank you, guys.

Thanks, Terry.

Thank you. Our next question comes from the line of Chris McGratty with KBW. Your line is open.

Hey, good morning, everybody. Jim, I think I want to start with loan growth. Typically when MOEs get announced, there's a little bit of market apprehension about pro forma growth rate. You guys had solid growth; First Midwest had a little bit of growth this quarter. How are you thinking about the pro forma profile of the company, especially with the economy recovering?

No, I believe both organizations are improving daily. They are engaging with clients and serving communities, and loan growth will depend somewhat on the state of the economy. However, I believe the loan growth we are achieving is what we should be able to maintain in a normal or slightly improving economic environment like we have today. While we haven't provided specific guidance, I think we can continue to deliver similar results. We also see potential for growth in our total balance sheet, and our limits may increase in the future, allowing us to leverage our industry verticals. Therefore, I think there are significant opportunities for us to keep expanding our loan portfolio.

Okay. And then on the deposit growth, you and some of your peers, I think have spoken about just the surprise factor of the deposit sale on balance sheet continuing to come in. With that confidence, can you speak to kind of the pace of investments as securities investments you might make? You've grown on the bond book a little bit in the last couple of quarters. Just trying to see an outlook for that? Thanks.

Yeah, Chris. We continue to put the excess cash to work. We're actually sitting a little more cash this quarter than last quarter and will be thoughtful as we put that to work given the outlook on rates. But our buy is just to put more money to work than us.

Great. And then maybe if I could sneak one in on, once you close the deal, you guys have a ton of capital; maybe updated thoughts on returning capital through buybacks?

Yes. Our capital priorities will remain the same; look at the current valuation, we think there's a great opportunity to return money to investors to see a share repurchase. We have an authorization outstanding today that will take us through the end of the year and we'll be looking for an opportunity to make use of that.

Okay. Thank you.

Thank you. I'm showing no further questions in the queue.

Well, thank you all for your support. As usual, Lynell and Brendon and the whole team are available to take any follow-up questions. Thanks again, and have a great day.

Ladies and gentlemen, this concludes Old National’s call. Once again, a replay along with the presentation slides will be available for twelve months on the Investor Relations page of the Old National website, oldnational.com. A replay of the call will also be available by dialing 855-859-2056. Conference ID Code is 4242648. This replay will be available through November 2nd. If anyone has additional questions, please contact Lynell Walton at 812-464-1366. That’s 812-464-1366. Thank you for your participation in today's conference call. You may now disconnect.