Additional information and where to find it. In connection with the proposed merger, Old National has filed with the SEC a preliminary registration statement on Form S-4 that includes a proxy statement of Capstar and a prospectus of Old National, as well as other relevant documents concerning the proposed transaction. Investors and security holders, prior to making any investment or voting decision, are urged to read the registration statement and proxy statement-slash-prospectus, and any other documents filed with the SEC in connection with the merger or incorporated by reference into the proxy statement slash prospectus because such documents contain important information regarding the proposed merger. Investors and security holders may obtain free copies of any documents and other documents filed with the SEC on its website at sec.gov. Investors and security holders may also obtain free copies of the documents filed with the SEC by Old National on its website at oldnational.com and Capstar on its website at capstarbank.com. Participants in the solicitation. Old National, Capstar, and certain of their directors and executive officers may be deemed participants in the solicitation of proxies from shareholders of Capstar in connection with a proposed merger. Information regarding the directors and executive officers of Old National and Capstar and other persons who may be deemed participants in the solicitation of the shareholders of Capstar in connection with the proposed merger are included in the proxy statement slash prospectus for Capstar's special meeting of shareholders, which was filed by Old National with the SEC on January 3, 2024. Information about the directors and officers of Old National and their ownership of Old National's common stock can be found in Old National's definitive proxy statement in connection with its 2023 annual meeting of shareholders as filed with the SEC on March 30, 2023, and other documents subsequently filed by Old National with the SEC. Information about the directors and officers of Capstar and their ownership of Capstar's common stock can be found in Capstar's definitive proxy statement in connection with its 2023 annual meeting of shareholders as filed with the SEC on March 10, 2023, and other documents subsequently filed by Capstar with the SEC. Welcome to the Old National

Bancorp's fourth quarter and full year 2023 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 forelooking 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. 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. These non-GAAP measures are intended to assist investors' understanding of performance trends. Reconciliations for these numbers are contained within the appendix of the presentation. I'd now like to turn the call over to Old National's CEO, Jim Ryan, for opening remarks. Mr. Ryan?

Good morning. Old National reported strong fourth quarter and record full-year results earlier this morning. During 2023, we successfully navigated a challenging interest rate environment along with industry-wide liquidity pressures earlier in the year. At Old National, executing our basic banking strategy served us well. In fact, our 2023 adjusted EPS return on average tangible common equity and efficiency ratio were the best in our nearly 190-year history. Tangible book value per share also grew by 17% year-over-year. Combined with our roughly 3.7% average dividend yield, gave shareholders a strong return for the year. Our peer-leading deposit franchise, disciplined loan growth, strong credit quality, and well-managed expenses and dedicated team members who are committed to our clients and communities drove these outstanding results. While many in our industry spent the year on defense, we remained on the offense by continuing to invest in new client-facing and key support talent and being ready and opportunistic for acquisitions, as evidenced by our recently announced Capstar Bank partnership, which will expand our franchise to the highly dynamic markets of Nashville, broader Tennessee, and Asheville, North Carolina.

I will share more details about our progress with the strategic partnership later in my comments.

Starting on slide 5, GAAP earnings for the year were $1.94, and adjusted EPS was a record at $2.05 per common share, representing a 5% increase year-over-year. Our adjusted return on average tangible common equity and efficiency ratio were records at 21.3% and 50.4% respectively. Adjusted ROA was a strong 1.28%. Moving to slide six, we reported gap earnings for the fourth quarter of $0.44 per common share. Our adjusted EPS was $0.46 per common share, and our adjusted results included higher-than-run rate costs related to a true-up of the accrual for the annual short-term incentive plan and additional tax credit amortization for the quarter. When combined, resulted in an after-tax adjustment of approximately $7 million or $0.02 of earnings per share impact. Returning to our CapSTAR partnership, we have filed our regulatory application and announced an additional $1.2 billion investment in Tennessee as a part of our existing community growth plan. As we spend time with our new team members, we are even more excited about our partnership. Our existing team in Nashville was already off to a great start, and we're seeing many new client acquisition opportunities from that team, which will only build as we close on our partnership. We still expect to close in the first half of the year. In summary, our 2023 EPS results proved more durable than most peers in a challenging year due to relentless focus on the basics, growing core deposits, consistent and strong underwriting, disciplined expense management, and ample capital. Brendan will provide you with our official 2024 outlook at the end of his prepared remarks. But as I look forward, it's difficult to predict what the year will bring. Predictions range from a few rate cuts to more than a handful, from a soft landing to something more severe. Regardless of what transpires, we have entered 2024 in a strong position by continuing to execute on our basic banking strategy, and we are set up to be successful in whatever comes our way, as we have for the past 190 years. I would like to recognize Mike Scudder. As planned, Michael retires executive chairman of Old National Bank Corp. at the end of January. I want to thank Mike for his combined 38 years of outstanding leadership and dedication to First Midwest and Old National. His contributions to the board and me personally were invaluable as we completed our transformational partnership and successfully navigated the last two years. Thank you. I will now turn the call over to Brendan to cover the quarterly results in more detail.

Thanks, Jim. Beginning on slide 7, we present our fourth quarter balance sheet, which highlights improvements in both liquidity and capital positions. Our fourth quarter core deposit growth has allowed us to organically fund loan growth and continue to reduce wholesale borrowings and broker deposits. We ended the year with a strong CET1 ratio of 10.7%, and we continued to accrete capital at a faster pace than most through the combination of our better-than-peer return profile and our at-peer payout ratio. Tangible book value per share grew 11% quarter-over-quarter and 17% year-over-year due to strong earnings and a 24% improvement in AOCI. Overall improvements in our liquidity and capital levels allowed us to stay on the offense in 2023, and our Q4 performance only strengthens our position as we begin in 2024. On slide 8, we present the trend in total loan growth and portfolio yields. Total loans grew in line with our expectations, and we remain focused on full relationships and structure at a price that meets our risk-adjusted return requirements. requirements. The investment portfolio increased during the quarter largely due to changes in fair values. Please note that we did execute a small loss trade on $41 million of securities with an earnback inside of one year. Moving to slide nine, we show our trend in total deposits, which were stable quarter over quarter, including $340 million of normal seasonal public fund outflows and a $164 million decrease in broker deposits. Our broker deposits as a percentage of total deposits is now 2.7%, which is well below peers. We experienced strong growth in both personal and business accounts, largely through CD and money market promotions. New checking account acquisition was strong and continues to outpace attrition. However, migration to higher-yielding products continues to impact the growth in this category. We are still experiencing upward pressure on deposit rates, but we have seen a marked deceleration in deposit costs in the quarter and into January. Total deposit costs for the month of December was 190 basis points, only five basis points higher than our Q4 average. Overall, we are exceptionally pleased with the execution of our deposit strategy that has led to above-peer deposit growth at below-peer costs. Slide 10 provides our quarter-end income statement. We reported GAAP net income applicable to common shares of $128 million, or $0.44 per share. Reported earnings include the following pre-tax items, a $21.6 million gain on the sale of Visa Class B shares, as well as a $19.1 million charge for the FDIC Special Assessment, $6 million in merger-related charges, and a $4 million contract termination charge. Excluding these items, our adjusted earnings per share was $0.46. cents. Moving on to slide 11, we present details of our net interest income and margin. As expected, deposit repricing led to modest declines in both net interest income and margin. New loan production rates of 7.72% and marginal funding costs in the low 4% range support our expectation that net interest income should bottom out in Q1. Slide 12 shows trends in adjusted non-interest income, which was $79 million for the quarter. All of our primary fee businesses performed as expected with seasonally lower mortgage revenue. Continuing to slide 13, we showed the trend in adjusted non-interest expenses, which were generally in line with our Q3 guidance, excluding $10 million of year-to-date performance-driven incentive accrual true-up and $5 million in higher amortization of tax credit investments. Our 2023 incentive plan was tied to deposit costs and growth relative to our mid-sized peers. Our outperformance in both these categories was critical to our record year and ultimately drove the higher incentive. The tax credit amortization charge was due to timing of project completion with a corresponding offset in tax expense. While both these items are within core earnings, we obviously do not expect them to run right into first quarter. On slide 14, we present our credit trends, which remain stable, reflecting the quality of both our commercial and consumer portfolios. Delinquency and non-performing loan ratios are largely unchanged. Non-PCD net charge-offs were a low 3 basis points, with PCD charge-offs of 9 basis points. Our fourth quarter allowance, including reserve for unfunded commitments, was unchanged at 103 basis points, and there were no material changes to our model assumptions, and the weighting on the Moody's S3 scenario remains at 100%. On slide 15, we provide a comprehensive overview of our capital position at the end of the quarter. We observed improvements in all regulatory capital ratios and an 11% increase in our TCE ratio, driven by strong earnings and assisted by improvements in AOCI. Following our 24% recovery in Q4, we anticipate an additional 20% of our outstanding AOCI to accrete to capital by the end of 2024. In summary, we are very pleased with our fourth quarter and full-year performance in what was a challenging year for our industry. 2023 proved to be a record year in a number of critical performance metrics, including adjusted EPS, return on tangible common equity, and efficiency ratio. We have improved the efficiency of our balance sheet with strong core deposit growth, which has led to better funding mix and better than expected net interest income. We continue to demonstrate our ability to expand our customer base while maintaining peer-leading deposit costs. Our strong liquidity also positions us well to take advantage of new lending opportunities. The credit portfolio remains stable, and our disciplined approach to managing expenses is evident in our full-year adjusted efficiency ratio of 50.4%. Slide 16 includes additional detail on our rate risk position and net interest income guidance. NII is expected to fall approximately 2% in Q1, remain flat in Q2, and then begin to increase in the back half of the year. The assumptions are all listed on the slide, but I would highlight a few of the primary drivers. First, we assume three rate cuts in the back half, consistent with the Fed guidance. Second, we are anticipating additional late-cycle deposit repricing that will give us a terminal beta of 39% by mid-year and a non-interest-bearing deposit mix that falls to 24% by year-end. Lastly, we assume the closing of our CapStar partnership at the end of Q2. We believe we have positioned the balance sheet well as we approach the end of this rate cycle, with most of the work to achieve a neutral rate risk position behind us. Also, we did run a forward curve scenario, including six rate cuts, and the result was not materially different from our three rate cut scenario. Slide 17 includes Sponsor Outlooks for the remaining items for the first quarter and full year 2024, and all guidance assumes Capstar closes at the end of Q2. We believe our current loan pipeline should support first quarter growth in the 1% to 2% range and full year growth of 12% to 13%. We anticipate continued success in the execution of our deposit strategy and expect to meet or exceed the industry growth in 2024. We expect Q1 non-interest income to be consistent with Q4, with the full year up 6% to 7% with the typical seasonal patterns. Our expense outlook for the first quarter should be approximately $248 million, modestly higher than our Q4 base of $240 million, which excludes the incentive true-up and tax credit impact. For the full year, we expect expenses just over $1 billion. Net charge-off are expected to range between 15 to 20 basis points, and provision expense should be approximately $80 to $85 million for the full year of 2024. This excludes the day-one non-PCD double count associated with the acquisition. Turning to taxes, we expect both a first-quarter and full-year effective tax rate of approximately 25% on a core FTE basis and 22% on a gap basis. With those comments, I'd like to open up the call for your questions. We do have the full team available, including Mark Sander, Jim Sangren, and John Moran.

At this time, I would like to remind everyone to ask a question. Simply press star followed by the number one on your telephone keypad. We do ask that you please limit yourself to one question and one follow-up, then re-answer the queue for any additional questions that you might have. Our first question will come from the line of Scott Seifers with Piper Sandler. Please go ahead.

Morning, everybody. Thanks for taking the question. Good morning, Scott.

Good to hear from you.

You, too. Brendan, I wanted to ask you about some of the nuance in the NII. So it looks like NII should drop in the first quarter, which is great. Maybe I was hoping you could discuss some of the puts and takes. Obviously, day count becomes a factor in the first quarter, but maybe sort of the interplay with how the margin fits in there. And then I think that you said the margin might expand in the second half, if I heard that correctly. Maybe just some thoughts as we go forward.

Sure. Yeah, so we're looking at, you know, obviously as we get three rates.

And then I guess along the lines of sort of underlying loan growth, you know, you've got the 4% to 6% expectation. Maybe just some thoughts on how that evolves through the year. Industry trends have, of course, been pretty soft, but I think you guys have gotten, you know, at least your fair share, if not a little more of any opportunities that are out there. So, you know, maybe just sort of your thoughts on how things trend, including demand through the year.

I think you summarized it well, Scott. I mean, as much as loan demand has slowed somewhat, customers are still feeling okay. For 24, you know, financials are holding up well. Employment levels are keeping consumer spending at solid levels. But, again, I think that most of them think growth is going to slow a little bit in 24. And CRE activity, of course, you know, slowed into last year as expected as we got it to. But it's begun to pick up a little bit. And as much as, you know, that still has to play out, there's – rents are holding up well in active and in multifamily and industrial.

Perfect. Okay, good. Thank you guys very much.

Thanks, Scott.

Your next question comes from the line. It's Terry McEvoy with Stevens. Please go ahead.

Thanks. Good morning, everybody. First question. Could you maybe expand on the $5 billion of time deposits repricing over the next year? I'm seeing kind of brokered CDs were over five other times or just below four. And it looks like the seven-month promo is about $4.75. So what are your underlying assumptions there?

Yeah, so a lot of these CDs, I'm going to say 87%, not almost, but exactly 87%. I think you have the weighted average rate. That gives an opportunity to reprice most of those early.

And then maybe just stepping out of the model for a bit, Jim, we're hearing the word scale more and more from banks with assets, let's call it over $100 billion or over $250 billion. My question is, how are you thinking about scale as a $50 billion bank and your ability to compete with community banks as well as the larger banks?

I really think we're in a sweet spot. You know, we're big enough to be relevant and compete for almost any client situation in the markets we serve. We're not so big that we get in our own way sometimes. As you get bigger, we know that happens. We're close to our clients. We're nimble. We're fast. We're opportunistic. You know, we can reach out and touch our clients and touch our team members on a regular basis. I really like the size we're at today. And, you know, given where we're operating on an efficiency ratio basis, I think we're operating, you know, fairly efficiently. So I'm really happy with where we're at and don't see any need to do anything dramatically different than where we're at.

Thanks for taking my questions.

Thanks, Terry. Good to hear from you. I hope you're staying warm.

Your next question comes from the line of Chris McGrady with KBW. Please go ahead.

Good morning. Good morning, Chris. Maybe a question on credit. You still have a 5% PCD mark for First and West. How should you be thinking about portfolios that you're maybe watching a little bit more closely going into 2024? Any de-risking or exits or tweaking that needs to happen? It's just kind of broader credit commentary.

With credit, certainly modest. Areas we're watching more closely, obviously, is the area office, like everyone, and that will remain to be close. No real changes in our underwriting and feel real good about where we're at.

And then, Brandon, a question just on the balance sheet. How do we think about, you know, maybe adding bonds at this point to reduce more rate sensitivity, just the overall size of earning assets for 2020?

Question. So I think there's a risk position. then that will include likely some reinvestment of cash flows.

Just beyond the maturing cash flows of the bond book, will the bond book grow in an absolute basis?

No, no, not expecting it to grow.

Your next question comes from the line of Brody Preston with UBS. Please go ahead.

Hey, good morning, everybody. Thanks for taking the questions. Good morning, Brody. Jim, I can, I don't know, I guess I'll speak for Terry and say we're both cold up here in Maine. I appreciate it.

We're trying to stay warm.

I just wanted to ask on the nuances of the deposit beta commentary. So, you know, we're going to peak at 39%. Is that happening in 1Q? And then the declining to a total beta of the low 20s by 4Q24 feels a bit more conservative than what some of your larger peers have kind of outlined in terms of talking about pretty aggressive down betas within their NII guide. You know, I guess what makes you feel more conservative when you talk about your beta?

Yeah, sure. I'll answer to drive a really strong beta down on that side. But I also think, you know, the positives are still really valuable. I think that probably –

Okay, got it. and i wanted to also ask on the the securities um could you remind us i think you have over a billion in securities that are set to mature and reprice in 2024 would you plan on kind of running those down and using it to fund uh the good loan growth that you've talked about

in the guidance i think a little bit of a got it and if i could just sneak one more in the the two

and half a billion of balance sheet edges that you have. Can you just clarify, is that just on the loan book? And then do you have any maturities of slops occurring in 24 or 25 that are meaningful that we need to be aware about?

Yeah, so it's a mix on both the investment portfolio and on our loans. We don't have a ton maturing. We actually have it.

Okay, great. Thank you very much. Thanks, Brody.

Your next question comes from the line of John Arfstrom with RBC Capital Markets. Please go ahead.

Good morning, everyone.

Good morning, John.

A couple of follow-ups. By the way, slide 16 is really good. That's a great slide. Terry took one of the questions on CD repricing, but you talk about exception pricing on 30% of your deposits. Has that eased at all? Is that just a product of last spring or early summer, or is that persisting?

That's been fairly persistent. We continue to go out there. We've been unapologetically aggressive in gathering new deposits,

and so that's creeped up a little bit every quarter. And we'll continue to be aggressive,

although we can do that at marginally lower rates in this environment than we have over the last couple of quarters. So we think that exception price or marginal cost will be a little lower than it has been. But, yeah, that's been a big part of our system.

So slide 19, you talk about your commercial real estate maturing inside of 18 months. And just, you know, a small bit of it is you've got that 4% demarcation line. I understand that. But what is the message here on credit? Is it that we're going to see some incremental NPLs as this stuff gets repriced and reworked, or you're not seeing that at this point in time?

we're not seeing this at that that at this point at this point time um you know i think now again the crea see some go to criticizing classified could you see that increase a little bit yes but we don't uh we think we'll take action i think that's what we continue to try to size up kind of where some of the risks are uh we think they're very manageable if i can add one more just jimmy

any anything on capstar anything new to reporter updates and just you put out a date i know that's difficult but just confidence level and putting that date out for a close thanks we feel really

good um where we stand today both in terms of the people and the client opportunities um i mean every time we're uh with our team members both the existing team members and our new team members um we just feel really good about the opportunities and i do think some of that growth we're going to experience is going to come out of places like nashville you know, Detroit, you know, Kansas City, St. Louis. We've got new team members that we've hired in the last handful of years just to continue to execute and create new opportunities for us that just weren't available to us in the past. You know, with respect to the regulatory applications, we're really good about that. We're in constant dialogue with the regulators. You know, we obviously announced our addendum to our existing community growth plan, which we thought was an important step as a part of the, you know, process to get to the finish line here. So, I mean, you know, it's hard to always predict exactly when you're going to get approval for these things. But nonetheless, we feel really good about where we stand at this point in time. And more importantly, I just think Nashville, Tennessee, the Asheville location will continue to represent a great opportunity for us to grow and probably contribute, you know, in the future at a much more meaningful level than even, you know, a typical partnership of this size would contribute.

You've got some new investor day potential locations as well. I like it. Thank you.

Thanks, John.

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

Well, as always, we appreciate your support and feedback, and the entire team will be available to follow up on any questions you might have. Thank you very much.

This concludes the National's call. Once again, our replay, along with the presentation slides, will be available for 12 months on the Investor Relations page of Old National's website, oldnational.com. A replay of the call will also be available by dialing 800-770-2030, access code 525-8325. This replay will be available through February 6th. If anyone has additional questions, please contact Linnell Durkholz at 812-464-1366. Thank you for your participation in today's conference call. You may now disconnect.