Old National Bancorp. (NASDAQ:ONB) Q1 2016 Earnings Conference Call - Final Transcript

May 02, 2016 • 11:00 am ET

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Old National Bancorp. (NASDAQ:ONB) Q1 2016 Earnings Conference Call - Final Transcript

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Q & A
Executive
Robert G. Jones

if we retained all the RMs and clients that we wanted to.

Analyst
Jon G. Arfstrom

Good, and then Jim, just a quick one for you, you singled out construction as a growth driver for the quarter. Maybe give us an idea of kind of where and what is driving that.

Executive
James A. Sandgren

Yes, and I'd say, primarily, and it's really over the last 12 months. So when I talk about the future advances on these construction loans, those are current construction loans that have been booked over the last 12 months.

And I'd say, a majority of those deals have been up in Michigan, down in Louisville, Lexington and then kind of smattered around our legacy markets. It's been a mix of a little bit of multifamily, some credit tenant, industrial type construction, pretty diverse type of projects, but with strong metrics, strong principles and guarantees, so we feel really good about them, and now that the weather is starting to cooperate, we're looking forward to seeing those loans fund up a little quicker.

Operator
operator

David Long, Raymond James.

Analyst
David J. Long

Bob, you mentioned in your comments that with the sale of the insurance business, the impact on earnings was going to be either no impact or very little impact. But yet, we're looking at a pretax number of $6.3 million last year.

How do we get to that, really, no or little impact to earnings when I'm looking at this $0.035 or so impact last year?

Executive
Robert G. Jones

Yes, so if you take the first quarter with contingency fees, a large portion of that net income's going to come there, because you don't pay commissions on contingencies. So that's a large portion of what we made last year will come from that.

And over time, as you reduce cost, $2 million to $3 million coming from the abatement of our, or the termination of our defined benefit plan, you almost begin to cover that net income there. And then, I'm absolutely convinced, David, that the growth parameter we're on, the ability to reallocate resources, we're going to be able to cover that costs, so.

I just, for '16, clearly no impact and I think '17, as we've built the balance sheet further, we'll cover that in a much efficient matter.

Analyst
David J. Long

Okay, and then the other question that I still have is regarding the Anchor transaction, seeing that, that closed here. When does that actually get integrated? And when do most of those cost saves then kick in?

Executive
Robert G. Jones

Yes, towards the latter part of the third quarter would be the integration, and a good portion of those costs come out. Some of them are starting to come out now, but I would say you'll begin to see them in the fourth quarter.

David, just one more point that -- on the insurance. Remember that does not include the allocation of any overhead either, and some of that overhead will go away as we think forward.

Operator
operator

Terry McEvoy, Stephens.

Analyst
Terry McEvoy

I guess, the first question on insurance, how important was that business