Old National Bancorp. (NASDAQ:ONB) Q3 2019 Earnings Conference Call - Final Transcript
Oct 21, 2019 • 08:00 am ET
Brendon B. Falconer
is related to the establishment of an allowance for $2.7 billion of acquired loans with relatively modest increase in reserves on the remaining legacy book. The range reflects the uncertainty of the future macroeconomic environment, but assuming economic conditions remained stable, we would expect to be near the lower-end of this range. More detailed information will be provided in our fourth quarter call.
Slide 14 provides some key takeaways from our third quarter performance. We are pleased with our results driven by good execution against our stated strategy. We continue to have a disciplined approach to credit risk management resulting in net charge-offs of just 3 basis point and near cycle low on non-performing loans. We are driving positive operating leverage, improving our efficiency ratio and increasing profitability metrics. While loan growth was lower than our expectations, both production and pipeline reached record highs and we remain optimistic about our ability to produce quality loans without compromising on credit discipline.
And finally, we are pleased with the stability in our margin, which was down just 5 basis points quarter-over-quarter, excluding accretion income and interest collected on non-accrual loans.
Slide 15 includes, thoughts on our third quarter starting points and our outlook for the remainder of 2019. We expect commercial loan production to remain strong based on both the size and quality of our pipeline. We expect core net interest margin to be under some pressure from the shape of the yield curve heading into the last quarter of the year. As the slide suggests fees and expenses should follow normal seasonal patterns and we remain very focused on continuing to drive positive operating leverage. Our fourth quarter tax rate is expected to be approximately 23% on an FTE basis and approximately 20% on a GAAP basis. We continue to expect tax credit amortization to be de minimis. Lastly, the cost saves from our Klein partnerships have been realized and we are very optimistic about our opportunities in Minnesota.
With that, we're happy to answer any questions that you may have. And we do have the rest of the team here with us, including Jim Sandgren, Daryl Moore and John Moran.
Darcy, we'll take questions at this time.