Old National Bancorp. (NASDAQ:ONB) Q3 2020 Earnings Conference Call - Final Transcript

Oct 19, 2020 • 10:00 am ET

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Old National Bancorp. (NASDAQ:ONB) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Welcome to the Old National Bancorp Third Quarter 2020 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 as noted on Slide 2, certain statements on today's call may be forward-looking in nature and are subject to certain risks, 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 provides 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 Jim Ryan for opening remarks. Mr. Ryan?

Executive
James C. Ryan III

Thanks, Dorothy. Good morning. I hope this call finds all of you and your families safe and healthy. We are pleased with our third quarter results as we made significant progress on client deferrals. We improved our operating leverage and grew the loan portfolio and ended the quarter with a robust commercial pipeline.

We remain committed and focused on the health and safety of our team members, clients and communities. We are currently occupying about 50% of our office buildings by rotating team members every four weeks. Our branch lobbies are open and we are active in our communities. Many larger banks have told their relationship managers to stay at home and not worry about goals this year. By contrast, our relationship managers are proactively serving existing clients and winning new relationships, rather than being distracted or derailed by COVID.

Jim Sandgren and I have also been actively calling on new client opportunities to help win business. I've been impressed by the quality of the new relationships we've been able to win this quarter, many of them moving from long-term relationships from other larger banks. I would like to thank our team members for their hard work and dedication.

Starting on Slide 3. Our third quarter net income was $77.9 million or $0.47 per share. I was particularly pleased with our progress on operating leverage and strong balance sheet growth. Growing our balance sheet and watching our costs should help us mitigate the near-zero interest rate environment. While we did not take a provision this quarter, we did grow the reserve, given our net recoveries for the quarter. Brendon will fill you in on all the details with respect to our reserve.

End of period commercial loans increased by 10.5% annualized primarily due to the record commercial production. Our commercial production was $978 million, up from $658 million in the second quarter. Line utilization was about the same. Core deposits were higher by 7% on an annualized basis driven by continued growth in non-interest bearing deposits. Net interest income