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Edited Transcript of ONB earnings conference call or presentation 22-Apr-19 12:00pm GMT

Q1 2019 Old National Bancorp Earnings Call

EVANSVILLE Apr 23, 2019 (Thomson StreetEvents) -- Edited Transcript of Old National Bancorp earnings conference call or presentation Monday, April 22, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Brendon B. Falconer

Old National Bancorp - Senior VP & Treasurer

* Daryl D. Moore

Old National Bancorp - Senior EVP & Chief Credit Executive

* James A. Sandgren

Old National Bancorp - President & COO

* James C. Ryan

Old National Bancorp - Senior EVP & CFO

* Robert G. Jones

Old National Bancorp - Chairman & CEO

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Conference Call Participants

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* Christopher Edward McGratty

Keefe, Bruyette, & Woods, Inc., Research Division - MD

* James Prescott Beury

Boenning and Scattergood, Inc., Research Division - Analyst of Banks and Thrifts

* Jon Glenn Arfstrom

RBC Capital Markets, LLC, Research Division - Analyst

* Nathan James Race

Piper Jaffray Companies, Research Division - VP & Senior Research Analyst

* Robert Scott Siefers

Sandler O'Neill + Partners, L.P., Research Division - Principal of Equity Research

* Terence James McEvoy

Stephens Inc., Research Division - MD and Research Analyst

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Presentation

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Operator [1]

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Welcome to the Old National Bancorp First Quarter 2019 Earnings Conference Call. This call is being recorded and has been made accessible to the public in accordance with the SEC regulation FD. Corresponding presentation slides can be found on the Investor Relations page at oldnational.com and will be archived there for 12 months. Before turning the call over to management, I 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 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 would now like to turn the call over to Bob Jones for opening remarks. Mr. Jones?

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Robert G. Jones, Old National Bancorp - Chairman & CEO [2]

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Great, thank you, Carmen, and good morning, everyone, and thank you for joining us this morning. I know that many or probably, in fact, all of you were hoping that you would not hear from me again. But given that my last day as CEO is May 2nd, we thought there would be value in giving you an update on our transition.

In short, it is going extraordinarily well. Jim and I have obviously had a great relationship for many years, and that relationship has gotten even stronger over the last few months. We have spent a great deal of time on transitional topics, meeting with clients and spending joint time with associates. Change is good and in fact it is very good, and I've seen the genuine excitement and increase in energy around the company as we have jointly made the rounds. I am extraordinarily excited for the future of our company and extraordinarily proud of Jim and his leadership team. I have pledged to him that I will always be available for him if the need ever arises. With that, let me turn the call over to Jim.

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James C. Ryan, Old National Bancorp - Senior EVP & CFO [3]

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Good morning, and thank you, Bob. Your insights and humor on these calls are going to be missed for sure. I would characterize our first quarter results as consistent with our standard strategy and in line with our expectations. Net income was a record $56.3 million, earnings per share were $0.32. When adjusted for merger charges, earnings per share were $0.33. Total loans were down slightly due to lower line utilization, seasonally lower production and continued elevated levels of commercial clients selling their businesses. I'm confident we aren't losing clients or opportunities because we aren't competitive. In fact, our markets remain strong and our clients continue to be optimistic. As a result, our commercial pipeline built nicely over the quarter and now stands at a record high. More importantly, the excepted loan category in our pipeline is up 49% quarter-over-quarter and has continued to build nicely in April. This should provide a good tailwind as we move into the second quarter. However, given the global backdrop and inconsistent economic data, we are also staying disciplined and continued to focus on lending in our footprint and not buying commercial credit. We do not believe this is the right time to stretch on credits and pricing.

Total deposits increased during the quarter and our beta remains a strong 18% cycle to date. Loans to deposits are also a low 84%. I remained focused on improving our operating leverage, which improved by almost 500 basis points year-over-year, and our adjusted efficiency ratio was below 60%.

In the first quarter, we announced that the board authorized a share repurchase plan for up to 7 million shares. We would have been perfectly happy to not execute the plan but industry price volatility during the quarter allowed us a window to repurchase 1.5 million shares at an average price of approximately $16.45. Despite these repurchases, tangible book value per share grew by almost 5%, and tangible common equity to assets was up 19 basis points to 8.66%.

The conversion from our former KleinBank systems and branches took place a week ago. The conversion went incredibly well with minimal client disruption. It's important to note that cost savings from the former KleinBank are already starting to be realized and we remain on track for 40% annualized savings fully realized in the back half of the year.

A quick update on M&A. Our strategy hasn't changed. We remain an active looker and a selective buyer. However, my desire would be to spend 2019 more inwardly focused, working to improve the associate and client experiences and execution. Having said that, scale is still very important. Technology investments and the regulatory burdens are still very high. I've told the board and our associates that we will remain patient and wait for the perfect pitch. Much like Bob and I have been working through our transition, I've been working with Brendon on a smooth handoff of his CFO duties. I'm confident you'll quickly see why Brendon was the absolute right choice as our next CFO. With that introduction, I'll now turn the call over to Brendon.

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Brendon B. Falconer, Old National Bancorp - Senior VP & Treasurer [4]

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Thank you, Jim. Turning to the quarter on Slide 4. GAAP earnings per share were $0.32 and our adjusted earnings per share were $0.33. Adjusted earnings per share excludes $1.2 million in merger-related charges as well as debt securities losses.

Moving to Slide 5. Adjusted pretax, preprovision net revenue was 23% higher year-over-year. This result was driven by increased scale from our recent partnerships, maintaining our strong low cost deposit base and a continued focus on expense management. We also improved operating leverage by 491 basis points year-over-year.

Slide 6 shows the trend in average outstanding loans, which benefited from a full quarter of the Klein partnership. The quarter-over-quarter change in end of period loans was primarily driven by declines in C&I and indirect portfolios. The decline in commercial outstands is influenced by seasonal factors, lower line utilization and elevated levels of prepays due to business sales. As Jim referenced, our period-end pipeline is the highest in the company's history. Moreover, the current pipeline shows an increase of 49% over prior quarter in the excepted category, which has historically carried a higher pull-through rate. We are encouraged by both the level, and more importantly, the quality of our pipeline and feel that we are entering the second quarter with positive momentum.

Loan portfolio yields, excluding accretion and interest collected on nonaccrual, increased 7 basis points. New production loan yields of 4.77% exceeded the portfolio yield by 32 basis points.

Slide 7 shows our year-over-year change in earning assets. We continue to show progress in our ongoing efforts to deliver more optimal earning asset mix, with a focus on commercial loans. Excess liquidity generated this quarter resulted in a higher percentage of securities compared to last quarter, with new money yields of 3.69% compared with a portfolio yield of 3.03%.

That noted, we have continued to remix the balance sheet towards more productive commercial and commercial real estate loans and out of indirect and other loans.

Moving to Slide 8. Our demonstrated ability maintaining a stable, low-cost core funding base in this challenging pricing environment is a clear competitive advantage and is a testament to both the quality of our banking franchise and the strength of the relationships we have built with our clients. Our deposit beta is now 18% current cycle to date with a total cost of deposits of only 46 basis points. A disciplined approach to deposit pricing will remain a key focus as we navigate the remainder of this rate cycle.

Next, on Slide 9, you'll see the detailed changes in our first quarter net interest income and corresponding margin. Net interest margin, excluding accretion, was 3.3%. A full quarter of positive impact from our recent Klein partnership was offset by fewer days, earning asset mix change and lower interest on nonaccruals. Accretion decreased 6 basis points from the fourth quarter and is now less than 5% of total revenue.

Slide 10 shows trends in adjusted noninterest income. Both Mortgage Banking and Capital Markets showed nice revenue growth over the prior quarter, while other fee categories remained relatively stable. We ended the quarter with the largest mortgage pipeline in recent years and strong momentum in this line of business heading into the second quarter. Also included on the slide is our purchase versus refi percentage for the mortgage business. Purchases accounted for 77% of our first quarter volume with only a modest increase in refi activity.

Next, Slide 11 shows the trend in adjusted noninterest expenses. The first quarter included an additional month of the Klein partnership as well as the seasonal uptick in payroll-related taxes and benefits. We are pleased with our continued ability to control expenses and remain on track for the anticipated cost savings from our Klein partnership in the back half of 2019.

Our adjusted efficiency ratio for the first quarter was 59.51%, a 299 basis point improvement from the first quarter of 2018. As Jim said, expense control is an important part of our culture, and we remain committed to generating positive operating leverage.

Slide 12 has our credit metrics. Credit conditions remained benign, with nonperforming and underperforming loans near cycle lows. We recorded $1 million in provision expense during the first quarter, while posting net charge-offs of $0.9 million. With 63 basis point of reserves against organic loans and 340 basis points on loan marked against the acquired loans, we believe that we have adequate reserve coverage.

Before we turn away from credit, we want to provide a brief update on CECL. Progress towards complying with the new standard is on schedule with all credit models both built and validated. Second quarter activities will be concentrated on running sensitivity analysis and finalizing assumptions. We anticipate providing an estimated range of the day 1 impact in the third quarter.

Slide 13 provides some key takeaways from our first quarter performance. We are pleased with our results driven by good execution against our strategic objectives. We maintained our strong low-cost deposit base with a low 18% deposit beta through the cycle. We continue to have a disciplined approach at credit risk management, resulting in net charge-offs of just 3 basis points. While loan growth was lower than our expectations, we ended the quarter with the highest pipeline in the company's history and we remain optimistic about our ability to produce quality loans without compromising on the credit discipline that has served us well in prior cycles. Lastly, we are driving positive operating leverage, improving our efficiency ratio and increasing profitability metrics.

Slide 14 includes our outlook for 2019 and 1Q '19 starting points. We expect commercial loan production to increase based on both the size and quality of our pipeline. Commercial activity will skew towards C&I vs CRE. We have ample capacity for both asset classes.

Net interest margin, excluding accretion, is expected to continue benefiting from low-cost deposits and improving asset yields. But the shape of the current yield curve presents challenges. Given the market's view of the past and short-term interest rates, we have gradually positioned our balance sheet to a more neutral footing to increase protection against the potential of downward rate shocks. 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 full year tax rate is expected to be approximately 24% on an FTE basis and approximately 21% on a GAAP basis. We continue to expect tax credit amortization to be de minimis in 2019. Lastly, we remain very optimistic about our opportunities in Minnesota. We recently completed our conversion of Klein and our cost saves remain on track. With that, we're happy to answer any questions that you may have, and we do have the rest of the team with -- here with us, including Jim Sandgren and Daryl Moore.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Scott Siefers with Sandler O'Neill.

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Robert Scott Siefers, Sandler O'Neill + Partners, L.P., Research Division - Principal of Equity Research [2]

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I guess just a quick question on expenses first. I think, at least relative to what I anticipated, the first quarter run rate, when you exclude the merger-related charges, came in a little better than I had anticipated. And I guess as I was sort of thinking about things, I figured something in sort of the mid-120s might have been a better approximation for, kind of, the first half of the year, and then a step-down in the second half as the cost savings from Klein were achieved. Can you just sort of provide an update on sort of how you see it, ideally, the second quarter core trend looking and then if that step-down for the full year sort of still holds true?

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Robert G. Jones, Old National Bancorp - Chairman & CEO [3]

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Well, seasonally, expenses are always higher than the first half of the year. You're right with that. I would just say that I don't -- the first quarter was a pretty normal. We have the merit increases, which affect our run rate starting April, and we were starting to realize some of the savings from Klein already as we said in my prepared comments, and fully expect them to hit in the second half of the year. So I don't think we're that far off. First quarter was pretty typical and -- with a little bump for merit increases heading into the second quarter here.

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Robert Scott Siefers, Sandler O'Neill + Partners, L.P., Research Division - Principal of Equity Research [4]

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Okay. All right, perfect. And then it sounds like you guys are still quite optimistic on the production side of things, but the overall net growth continues, sounds like, to get impacted by those pay downs that have been sort of nagging for the past few quarters. Is there any sense that that's abating? And how would you expect the average net growth to trend from here on out?

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James A. Sandgren, Old National Bancorp - President & COO [5]

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Yes, Scott. This is Jim Sandgren. We're very optimistic as we roll into the second quarter as both Jim and Brendon alluded to. We have continued to suffer from some elevated payoffs. Again that happened in the first quarter with some large sales of companies. So that continues. But as we look at the pipeline growing to $2 billion, and maybe even more importantly, our excepted category being in the highest level typically. Those pull-throughs are 90% or higher. So we really feel good about that. The other piece of the pipeline that I think is encouraging is that is a higher percentage of C&I, and in the first quarter, we did have more C&I production than we had in CRE, so that also feels pretty good to us. Also, we still have about almost $550 million in construction advances on some of our commercial construction projects that obviously didn't get advanced much in the first quarter due to some pretty tough weather in a lot of our markets.

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Robert G. Jones, Old National Bancorp - Chairman & CEO [6]

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And, Scott, our line utilization was down almost 3%, so that has really helped outstandings.

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Operator [7]

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Your next question comes from the line of Chris McGratty with KBW.

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Christopher Edward McGratty, Keefe, Bruyette, & Woods, Inc., Research Division - MD [8]

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Jim, I think in your prepared remarks, you talked about buybacks given the opportunists with the stock. Given your comment on loan growth and more optimism is what we're hearing, I think, should we be assuming that you take the foot off a little bit on the buyback at least for near term? Or is this kind of a fair level since capital levels actually still grew in the quarter?

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James C. Ryan, Old National Bancorp - Senior EVP & CFO [9]

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Yes, I think we are being opportunistics. When we have volatility like we saw at the end of last year and really, in March, I guess, of this year, we're being opportunistic and step into it. And I think despite balance sheet growth, we have capacity because our capital levels were completely fine with. So we'll still be opportunistic.

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Christopher Edward McGratty, Keefe, Bruyette, & Woods, Inc., Research Division - MD [10]

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Okay. And on the core margin, the betas -- the deposit betas remain pretty low compared to peers. How should we be thinking, Brendon, maybe the next few quarters on core NIM trajectory given where we are with the curve and rate expectations shifting?

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Brendon B. Falconer, Old National Bancorp - Senior VP & Treasurer [11]

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Sure. I think with burning asset mix, should continue to improve with the commercial loan production. So that will be a -- certainly a benefit to margin. I'd point you to our new business rates on both investments and loans exceed the portfolio yield, so that should be a positive. And the big question mark is where deposits go from here. But we generally feel good about the trajectory of the earnings asset side.

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Christopher Edward McGratty, Keefe, Bruyette, & Woods, Inc., Research Division - MD [12]

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Okay. So margins potentially finding support if not maybe increasing a little bit after the compression this quarter? Or is stability kind of the message?

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Brendon B. Falconer, Old National Bancorp - Senior VP & Treasurer [13]

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Yes, I think stability is probably a better term. Obviously, this is a rate environment. The belly part of that curve has just been really, really tough in the first quarter. And so we got a little bit of relief here, but what we're hoping for a better rate environment going forward.

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Operator [14]

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Your next question comes from the line of Nathan Race with Piper Jaffray.

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Nathan James Race, Piper Jaffray Companies, Research Division - VP & Senior Research Analyst [15]

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Maybe want to start on credit with Daryl. The criticized loans are up fairly noticeably in the quarter, I think up 10% on an absolute basis. So just any color on what you're seeing there? And perhaps, an update on the healthcare credit that percolated towards the back half of last year as well?

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Daryl D. Moore, Old National Bancorp - Senior EVP & Chief Credit Executive [16]

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Yes, sure. The increase in this special mention and a little bit in the substandard really relate probably -- well, really relate to our commercial real estate portfolio. We talked over the past 3 or 4 quarters about how we're tightening that up. We don't see anything significantly in that portfolio. What we are seeing is just a slight increase in vacancy rates on some of the projects as well as some concessions. And so for those that are behind what we projected when we approved those construction loans or those loans, we slid those into that special mention category until they begin stabilizing and that vacancy ticks up a little bit. With respect to that one credit lapse in the fourth quarter, the healthcare credit, actually that's stabilized. We had some additional equity that was put in the project by one of the significant owners, and that's been getting to lease up the management company. So we're feeling very better about that credit today.

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Nathan James Race, Piper Jaffray Companies, Research Division - VP & Senior Research Analyst [17]

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Got it. That's helpful. And perhaps a follow-up. In terms of lack of absorption, is that in any particular geography or market or asset classes?

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Daryl D. Moore, Old National Bancorp - Senior EVP & Chief Credit Executive [18]

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What we're seeing at this point in time, I would say it's across the asset classes, but if you had to have me pick one, I would say it's in the multifamily at least in our portfolio. And we have a concentration in markets. There's no particular market that is worse than the other. We've generated more loans in some of the markets, so there is no market dynamic working there other than just the fact that we've got more multifamily loans in some of our markets than others.

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Nathan James Race, Piper Jaffray Companies, Research Division - VP & Senior Research Analyst [19]

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Got it. Understood. And then if I could just ask one more on line utilization. It looks like it ticked down 300 basis points compared to the fourth quarter. Was that just seasonal or is there anything else there?

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Robert G. Jones, Old National Bancorp - Chairman & CEO [20]

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That, we've been running it seasonal a little bit, but this was a bigger drop than we had seen, and I think that impacted balances by close to $65 million. We would anticipate that utilization bouncing back up in the second quarter. So a little unusual.

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Operator [21]

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Your next question comes from the line of Terry McEvoy with Stephens.

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Terence James McEvoy, Stephens Inc., Research Division - MD and Research Analyst [22]

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The betas remain really low. So I guess my question is where do you see more future upward pressure on deposit cost? Would it be in your legacy community markets or some of your newer more metropolitan markets?

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Brendon B. Falconer, Old National Bancorp - Senior VP & Treasurer [23]

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This is Brendon, Terry. Yes, I think the pressure is really coming from some of the newer markets. Legacy markets remain really low. The exception pricing requests we get out of our legacy markets are relatively lower compared to our newer markets. But the competition is tough and acquisition rates continue to be high. But again, I'd say that we'll weather that storm better than most. So but hoping that deposit pricing moderate from here, but we have not seen a major change in our clients' expectations for rates. Yes.

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James A. Sandgren, Old National Bancorp - President & COO [24]

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Terry, you can imagine we have a lot of discipline around this process and lot of conversation to make sure that we're absolutely only repricing deposits we need to reprice, and it's been a good healthy process for us here at the company.

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Terence James McEvoy, Stephens Inc., Research Division - MD and Research Analyst [25]

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And then, Jim, a follow-up for you. You mentioned in the prepared remarks your inward focus, but if you see that perfect pitch, you're going to swing the bat. Could you just talk about that perfect pitch in terms of size, markets, characteristics to help us understand now that you're up to that what you're looking for?

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James C. Ryan, Old National Bancorp - Senior EVP & CFO [26]

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Yes, great question. And it really hasn't changed at all. As you know that Bob and I have been by to our side for a long, long time here. And so for us, I think it's a bank between $1 billion and $3 billion that's in market that really adds to a market where we don't have as much scale as we'd like to be that we can make sure that we did good cost saves out of. So it's pretty much we have been looking for in the past right in our footprint that adds a scale to an important market for us where we have subscaled today and that we can rely on cost saves versus revenue growth.

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Terence James McEvoy, Stephens Inc., Research Division - MD and Research Analyst [27]

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And then just a last one. I'm not quite sure what to make there. Klein added $35 million of loan production in the first quarter, which, as an analyst, I can just calculate 8% of the quarterly production. Why is that bullet point there? I'm guessing it was better than expected and there's momentum within that market.

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James C. Ryan, Old National Bancorp - Senior EVP & CFO [28]

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Yes, we definitely have a lot of momentum in that market. Now the conversion is behind us, a really strong commercial team that's added to our legacy Old National team up in Minnesota. So we feel good about the growth opportunities for us in that market.

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Robert G. Jones, Old National Bancorp - Chairman & CEO [29]

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We couldn't be more pleased with the team that we have in place, both in the commercial and the retail side. And as we said earlier in our prepared comments, that conversion has gone incredibly well.

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Operator [30]

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Your next question comes from Scott Beury with Boenning and Scattergood.

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James Prescott Beury, Boenning and Scattergood, Inc., Research Division - Analyst of Banks and Thrifts [31]

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Just first question, I guess, is a follow-up. In terms of the pipeline, do you have any color you could give us in terms of how that's spread out geographically?

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Brendon B. Falconer, Old National Bancorp - Senior VP & Treasurer [32]

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Yes, sure. Right now, a big chunk of that is in our Wisconsin, Minnesota, Michigan markets. We continue to have strong production and pipeline growth out of our Russellville, Kentucky market as well. And then certainly, pockets of our Indiana markets. But really led by Wisconsin, Minnesota and Michigan right now.

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James Prescott Beury, Boenning and Scattergood, Inc., Research Division - Analyst of Banks and Thrifts [33]

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Okay. So the vast majority is -- or maybe not the vast majority, but the bulk of it is really coming out of some of the newer markets?

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Brendon B. Falconer, Old National Bancorp - Senior VP & Treasurer [34]

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The largest piece, but we still have good pipelines in our out legacy markets as well.

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James Prescott Beury, Boenning and Scattergood, Inc., Research Division - Analyst of Banks and Thrifts [35]

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Okay, that's helpful. And then on the earning asset mix. Obviously loan demand move balance is a little more challenging this quarter given some of the pay-downs and some of the seasonal factors. But I noticed that you did have an increase in the securities in the earning asset mix as well as at period end. And I was just curious if you could kind of talk about that and give your expectations on whether that's going to kind of moderate as you see some of these loans come through?

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Brendon B. Falconer, Old National Bancorp - Senior VP & Treasurer [36]

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Sure, yes. So as loan growth was a little softer in the first quarter, deposits were up. We had some excess liquidity. We put it to work in the investment portfolio. And as loans increase, we intend to improve that earning asset mix and we'll flex the investment portfolio as needed.

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James A. Sandgren, Old National Bancorp - President & COO [37]

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With loans to deposits at 84%, pretty strong funding base to support kind of earnings asset growth.

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Operator [38]

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And your next question comes from the line of Jon Arfstrom with RBC Capital Markets.

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Jon Glenn Arfstrom, RBC Capital Markets, LLC, Research Division - Analyst [39]

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Just a couple of smaller ones. I think most of the big topics have been picked over. But can you touch on the capital markets driver this quarter? It was kind of a bigger item than I had expected. And that -- go to that one first. Just (inaudible).

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Robert G. Jones, Old National Bancorp - Chairman & CEO [40]

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Yes, just real quick. I mean it was a strong quarter. Mostly, I think on existing floating rate loans being swapped to fixed. And so with -- that ebbs and flows, but it's a nice business to be in and it really gives our clients a lot of options to protect from a rate risk. But mostly driven opportunistically when rates kind of fell here in the quarter.

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Jon Glenn Arfstrom, RBC Capital Markets, LLC, Research Division - Analyst [41]

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Okay. So not one big item in there?

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Robert G. Jones, Old National Bancorp - Chairman & CEO [42]

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No, but we continue to see good momentum going into the second quarter with that business as well.

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Jon Glenn Arfstrom, RBC Capital Markets, LLC, Research Division - Analyst [43]

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Okay. The other one is mortgage. You talked about record pipelines, and obviously, it was a decent quarter this quarter, but what's possible there over the next couple of quarters?

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James A. Sandgren, Old National Bancorp - President & COO [44]

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Well, you know Chris very well, Jon, and he's pretty giddy about the business. So we feel really good about heading into the quarter here with the pipeline continuing to grow and really seeing nice opportunities out of Minnesota as well, which I think speaks a lot to both the former Anchor franchise and former Klein had good mortgage businesses but together we're better. And so I think the opportunities will continue to present themselves in Minnesota. And I think we'll have some decent quarters going forward based on what I'm seeing in the pipeline so far.

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Jon Glenn Arfstrom, RBC Capital Markets, LLC, Research Division - Analyst [45]

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Okay. And then, I guess, the last one back to deposit pricing. I know you've talked about it quite a bit. But yet a pretty big step up in checking and money market costs. Is that -- would you call that Klein related or as you are just playing defense there, what was the driver of the big increase in those two?

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Brendon B. Falconer, Old National Bancorp - Senior VP & Treasurer [46]

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Jon, this is Brendon. No, not competition. We have been running some targeted money market specials in select markets where we have relatively low share, and that's been driving some of the growth and some of the increase in pricing in that line item.

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Robert G. Jones, Old National Bancorp - Chairman & CEO [47]

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So I think that we'd characterize it as partly defensive and partly offensive. We're really trying to get new money in the door, and the new money cost is obviously higher than we have on our existing books, but it's really trying to be as much offensive as anything else.

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Operator [48]

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And there are no further questions at this time.

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James C. Ryan, Old National Bancorp - Senior EVP & CFO [49]

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Well, thanks everybody for your attendance. And as I said in my opening remarks, we're certainly going to miss Bob on this call, and I don't have nearly the sense of humor that he has and the analogies, but thank you all for your participation, and as always, we'll be around for follow-ups.

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Operator [50]

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This does conclude Old National's call. Once again, a 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 1 (855) 859-2056. The conference ID 2358708. This replay will be available through May 6. If anyone has additional questions, please contact Lynell Walton at (812) 464-1366. Thank you again for your participation in today's call.