Old National Bancorp Earnings Call Insights: Loan Growth, Indiana Community Profile
On Monday, Old National Bancorp (NYSE:ONB) reported its third quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Scott Siefers – Sandler O’Neill & Partners: I just had I guess a couple of questions. Chris, maybe first one for you. I appreciate the commentary on the direction of the core margin and then I know it sounds like there’s going to be a little more clarity on the PAAs once we introduce or now we’ve introduced Indiana Community maybe with 90 days or so from now, but to the extent you can just was curious you might kind of enter a guess on reported margin for the fourth quarter?
Christopher A. Wolking – Senior EVP and CFO: I would really feel more comfortable not. I think Scott, it’s a question about IBT and the combined continued march down of Monroe and Integra, I’d really rather talk a little bit more about that after we see a full quarter of ICB.
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Scott Siefers – Sandler O’Neill & Partners: Then Bob, next question was for you. Kind of duck tailing on the comments that you made in your closing remarks, I guess as I look at things for the last couple of quarters obviously there’s a little noise introduced in the equation with the balance sheet of INCB, but basically last couple of quarters you guys loan growth has been, little stronger than I might have anticipated. Beyond the comments that you cited sort of countervailing in commercial maybe slowing consumer maybe a little better, I wondered if you could just sort of speak to the competitive dynamics or where you guys stand in that field and how you see things from that perspective?
Robert G. Jones – President and CEO: Happy to. I hope everyone noticed that while we can’t give you any optimism for the future of loan growth, we can surely maintain our negative view on credit culture nothing else that consistent. Scott, I would say that as always Indianapolis remains extremely competitive we are seeing competitors both on structure and pricing be pretty aggressive, fortunately the pricing dynamics in Indy are more on the larger credits and are more national partners. Structure tends to come down more into the smaller credits and again we won’t get into those game. Absent Indianapolis it’s competitive you see good strong competition, but I would say that it’s rational in most cases, again smaller bank tend to be a little irrational. For the most part we’re able to take advantage of that market share and have a fairly level playing field in competition again Indy is tough and Louisville’s come along more difficult, but we have a little better opportunity in Louisville.
Scott Siefers – Sandler O’Neill & Partners: Along those lines, you mentioned on credit I guess last question for you Daryl. One the one hand certainly sort of a characteristic cautious tone from you by the same token. I think the chart-off numbers have been extraordinarily low somehow maybe even lower this quarter. I guess to a certain extent, I also still remember your comments from, I guess five years or so gone now. Right at the start of the real estate downturn is kind of a precursor to what actually happened. If you could sort of characterize your magnitude of concern on things you’re seeing or is just kind of your general conservatism. I guess however you can answer that question qualitatively.
Daryl D. Moore – EVP and CCO: Scott I think that maybe the difference this time then where we were five years ago. Is if you look at many of our mid and small size businesses. They’re just holding their own, right. So, they’ve not had good strong top line revenue growth. They are managing their margins pretty well. Their expenses are well managed, but any kind of blip that comes along seems to set these guys back a little more of higher magnitude than when things are going great. So, if you’ve got a company that has just been clipped along okay, you gets the margin compression, then it kind of sets them back. If top line revenues come down for quarter two, it’s going to set them back. So, this environment is more susceptible to higher credit risk in our portfolio of these little blips than we were five or six years ago. If the economy does improve, that’s going to continue with our clients and we could see some increasing risk. If the economy turns back round, I don’t think you’re going to have a whole sale, big increase and risk in the portfolio it’s just where this economy is going I think.
Indiana Community Profile
Dan Werner – Morningstar: Couple of quick questions. You discussed the line usage of Old National, how does that compare to what you brought on with Indiana Community customers, is there a significant difference between their commercial customer usage and yours?
Robert G. Jones – President and CEO: Dan, I would say this that the Indiana Community profile is probably a little less C&I, a little more small business and commercial real estate. So, their line utilization would probably be a little higher if I had to word you a guess, but they probably don’t have as many lines committed. So, as you’re building those models, I wouldn’t think much about variable usage of lines in the IBT portfolio.
Dan Werner – Morningstar: Then on Page 34 of the review, I am looking at the balance sheet and looking at the deposits and kind of the organic change on some of those deposit categories. Was the organic change primarily from Old National or was there some contributed by Indiana Community, I’m trying to get a better sense of – since it is such a recent closing how much anticipated runoff on deposits are you going to get especially given the branch consolidation that you guys are currently undergoing with both within Old National and Indiana Community?
Robert G. Jones – President and CEO: So Dan that would actually be just the IBT — or the core Old National prior to IBT. So that is more — the largest runoff in the non-interest bearing DDA, we had one large client in our Bloomington market that was a hospital they got bought and they consolidated their accounts in the parent and unfortunately the parent didn’t bank with us and the balance of that’s really Barbara’s work at trying to reduce deposit cost and margins, but the larger rundown there’s a singular client almost that have significant balances in Bloomington.
Christopher A. Wolking – Senior EVP and CFO: These are quarter-end numbers, so they’re just subject to some inherent volatility, but I think important to note there is the change in other, what we call other time deposits, which is our CDs, most or most expensive core deposit. Back and forth we see some of that stuff moving into lower expense transaction accounts, but some of it’s leaving the bank, which has been a help to our margin on the core side.