Jim Ryan on Cautious Optimism in Lending and Strategic Acquisitions

Loan Growth and Cautious Optimism

• 💡 Loan growth was mixed, driven by both commercial industrial loans and commercial real estate loans, with pipelines up meaningfully year-over-year.
• 📈 Despite negative headlines, clients remained eager to do business and ask for borrowing, leading to a cautiously optimistic outlook for the industry.
• 📉 While the quarter was relatively strong, it was slightly weaker than initially anticipated at the start of the year.

Cost Control and Economic Concerns

• 💰 The banking industry, including Old National, managed its net interest margin by lowering deposit costs, contributing to strong performance.
• ⚠️ A significant 66% increase in the provision for credit losses was driven by forecasts anticipating future economic weakness, particularly due to global trade impacts and tariffs.
• 🌾 The agricultural sector is a particular area of concern due to a tough year, though strong balance sheets provide some resilience.

Strategic Acquisition of Bremer Bank

• 🎯 The acquisition of Bremer Bank aims to build scale and density in key Upper Midwest markets, specifically the Twin Cities.
• 🗺️ This move expands Old National's presence into North Dakota and strengthens its position in Wisconsin.
• 🤝 The acquisition is seen as a continuation of Old National's strategy of finding great partners and serving communities, with no significant change in regulations cited as a driver.
• 📊 The deal, involving $16 billion in total assets, is expected to position Old National as the number three bank in the Twin Cities market share.