First Midwest Bancorp, Inc.

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 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 or outcomes to differ from those disclosed. The company refers you to its forward-looking statement legend in the earnings release and presentation slides. 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 with the appendix of the presentation. I'd now like to turn the call over to Old National's Chairman and CEO, Jim Ryan, for opening remarks. Mr. Ryan?

Good morning. Earlier today, Old National reported our second quarter 2024 results. Our earnings per share exceeded expectations due to better than expected revenue growth and lower expenses, which led to positive operating leverage. These strong second quarter results were driven by our investments in new markets and talent in our footprint, supported by our peer-leading low-cost deposit franchise, solid credit performance, and ample capital. We remain focused on the acceleration of our wealth management, treasury management, and capital markets businesses. Before moving to our second quarter highlights, I also want to provide you an update on our previously announced partnership with the Nashville-based Capstar Bank. which closed on April 1st and expanded our franchise to several strong and vibrant southeastern markets. I'm pleased to share that last week we successfully completed all banking center and systems conversion for this partnership. As of July 15th, all former Capstar branches have been converted to old national banking centers and all legacy Capstar team members are now operating in the old national network. The success of our partnership would not have been possible without our team members' hard work passion, professionalism, and collaboration. And I want to take this opportunity to acknowledge and thank everyone involved in the integration for a job extremely well done. Now, moving to our second quarter highlights on slide five, we reported gap earnings of 37 cents per common share and our adjusted EPS was 46 cents. These adjusted earnings per share results exceeded consensus estimates by two cents or 5%. Our adjusted return on average changeable common equity for the quarter was 17.2%, and our adjusted ROA was 1.12%. Our adjusted efficiency ratio was a low 52.6%. Excluding deposits and loans assumed in the Capstar transaction, our total deposit growth was 2.4% annualized during the quarter, and our loan growth was 5.9% annualized. Including Capstar deposits were up a total of $2.3 billion, and loans were up $2.6 billion in the quarter. Our total cost of deposit for the quarter remains at a low 216 basis points. At the same time, we remain focused on growing our tangible common book value per share, which grew 10% from a year ago. In summary, our second quarter 2024 earnings evidenced another strong on-plan quarter for Old National. We exceeded analysts' expectations due to our strong deposit franchise, disciplined loan growth, solid credit quality, and ample capital. With that, I'll now turn the call over to John.

Thanks, Jim. Turning to slide six, you can see our second quarter balance sheet, which highlights continued stability in our liquidity and our capital position. Our balance sheet also reflects the close of the Capstar transaction on April 1st. Total deposit growth over the last year has again allowed us to organically fund loan growth while holding borrowings flat. Additionally, we were able to grow our tangible book value per share 10% over the last year. Given its relative size and our strong retained earnings in the quarter, the addition of Capstar was essentially capital neutral with our CET1 ratio unchanged despite closing the deal. We continue to expect that we will accrete capital at a faster pace than most, through the combination of a better than peer return profile and a 30% dividend payout ratio. Our loan to deposit ratio ticked up modestly due to planned deposit runoff of approximately $400 million at Capstar. Our liquidity and capital levels continue to provide a strong foundation, which positions us well as we enter the back half of 2024. On slide seven, we show the trend in total loan growth and portfolio yields. Total loans grew $2.6 billion with $2.1 billion attributable to Capstar. Excluding Capstar, total loans grew 5.9% annualized from last quarter, in line with our expectations. We remain focused on full relationships and structure at prices that meet our risk-adjusted return requirements. New loan production rates in the high 7% range and marginal funding costs in the mid-4% range support our expectation that net interest income will grow modestly for the remainder of 2024. The investment portfolio increased 3% in the quarter due to the Capstar transaction. Shortly after closing, we repositioned Capstar Investments, which improved our total portfolio yields. Overall, fair values and duration were effectively unchanged. As we've mentioned in past calls, new money yields continue to run 200 basis points above back book yields, and we have approximately $1.3 billion in cash flows expected over the next 12 months. Moving to slide eight, we show our trend in total deposits, which grew $2.3 billion with $2.1 billion attributable to Capstar. As mentioned earlier, we intentionally ran approximately $400 million of higher cost deposits out of Capstar at closing. Excluding Capstar, total deposits grew 2.4% annualized with normal seasonal outflows in commercial and retail deposits offset by public fund and broker deposit increases. Our broker deposits as a percentage of total deposits are 4.6% and remain well below peer levels. We did see a 15 basis point increase in deposit rates compared to the prior quarter with Capstar driving approximately five basis points at that upward pressure. That said, deposit costs leveled out at 216 basis points and were steady over the course of the quarter, which was consistent with our spot rate at June 30th. Overall, we remain pleased with the execution of our deposit strategy, and we believe we are stabilizing with respect to both total cost and the non-interest bearing mix. Slide nine provides our quarter and income statement. We reported GAAP net income applicable to common shares of $117 million or 37 cents per share. Reported earnings include the following pre-tax items, $19 million in merger related charges and $15 million of CECL day one non-PCD provision expense. Excluding these items, our adjusted earnings per share was 46 cents. Moving on to slide 10, We present details of our net interest income and margin. Spread revenue and margin were both slightly better than forecast, primarily due to higher asset yields and accretion. Our low total deposit cost of 216 basis points remains a key competitive advantage. Year over year, we again showed deposit growth that essentially kept pace with asset generation while maintaining a low total cost of funding. On slide 11, we show trends in adjusted non-interest income, which was $87 million for the quarter, with Capstar contributing $7 million. Our primary fee businesses performed well with bank fees in line with our expectations, mortgage benefiting from seasonality and modest improvements in production and pipelines, and capital markets returning to more normalized levels. Continuing to slide 12, we show the trend in adjusted non-interest expenses of $264 million for the quarter, with Tapstar contributing $18 million. Expenses were in line with our guidance and remained very well controlled. On slide 13, we present our credit trends, which remain stable, reflecting the quality of both our commercial and consumer portfolios. The delinquency ratio remained stable, and the non-performing loan ratio decreased four basis points. Total net charge-offs were 16 basis points and a low 11 basis points, excluding five basis points related to PCD loans. Our second quarter allowance for credit losses to total loans, including reserve for unfunded commitments, was 108 basis points, up five basis points from the prior quarter. There were no material changes to our model assumptions, and the weighting on the Moody's S3 scenario remains 100%. It is also worth mentioning that our allowance for credit losses plus the discount remaining on acquired loans to total loans now stands at 161 basis points. Slide 14 presents key credit metrics relative to peers. As you can see, a proactive approach to credit monitoring has led to above peer levels of NPLs, but delinquency and charge-off ratios that are well below peer averages over long periods of time. We have long practiced conservatism here, and we believe the results speak for themselves. With CRE remaining in focus, we have enhanced disclosure in this quarter's presentation. I'll turn it over to Mark on slide 15.