Q2 2023 Old National Bancorp Earnings Call
[music].
Welcome to the old National Bancorp second quarter 2023 earnings conference call. This call is being recorded and it has been accessible to the public in accordance with the SEC's regulation FD corresponding presentation slides can be found on the Investor Relations page at old National Dot Com and will be all.
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 discussed 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 the 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 those numbers are contained within the appendix of the presentation I would now like to turn the call over to <unk>.
Old National C E O Jim Brian Mr. Ryan. Please go ahead.
Good morning, we are pleased to be with you today to share details about our strong second quarter performance.
Simply put the corner was business as usual for old national with growth in deposits solid liquidity and credit quality disciplined loan growth and well managed expenses the strength of our franchise remains evident in the results outlined on slide four.
We reported EPS of <unk> 52 cents for the quarter adjusted EPS was <unk> 54 cents per common share with adjusted our way in.
In our O a T C 133, and 22% respectively.
Our adjusted efficiency ratio was a low 49% tangible book value, excluding a O C. I also increased 15% year over year.
Deposit balances were up 4% during the quarter with growth in core deposits up 2% as we continue to compete for new banking relationships effectively.
Our total cost of deposits was 115 basis points and we maintained our deposit pricing discipline with a low 23% total deposit beta cycle to date.
Our credit quality remained stable with six basis points of non P. C D related charge offs.
We remain watchful inconsistent with other banks are focused on potential pockets of softness.
Like our deposit portfolio, our loan portfolio is granular and relationship driven which should continue to serve us well.
We remain confident in our client selection underwriting and as you know old National has taken a proactive approach to managing credit. This approach has served us well in the past and you see evidence of that stance. This quarter as we work to address any credit deterioration aggressively.
On the client side engagement remained high in the quarter.
We expect full relationships with our borrowing clients and to the extent that newer existing clients locked up potential we will manage accordingly.
We do however continue to expect disciplined loan portfolio growth in 2023.
In other areas, it's more of the same.
We're below peer deposit costs should drive a funding advantage, we expect to see organic growth of our wealth management client base and we continue to focus on disciplined expense management, while building tangible book value.
We also continue to invest in top revenue generating talent and expanded a dynamic new markets within our footprint.
We recently celebrated the opening of our first Metro Detroit area commercial banking office with a terrific new team.
And we announced two prominent commercial relationship managers have joined our Nashville wealth management team.
Before I turn things over to Brendan I also want to take a moment to share that our old national family continues to recover and heal from our Louisville tragedy on April 10th They claimed the lives of five of our team members and impacted so many others.
More than three months later, our O N B family continues to do our best to love care for and support one another.
Additionally in June our downtown Louisville team began serving clients at a new location in the heart of downtown Louisville.
Once again I want to thank countless individuals and organizations, who are cared for and supported our family during this challenging time.
Also want to acknowledge and thank our team members for their resiliency and their commitment to supporting one another.
With that I will now turn the call over to Brendan to cover the quarterly results in more detail.
Thanks, Jim turning to our quarter end balance sheet on slide five we continued to effectively navigate the challenging operating environment.
Heaving, a more efficient balance sheet.
We improved our earning asset mix with cash flows from our investment portfolio reinvested in laws, while their funding mix improved through higher deposit balances and lower borrowings as a result, our loan to deposit ratio improved by 100 basis points, while strong earnings bolstered our capital levels and contributed to tangible book value growth despite facing.
The OCI headwinds.
On slide six we present the trend in total loan growth and portfolio yields total loans grew by 2% in line with our expectations. We sold approximately $300 million of non-religious ship CNI loans at par during the quarter as we look to manage liquidity, while prioritizing lending to our clients with full banking relationships.
The investment portfolio decreased by 2%, mainly due to portfolio cash flows and declines in fair values. Despite rates shifts the duration remained steady at 4.4 years and is not expected to extend further.
Cash flows from the portfolio are expected to be $1.2 billion over the next 12 months.
Moving to slide seven we show our trend in total deposits, which increased $1.3 billion or 4% quarter over quarter.
Core deposits grew approximately $800 million, including $490 million of normal seasonal public inputs.
The trend in average deposits reflects the continued mix shift away from noninterest bearing accounts into money markets and Cds.
Market conditions continue to put upward pressure on deposit rates with interest bearing deposit costs, increasing 37 basis points to 1.66%, resulting in a cycle to date interest bearing deposit beta of 33%.
Total deposit costs were relatively low at 1.15%, which equates to a cycle to date total deposit beta of 23%.
While it is challenging to estimate the terminal beta we had a strong track record of managing deposit rates and are confident we can maintain our funding cost advantage throughout the remainder of the rate cycle.
Our disciplined approach of exception pricing has allowed us to successfully defend deposit balances and our targeted promotions have resulted in above peer deposit growth.
Slide eight provides our quarter end income statement.
Sort of GAAP net income applicable to common shares of $151 million or <unk> 52 cents per share.
Reported earnings includes $6 million in pre tax merger related and other charges. Excluding these items our adjusted earnings per share was 54.
Our profitability continues to be strong with an adjusted return on average tangible common equity of 22, 1% and adjusted return on average assets of 133%.
Moving on to slide nine we present details of our net interest income and margin.
Both metrics surpassed our expectations as we reported a linked quarter increase in net interest income and experienced lower than anticipated margin compression or.
Our strong performance was bolstered by the quarter point rate hike by the fed in may and our better than expected deposit growth.
Furthermore, we continue to make progress towards achieving our targeted neutral rate risk position by the end of the rate cycle, while prudently, adding protection against any sudden reversal and fed rate policy.
Slide 10 shows trends in adjusted noninterest income, which was $82 million for the quarter. Our primary fee businesses remained stable, but we did benefit from a $4 million increase in other income that we would not anticipate in our run rate next quarter. The items driving that increase were company owned life insurance revenues a recovery from a prior charged off asset.
And positive derivative valuations associated with the transition from LIBOR to silver.
Continuing to slide 11, we show the trend in adjusted noninterest expenses adjusted expenses were $241 million and our adjusted efficiency ratio was a low 49, 4% our.
Our expenses were well controlled and consistent with the previous quarter, excluding a 5 million dollar increase in incentive accruals related to our strong year to date performance. This would equate to a Q3 run rate of $237 $5 million.
On slide 12, we present, our credit trends, which remained stable, reflecting the strong performance of both our commercial and consumer portfolios delinquencies have decreased and net charge offs have remained steady at a modest six basis points, excluding the seven basis point impact from P. C D loans.
The rise in nonperforming loans, primarily stems from the anticipated migration of P. C. D credits as we maintain an aggressive approach to resolving these loans while charge offs from this portfolio are expected to remain elevated in the short term, we expect minimal impact on provision expense given that we currently carry a $39 million or approximately 4% reserve against this book.
Our second quarter allowance, including reserve for unfunded commitments stand at $338 million or 104 basis points of total loans. The modest reserve increase was largely driven by loan growth, partially offset by adjustments in our economic forecast.
We continue to rely on a 100% weighted Moody's as three scenario that projects peak unemployment of seven 2% a negative GDP growth of three 1%.
Barring any significant deterioration beyond these economic assumptions, we expect provision expense to remain limited to portfolio performance and loan growth.
Shifting to key areas of focus on slide 14, you will see further details on our loan portfolio, our commercial loan book, which constitutes approximately 70% of our total loans is granular and well diversified our non owner occupied CRE is also well diversified across various asset classes and geographies regarding non owner occupied office properties.
Geordie of the portfolio was comprised of suburban or medical offices with a significant portion of credit tenant leases only a negligible percentage less than 1% of total loans is attributed to properties located within central business districts that are geographically dispersed across 11 missed Midwestern cities in our footprint.
On slide 15, we provide highlights from our recent examination of fixed rate CRE maturities over the next 18 months less than 1% of total loans that are non owner occupied CRE mature within 18 months and carry a note rate of less than 4%.
Our approach to underwriting theory includes a 300 basis point margin over at the current rates at the time of origination. While these maturing credits have surpassed the original underwriting stress coupon. We have observed improved net operating income from higher rents.
This improvement has been sufficient to uphold debt service ratios in line with our underwriting guidelines and we believe the refinance risk in this portfolio to be minimal.
Slide 16 details our Q2 commercial production the.
The 1.9 billion of production was well balanced across all product lines and major markets as discussed on last quarters call. We have tightened our pricing standards enhanced our credit structure and reinforced with our our EMS the importance of acquiring a full banking relationship for new loan requests.
As a result of these actions and strong Q2 production our pipeline has decreased to $3 $1 billion and is consistent with low to mid single digit loan growth, we expect in the back half of the year.
On slide 17, we present further insights into our deposit base, our average core deposit balances meaningfully lower than peers, 81% of our accounts have less than $25000 on deposit and Kieran average balance of just $4500. It's important to highlight that we maintain strong enduring relationships with our deposit customers.
50% of which had been with the bank for over 15 years.
Our top 20 deposit clients represent only 5% of total deposits and have a weighted average tenure of greater than 30 years.
Lastly, our broker deposits were three 5% of total deposits at the end of the quarter, which we expect to be well below peer average.
On slide 18, we provide a comprehensive overview of our capital position at the end of the quarter, we observed improvements in all regulatory capital ratios and maintain stability in our TCE ratio despite facing the negative impact of increasing a OCI.
Our above peer return on tangible common equity coupled with our peer average dividend payout ratio should result in us accrete capital at a faster rate than most.
Additionally, we anticipate 30% of our outstanding a OCI to accrete capital by the end of 'twenty 'twenty four.
We did not repurchased any shares in the quarter and do not intend to do so in the near term as we focus on capital growth.
In summary, our strong second quarter performance marked the successful conclusion of the first half of 2023 with results slightly exceeding our expectations we.
We have improved the efficiency ratio of our balance sheet through a better earning asset mix strong core deposit growth led to a better funding mix and we grew tangible book value per share by 15% excluding OCI impact.
Despite the challenging rate environment, our net interest income grew quarter over quarter, largely due to the strong execution of our deposit strategy.
We have demonstrated an ability to both expand our customer base, while maintaining peer leading deposit costs, our credit portfolio remains stable and our disciplined approach to managing expenses is evident in our quarterly adjusted efficiency ratio of 49, 4%.
Slide 20 includes thoughts on our outlook for the remainder of 2020 three we.
We believe our current pipeline should support second half 2023 loan growth in the low to mid single digit range with full year growth in the mid to high single digit range.
We continue to target at or above industry deposit growth and we are reconfirming, our guide on 9% to 12% year over year net interest income increase with a stronger conviction towards the higher end of this range. The key assumptions in this guidance include one more rate hike and a through the cycle interest bearing deposit beta of 43.
To 53% by year end and noninterest bearing deposits falling to 28%.
We expect fee businesses to be stable in the back half of 2023 with the exception of the $4 million a non run rate items, we noted earlier.
Our expense outlook its adjusted to approximately $949 million for full year 2023, excluding merger related charges and property optimization related expenses.
This reflects our prior guidance of $939 million adjusted upward by $10 million for higher incentive accruals $5 million of this has already been accrued at quarter end.
Provision expense should continue to be limited to loan growth portfolio changes and non P. C. D charge offs as we believe we have adequate reserves against the P. CD book.
Turning to taxes, we expect approximately $8 million in tax credit amortization for the remainder of 2023 with a corresponding full year effective tax rate of 25% on a core FTE basis, and 23% on a GAAP basis.
With those comments I'd like to open up the call for your questions. We do have the full team available, including Mark Sander, Jim Sandgren and John Moran.
Thank you at this time I'd like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad to allow everyone an opportunity to ask a question. We ask that you. Please limit yourselves to one question and one follow up well pause for just a moment to compile the Q&A roster.
Okay, we'll take our first question from Ben Garlinger with Hyundai Group. Please go ahead.
Hey, good morning, everyone.
Ben.
Hey, Phil.
Two.
A modeling question upfront, but you guys gave a lot of guidance with both the left and right side of the balance sheet or specifically to the cost.
Cost of liabilities and deposits going forward.
The one piece that I think was missing and I kind of just back into it a little bit what was the average earning asset yield or what you might see a uptick in terms of the next rate hike.
So putting it altogether I'm coming up with a margin of around a 3.4.
At year end I might be off by a couple of bits here and there but.
Is that do you think Thats, a fair assumption and then what would be some possible factors that could be above or below that.
Yes, I think you're I think you're in the ballpark there.
I think what we need to think about is what is the velocity of deposit pricing going forward and how well can we do against that.
Deposit Beta guide.
Can tell you today that philosophy does seem to have slowed I know, we're one month into the third quarter I think there are some potential upside there.
And we do have still a significant amount of fixed.
Fixed asset repricing fixed pricing assets that will reprice over the next 12 months is meaningful.
Good.
Help defer a lot of it is kind of late cycle deposit repricing that we have.
So I think those are the two items would probably offset.
Margin pressure going forward.
Gotcha, and then just kind of following up on that.
Just erring on the side of conservatism because you guys do you have a really healthy.
Positive franchise that you're or beta.
That doesn't whipsaw nearly as much as some other lower quality peers I guess you could say, it's like is it more just elongation. It just seemed a little.
Service to me, but you guys probably have a better vantage point.
I think our through the cycle deposit beta that we put out there I think that range seems reasonable time will tell.
But what we can do we continue to say whatever whatever their positive beta as do many industry. We think we outperform it at the end of the day.
That's our best guess today in this environment.
And what we tried to outperform it absolutely one thing we're certainly confident that we can we can be better than peers.
Got you that's great and then just one.
One more kind of changing topics a little bit.
Kind of historically modeled for a worst case scenario based on Moody's the S. Three.
And with that as the backdrop. If you guys are slowing loan growth because that kind of negate the economic factors associated with <unk> or is it more.
Bad could get worse in their modeling. Therefore, you go lower what I'm really getting at here is that you're slowing loan growth should the provision comes down as well assuming there is no credit events.
See our provision should be generally limited to loan growth in non PC to charge offs.
And so if loan growth moderates, a little bit that should moderate provision expense going forward.
Alright, I appreciate it great quarter.
The rest of your continuing to strengthen.
Thanks Ben.
Next we'll go to Scott <unk> with Piper Sandler Your line is open.
Good morning, guys. Thank you for taking the question.
Wanted to ask a question on NII, So obviously really good performance and glad to see the sturdy guide.
And maybe if you could offer just sort of in any thoughts you might have or be comfortable with on sort of when and why you would see NII ultimately bottoming.
And to the extent possible, what what would happen to it thereafter, and presumably it becomes a function of loan growth and sort of back book repricing, but maybe just sort of nuances of of upcoming ebbs and flows in NII in the aggregate.
Scott, Yes, I think it's impossible to predict with any level of kind of precision.
I bought them bottoms out and at what level I can tell you that we continue to is running assets at our balance sheets in the next rate hike will help offset any positive headwinds as we've talked about a little earlier I think the pace of deposit repricing has slowed a little bit.
So I don't want to call the yen, but certainly there is more probably downside pressure than than upside opportunity at this point.
Okay and.
And as it relates to the non interest bearing deposits, which.
So I think we have we haven't gone down to <unk>.
I assume they go down about 28% from roughly 30% today, maybe just sort of the.
Background as to what you guys are thinking that leads you to Williams, that's the right number in other words what are the risks.
But also what youre seeing that that suggest they will settle out.
Fairly soon.
Yes, we are monitoring the pace of that transition out of noninterest bearing into interest bearing accounts, it's probably maybe the most aggressive of the assumptions in there, but probably has maybe the smallest impact in terms of our guide, but I don't think it moves around our NII guidance significantly.
If we miss that by a couple of percentage points, but Scott honestly, it's our best guess, that's a tough one to call, but we're monitoring the behaviors.
We feel comfortable at that level now and we will update you if that changes.
Okay perfect alright, thank you very much thanks.
Thanks Scott.
Thank you and next we'll go to David long with Raymond James Your line is now open.
Good morning, everyone.
David.
So let's stick with the deposit discussion here and the question I have is it seems like June there was a lot of competition as banks wanted to show deposit growth in the quarter.
Is your sense that maybe deposit competition has eased in July and then as a second part of that.
Throughout the second quarter and then into here in July where are you seeing the biggest competition is it the G sibs as at the regionals as at the community banks, where is it most competitive thanks.
I don't think that David It's Marc I don't think that competition has eased I would say the pace of increases has eased as what Brian was trying to.
Convey so we stay competitive were sustained in the upper half of the market in terms of our rate positioning.
And I just think there's still there's still it's still fierce competition and where is it coming from frankly everywhere.
And so more of the midsize banks than anything else.
The <unk> don't have to compete as much as.
All of our markets have plenty of competition and I think it's still pretty healthy out there.
Got it Okay, and then secondly wanted to ask about your appetite to hire additional commercial bankers I know you guys have had a lot of success over the last year or two.
Are you still looking to hire within your footprint and if so what is it what is the commercial banker that's attractive to look like.
Well the answer your question is yes, so we will always stay in the market. We've got a long term view.
The lateral will repeat it good.
Good revenue producers pay for themselves quickly even in this environment, we are building up.
Mark a model for the long term and.
People, we've got a good story to tell and we want to take advantage of that when people are looking to make a move and frankly being proactive with people who might not be looking to make a move we have slowed the pace of hiring this year.
Largely because we don't need to add folks, we just are being opportunistic, but we still hired nine revenue producers across wealth and commercial in Q2.
And we will continue to look for it.
The prototypical profile is is a seasoned a 10 to 15 or more of your banker who's.
Banking within our markets I guess is the best way.
Yeah.
Got it thanks, Mark I appreciate it thanks, everyone.
Thanks, David.
Next we'll go to Chris Mcgratty with K B W. Your line is now open.
Hey, good morning, Hey, guys aircrafts, good Hey, Brendan maybe another one for you I think market consensus is that we stay higher for longer after this week.
Fed move.
As that plays out.
To the earlier comments on margin.
Should the narrative get.
A little bit harder next year or is it kind of a balancing act, where you can kind of hold margins.
Uh huh.
I think it's a balancing act right it's that fight.
It's that fight to hold margin.
We all we all play in.
I think we have an advantage over most others given our the quality of our deposit franchise.
Our philosophy of deposit costs can can slow like I said, we have a lot of earning assets at fixed rates are going to reprice meaningfully higher.
Fixed rate book is going to reprice, a 180 basis points above kind of runoff yields or invest portfolio that we're reinvesting into loans plus 400 basis points.
So yes, I think we have the tools and the balance sheet to help fight for flat and.
And a lot higher for longer rate environment.
Okay. That's helpful.
And then in terms of capital Jimmy talked to just about everything is kind of on hold given the given the environment.
What are you looking for to kind of make me make a switch to returning more capital.
There's an awful lot to play out here.
With respect to the economy in the last rate move up I think like all investors right. We're trying to answer those questions.
And then I think we get more comfort.
And how do we think about returning capital and which form.
So I think you know.
I think we get more clarity as the year continues to progress and would have better opex heading into next year.
Okay.
If I could just sneak one more in Brendan I.
I think you mentioned $4 million of kind of non run rate.
So that would put you kind of $78 77, and 78 kind of ballpark for quarterly a phase I wanted to sure I understood that and then given the tax benefit in the quarter. I know you gave the full year guide, but do you have what.
The back of the envelope is for the back half of the year without adjustment.
Yes, I think that $70 70.
The right number for fees going forward, given sort of mortgage and capital markets.
<unk> and then on the tax rate I think that I think that full year guide is probably approximates the back two quarters.
Alright perfect. Thanks.
Thanks, Chris.
Thank you and next we'll go to Terry Mcevoy with Stephens. Your line is now open.
Hi, good morning, everyone.
Good morning, Jerry.
Maybe the decline in the loan pipeline, the 5.4 to $3 1 billion.
How much of that is internal focus on the full relationship and just tightening things up versus just less market demand out there.
Yes chase market.
Don't put percentages out of a more is driven by our internal our focus than it is external certainly CRE markets have.
Retracted a bit and are not as active so theres some of that but more of it is.
Frankly, our rationing, our balance sheet and as Jim and Brendan both alluded to in our comments, we're a relationship bank.
And we always are that way, but occasionally you have in the past should have times, where you lead with credit in this environment, where we're not doing that deposits have to come.
They want and if the pipeline didn't reflect that we moved them out of the pipeline. So we've rationed our pipeline down proactively.
And then just overall managing the size of the balance sheet, what's your appetite for additional loan sales and will the cash flow from the securities portfolio be utilized to fund loan growth.
Yes, Terry this is Brendan yes, we lastly, using best portfolio to continue to fund loans and I think to the extent that deposit continues to grow.
To fund.
To fund our loan growth will will use that if it doesn't there is opportunities to continue to to pair, but it won't be significant or sizable.
And maybe just one last one I mean, the expense guide I just want to make sure. It fully captures what Jim talked about in terms of the South East, Michigan and Detroit build out what Youre doing in wealth management, what youre doing in Nashville, you've got a lot of growth initiatives, but you've really been able to self funded and havent raised the expense guidance, which I.
It's been a real positive surprise I'm, just making sure all the all of those initiatives you feel like are captured in that and the expense guide for this year.
Yes. They are absolutely. It's all captured in that that's the goal right. I mean, I think we have continued opportunities to invest in people.
And any technology needs, but at the same time, we got to figure out ways to self fund that and so we want to be incredibly disciplined around what that looks like.
I totally agree thanks for taking my questions. Thanks Terry.
Yeah.
Thank you next we'll go to our Brody Preston with UBS. Your line is open.
Hey, good morning, everyone.
Good morning Brody.
Hey, I just wanted to follow up Brennan I think you said that you know there might be some.
Upside.
You know on NII or maybe it was Jim that said that just dependent on what happens with the velocity of the deposit Beta guide I think I think the spot rate in the deck. Excuse me you said was 198 and so I guess you know how how is the velocity change from that 198.
Level.
Gas slowed materially, but its early days in the quarter and so we don't want to declare victory and say that's a permanent change of philosophy, but we have seen some positive trends on that front and absolutely continue to watch it.
Got it.
I saw the uptick in broker deposits quarter over quarter and it looked like it was fairly fairly spread out a bit.
The front end and the back end.
I wanted to ask just so you know just given.
<unk> came in a bit better than what I expected.
Are you guys planning on maybe slowing the pace of brokered or you know is there potential for you to pay broker deposits back and with that kind of feed and so maybe you know this.
A slowing of the increase in AR and the deposit cost trajectory.
Yes, it's all about core deposit growth trajectory did a stent that we continue to grow core deposits at rates.
Better than brokered book will continue just can you do that and deemphasize or use a broker.
Okay.
Yeah.
Okay.
And then the last one for me.
Just in terms of the the loan pipeline I'm, sorry, if I missed it.
Do you have a sense for I guess.
What portion of it is kind of fixed rate versus floating rate at this point and what kind of new.
Fixed rate origination yields are.
Yes, we do it's about 75% floating and 25% fixed.
Okay.
And is there a difference between what the origination yields are on the fixed rate versus the floating rate.
Yes, we actually put in the slide deck sort floating rate just in just in June was 761.
And fix was around just above 6%.
That could move up a little bit.
Given our potential obviously rate hike coming here shortly.
What what drives that Delta Brendan between you know commercial fixed and commercial floating being you know 150 to 160 basis points, you know kind of difference at this point in the rate cycle, yes at the swap curve do you think about the average tenure of these fixed rate deals five years that that five year swap curve is about.
Hello.
Got it.
Got it okay, great well. Thank you very much for taking my questions I appreciate it.
Thanks Brody.
Next we'll go to John are strong with RBC capital markets. Your line is open.
Hey, Thanks, good morning.
Morning, John .
A couple of follow ups.
Just on the margin Brendan too.
So just put it all together do you feel like is the margin inflicting now I mean, if the fed is done this week.
Inflicting imminently in your mind.
I think that's it.
I think theres, probably more downward pressure than upward opportunity in this.
So dependent on again, the velocity of deposit repricing and where these terminal betas.
There's opportunity to continue to grow NII on the earning asset side because of.
Fixed rate assets repricing isn't enough to offset it we just don't know yet.
Okay.
Slide 14.
This is great because it's you don't have exposure to the central business district. So.
Banks that don't have the exposure tend to talk about it more ultimately but.
Youre in a lot of big cities.
What are you seeing in terms of central business District office real estate.
Do you feel like it's as big of a problem as we think about <unk>.
Outside just curious what youre seeing.
I think you just answered your own question I think it's not as big a problem as it is made out to be and yet we all have our eye on it it's not like it's robust and there arent.
Much in the way of new opportunity certainly, but the risks there.
I think it's perhaps a little overly stressed in the media.
I think we have are as well.
Circle, and fix that we need to well reserved for the couple of opportunities that where there are issues.
Okay. Okay. Good.
And then Jim one for you anything on regulatory concerns you are looking at well under $100 billion.
What.
Anything that youre hearing that.
If you would have an over over outside of Genpact on old nationals.
No.
I think you know obviously, we're paying really close attention to whats being said out there.
We have always been in the position of having good regulatory relationships.
And this is now not the time to.
Reduce any emphasis on the work you do right and so we just got to continue to to continue to improve it at every single thing, we do to meet regulatory expectations exceed regulatory expectations, but as I see those things I think that the.
The toughest ones seem to be aimed at.
North of 100 billion.
And obviously theres a lot of distance between where we're at today and that number. So I think we're in a great spot I actually think we're in the sweet spot for kind of profitability.
In terms of banks, our size, where we have the scale to go off and hire and invest in technology.
And yet.
Well, maybe miss some of the toughest things that come to our industry. So I think we're in a really strong spot to be for the next few years.
Yeah I agree returns returns look really good so alright.
Alright. Thank you I appreciate it thanks John .
There are no further questions at this time I'll now turn the call back over to Jim Ryan for closing remarks.
Well as always we appreciate.
State your participation. Thanks for the one or two questions that I actually got that.
More directed towards.
And Mark.
Well now John and Brian and the whole team are here to answer any follow up questions. So once again. Thank you for all your participation and support.
Yeah.
This concludes old nationals 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 old National Dot Com a replay of the call will also be available by dialing 870 702030 access code 525.
Eight three to five this replay will be available through August eight if anyone has any additional questions. Please contact <unk> Walton at 8124641366. Thank you for your participation in today's call.
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Yeah.
Yes.