Old National Bancorp (ONB) Q4 2021 Earnings Call Transcript

Old National Bancorp  (NASDAQ: ONB) Q4 2021 earnings call dated Jan. 18, 2022

Corporate Participants:

James C. Ryan III — Chairman and Chief Executive Officer

Brendon B. Falconer — Chief Financial Officer

James A. Sandgren — President and Chief Operating Officer

Mark G. Sander — President and Chief Operating Officer

Analysts:

Ben Gerlinger — Hovde Group — Analyst

Scott Siefers — Piper Sandler — Analyst

Terry McEvoy — Stephens — Analyst

Chris McGratty — KBW — Analyst

Jon Arfstrom — RBC Capital Markets — Analyst

Presentation:

Operator

Welcome to the Old National Bancorp Fourth Quarter and Full Year 2021 Earnings Conference Call. This call is being recorded and 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 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 and 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 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 these numbers are contained within the appendix of the presentation.

I’d now like to turn the call over to Jim Ryan for opening remarks. Mr. Ryan.

James C. Ryan III — Chairman and Chief Executive Officer

Good morning and Happy New Year. We are pleased to host our call, discuss our 2021 results and update on our pending partnership with First Midwest Bank.

Let’s start on slide 4. We are pleased to share our full-year 2021 results. I would categorize this year’s result as better than planned. The 2021 EPS was $1.67, adjusted EPS was $1.73 with an adjusted net income of more than $286 million. Our adjusted return on average tangible common equity was north of 15% and our adjusted efficiency ratio was approximately 57%. Highlights include 7% commercial loan growth, driven by record commercial production of $3.9 billion, coupled with net recoveries of $4.8 million for the year. We also saw a record wealth management revenue of 2021.

I’m particularly pleased that commercial loans are now up 20% in total from 2019 levels, excluding the impact of PPP. That significant growth amid a global pandemic and we’ve maintained a consistently strong credit profile in the process. We’ve opportunistically leaned in when several of our competitors closed [Phonetic] and we continue to benefit from that stance taking share by doing what we do best Consistent Quality Growth.

Moving to Slide 5 our 4th quarter EPS was $0.34, adjusted EPS was $0.37. We saw strong commercial loan production of 1.1 billion during the quarter and excellent credit quality. Our pipeline ended the year at a robust $2.5 billion.

A quick update on hiring. We opportunistically added significant talent during the quarter, especially in our commercial and wealth management teams. Building upon our recent success in St.Louis, we have hired two industry veterans to start an LPO in Kansas City, which should be operating at full strength later in the quarter. We’ve also begun recruiting talent in Chicago, anticipating that Chicago and Minneapolis will be a significant focus in 2022. In summary, our talent pipeline remains strong. I am personally active and recruiting key team members, and we will continue to make these vital investments throughout the year.

Moving to Slide 6, which contains a quick refresher on some of our accomplishments in the next steps with our partnership with First Midwest. As you know, both companies have tremendous integration history and experience, and as a result, our work is going very well. We have decision and [Phonetic] communicated the organizational structure and leadership positions for all client segments and support areas. We’ve also settled in our core processing system and supporting applications. Our team members’ engagement has remained strong and as a result, we’ve seen minimal attrition in our client-facing roles.

Our combined leadership teams continue to meet and build a collective long-term strategy and develop tactics to accelerate our combined growth. While we are still waiting on Federal Reserve approval, we continue to have a frequent and constructive dialog with the Fed staff who assure us our application is complete and ready for review at the board level. We expect we will hear positive news this quarter. As soon as we hear, we will move expeditiously towards the close. With a more elongated than expected regulatory approval and the global pandemic-related issues affecting the availability of labor and IT equipment, we now expect our systems conversion to occur in July. Given the delayed systems conversion, we expect to achieve closer to 50% of the run rate savings we modeled in 2022. We still expect to achieve 100% of the original model savings of $109 million in 2023.

Lastly, despite potential distraction from the lingering pandemic-related issues and our transformational merger, we remain highly focused on serving our clients and communities. I think our results for the quarter in the year illustrates the success of those efforts. Our success would not have been possible without one of the strongest teams in the industry. I’m also grateful for the hundreds of team members who are focused on the successful integration of the combined companies.

Thank you, and I’ll now turn the call over to Brendon.

Brendon B. Falconer — Chief Financial Officer

Thanks, Jim. Turning to Slide 7. Our GAAP earnings per share was $0.34 and our adjusted earnings per share was $0.37. Adjusted earnings exclude $6.7 million in merger-related charges, as well as $400,000 in debt securities gains. By nature of the trend in commercial loans and the related pipeline and production trends, all excluding the impact of PPP loans. Q4 represents our 6th consecutive quarter of organic loan growth with 2021 commercial outstandings increasing over 7% with both CRE and C&I showing solid growth. Strong commercial production of $1.1 billion was well balanced across all our major markets.

We’re also pleased with the strong 4th quarter production did not have a significant impact on our pipeline, which ended the year at [Indecipherable], the highest year-end level on record. The size and quality of the pipeline that includes almost $500 million in the accepted category, support our optimistic outlook on loan growth heading into 2022.

Turning briefly to pricing, new money yields on C&I were 3.39% which are now well above portfolio yields. New CRE reproduction yields were slightly lower for the quarter at 2.59%. More than 80% of our production is indexed to short-term rates with good spreads and relatively low absolute coupons. While this put some pressure on margin in the near term, it does position us well for a rising rate environment. The rest portfolio increased this quarter as deposit growth once again outpaced total loan growth. We continue to put much of the excess liquidity to work in our investment portfolio. New money yields on investments improved 18 basis points quarter-over-quarter to 1.8% with portfolio duration, shorter by a quarter year.

Moving to slide 9, we again saw meaningful increases in both period end and average deposit balances. Quarterly growth came largely from our retail clients with business clients drawing down on [Indecipherable] accounts. The total cost of deposits for the quarter was 5 basis points, while total interest-bearing liabilities were 28 basis points, both down one basis point from Q3.

Next on Slide 10, you will see details of our managed first income and margin. Managed first income excluding PPP decreased $300,000 which was consistent with both our expectations and goals of maintaining stable NII throughout this challenging rate environment. Managed first margin decreased 15 basis points from the prior quarter to 2.77% and core margin, excluding accretion and PPP, declined 11 basis points to 2.5%. Excess liquidity and interest collected on non-accrual loans accounted for 6 basis points of the decline.

Slide 11 shows trends in adjusted non-interest income. Adjusted non-interest income for the quarter of $51 million with $2 million lower than Q3, largely due to seasonal declines in mortgage. Our wealth line of business finished with a strong 4th quarter, which resulted in record revenue for the year. Our capital markets business had another strong quarter. It finished the year just shy of last year’s record revenue. Mortgage production was up slightly in the quarter, but the seasonal decline in the size of the pipeline resulted in a $3.9 million decrease in revenue.

Next, Slide 12 shows the trend in adjusted non-interest expenses. Adjusting for merger charges and tax credit, amortization, non-interest expense was $123 million. The quarter-over-quarter increase was driven by additional lending incentives related to strong commercial and mortgage production. Additionally, increases in marketing and professional fees categories were related to investments in Minnesota marketing efforts and the establishment of a new brand for our high net worth wealth division that we discussed last quarter.

Turning to PPP loans on Slide 13, you will see a roll-forward of those balances, which stood at just $169 million [Indecipherable] unamortized fees, and the remaining loans totaled $6.4 million. We anticipate most of the remaining loans will be forgiven in the first half of 2022 and the related fees recognized accordingly.

Slide 14 shows our credit trends. Credit conditions continue to be benign and [Indecipherable] and our commercial and consumer portfolios continue to perform exceptionally well. Delinquencies ticked up 1 basis point to end the quarter at a very low 11 basis points. We were pleased to post a 5th consecutive quarter in a net recovery position resulting in full-year net recoveries of $4.8 million. The non-performing loans to total loan ratio once again hit a new cycle low at 92 basis points. And while this metric remains higher than peers, the net charge off to the NPL ratio is significantly better than peers. We believe our approach to downgrading troubled credits early and a patient approach to work out results in better outcomes for our clients and ultimately lower costs for the bank.

On Slide 15 you will see the details of our 4th quarter allowance, which stands at $107 million, a slight decline from Q3. Credit loss expectations showed a slight improvement quarter-over-quarter, but the related reserve release was largely offset by additional reserves for loan growth. While our outlook on credit remains optimistic, we believe it is still prudent to maintain above to maintain above-average levels of qualitative reserves, which stood a $37 million at quarter-end. As a reminder, we also continue to carry $34 million in unamortized marks [Phonetic] from our acquired portfolios. At the wrap of my comments, here are some key takeaways. We are very pleased with the fundamental results of the quarter and year, strong commercial loan growth led to stable core noninterest income despite interest rate headwinds. Our fee-based businesses led by wealth, mortgage, and capital markets continue to perform well and provide a great launching point for 2022. Expenses remain well-controlled and our strong credit quality continues to keep credit costs low.

Slide 16 includes thoughts on our outlook for 2022. We ended the quarter with a healthy $2.5 billion commercial pipeline, which supports our favorable outlook on loan growth. This historically low-interest-rate environment will continue to put pressure on [Indecipherable] income which should be mitigated through continued earning asset growth. Rising short-term rates will have a positive impact on earnings as we gradually reposition the balance sheet to a more asset-sensitive position. The PPP loan forgiveness process continues for our clients. We expect runoff of most of the remaining balances and related fee recognition to occur in the first half of 2022.

We expect our key businesses to continue to perform well. We are encouraged by the momentum in our wealth business and the strong commercial activity should help maintain the high level of performance in our capital markets business. Mortgage revenue should follow industry trends and be seasonally lower in the first quarter. Our other fee lines are expected to be stable in the near term. ONB stand-alone expenses are expected to rise to 2% in 2022 and should follow a typical seasonal pattern. The estimate includes an expectation of slightly higher [Indecipherable] increases related to inflation and continued strategic investments in both revenue talent and technology.

A brief update on taxes. We continue to expect a reduction in the volatility caused by our tax credits as we worked through the last of the remaining one-year historical tax credit commitments. In total, we are expecting approximately $12 million in tax credit, amortization for the year with the corresponding ONB standalone full-year effective tax rate of approximately 17% to 18%. The pro forma rate for the combined company will be in the range of 21% to 20%. In light of the delayed close of our merger with FMB we want to provide an update on the combined company expense expectations. Our June 1st announcement assumed 75% of the annualized cost synergies would be realized in 2022. The first quarter closed the deal and the corresponding July conversion date is now expected to reduce the 2022 impact to approximately 50% of the total synergies with the majority realized in the second half of the year.

That said, we are still confident we will realize 100% of $109 million in targeted savings, which will help us deliver meaningful positive operating leverage. In other words, the magnitude of the sales is unchanged and the timing is now elongated by 90 days.

With that, we are happy to answer any questions that you may have and we do have the full team here including James Sandgren, Daryl Moore, and John Moran. Also joining us this morning is Mark Sander, President, and COO of First Midwest Bank.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from the line of Ben Gerlinger with Hovde Group.

James C. Ryan III — Chairman and Chief Executive Officer

Good morning, Ben.

Ben Gerlinger — Hovde Group — Analyst

Good morning everyone. I was curious if we could take a minute to talk kind of high-level loan growth through the pandemic Old National. And [Indecipherable] pretty solid job growing loans pretty consistently throughout the pandemic, especially when you compare that to like Fed H8 data. So when you look at the fourth quarter, Old National was a little bit lower, which makes sense. We look over the fourth quarter run rate, you guys have done a better job, and then with the commentary about 1Q boding well for future growth, I was curious on kind of what you guys are seeing some kind of the ground level in terms of your clients, better loan demand, typically fourth-quarter kind of pulls in from first quarter’s demand and the first quarter is usually flat. So just kind of curious if you could just spend some time thinking out loud about how your clients are procuring their need for loans and what it might mean for you guys in the first half of 2022.

James A. Sandgren — President and Chief Operating Officer

Yeah. Ben, this is Jim Sandgren. I think you nailed it, obviously really strong production in the fourth quarter. The pipeline is down a little bit seasonally in the process of building those back up. I will tell you I think from a grassroots our clients feel really optimistic in spite of the challenges that they continue to face around labor and supply chain. But the only thing, that caused a little concern in the fourth quarter was a high level of pay-offs again highest level that we’ve seen in a number of years and I don’t know if that will continue in the first quarter or not, but I do think the pipeline continues to reflect that our customers are investing and growing if they can find the labor.

So again, we think we’ll get off to a good start. Just not knowing exactly where those payoffs will continue to land. And Mark, would you like to add anything from your perspective?

Mark G. Sander — President and Chief Operating Officer

I think it’s very similar to what Jim said, pipelines are strong, customers I think are optimistic. There is still a fair amount of liquidity in the system of course, and pay-offs are elevated, but our production is good and solid and should put position us well for loan growth coming right on the box in Q1.

Ben Gerlinger — Hovde Group — Analyst

Great, that’s helpful and then Brendon if you can kind of just look at the yield curve expectations going forward, I know that you have two balance sheets coming together. You have a margin of near or at its floor. So, if the markets kind of expecting that 3 to 4 hikes in ’22 and beyond a couple more, I was curious if you had any idea of where the margin might shake out as we end ’22 [Indecipherable] of combining everything together.

Brendon B. Falconer — Chief Financial Officer

Sure. Yes, I think you’re right, I think, short of rate changes. I think we’re getting close to the floor. And I think we’re all the way there yet. I think there could continue to be some margin compression without some help from the Fed. We have looked at both balance sheets and the margin impact from rate increases and how we’d like to model that up Ben is against the forward curve and so we think the ONB stand-alone is going to get some upward movement to about 2% to 3% and NII on a standalone basis, and when we fold in FMB which has a slightly more asset sensitive balance sheet, has a little more cash on hand, we think that’s closer to 3% to 4% again it gets a forward rate, which is now kind of 3.5 to 4 rate hikes embedded in there.

Ben Gerlinger — Hovde Group — Analyst

Okay, great, that’s helpful. I will step back. [Indecipherable] year.

James C. Ryan III — Chairman and Chief Executive Officer

Thanks, Ben.

Operator

Your next question is from Scott Siefers with Piper Sandler.

James C. Ryan III — Chairman and Chief Executive Officer

Good morning, Scott.

Scott Siefers — Piper Sandler — Analyst

Good morning, guys. Thanks for taking the question. Brendon wanted to follow on some of those rate sensitivity comments, can you maybe talk a little bit about where you’re most sensitive on the curve or I guess ideally where on a pro forma basis you’ll be most sensitive? Do you benefit must at the beginning of the tightening cycle or will take a few hikes for you to feel the full benefit?

Brendon B. Falconer — Chief Financial Officer

No. I think we benefit right out of the gate with short-term hikes. Yeah, it shouldn’t be a significant difference from quarter to quarter. Ultimately, the long-term impact of this will be — where is the middle and long into the curve shake out from a long-term perspective, but in the first few quarters, we will benefit right out the gate.

Scott Siefers — Piper Sandler — Analyst

Okay, perfect. And maybe how do your thoughts on deposit data [Phonetic] fit into the equation?

Brendon B. Falconer — Chief Financial Officer

Yeah. So what we modeled was I think a fairly conservative view of deposit data [Phonetic] that are a little below for the long-term full rate cycle. But in that 10% to 20%, which frankly could be a very conservative assumption, given how we reacted that for the first three rate hikes last cycle. I think we’ll be able to manage deposit data [Phonetic] very low for the first year.

Scott Siefers — Piper Sandler — Analyst

Okay, perfect. Thank you. And then just as it relates to the closure of that transaction, how quickly would you guys be able to close, after you do receive Fed approval? I imagine you’re pretty much good to go, just sort of waiting on that green light, but what kind of timeframe we’d be looking at?

James C. Ryan III — Chairman and Chief Executive Officer

Well, we need, we need at least 15 days from whenever we receive approval, and more than likely we would do it at the beginning or end of a month or beginning of the next month to just to keep the accounting clean and smooth. So just depends on when we might hear and how close we are to the next kind of the beginning of a month, Scott. But again, other than that, we’re ready to close perfect.

Scott Siefers — Piper Sandler — Analyst

Perfect. All right, good. Thank you guys very much.

Operator

Your next question is from Terry McEvoy with Stephens. Good morning, Terry.

Terry McEvoy — Stephens — Analyst

Hi, good morning everyone. Jim maybe start with a question for you. Old National resolve that issue in Indianapolis, kind of a day before the Fed approved a few transactions, you guys obviously weren’t on that list. Is there anything that I’m missing out there that maybe I just haven’t picked up on? And is there anything you can share with us that gives you confidence that the transaction can close here in the first quarter?

James A. Sandgren — President and Chief Operating Officer

[Indecipherable] say as we continue to have very constructive dialog and I think it’s just a matter of timing. I need you to imagine, there’s a lot of priorities right now, the Fed. We had two Fed governors, just as recently as last week going through their confirmation hearings, [Indecipherable] think a lot on their plate right, there are a lot of changes. So we are patiently waiting and those three prior announcements were ones that were in the queue, longer than us. Right. So I have nothing, no reason to believe that we won’t hear positive news. So we’re just, we expect that we’ll hear that news here soon and we’ll move towards close like I said, but nothing, there is no outstanding questions or issues that we’re aware of and feel like we’re in good shape and ready for approval.

Terry McEvoy — Stephens — Analyst

Great. And it seems like every week, a large bank announces a new deposit product to reduce overdraft fees. Could you maybe just talk about the Old National kind of overdraft structure and product, how does that compare to First Midwest and whether, do you think you need to make any changes going forward, when the two companies combine?

James A. Sandgren — President and Chief Operating Officer

I would just say we are aligning our process and process together as we come together during the conversion in July. We’ve been spending a lot of time on it. That probably means slightly lower income for the Old National deposit service charge program and we are looking at like everybody else, what’s going on in the industry. We’re not going to be immune from those changes in the future. I think it’s a little early to know exactly how it’s going to shake out for banks our size, but clearly, the national banks are moving towards a program.

So we’re going to, we’re going to continue to watch it. We’re going to continue to do the right things and I would say our programs are kind of right in the middle with everybody else. As we align the two programs and we’ll just have to wait and see ultimately, if there is a standard that gets set and how that might impact us in the future.

Terry McEvoy — Stephens — Analyst

Thanks. And maybe if I could squeeze in one more. You mentioned recruiting in Chicago. Is that because you see the pro forma company just having the ability to have a larger kind of platform and the need for more lenders or do you expect some attrition and you want to fill some holes, so to speak in the company?

James A. Sandgren — President and Chief Operating Officer

We’ve really seen almost no or minimal attrition so far, and don’t expect to have any. I mean our teams from day one, saw the opportunity, right. And we’re excited about what that might mean for them. I just think there is an opportunity to continue to invest. We have a great story to tell. When we get a chance to tell the story to potential team members, they like it. They feel the energy, they feel the opportunity that’s in front of them and so it’s been more opportunistic around that and I just believe there’s always an opportunity to add talent and so we’re just going to continue to go on do that. But nothing that we’re worried about in terms of our existing team. We got great team members in Chicago today who are completely capable of doing the work, but I do think there is more opportunity and we will have a bigger balance sheet. I think there’ll be more middle-market opportunities for us. It’s just we combined, the two companies and we’ll continue to take advantage of that client set and make sure we got team members who can fill those needs.

Terry McEvoy — Stephens — Analyst

Thank you, Jim.

James A. Sandgren — President and Chief Operating Officer

Thanks, Terry.

Operator

Your next question is from Chris McGratty with KBW.

James A. Sandgren — President and Chief Operating Officer

Good morning, Chris.

Chris McGratty — KBW — Analyst

Hey, good morning Jim. Question on just the balance sheet position to close and pro forma. Brendon maybe a question for you, any tweaks that you might be doing on either side of the balance sheet to kind of put your best foot forward pro forma?

Brendon B. Falconer — Chief Financial Officer

Yeah, Chris. We’re taking a look at that. I guess what we can tell you now is anything that we do will not be material to the overall balance sheet and certainly, anything we do, we’ll be looking to do in an EPS and capital neutral way.

Chris McGratty — KBW — Analyst

Okay. And then once you close, you obviously are in a very strong capital position. What are the philosophical thoughts on a buyback at these levels?

James C. Ryan III — Chairman and Chief Executive Officer

Obviously, we don’t want to do anything ahead of any kind of Federal Reserve approval. So I think once you know hopefully we receive [Indecipherable]

Soon. I think we can look back at our capital and just make any actions going forward. We’re obviously going to be at the low point once we close, and mark the balance sheet. And so we’re looking at that and we’ll be looking at a quite frankly as what’s the best return of capital right, and so we’ll just continue to do what we’ve always done. We probably run a little more capital on average than some of our peers, especially given our credit quality, but we’ll make sure we do the appropriate thing for shareholders and manage capital and take a look at that, but as Brendon said it’s still too early. We’re looking at the balance sheet and any potential actions we might take, but if we do anything, it’s going to be pretty minimal.

Chris McGratty — KBW — Analyst

Okay. But post-closing the message on a buyback is it’s on the table, but it’s balanced against the growth. Is that the right interpretation?

James C. Ryan III — Chairman and Chief Executive Officer

Absolutely.

Chris McGratty — KBW — Analyst

Okay. And then maybe one more on deposits. I think we, as analysts continue to be surprised by the pace and the stickiness of the deposits? What are you seeing, like incrementally on deposit growth? What are your expectations for maybe the next 6 to 9 months?

Brendon B. Falconer — Chief Financial Officer

Yeah, Chris. So I think we were a little surprised to at the acceleration of the growth again here in the fourth quarter, it has slowed a bit in the third and hit back up pace. And as we stated and look at past cycle, our view is that this sticks around for longer and that growth may moderate a bit, but we don’t see that at least in the near-term this is going to run out of the bank, very quickly. That said, we are prepared. We have a tremendous amount of liquidity. If this does get ahead of us. I think we have a really strong balance sheet, a great liquidity position to manage through that.

Chris McGratty — KBW — Analyst

Got it. Thanks, Brendon.

Operator

[Operator Instructions] Your next question is from Jon Arfstrom with RBC Capital Markets.

James C. Ryan III — Chairman and Chief Executive Officer

Good morning, Jon.

Jon Arfstrom — RBC Capital Markets — Analyst

Hey, good morning everyone. Maybe obvious here but on Slide 16 your NII guide, I’m assuming that assumes no rate increases. Is that right, Brendon?

Brendon B. Falconer — Chief Financial Officer

That’s correct, that’s exactly what we’re working on. Yeah.

Jon Arfstrom — RBC Capital Markets — Analyst

Okay, good. And then in terms of your expense guide the 2% to 3%, how much of that is hiring versus just call it natural pressures on expenses like comp and technology?

James C. Ryan III — Chairman and Chief Executive Officer

I mean those are the two biggest factors right. And clearly, our merit process is more outsized than it has been in the past. We anticipated this and we try to get ahead of this a couple of years back, but we’re also accelerating some of those increases, particularly at the lowest wage side and then obviously our hiring, I think we’ll be pretty consistent with what we did last year.

Jon Arfstrom — RBC Capital Markets — Analyst

Okay.

James C. Ryan III — Chairman and Chief Executive Officer

So that’s kind of built-in the run rate to some level, but it on average they are more expensive. The people we are hiring today are more expensive than then maybe kind of our average team member today. So I think, like any other bank that I’ve seen so far, we’re not going to be immune from that. Historically, we thought our expense growth would have been flattish year-over-year and today, we’re saying it’s up 2% or 3% depending on kind of those needs.

Jon Arfstrom — RBC Capital Markets — Analyst

Okay. And then if you set aside the synergies from the merger, is it safe to assume that we should expect similar type growth at First Midwest on their core.

Ben Gerlinger — Hovde Group — Analyst

Yes. Similar.

Jon Arfstrom — RBC Capital Markets — Analyst

Yeah, okay. And then one more thing on lending. It’s obviously picked up a little bit for the industry in terms of commercial, you guys have certainly buck that trend and had better growth. But do you expect the pipeline numbers to continue to increase? Is there anything different in terms of the loan growth story that’s emerging right now or is it just really more of the same?

James A. Sandgren — President and Chief Operating Officer

Yeah, John, I would think that the pipeline will continue to rebuild and grow like they did last year. We haven’t seen anything to the contrary. But certainly, stay very close to our customers. But again optimism for our customer base continues to be good, in spite of the challenges that are facing them with supply chain and labor.

James C. Ryan III — Chairman and Chief Executive Officer

I would also add some of our new talent coming online, Jon, and their ability to you know run out their non-competes and things like that. I think gives us more confidence. The team we just putting in place right now in Kansas City. Again, those will all be kind of net additive to the pipeline, as we continue to hire new talent. We get them and are readily placed to be successful.

Jon Arfstrom — RBC Capital Markets — Analyst

Okay, and any theme on the new talent you’re hiring. I mean is it just big bank for fatigue, wanting to come to a company like yours, but any thematic story behind that.

James C. Ryan III — Chairman and Chief Executive Officer

Yeah, I think it’s a lot of it. I think you know it’s, sometimes it’s hard to do your job, to serve your client, serve your communities, at some of the large institutions. And I think they see a growth story here, a little bit of entrepreneurial story here and all that, it’s pretty exciting to be a part of right. And for better or worse some of those largest competitors we face in our markets have lost that ability to do that. And so, but we feel really good about the story. And clearly, it’s working. It’s an interesting time right now we’re just kind of working through year-end stuff. And, but I’m confident we’ll continue to hire new talent as we enter the New Year here and continue to have lots of opportunities in front of us.

Jon Arfstrom — RBC Capital Markets — Analyst

Okay, all right, thank you.

Operator

At this time there are no additional questions.

James C. Ryan III — Chairman and Chief Executive Officer

Well, thanks to everybody for joining us. I know you got a busy day in front of many of you as usual. Lynell, John and Brendon and myself are all here to take phone calls. We appreciate it. Have a great day.

Operator

Thank you, this concludes the 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 855-859-2056. Conference ID code 3313815. Again, dial 855-859-2056, conference ID code 3313815 This replay will be available through February 1st. If anyone has additional questions please contact Lynell Walton at 812-464-1366 again, the number is 812-464-1366. [Operator Instructions]