For Old National, ‘business as usual’ after CFO charged with felonies

The chief executive of Old National Bancorp said the Evansville, Indiana-based bank is “focused on running our business as usual,” driving loan growth and integrating a substantial acquisition, despite news earlier this month that it placed its chief financial officer on administrative leave following his March arrest on child molestation charges.

Chairman and CEO James Ryan III, speaking during the company’s first-quarter earnings call Tuesday, said the company would “not comment” on specifics of the allegations against Brendon Falconer, who has served as CFO of the $49.5 billion-asset bank since 2019. He was charged with two felonies of child molesting and child molesting with a child under 14, Indiana court records showed.

“We will provide any updates in the future when appropriate,” Ryan said.

Falconer’s initial court hearing was scheduled for April 29

“We already have an exceptionally talented finance, accounting and treasury team in place. For example, Mike Lloyd, our treasurer, and Angela Putnam, our chief accounting officer…each has 10 years-plus experience with us. John Moran, you already know from his tenure with us and as a Wall Street analyst covering banks like Old National, has seamlessly taken on the interim chief financial officer role…He also was identified as a primary successor during our succession planning process. I have complete confidence in John and the entire team.”

Moran is also the company’s chief strategy officer. Prior to joining Old National, between 2019 to 2021, he was the CFO of NBT Bancorp, a $13.3-billion institution in Norwich, New York. Early in his career he was an analyst covering banks.

Ryan, along with President and Chief Operating Officer Mark Sander, said during the earnings call that Old National’s management has kept its attention on positioning the bank for above-average loan growth while also integrating its acquisition of CapStar, which closed April 1.

Old National struck a deal last year to acquire the $3 billion-asset CapStar in an-all stock deal valued at $344.4 million when it was announced. The acquisition closed as planned and gave the buyer about $2 billion of loans and nearly $3 billion of deposits.

It also accelerates Old National’s expansion in the Tennessee market, which it entered in 2022 with a Nashville-based high-net-worth wealth management operation. Shortly after that, it added a commercial banking team in Tennessee’s largest market. Ryan said Tuesday that the deal also provides a springboard for further expansion in the Southeast.

He said the bank could focus on integrating CapStar, for now, but it would be evaluating ways to deploy more capital later this year.

“As we get into the back half of the year, I think that could be something that’s a serious part of our conversation — unchecked capital grows pretty quickly,” Ryan said. “And so I think there’ll be opportunities to think about capital a little differently than we have in the last couple of years.”

In the meantime, the bank is generating steady loan growth at a time when many peers are struggling to maintain momentum amid high interest rates and, by extension, high borrowing costs.

Its loans totaled $33.6 billion at the close of the first quarter, up 6% from a year earlier. Period-end total deposits of $37.7 billion were up 8%. Higher deposit costs in the quarter — an industry-wide trend because of lofty rates — impacted net interest income, but this was offset partly by loan growth.

Net interest income on a fully taxable equivalent basis decreased 6% from a year earlier to $362.7 million.

Piper Sandler analyst Scott Siefers called the loan growth “a rarity this quarter,” and summed up Old National’s results as “solid.”

The bank reported first-quarter net income applicable to common shares of $116.3 million, or 40 cents per share, down from $142.6 million, or 49 cents, a year earlier. Relative to the prior year, earnings were lower in large part because of a special Federal Deposit Insurance Corp. assessment, CapStar merger costs and the distribution of a legacy pension plan linked to a prior acquisition.