Earnings Call: Q1 2021

Apr 19, 2021

The Old National Bancorp First Quarter 2021 Earnings Conference Call. This call is being recorded and has been made accessible to the public in accordance with the SEC Regulation FD. Corresponding presentation slides can be found on the Investor Relations page at at oldnational.com and will be archived there for 12 months. Management would like to remind everyone that as noted on Slide 2, 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 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? Thank you and good morning everyone. Starting on Slide 3, we are pleased to share our Q1 results. Earnings per share were $0.52 Earnings per share were positively impacted by our reserve release. Brendan will fill you in, in all the details, but despite the release, our earnings would have exceeded consensus with the company's estimates. Adjusted pretax pre provision are up 18% year over year as a result of the implementation of the OMD Way. Adjusted operating leverage also improved over 900 basis points and our efficiency ratio was 54.3%. Other highlights for the quarter include end of period commercial loans excluding PPP increased 2.6% annualized because of record Q1 commercial production of $718,000,000 End of period total deposits increased more than 8 $100,000,000 which was 19% higher on an annualized basis and our loan to deposit ratio is now a very low 78%. Net interest income dollars were relatively unchanged consistent with our guidance. Wealth management assets under management grew nicely. Orders revenue was seasonally stronger than expected and all expense categories were slightly better than we had planned. During the quarter, we worked hard with our clients on the SBA forgiveness process for round 1 PPP loans and originating new round 2 loans. Our team helped the SBA fund almost 10,000 loans in the 1st round. 75% of those applications have been forgiven by the SBA already. Our focus on the forgiveness process has allowed our clients to achieve forgiveness faster than most. I'm also proud of the work we've done to support the 2nd round. We have processed almost 6 1,000 applications totaling $578,000,000 with an average loan size of $98,000 to most of our credit quality metrics approved during the quarter. With consistently better than economic forecast and the matchless stimulus programs, We reduced reserves consistent with our modeling. We still have approximately 30% of our reserves supported by qualitative adjustments given the higher than to the average level of economic uncertainty that exists today. We continue to proactively downgrade our pandemic impacted loans into watch asset quality ratings and are still meeting weekly to review credit quality loan by loan. We continue to believe that our historically strong and consistent underwriting practices, diverse in and hiring. We have added some excellent candidates during the quarter and we continue to have a good pipeline of opportunities. We have a fantastic story to tell and we have strong interest from people wanting to join our team. Lastly, despite the ongoing distractions, We have remained focused on serving our clients and communities, and I think our results are indicative of our efforts. I'll now turn the call over to Brendan. Thank you, Earnings exclude $1,500,000 in OMB Way related charges as well as $2,000,000 in debt securities gains. Moving to Slide 5, We are pleased with our quarterly adjusted pre tax pre provision net revenue, which was 18% higher year over year. And despite the challenging operating environment, We generated 9 19 basis points of positive operating leverage. Slide 6 shows the trend in outstanding loans and our earning asset mix. Total average loans excluding PPP grew $118,000,000 or 3.7 percent and the period commercial loans increased $59,000,000 driven by record Q1 commercial production of $718,000,000 Commercial activity remains strong throughout our footprint with production well balanced among our major markets. Commercial production yields increased quarter over quarter to 2.89%, 75% of which were floating rate. Even with our seasonally strong production, our quarter end pipeline increased 28% over prior quarter to $2,600,000,000 We believe the current pipeline with over $600,000,000 in the accepted category should lead to another strong quarter of production. The investment portfolio also increased in the quarter as deposit growth once again outpaced loan growth. We are taking a disciplined approach to putting excess liquidity to work in our investment portfolio with new money yields of 1.35 percent and a portfolio duration well within 5 years. Moving to Slide 7, period end and average and has been made successful. This growth has largely come from higher business and personal savings rates that have resulted from changing spending and added liquidity from the various government stimulus actions during the quarter. Turning to pricing. Our total cost Deposits was 7 basis points for the quarter, a 2 basis point improvement over Q4. In our continuing efforts to drive funding costs lower, We also reduced average borrowings this quarter by $181,000,000 Next on Slide 8, you will see details of our net interest income and margin. Net interest income declined to $13,000,000 quarter over quarter, largely due to the decrease of $10,000,000 in PPP related interest and fees. Excluding the impact of PPP, net interest income was in line with our expectations with a slight $3,000,000 decline predominantly due to 2 fewer days in the quarter. Management margin declined 32 basis points this quarter to 2.94% due to lower PPP fees, fewer days and additional excess cash. Core margin excluding accretion and PPP fell 14 basis points to 2.74%. Excess cash and fewer days accounted for 8 basis at the midpoint of the decline with the remainder due to new business rates on loans and investments. Slide 9 shows trends in adjusted non interest income. Adjusted non interest income of $55,000,000 in the Q1 was slightly lower than the $58,000,000 we recorded in Q4. The $3,000,000 decline primarily driven by lower capital markets income. Mortgage revenues were better than expected with unseasonably strong first quarter production of $518,000,000 and elevated gain on sale margins. We also saw nice growth in our Wealth segment due to increases in assets under management and progress in our OMB Way related initiatives. Next Slide 10 shows the trend in adjusted non interest expenses. Adjusting for OMB Wave related charges and tax credit amortization, non interest expense was $115,000,000 These results are slightly better than what we outlined in our Q4 call and they include a $1,300,000 reversal, a provision for unfunded commitments, which runs through the other expense category. We do not anticipate additional material reductions in our unfunded reserve in the near term. Included in our total expenses in Q1 were $1,500,000 in charge of related to the OMB Way strategic plan. We have just completed the migration of at the end of the call. This call is being recorded and has been made accessible. With $1,100,000,000 at quarter end. We continue to assist Round 1 clients with forgiveness with approximately 75% formally through the SBA forgiveness process. We We have seen stronger demand in Round 2 than we anticipated, having originated just under $500,000,000 through March 31. As of late last week, round 2 applications totaled $578,000,000 with corresponding fees totaling approximately $26,000,000 This brings the total unamortized fees on PPP loans from rounds 12 to $33,000,000 We would anticipate most around 2 loans to be forgiven and the corresponding recognition of the fee income to occur late in 2021. With that, I will turn it over to Daryl to discuss credit. Thank you, Brendan. Slide 12 reflects the performance of our loan portfolio both on a current quarter and historical trend basis. Total 30 plus day delinquencies continued their downward trend for the 3rd consecutive quarter, falling to 12 basis points at the most at quarter's end. As our commercial delinquencies have historically been on the low side, the improvement we have seen over the past several quarters has been concentrated in the retail portfolio. Stimulus payments, higher levels of discretionary funds as a result of reduced spend during the pandemic and seasonal income tax refunds are all likely contributing factors to the historically low retail delinquency rates. We will have to see what subsequent quarters may bring on the delinquency front, but the current at this level is in all likelihood unsustainable in the long term. Net charge offs were well contained with a very small net recovery posted in the quarter. The Lack of charge offs has certainly been a very pleasant surprise given where we feared we might be back in March of last year. Over the past several We have been of the mind that charge offs associated with pandemic would be pushed out to the 1st and second quarters of this year. At this point in time, we are not Seeing a strong potential for significant charge offs in the portfolio, although they certainly could occur if we get a setback in the progress we are making on the pandemic front or the for some reason. Nonperforming loans fell slightly in the quarter with both nonaccrual and restructured loans reflecting modest decreases in the period. As you can see, the gap between Old National and its peers in this particular metric has favorably narrowed over the last several years. We continue to perform well in the net charge offs to non performing loan category. As you can see over the past 3 years, our peers results have ranged from roughly 21% to 28%, while we have reflected results in the 1% to 4% range. With the net recovery results in the current quarter, we're off to a good start in this category for 2021. The combination of swift vaccine rollout and generous government stimulus programs have certainly led to a more rapid economic recovery than and many of us could have imagined 12 months ago. I believe we all acknowledge and understand how fortunate we are to have escaped a longer and more to severe economic downturn than we experienced. However, in our opinion, we need to take this opportunity to step back and see how we might change approaches to forward views of risk identification management. I think the industry does a relatively good job of understanding credit risk based on historical performance, but many of us had to scramble back in March of Last year to try to figure out how an unprecedented event like a pandemic was going to impact our loan portfolios going forward. In retrospect, we were able to get the job done, The way we accomplished this was not as efficient or as specifically forward risk oriented as we might have wished. We have ongoing efforts in the bank attentive on learning from this experience and intend to take steps even in the near term to make ourselves better on this front. With that, I'll turn the call back over to Brendan. Thank you, Daryl. On Slide 13, you will see the details of our Q1 allowance of $140,000,000 which is a decline of $70,000,000 from Q4. The improving economic outlook, including the impact of the successful vaccine rollout and most recent government stimulus led to an $11,000,000 decrease in reserve needs. The improving underlying quality of our loan portfolio led to an additional $7,000,000 reduction. As you recall, we were measured in our approach to the reserve build at the onset of this crisis and will be similarly thought as the economy improves. And although the omni is clearly strengthening, there remains an above average amount of uncertainty. As a result, we are holding a larger amount of qualitative reserve today than is typical and we will continue to closely monitor our portfolio performance and make the appropriate adjustments to our reserve in future quarters. I would also like to remind you that we continue to carry 46 to $1,000,000 in unamortized marks from our acquired portfolios. And while these marks will not directly offset charge offs, any remaining mark will accrete through margin on resolution. As I wrap up my comments, here are some key takeaways. We are very pleased with the fundamental results of the quarter. Record 1st quarter commercial production and earning asset growth helped us deliver on the stable net interest income we guided to last quarter. Our fee businesses, particularly mortgage and wealth continue to perform well and our credit quality metrics continue to exceed expectations. Slide 14 includes thoughts on our outlook for 2021. We ended the quarter with a healthy $2,600,000,000 commercial pipeline, which included $623,000,000 in the accepted category. Lower new business and reinvestment rates will continue to put pressure on net interest margin, but we expect net interest income to remain stable through continued earning asset growth. The PPP loan forgiveness process continues for our round 1 clients and round 2 production is going well. We expect to the run off of round two balances to occur in the latter half of twenty twenty one and the recognition of most of the related $26,000,000 in unamortized fees to occur at that time. We expect our fee businesses to continue to perform well. We are encouraged by the momentum in our mortgage and wealth businesses, but Our performance will be subject to industry trends. The strong commercial activity and rate environment should help maintain the high level of performance in our Capital Markets business. Deposit service charges continue to lag historical levels with the receipt of additional stimulus further delaying the return of this revenue line to pre pandemic levels. Other fee lines are and expected to be stable in the near term. Expenses should increase in 2Q with our annual merit increases that were effective in early April, and and we do not anticipate any additional material recapture and are reserved for unfunded commitments. We are generally comfortable with the current consensus estimates on expenses for the remainder of the year. Lastly, a brief update on taxes. We continue to expect a reduction in the volatility caused by our tax credits as we work through the last of the remaining 1 year historical tax commitments. In total, we are expecting approximately $5,000,000 in tax credit amortization for the year, with a corresponding full year effective tax rate of approximately 20%. With that, we're happy to answer any questions that you may have. And we do have the full team here, including Jim Zanger. Our first question comes from Scott Stiefers with Piper Sandler. Your line is open. Scott, you're back. Good morning, guys. I know. I'm glad you remember. That's right with the world. Didn't need a repeat of last quarter, but I appreciate you. So, hey, good morning. I hope you guys are doing well and appreciate the question or you taking the question. Maybe first place to start off, Just on sort of the nuance of the margin, the core margin ex PAAs and PPP down to about 2 74. Maybe sort of thoughts on kind of what's going on there. And I guess more importantly, sort of order of magnitude Further pressure, just as you see it? Yes, Scott, this is Brendan. Yes, I think it's difficult for us to pinpoint where the margin is headed. Obviously, excess liquidity in the system is putting pressure on margins, But our focus has been and will continue to be maintaining the interest income stable. We think we have the earning asset growth potential to And that's where we'll be focused. Okay. All right. Perfect. And then just on the Sort of the lending side, I mean, you guys are really sort of bucking the trend by showing any growth on the commercial side, which is good. I Yes, I'm curious, Jim, to hear your thoughts on competition and the dynamic there. Now that we're sort of more successfully reopening broadly speaking, are Your competitor is doing the same thing or is it still sort of in an environment where you guys are just really well positioned to kind of continue to take market share, particularly in some of your newer markets. Yes, Scott. Jim Sandgren here. Yes, we continue to be really opportunistic. I think as we've shared in past calls, we've been out. We're out calling. Our leadership team has been out in the markets the last few months and if the clients and prospects are willing to see us, we're out making calls. So really like the frame of mind. I will tell you the competition is certainly starting to heat up, particularly on the commercial real estate side. We're seeing some break compression there. Also extended interest only periods on Construction deals, we're seeing kind of longer term fixed rates without swaps and without prepayment penalties. Again, we're maintaining discipline and we're still winning. And so to see The growth that we had in the Q1 with commercial line utilization down and we're starting to see the secondary market refinancing Start picking up. But again, I think our frame of mind has been very opportunistic and we've been out calling. And I think I think other banks are starting to certainly pick up. So competition is fierce, but I like our chance We obviously built the pipeline up quite a bit in the quarter. We finished the Q1 really strong with production and feel good about second quarter as well. Scott, this is Jim. I would also add that I think you're starting to see the fruits of all of our efforts regarding new hires start to impact us here. I can think of we were just in Wisconsin and we've got some great new hires in Wisconsin that are really starting to get some traction in that C and I space. And as we continue to fill out in key markets new hires, I think we'll continue to have opportunities to grow, particularly as their non competes wear off And they could be active calling on their former clients in the marketplace. So this is the way we're driving new business is we've got an Incredibly focused effort. Jim and I are out calling regularly and we're hiring new people to help augment some markets and some product classes we continue to want to grow. Okay, perfect. That all sounds great. So thank you guys very much. Thanks, Scott. Great to hear from you. Our next question comes from Terry McEvoy with Stephens. Your line is open. Good morning, Terry. Hi. Good morning, everyone. Good morning. Good morning. Good morning. Good morning. This last quarter just looking at the releases, you kind of shifted from the allowance for loan losses to the allowance for credit losses. And I'm just wondering, do you have a reserve against securities or unfunded loan commitments, just because the Q4 matches up with what was disclosed today? And And then could you just repeat again what the unfunded loan commitment expense was in the Q1 and maybe what that was last year? So, Terry, the allowance for unfund commitments is related to credit losses, obviously, associated with any of those unfunded construction draws or And we've had that on the books for some time. We ended the quarter $1,300,000 lower than we did last quarter. And And that really runs through our CECL models and the same drivers that drive our allowance for credit losses are the drivers that drive our allowance for our funding commitments. Okay. Thanks for clearing that up. And then, Jim, just the last page of the investor deck, your 20 peer banks, I just noticed 2 announced an MOE last week, another one included in a deal this morning. I guess my question is, what does that say about midsized banks and And what does that say for Old National? Well, I think it continues to be a difficult And out there, right? I mean the operating environment is not getting any easier. There's lots of competition. There's lots of need to continue to invest in talent and technology. And I I think revenue growth can be challenging for our industry. So I think all those things are driving those types of conversations. As I have I said previously, we are open to all those kinds any kind of transaction that will ultimately drive stakeholder value and we'll just have to think. But Anything in the MOE space, I think requires a higher bar, right? And you got to be really focused on culture and strategy and fit, in addition to the financials. Because if you can't get those things right, then the financials won't come. So obviously open, anything that makes sense, our Board of Directors would Take a look at those things, but a slightly higher bar. Great. Thanks, Jim. Thank you. Our next question comes from Chris McGarity with KBW. Your line is open. Good morning, Chris. Hey, guys. Good morning. Jim, maybe a question on capital. You talked about the growth, the movers and the drivers of the growth Can you speak to your appetite for buybacks? Obviously, I heard the comments about a little bit cautious on the uncertainty with the economy, but you guys have a ton of capital. I'm just interested in kind of buyback priority. Yes, definitely on the table for us to consider. And we're going to balance those out with kind of near term outlook on Any potential M and A partnerships, and we'll just go through the trade offs. Clearly, as the economy gets a more stable footing, we get more comfortable, I think they But again, I think we want to look at how we can better deploy capital. What's the better use of capital, a buyback or an M and A partnership Okay. But I guess I shouldn't read into the lack of a buyback meaning proximity to a deal? No. That's been our stance the entire year. Okay. And then maybe just On the reserve, obviously, your credit has been spectacular over cycles. How do we think about just the absolute level of reserve today versus maybe fast forward a year when we fully emerge. Could you just remind us where the day 1 was and how you're thinking about that, Bogie? Yes, Chris, this is Brendan. Yes, so we started day 1 season with that $96,000,000 at $114,000,000 today. A big chunk of that difference in our model say is the qualitative reserve, which we're holding significantly more than we did at Just reflective of the uncertainty of the economy. So that is that comparison. That said, we're not sure what the economy will look like 3 quarters from now. We're comfortable with where the reserve stands today and we'll be flexible and move it up or down accordingly. Okay. And then if I could just sneak one other clarifying comment. The NII stability, was that excluding both PPPN accretion or was that a GAAP number? No, core, core yes, core net interest excluding PPP accretion. All right. Awesome. Thanks, Brendan. Our next question comes from Jon Arfstrom with RBC Capital Markets. Your line is open. Hey, good morning. Good morning. Question for you, Brendan, just on the expense guide to clarify that. I see a consensus of about $485,000,000 for the year. Is that the number you're looking at or should we be looking at something else? Yes. I'm thinking, John, that the second, third and fourth quarter numbers are reflective of our expectations. So give ourselves credit for the $3,000,000 beat relative to what the Street had. But yes, rough and tough, that's pretty close. Back on loan growth, Any differences in recovery expectations across the footprint? And if you had to put Put your finger on what is really driving the commercial optimism, what would that be? Yes. I'm going to start us John, and I'll let Jim jump in. Clearly, I think we've demonstrated our willingness to be out seeing clients, looking for opportunities. And it's all driven by the comfort around our credit quality in our portfolios, right? We came in we're known to be that relatively conservative lender. So we came in feeling pretty good about our We are quickly able to jump in and analyze the portfolios and confirm that we should continue to feel good about that. So it didn't stop us where many of our peers Took a pause there. They took a pause for a couple of different reasons. They took a pause because I think they're worried about their own portfolios, but they also took a pause because they had people at home, maybe not as proactive as our team members were. And so we continue to do as our team members were and so we continue to do that. Places like Michigan continue to Have setbacks in terms of their COVID numbers. So that will probably put maybe a little bit At least on the psyche of some of those people up there and so we'll continue to watch that. But I don't see a big change in our markets. It's Still a Midwest focused organization and they all seem to be recovering kind of an equal basis. But I do think it will Various competitors will come back in various ways. And as Jim said, we've seen a most acutely on the commercial real estate sector where that We'll continue to be active. Yes. The only thing I would add, our Clients and prospects we're talking to, certainly in the manufacturing space, some in the contracting spending, very, very optimistic. And the biggest challenge across the footprint is just finding skilled labor. And that's the big thing that's holding people back. And there's been some supply chain challenges as well. But Overall, I mean, it's really an optimistic outlook and they continue to deal with those other challenges fairly well. So Optimistic. Just two more follow ups. Slide 12, the credit slide. The non performing loans, they're coming down and they're gradually coming down. And I'm just curious, You could share with us the profile of what is in NPLs and maybe kind of the flows in and out in terms of what you're seeing there? Yes. John, let me start by saying what's interesting in this environment is, there are still, what I would consider maybe probably smaller banks in Old National that are really aggressive in taking some of these clients. And so through any cycle, That has a big influence on your ability to manage nonperformers or move nonperformers out is kind of liquidity in the And who's taking these loans. And so we never I think maybe for a quarter, maybe 2 quarters that slowed down a little bit, but really not like you might think it is. So that's the first kind of ability for us to manage those. On the nonperforming, We had a little less than $10,000,000 in actual pay downs out of that portfolio. So again, to the extent that they're find other banks that are doing that. The profile on our non performers is really across the board. We just Really don't have any industries that are concentrated in any of that, really no C and I versus CRE. It is to just individual borrowers throughout the many different industries that have come on this list. And I think it's to Jim's comment earlier, it's the way we've underwritten coming into the cycle. And John, you know our history here, right, where we tend to call very early. And I think if you look at to the graph to the right in terms of what our charge off looks like relative to that portfolio, because we're early to Call them and really decide whether this is a credit that we think we can stick with or this is a credit that we think we need to work out. I think that gives us It's an advantage when it comes to that the actual loss experience that we have with those individual borrowers. And quite often, we're able to rehabilitate them and they go back We recapture that interest income that we didn't take all the time they were in that bucket. But I think it's just being proactive and with Those situations and try to get as accurately as possible when we see weakness. Yes, it's interesting. You look at that chart in the upper right on Slide 12 and we look at it every quarter, but when you really look at it, it's you're right on that, it's impressive. And then I guess the last Chris and Terry asked around it as well, but what is your appetite on M and A and excluding the MOE piece of it Because I agree that's rifle shot and sticky situations on a lot of that. But what is your appetite and what are you seeing in terms of deal to the flow and attractiveness of potential sellers. I guess consistent with my previously our previous comments on the quarter, we're not See a lot of books being passed around and those smaller opportunities. And our appetite, I think it's back. 2019, We're internally focused. 2020 was the year of the pandemic and executing our OMB way. And I think now we're in a position, particularly as we get more comfortable with credit, that we could be in a position. And it doesn't mean that it wasn't active over those 2 year periods of time. I can tell you, I was very active. I still continue to do that a lot of that personally. And so absolutely, are in a position, to if one comes along that's attractive that Meets all of our hurdle rates, we would absolutely take a look at it in this kind of environment, particularly given our better ability to assess credit risk. Okay. All right. Thank you. Our next question comes from Ben Gurlinger with Hub Group. Your line is open. Good to hear from you, Ben. Thanks. Good morning, guys. Solid quarter, good start to the year. I just wanted to kind of Follow-up a little bit more kind of hypothetically on credit. Now if you look over the past couple of recessions, you see net charge offs peaking in a bit of a bell curve manner about 2 or 3 quarters after the bottom from like a GDP perspective, I guess you would say. So this Recession and kind of recovery is a bit different, obviously, because a lot of the stimulus and government programs intervening and preventing a lot of So I'm just kind of thinking hypothetically, there's probably going to be a bit of a bell curve, but elongated and Need improvement or just more time passing by before you feel more comfortable with that total allowance working back down to the kind of low 90s a 1000000. Ben, I think you characterized it really well. I do think this Session is different, probably is, could be elongated, maybe a lower peak. And I think time is what's going to tell that story. And then in opening comments, we're going to be thoughtful and About our approach to reserving over the course of the year given the uncertainty, I think your comments are appropriate in how we're thinking about it as well. Thanks. And then just kind of thinking about loan growth in general. A lot of the bigger banks You guys have all alluded to pulled back and then most recently come back into the quarter. In some of the commentary, at least from last week on the The really big regional banks have seen as though the second half of the year is going to be the area where you see actual growth. Seeing that you guys have seen core loan growth late last year early this year, It's going to be recovering. Like I'm just trying to figure out a sense of your core loan growth. Is it a driver of you taking share or is it you just knowing your customer because you are competing for slightly smaller customers or from a more nuanced Dynamic, is there areas within lending, whether it be C and I or CRE that you feel as though you can make hay in while the other people are still on the sidelines. Yes. I'll just add, it's a little bit of both, right? I mean, we are taking share. We're taking share because we're just a little bit more nimble, a little bit more focused. We're taking share because we're hiring new people. And then we know our That's why we try to provide the pipeline perspective. It's really hard to look out 2 or 3 or 4 quarters out in terms of what growth might translate. We feel really good about obviously, we gave our pipeline numbers for the quarter in the accepted category. That gives us more comfort. It's hard to know How competition is ultimately going to change those pipeline numbers. But what I will tell you, listen, it won't stop our focus. It won't stop our efforts. I'll work it out, hustle everybody around us. We're going to work really hard. We'll continue to put attractive people on the team to go out and grow this business. And then finally, my last question kind of looks at more of the fee income. Obviously, mortgage is a bit out of your control given the national dynamics of it. But are there any areas where you continue to see some outsized I know that wealth management had a good quarter. Service charges were down a little bit, but that's probably a day count factor. Are there any areas within fee The income where you're adding some talent that maybe the market isn't looking at it correctly? Well, I would just say the wealth management space is an area we continue to grow and look for talent. And Fundamentally, we're changing our approach to that business. We're really focused on holistic financial planning and less focused on individual transactions or to grow So I think those are probably, as we've always said, a little longer term play. They don't translate in the results. But I think the quarter you're starting to see both We benefited from obviously a better market by and large, but also continuing to hire people in that space, continue to have a focus in that space. I've never felt better about that business than I do For us to continue to drive better than our historic run growth profile. I think treasury management is an area that we're in the short run, but over the long term, I feel better about our ability to grow that business. Okay, great. I appreciate all the answers. Our next question comes from Scott Kiefer with Piper Sandler. Your line is open. Hi, Scott. Hey, guys. Hey. Just don't want to make you put too fine a point on the PPP outlook, but So most of what you've got left in fees is round 2. Just as we sort of think about the cadence of things, when most of the round 1 Forgiveness fees, does that come in the second quarter? And then how are you thinking about the round 2 forgiveness in the second half of the year? Is that going to be sort of lumpier and geared The Q4 are kind of evenly split through the 2 quarters and second half of the year. And then at this point, would you say, I mean, we're pretty much Done with originations in round 2. In other words, what we sort of what we see is what we get and this is a good base to go off of? Yes. I would say a vast majority of the originations that we quoted, Brandon gave you the Q1 through the Q4 and then I quoted year to date, the $578,000,000 That's more than likely the bulk of what we're going to be doing for the year, Given the program is likely to run out of funds here very soon, that's probably loaded towards the Q4. That round 2 number is probably loaded towards the Q4. And let's just say 90% of that number probably is collected this year. It's really hard to put a finer point on it than that. But I think you otherwise Accurately understand the situation. Okay. Terrific. All right. Thank you, guys. Appreciate you taking the follow-up. Thanks, Scott. There are no further questions in queue at this time. I'll turn the call back over to Jim Ryan for closing comments. Thank you so much. We appreciate your participation. One thing that I want to make sure we pointed you towards, we just published our first ESG report. We're awfully proud of the work we do. We're awfully proud of Our ability to tell that story. So hopefully, you had a chance to take a look at that report. We think it's indicative of all of our hard work and energy. In addition to The commercial and all the other things that we're doing, I think it's how we support our communities, how we support team members, the environment and things like our governance practices, I think are all well captured within that report. And I just want to thank you for your support. As always, Lynelle Walton and Brendan are available for any phone calls, any follow ups you have. Thanks so much. This concludes 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 1-eight fifty five-eight 5,92,056 with conference ID code 9,135,118. This replay will be available through May 3. If anyone has additional questions, please contact Lonnel Walton at 812-464-1366. Thank you for your participation in today's conference call.