Welcome to the Old National Bancorp Second Quarter Earnings Conference Call. This call is being recorded and it has been made accessible to the public in accordance with the SEC’s Regulation FD. The call along with the corresponding presentation slides will be archived for 12 months on the Investor Relations page at oldnational.com. A replay of the call will also be available beginning at 1 PM Central Time on August 1 through August 15. To access the replay dial 855-859-2056, conference ID code 43576759. Those participating today will be analysts and members of the financial community. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, we will hold a question-and-answer session. At this time, the call will be turned over to Lynell Walton for opening remarks. Ms. Walton?

Thank you, Holly. Good morning, and welcome to Old National Bancorp's second quarter earnings conference call. Joining me are Bob Jones, Jim Sandgren, Jim Ryan, Daryl Moore and Joan Kissel. Some comments today may contain forward-looking statements that are subject to certain risks and uncertainties that could cause the company's actual future results to materially differ from those discussed. Please refer to the forward-looking statement disclosure contained on Slide 3, as well as our SEC filings, for a full discussion of the company's risk factors. Additionally, as you review Slide 4, certain non-GAAP financial measures will be discussed on this call. References to non-GAAP measures are only provided to assist you in understanding Old National's results and performance trends, and should not be relied upon as a financial measure of actual results. Reconciliations for such non-GAAP measures are appropriately referenced and included within the presentation. Before moving into the heart of our earnings discussion, I just wanted to take a moment and acknowledge the many moving parts or what is affectionately called noise in our numbers this quarter. We realized this doesn’t make your jobs any easier. It is our intention with this call to do our best to highlight this noise and as we’ve termed them notable items, so you can evaluate the core results and strong underlying fundamentals of our performance this quarter. As we turn to Slide 5, you can see the strategic actions that were accomplished during the quarter as they relate to our initiatives for the year. First, the closing of our partnership with Anchor BanCorp and entry into the state of Wisconsin. This transaction closed May 1, so our financial results in the quarter contain two months of Anchor operating income and expenses along with the issuance of an additional 20.4 million shares of common stock. The second strategic action is the sale of our insurance subsidiary, which closed on May 31, so there are two months of insurance income and expenses in our quarterly results. The third strategic action is the early termination of our FDIC loss share agreements, which means no more covered loans and no more indemnification asset going forward. Slide 6 contains some of the financial highlights of the second quarter with our reported net income of 39.1 million and earnings per share of $0.31. Notable items impacting this quarter are included on this slide and had a net positive impact of 8.7 million on an after-tax basis. Two of the biggest highlights of the quarter are first, over 11% organic loan growth and second, the 5.5% increase we saw in our tangible book value even after closing the largest partnership in our history. In addition, we had quarter-over-quarter organic growth in our fee income businesses. All of these will be discussed in greater detail throughout our prepared comments. With that overview, I’ll now turn the call over to Jim Sandgren.

Thank you, Lynell, and good morning, everyone. From a bank perspective, the headline for Old National’s second quarter is simple. We continue to produce significant organic loan growth throughout our franchise. To be specific, the 11.3% organic growth that we experienced was our best result since the second quarter of 2014 and it marks five consecutive quarters of meaningful loan growth. If you'll turn to Slide 8, I’ll begin with a closer examination of our loan growth numbers. As you can see, the first green bar labeled Day 1 Anchor. This represents the more than $1.6 billion loan portfolio that moved to Old National’s books when we closed our partnership on May 1 of this year. The second green bar reflects the 199.1 million in organic loan growth that we experienced during the quarter, driven primarily by increases in commercial of over $154 million and indirect of nearly $33 million. What is truly unprecedented and it's the reason we chose to label the first green bar the way we did is that from May 1 to quarter end, our new Wisconsin market accounted for 39 million in new organic loan growth or almost 20% of our quarterly total. To say we are pleased with these early results in Wisconsin is an understatement. I can tell you that this success is directly attributable to the strong leadership and team we have in place in the market which has absolutely hit the ground running. We also experienced impressive growth from a number of our markets across our footprint. In addition to the 39 million in new loans in Wisconsin, we saw a $32 million increase in our Louisville, Lexington market, a $30 million increase in both our Bloomington, Columbus and South Bend, Elkhart markets followed by gains of 15 million and 11…

Thank you, Jim. I would like to begin by touching on two of the strategic actions Lynell mentioned in the opening of the call. First, on Slide 12 is the closing of our partnership with Anchor Bank. This slide depicts the Day 1 balances and the resulting accounting entries recorded as of the closing date. Most notable is the 4.5% loan mark compared to the 5.4% mark we estimated on announcement date. The 4.5% loan mark compares favorably to our more recent transactions and is a testament to the good progress Anchor Bank made with its portfolio. The second action is the sale of our Insurance subsidiary on Slide 13 shows the reconciliation of the sales proceeds to the after-tax book gain that was recorded during the quarter. Of significance is the $8.3 million increase in income tax expense associated with the non-deductible goodwill in the Insurance subsidiary. It's also worth noting that the goodwill intangibles are reduced by $47.5 million as part of the transaction. Moving to Slide 14, the graph depicts the trend in our total revenue. Excluding the gain on the sale of Insurance, we experienced 11.6% in total revenue growth quarter-over-quarter. It's important to note that the Durbin Amendment which became effective for us in July of 2015 resulted in a $2.9 million decline in our interchange income during the second quarter of 2016 compared to the same period a year ago. The graph on Slide 15 shows the trend of our GAAP net interest margin and our core net interest margin. Our reported GAAP margin obviously benefited from strong organic loan growth we experienced in the quarter and the addition of two months of Anchor. As we have seen from past transactions, the margin contribution from purchase accounting can be more impactful in the early…

Thank you, Jim. Slide 23 provides a look at net charge-offs and loan loss provision trends over both the last quarter and the last year. Net charge-offs in the current quarter were roughly $200,000 compared to $1.6 million last quarter and $1 million for the second quarter of 2015. Gross charge-offs at $2.7 million this quarter were also lower than the $3.9 million levels experienced both last quarter and in the second quarter of last year. Gross charge-offs are a metric we are watching more closely as we think that we could expect to see lower levels of recoveries going forward, as we get farther out from the losses experienced during the great recession. Combining a single basis point loss rate in the current quarter with the 9 basis points in losses last quarter, annualized losses stand at 5 basis points at June 30. On the provision for loan loss front, the current quarter’s provision of $1.3 million was significantly higher than the $100,000 provision last quarter, but $1 million lower than the $2.3 million provision expense in the second quarter of last year. A strong quarterly loan growth, slightly higher C&I pool loss rates, and the movement of the Integra and Monroe FAS 91 acquisition portfolio loans into the bank’s non-marked portfolio created additional need for provision in the quarter. Some of that increase was offset by a significant drop in special mention loans that I will speak of in just a minute, lower retail loss rates, and a net decrease in total measured impairment. As noted on the slide, the allowance for loan and lease losses as a percentage of pre-marked loan balances stands at only 58 basis points. However, it's important to remember that we have significant marks on our acquired portfolios. Although the allowance for loan…

Good morning and thank you, Darrell. Since we were last together we did announce a number of promotions that were part of our strategic reorganization. As part of that announcement, let me welcome Jim Ryan as a formal participant to our quarterly call. While most of you know Jim from our NDRs or conferences, today is his first call as Old National CFO. I also want to acknowledge Jim Sandgren and his recent promotion to President and Chief Operating Officer. Both Jims or as we affectionately call them the James gang are off to a great start in their new roles and we look forward to a bright future with both of them in their expanded leadership roles. I should also mention that Chris Wolking may be the happiest guy at Old National. He is truly enjoying his new role leading our capital markets and specialty product efforts and has already made a very positive impact on yields and production. As has become our custom, I thought I would start my remarks with an overview of the economic activity in our markets to give you a better sense of our customer activity as well as their psyche. There is still a great deal of positive activity within our markets evenly distributed throughout all four states. Most customers do report strong sales pipelines and good customer activity. While this positive mood shifts slightly to the negative as we discussed the global or national economy, we are still getting a strong sense that the real economy is better than what is being discussed in the media or certainly in the political arenas. Brexit, while very real, has had little impact on our customers and my sense is that other than those customers who have global operation, there’s a general sense it will…

[Operator Instructions]. Our first question will come from the line of Scott Siefers with Sandler O'Neill.

Mister consistent.

Good morning, guys. Thanks, Bob. I got lucky this quarter. I was nervous after that 4Q slipup I had.

Now you know what we felt like on a quarterly basis, Scott.

Just a couple of quick questions for you. First, maybe for Jim Sandgren, I’m curious on your loan growth comments. If you could speak a little more on CRE and sort of the increase in contributions that’s bringing to total growth? And then maybe if you could speak specifically to the attrition of the CRE specialty group that you alluded to and maybe discuss a little bit about kind of how that’s different from what you guys were doing sort of enterprise-wide previously please?

Sure. I’ll be glad to, Scott. Certainly for the quarter and the last couple of quarters we’ve seen a little bit of a tick up in our commercial real estate opportunities and we’ve seen some growth there, certainly the last two months starting in May and June with the Anchor team. That’s their expertise and we’ve been able to leverage some of that across our footprint. I’ll have Daryl talk a little bit about the CRE specialty group. But in recent business up to that market, I know Daryl and I have a huge amount of confidence as we spent time with Jim Sayer [ph] who’s now the Chief Credit Officer of our commercial real estate group and then Kevin O'Driscoll who heads up the production side of things. A real deep understanding, they have some big bank experience with commercial real estate and so it’s given us a real sense of comfort. That being said, we’ll continue to keep a very close eye on this portfolio and it doesn’t add a huge amount from a concentration standpoint. It’s just something we’ll have to look at as we go forward. But we have seen some nice opportunities to grow the balance sheet and like I said keep a close eye on it going forward. But Daryl will speak to the specialty group.

Yes, Scott, what we decided to do is really on our complex or larger commercial real estate loans, anything over $5 million, we’re going to take that extra piece that Jim just talked about with Jim Sayer who came out of the Wells organization. He and his underwriters have a very disciplined approach. They’ve applied some metrics that we weren’t applying before, like debt yield. They’ve got sophistication around yields, around the type of projects. And so we’re going to leverage that, look at their policy which we already have and begin to develop some more specific guidelines for those types of projects and those complex commercial real estate deals will be underwritten by Jim’s group. Anything less than the 5 million or uncomplicated or less complicated projects will be continued to be underwritten through our conventional underwriting team. So as I looked at it, what I saw was the ability to really add some more sophistication because of the experience they had and overlie that on our existing underwriting. And I really do think from a risk perspective, it’s going to ramp things up for us just a little bit and I feel pretty good about it.

Okay. Perfect. That’s good color. And then maybe separately, Jim Ryan, hopefully kind of a soft ball for your first official question as CFO. Can you walk through the revenue impact just on the Insurance sale in the 3Q and the 4Q? In other words, do you still have roughly the 7 million or so in the 2Q, does that just go to zero or is there some residual amount that sticks with us in the 3Q, 4Q, maybe if you can just discuss that progression please?

Thank you, Scott. I really appreciate the soft ball question. You’ve hit the nail on the head. We do not anticipate any revenue in the third quarter from the Insurance operations. You can tell that the contribution net of the expenses in the second quarter was de minimis. It was barely positive. So from this perspective, we would anticipate that would have been the case in the third and fourth quarters as well.

Okay. Perfect. All right, I think that does it for me. So thank you guys very much.

Thanks, Scott.

Thanks, Scott.

Our next question will come from the line of Emlen Harmon with Jefferies.

Good morning, Emlen.

Hi. Good morning. I think I get a vote for mister consistency too as always the number two guy here.

Always the bride’s maid, never the bride, Emlen.

That’s right. Just on the Wisconsin growth, it was good to see that market leading in its first quarter. Do you feel like the growth is on a sustainable trajectory there? And were there any aspects I guess to the acquisition that kind of helped boost the growth in that market, whether it was than being able to do some larger deals or if there was anything specific that kind of aided the growth rate there?

Yes, it’s a great question, Emlen. I would tell you that the future there is very bright. I think that we’ve got a second and the first quarter as partners and saw production, which was beyond any we even expected. And I think the future is even brighter as we kind of begin to align more product sets up there, more product opportunities, give them more support. But the moral is excellent. I think the lesson we learned or the takeaway is the majority of the folks at Anchor had big bank experience, so they understood our credit constraints, our credit risk profile and I think again everything there is very positive. So it kind of falls into the answer of the question on commercial real estate. What we found there was deep industry expertise that layered on top of our risk profile just gives us more comfort that we can take a little more ability to take on some commercial real estate but still under our conservative risk profile. Again, that’s that big bank experience I referenced.

Got it, okay. Thanks. And then you guys have noted there is going to be a little bit more or some more help from cost saves to come in the first quarter of '17, so I appreciate you kind of lining out the third quarter, fourth quarter expense outlook. If all else being equal, what kind of drop should we expect into the first quarter of '17?

Yes, really a bulk of the cost savings, so that would be 32% of the original Anchor expenses, they’re really going to come in the first quarter. We will see some benefit in the fourth quarter, Emlen. Typically, it’s 30 plus days kind of post integration that we start to see a bulk of the cost savings coming through. So you can imagine that we’ll see some of that in the fourth quarter, but we’ll start to realize basically I would say a vast majority of the cost savings from the initial integration starting in 1Q '17.

Okay. And I guess what’s just kind of tricky for us is maybe understanding how much is actually in the second quarter run rate from Anchor? Do you have a sense of what the dollar dropped from 4Q to 1Q is next year?

Repeat that question, Emlen.

So I understand the majority of the cost saves are going to hit in the first quarter, just what’s the dollar difference from the fourth quarter to the first quarter? Like how much are you actually picking up on a dollars basis?

So Emlen if you take – we had about $11.4 million in expenses for the quarter from Anchor. So if you take that over two months, it’s about 6.5 million a month. So you’re going to get very little in the fourth quarter. I would take about 25% to 30% of that number in terms of what your savings would be in the first quarter. So if you say 17 million or so on a run rate basis, we should be able to pick up about 30% drop of that number in the first quarter, if that helps you.

Okay, that does. Thank you.

Our next question will come from the line of Chris McGratty with KBW.

Good morning, Chris.

Hi. Good morning. Bob, it’s actually Mike Perito stepping on for Chris. How’s everybody?

You know, pretty soon we’re not going to let Chris even use his name.

It has a little bit better ring than mine, so I like to run with it. A couple of quick follow ups on some of the questions that have already been asked. So on the growth outlook, the pipeline’s over 1 billion, it seems like it’s pretty strong across the multiple footprints. As we kind of think of what the franchise can achieve now with Anchor on board, is kind of at the high-single digit range, is that reasonable? It would seem like anything, 5%, 6% would be too conservative just given where the pipeline is and the closings that you already have in the pipeline?

I think that’s a great – again, all things being equal you could get into a recession or a political you don’t know, but if you said today as we look forward, I think high-single digits is consistent with where we see.

Okay. So on the provision, obviously some of it will be driven by growth and I appreciate Daryl’s comments that on the gross charge-offs, the recoveries are slimming here. And then as you kind of look to the agricultural side, I guess a two-part question here. I guess, one, are there any kind of – what are the average sizes of some of the ag credits that you guys have? Is there anything substantial that could potentially drive a relatively large quarter-over-quarter delta in provisioning? And I guess, two, as you think about near-term provisioning as a whole, should we start to see a steady ramp from kind of this 2Q level as you guys continue to put up decent growth, or are there other factors that kind of drove the 1.3 million in the quarter?

This is Daryl. With respect to the ag portfolio, we don’t see anything – we don’t have a lot of significantly large ag credits. We have some in the $5 million to $6 million range but those are a handful. We don’t see anything today; now I say today that would make us feel like we’ve got any exposure to large provisions going forward. Part of it has to do with the remaining growing crop year as well as the prices. But there’s nothing in there today that we haven’t already accounted for that we’re concerned about. With respect to the near-term provisioning, I think a couple of things. I think you hit it on the head growth and I think depending upon the growth that we have, that could stimulate some higher provisioning. And you never know about the impairment or the PDs, but I would say generally as we’re looking forward a good share of higher provision is going to be associated with the growth in the portfolio, as we see it today.

Okay. Thanks. That was helpful. And then, Bob, maybe just one high level question for you. You guys made the point to point out the tangible book value growth and it seems with the pipeline over $1 billion, obviously that’s not all going to close but that’s about 7% of your balance sheet, which is a pretty significant number. Can you maybe just update us on how you guys are thinking about your capital priorities now that Anchor is on board, with the backdrop of the stronger organic growth and also the tangible book value growth year-over-year you guys have seen?

Yes, really our focus is on organic growth. I think we’ve all said in our comments one way or another, we continue to see this franchise that’s transformed from a very low growth to a better growth profile and capital will be used to fund that growth. And the obvious tangential question is M&A. At this stage, we’re really focused on execution. As I’ve said all along we’ve built the house, I don’t know that I need to do anything else to make it any better. If we get an opportunity, we’re clearly going to look at it. But we’re all just very, very keenly focused on execution and growth and take advantage of these new markets that we’re in.

All right, great. Thanks, everyone. I appreciate it.

Thank you. Tell Chris hello.

I will.

Our next question will come from the line of Terry McEvoy with Stephens.

Good morning, Terry.

Hi. Good morning, everyone. To start with a question I’ve been I guess focused a lot on the Anchor deal and haven’t really kept up on the rationalization of the branch franchise and you took a small expense last quarter. Could you just remind us kind of what you’re doing with the branches? How do you think about the earn-back period on some of these expenses? And what you have planned for the second half of this year?

Yes, really in Wisconsin we have no branch closures or consolidations. We obviously didn’t have a franchise there. We owe it to the team up there to kind of take a little bit of a year or so just to look at that franchise and see where opportunities for growth are. So the branch closures that we had in this quarter were really related to our Michigan market. It’s a good example of – we’ve been up there for a while. We began to look at customer patterns and Jim and his team have had a couple of closures in the Michigan market that that cost is related to.

And then you talked a lot about the growth opportunities at Wisconsin and Anchor. I guess on the flipside, as soon as the deal was announced, it’s a competitive market. I’m sure your competitors were calling on some of the better clients at Anchor. What type of runoff have you had and is it pretty consistent with your initial expectations?

It’s actually better than we expected. We’ve had de minimis amount of runoff. And again, I can’t tell you how much we appreciate the leadership of Chris Bauer and Tom Dolan and Martha Hayes up in those markets. They from day one were very aggressive and going out and talking to clients. They are great advocates for Old National and then we put some of our best and brightest up there; Len Devaisher and Kevin Anderson and we haven’t lost any RMs. We really have very, very little client loss. So we’re off to a great start and we continue to make sure we support them as best we can.

Great. And then maybe one last one. You put out such a nice presentation. Slide 33, the drop in the consumer direct production yield, volume was up a lot. Is something going on there? It just caught my eye this morning.

Yes, this is Jim. So what we had was a home equity line of credit promotion that we really kicked off in the beginning of the second quarter offering some teaser rates for 12-month introductory level. So it did as you can see help drive some nice growth in the home equity portfolio, which we hadn’t seen for a while. So that’s what’s driving that reduction in yields there.

Terry, you got to give Chris some kudos. His first quarter on the job, he drew the indirect yields up.

That was noted, I appreciate that. Thank you, everyone.

I think you forget about Jim.

Thank you.

Thank you.

Our next question comes from the line of Jon Arfstrom with RBC Capital Markets.

Good morning, Jon Arfstrom.

Good morning. A few follow ups just on the pipeline numbers on Slide 9. Do you have an idea of how much of that is from Anchor and call it what the legacy bank looks like in terms of the pipeline?

Yes, Jon. So the Wisconsin contribution there is just a little bit over $200 million and so the legacy piece is about a little over 900.

Okay, good. And then Jim Ryan maybe for you, the lower merger and integration charges, anything notable there? It’s a little better than we thought. What’s driving them?

Yes, just really good execution with our vendor management group just trying to drive down early termination charges on their key IT contracts, most notably their core service provider. There was some great negotiation done on behalf of the Anchor team and our team just driving those contracts lower.

Okay, good. Daryl, for you, did you disclose the size of your ag exposure, the overall total?

It’s about $280 million at this point in time.

Okay, so very small. Okay. Anything else outside of ag that you’re watching more carefully?

I would say all banks are watching the commercial real estate. Despite what we said about the growth, everybody is looking at that and making sure that we don’t get too heated there and we have very small energy. We’ve gotten a little bit of coal, we’re watching that. But outside of that, everything else seems to be moving along pretty well, Jon.

Okay, good. And then around the horn to you, Bob. On M&A, is Bob Jones saying pause? Did Jim Ryan turn out the lights on the M&A department when he changed chairs or what are you thinking?

I get criticized when I use this analogy but I think we’ve earned the right to be a little more selective in our partners. We’re in the markets we want to be in. If we get a deal that makes a lot of sense with reduced earn-back, great strategic opportunities, good expense saves, we clearly have to look at it. But I can tell you that we’re spending a lot more energy on execution and really trying to drive higher quality earnings.

Okay. And when does the rebranding take place?

Mid-September when we do the conversion.

Okay, got it. All right. Thank you.

Thanks, Jon.

Our next question comes from the line of John Moran with Macquarie.

Good morning, John.

Good morning. How’s it going?

Great.

Good. I wanted to circle back on OpEx for the, I don’t know, third or fourth time now. So I understand that you’ve got 25% to 30% of Anchor that would drop out in kind of 1Q. And then in addition to that, I think you said that there is 2 million to 3 million in saves out of the pension, and that would be expected to start hitting – does that hit 4Q or is that already in 4Q’s guide or is that kind of incremental in 1Q?

There would be just a little bit of benefit in the fourth quarter depending on exactly when we execute and that’s really in the guidance. And then most of the benefit though will be in the 1Q of '17.

Okay, got it. That’s helpful. And then Jim, I think you mentioned 3 to 5 basis points of margin compression all else not equal, because there’s a strong pipeline, good loan growth here. And then you mentioned reducing some asset sensitivity. Would that be done – I assume that what you’re kind of getting at is layering in some duration in the investment securities book or swaps?

That’s absolutely correct. When opportunities present themselves, so if we get a backup in interest rates, we might look at putting some additional duration on the investment portfolio. It probably won’t move the needle meaningfully but nonetheless we’re going to continue to look for opportunities maybe swapping some stuff back to fixed rate on the loan side. Those types of actions when opportunities present themselves I think will give us a chance at insulating from some of the flatter yield curve we find ourselves in today.

Got you. And so historically you guys had run pretty neutral or I think even if I’m remembering correctly, a little bit liability sensitive. So you just kind of walk that back in terms of the asset sensitivity that you put on the last year or few years?

Yes, I think it’s a great observation. We are more asset sensitive that we’ve ever been as a bank. And so we got more asset-sensitive in the second quarter primarily as a result of bringing on the Anchor balance sheet. Even though they have commercial real estate loans, most of those loans are variable rate in nature. So we will look for ways to still remain asset sensitive and benefit if rates ever do rise, but that is an expensive position to maintain. And so to the extent that we feel comfortable adding some additional duration, we’ll look for those opportunities.

Terrific. Thanks for taking the questions.

Thanks, John.

Our next question comes from the line of Peyton Green with Piper Jaffray.

Welcome back, Mr. Green.

Good morning. Thank you. My questions have actually been asked and answered. But I guess maybe, Bob, if we step back and kind of take a look at what you all have done over the last five years, there’s been a whole lot of change in the franchise. What are you most optimistic about in terms of driving returns over the next two or three years? And then what are the biggest challenges for you to get there?

I think the opportunities are really growth. We’re just seeing – I think we’re at the beginning of seeing what this franchise can look like in terms of the growth both on their commercial – and we don’t talk about retail a lot but as part of our United Bank & Trust partnership in Ann Arbor, we brought on an extremely talented management team part of which we have a gentleman now running our retail bank [indiscernible] just doing a great job. So I think the growth is optimistic. I wouldn’t be my normal honest self if I didn’t say that I think we’ve made some good progress on expenses. I think we still have an opportunity to do a better job on reducing costs. I would tell you we’re all very focused on it, but at the right manner of doing that. And as you think forward, I think the risk for all of us is just this yield curve and the interest rate environment. The question kind of at the end is what keeps you awake at night and I’m not sure that a stock price wouldn’t be at the top of that list for me as I think through what we’ve done and kind of where that stock price sits. I wouldn’t be doing my job if I wasn’t focused on it.

Okay. And then maybe with regard to retail or consumer, the indirect auto numbers have been very good for you all. Would there be a decision tree that would change your mind on keeping indirect auto versus something else? Could it be a funding mechanism for other growth later on?

Yes, I think that’s a great question and I think that’s one of the things Chris is looking at. Chris is two months on the job in indirect in the balance of his capital markets. He saw the yield increase there through some of his efforts. But we’ve asked Chris and Chris is going to take a real hard look at that portfolio to see if it’s the best use of capital and funding. And I think as you look forward to the future, we’ll have some more decisions to communicate there.

Okay, great. Thank you for taking my questions.

Thanks, Peyton. Glad to have you back.

Your next question is a follow up from the line of John Moran with Macquarie.

Welcome back, John.

Thanks. Thanks for taking the follow up. I’ve got a ticky-tack [ph] modeling question. Just on the tax rate and I know you guys are guiding for a step down here in the back half of '16, but is it fair to assume that that goes back up in '17 to kind of the 26, 27, 28-ish level?

John, we are always looking at opportunities to keep that tax rate in check. So obviously as we make more income that would put pressure on that rate. But I don’t know if we’re willing to say at this point in time that that rate is going to go back up from here. I think we’re continuing to look for ways to moderate that rate even into 2017.

As part of what Chris is focused on in the capital markets with some of his transactions and that group, we’ve also got some ways to moderate our taxes. So, as Jim said, we’re keenly focused on it.

Okay. Thanks very much for taking the follow up.

Thanks, John.

At this time, we have no further questions. I’ll turn the conference call back over to management for their closing remarks.

Great. Thank you all. Thank you for your insightful questions. Any follow up, let Lynell know and we look forward to talking to you again soon.

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 Web site, oldnational.com. A replay of the call will also be available by dialing 855-859-2056, conference ID code 43576759. This replay will be available through August 15th. If anyone has any additional questions, please contact Lynell Walton at 812-464-1366. Thank you for your participation in today's conference call.