ONB — Old National Bancorp

Summary of Old National Bancorp (ONB) Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Earnings Per Share (EPS): GAAP EPS of $0.55; adjusted EPS of $0.62, a 5% increase quarter-over-quarter and a 27% increase year-over-year.
• Return Metrics: Adjusted return on average tangible common equity (ROATCE) of nearly 20%; adjusted return on assets (ROA) of 1.37%.
• Efficiency Ratio: Record low adjusted efficiency ratio of 46%.
• Loan Growth: Total loans grew 6.4% annualized from the prior quarter.
• Credit Quality: Criticized and classified loans decreased by 8%; total net charge-offs at 27 basis points.
• Capital Position: Common Equity Tier 1 (CET1) ratio over 11%; tangible book value per share increased by 15% year-over-year.

2. Strategic Updates and Business Highlights

• Successful completion of the systems conversion and integration related to the Bremer Bank partnership, enhancing market presence in Minnesota and North Dakota.
• Focus on organic growth and disciplined capital returns, with a commitment to investing in talent, technology, and client-facing capabilities.
• Continued strong performance in fee income, particularly in mortgage and capital markets, driven by favorable rate conditions.
• Commitment to maintaining a disciplined approach to pricing and managing deposit costs.

3. Forward Guidance and Outlook

• 2026 Loan Growth: Expected growth of 4% to 6%, with a positive outlook on borrower sentiment driven by lower rates and economic clarity.
• Net Interest Income (NII): Anticipated increase due to asset repricing and continued loan growth; guidance includes expectations for two additional rate cuts.
• Expense Management: Expectation of controlled expenses with full realization of Bremer cost savings in Q1 2026.
• Capital Management: Plans for increased share repurchases in 2026 while maintaining adequate capital for growth.

4. Bad News, Challenges, or Points of Concern

• Deposit Growth: Core deposits decreased by 3% annualized, primarily due to seasonally lower public funds balances.
• Market Competition: Competitive pressures in certain markets, particularly regarding deposit pricing, though management noted rationality in pricing strategies.
• Credit Risks: While credit metrics improved, ongoing active portfolio management is necessary, and there is a cautious outlook on macroeconomic uncertainties.

5. Notable Q&A Insights

• Margin Trajectory: Management indicated that day count impacts NII projections, with expectations for stable margins moving through 2026.
• Capital Management: Plans for a more active share repurchase strategy in 2026 compared to 2025, balancing growth and capital returns.
• Loan Growth Drivers: Positive sentiment among borrowers is expected to drive growth, with a focus on middle-market commercial and industrial sectors.
• Wealth Management Strategy: Emphasis on talent acquisition to enhance growth in the wealth management segment, indicating potential for increased market penetration.

Overall, Old National Bancorp reported a strong finish to 2025, with record financial performance and strategic initiatives aimed at sustaining growth and profitability in 2026, despite some challenges in deposit growth and competitive pressures.