ONBPP — Old National Bancorp

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

1. Key Financial Results and Metrics

• Earnings: Q4 GAAP EPS was $0.55; adjusted EPS was $0.62, reflecting a 5% quarter-over-quarter increase and a 27% year-over-year increase.
• Profitability: Adjusted return on average tangible common equity (ROATCE) was nearly 20%, and adjusted return on assets (ROA) was 1.37%. Adjusted efficiency ratio improved to 46%.
• Capital: Common Equity Tier 1 (CET1) ratio exceeded 11%, and tangible book value per share grew by 4% quarter-over-quarter and 15% year-over-year.
• Credit Quality: Total criticized and classified loans decreased by 8%, with low levels of non-PCD charge-offs (27 basis points).

2. Strategic Updates and Business Highlights

• Successful integration of Bremer Bank partnership, enhancing market presence in Minnesota and North Dakota.
• Focus on organic growth, with a commitment to investing in talent, technology, and client-facing capabilities.
• Continued emphasis on disciplined credit management and maintaining high liquidity and capital ratios.
• Positive growth in total loans (6.4% annualized) and noninterest income, particularly in mortgage and capital markets.

3. Forward Guidance and Outlook

• For 2026, loan growth is expected to be between 4% to 6%, with a strong pipeline supporting 1Q growth of 3% to 5%.
• Anticipated continued strength in fee income, particularly in mortgage and capital markets.
• Expense management will benefit from full realization of Bremer cost savings, with expectations for a record low efficiency ratio.
• Net interest income (NII) is expected to increase, supported by stable to improving net interest margin (NIM) and fixed asset repricing.

4. Bad News, Challenges, or Points of Concern

• Core deposits decreased by approximately 3% annualized, primarily due to seasonally lower public funds balances.
• The use of brokered deposits increased, although still below peer levels (6.7% of total deposits).
• Some concerns regarding competitive pressures in deposit pricing, although management noted that pricing remains rational in most markets.

5. Notable Q&A Insights

• Management indicated that the margin trajectory in 2026 will be influenced by factors such as loan growth, the steepness of the yield curve, and effective deposit beta management.
• There is a cautious optimism regarding mortgage performance, with expectations for a constructive rate backdrop.
• The company plans to be more active in share repurchases in 2026 compared to the previous year, balancing capital growth with shareholder returns.
• Management expressed confidence in the improvement of credit metrics, suggesting that the peak of criticized and classified loans may have passed.
• The focus remains on organic growth rather than pursuing additional M&A opportunities, emphasizing internal development as a priority.

Overall, Old National Bancorp reported strong financial performance in Q4 2025, driven by strategic initiatives and effective management, while also addressing challenges related to deposit growth and competitive pressures.