8-K: Old National Bancorp Q1 2026 Performance Update

Old National Bancorp reports strong Q1 2026 results with peer-leading profitability and disciplined expense management, alongside a robust capital position and a stable outlook.

Summary

• Old National Bancorp reported strong financial performance for the first quarter of 2026, highlighting peer-leading profitability and a record adjusted efficiency ratio.
• The company achieved an adjusted ROATCE of 19.0% and an adjusted ROAA of 1.33%, demonstrating effective operational performance.
• Loan growth was robust, increasing by 8.0% annualized, driven by strong Commercial & Industrial (C&I) loan growth of 16.9% annualized.
• The deposit franchise remains high-quality and low-cost, with total deposits growing 4.2% annualized and total deposit costs at 172 basis points.
• The company maintained a strong capital position, with CET1 capital to RWA at 11.11%, and tangible book value (TBV) per share increased 11% year-over-year.
• The outlook for full-year 2026 anticipates positive operating leverage and over 15% EPS growth year-over-year, assuming no Federal Reserve interest rate cuts.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive filing, with strong operational performance, robust capital levels, and a clear outlook, though some sequential quarter-over-quarter declines in key profitability metrics are noted.

Positives

• Achieved a record adjusted efficiency ratio of 45.7% in Q1 2026.
• Reported strong Q1 2026 adjusted ROATCE of 19.0% and adjusted ROAA of 1.33%.
• Total loan growth was 8.0% annualized, with C&I loan growth at 16.9% annualized.
• Total deposits grew 4.2% annualized, with low total deposit costs of 172 bps.
• Tangible Book Value (TBV) per share increased 11% year-over-year.
• Returned $151 million in capital to common shareholders in Q1 2026, including $95 million in share repurchases.
• Maintained a strong CET1 capital ratio of 11.11% to RWA.
• Credit quality remains strong with net charge-offs of 19 bps (excluding PCD loans).

Negatives

• Net interest income decreased by 2% compared to the fourth quarter of 2025, primarily due to lower asset yields.
• Net interest margin (NIM) decreased by 10 basis points compared to the fourth quarter of 2025.
• Adjusted earnings per diluted share decreased by 2% compared to the fourth quarter of 2025.
• Adjusted return on average tangible common equity decreased by 90 basis points compared to the fourth quarter of 2025.

Risks

• Potential impact of future business combinations on performance and financial condition, including integration challenges.
• Changes in economic conditions and economic and business uncertainty that could materially impact credit quality trends.
• Inflation and governmental responses to inflation, including increasing interest rates.
• Cybersecurity threats and other operational risks.
• Potential impact of regulatory changes on capital flexibility.
• Risks associated with purchase accounting for the Bremer merger.
• Disruptive technologies in payment systems and other banking services.
• Effects of climate change on the company and its customers.

Future Outlook

The full-year 2026 outlook projects positive operating leverage and over 15% EPS growth year-over-year, assuming no Federal Reserve interest rate cuts. Net interest income is projected around $2,415 million (+/- 2%), noninterest income between $485 - $505 million, and noninterest expense between $1,435 - $1,455 million. The net charge-off ratio is expected to be around 0.25% - 0.30%, with a provision for credit losses of $135 - $145 million.

Management Comments

• Old National's primary strategic objective is to be a top quartile performing basic bank that is a primary, trusted partner to our clients in the communities we serve, and a highly respected, highly valued employer that continually empowers our team members to grow, develop and succeed.
• Management believes excluding certain items (merger-related charges, pension adjustments, FDIC assessments, debt securities gains/losses, CECL Day 1 non-PCD provision) from non-GAAP measures is useful for assessing underlying operational performance and comparability.
• Management believes presenting net interest income and net interest margin on a fully tax-equivalent basis enhances comparability for peer comparison purposes.
• Management believes tangible common equity measures are valuable indicators of capital strength and facilitate comparisons with peers.

Industry Context

StockSavvy.ai notes that Old National Bancorp's Q1 2026 results reflect a banking industry navigating a complex interest rate environment and ongoing integration of past mergers. The focus on core deposit franchise strength and disciplined expense management aligns with strategies employed by many regional banks seeking to maintain profitability and capital adequacy.

Comparison to Industry Standards

• Old National's Q1 2026 adjusted ROATCE of 19.0% and adjusted ROAA of 1.33% are positioned in the upper quartile compared to its peer group, which includes companies like Huntington Bancshares, Inc. (HBAN) and Regions Financial Corporation (RF).
• The adjusted efficiency ratio of 45.7% is a record for the company and appears to be significantly better than the peer average, which is not explicitly stated but implied by the company's positioning.
• The loan-to-deposit ratio of 89% is within a healthy range for the industry, indicating efficient use of its deposit base.
• The CET1 capital ratio of 11.11% is strong and generally meets or exceeds regulatory requirements and peer benchmarks for well-capitalized institutions.

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for continued capital returns through dividends and share repurchases, and growth in tangible book value per share.
• Employees: Commitment to empowering team members for growth, development, and success.
• Communities: Continued investment and commitment as demonstrated by the 2025 Community Action Report.
• Customers: Focus on being a primary, trusted partner, supported by strong client satisfaction scores (NPS of 50).

Next Steps

• Continue to prioritize organic growth and capital growth over M&A.
• Execute on revenue-generating and cost-reduction initiatives.
• Monitor and manage credit quality and loan portfolio diversification.
• Respond to potential regulatory capital rule changes for additional capital flexibility.
• Continue to invest in team members for growth, development, and success.

Key Dates

Recommendation

The company demonstrates strong operational performance and a solid capital position, with a positive outlook. However, the sequential quarter-over-quarter decline in key profitability metrics and the ongoing integration of past mergers warrant a 'hold' recommendation pending further performance trends and market conditions.

Keywords

Old National Bancorp, Q1 2026 Earnings, Financial Performance, Banking, Profitability, Loan Growth, Deposit Franchise, Capital Management