10-K: Old National Bancorp Reports Strong 2025 Growth Driven by Strategic Acquisitions

Old National Bancorp achieved significant growth in 2025, with net income up 24.9% and assets increasing by 34.7%, primarily fueled by the successful integration of Bremer Financial Corporation.

Summary

• Net income applicable to common shareholders increased by 24.9% to $653.1 million in 2025, up from $523.1 million in 2024.
• Diluted earnings per common share rose to $1.79 in 2025 from $1.68 in 2024.
• Adjusted diluted earnings per common share, excluding certain notable items, increased to $2.21 in 2025 from $1.86 in 2024.
• Total assets grew by 34.7% to $72.2 billion at December 31, 2025, from $53.6 billion at December 31, 2024.
• Total deposits increased by 34.9% to $55.1 billion, with 5% organic growth excluding the Bremer acquisition.
• Total loans expanded by 34.4% to $48.8 billion, with 5% organic growth excluding the Bremer acquisition.
• Net interest income increased by 34% to $2.1 billion in 2025, driven by acquisitions, loan growth, and lower costs of average interest-bearing liabilities.
• The efficiency ratio improved to 55.10% in 2025 from 55.85% in 2024, reflecting disciplined expense management.
• Tangible book value per share grew by 15% in 2025.
• The acquisition of Bremer Financial Corporation was completed on May 1, 2025, contributing $16.3 billion in total assets, $11.1 billion in loans, and $12.9 billion in deposits.
• Merger-related expenses totaled $140.9 million in 2025.
• Provision for credit losses increased to $197.7 million in 2025, including $75.6 million for CECL Day 1 non-PCD provision expense related to acquired Bremer loans.
• Net charge-offs to average loans increased to 0.25% in 2025 from 0.17% in 2024.
• Non-performing loans to ending loans improved to 1.07% in 2025 from 1.23% in 2024.
• The company employed 4,971 full-time equivalent team members and operated 346 banking centers at year-end 2025.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong performance, driven by successful strategic acquisitions and solid organic growth. While there are increased merger-related expenses and a slight uptick in net charge-offs, the overall financial metrics, efficiency improvements, and positive outlook indicate robust operational execution and strategic positioning.

Positives

• Net income applicable to common shareholders increased by 24.9% to $653.1 million.
• Adjusted diluted EPS increased by 18.8% to $2.21.
• Strong growth in total assets (34.7% to $72.2 billion), total deposits (34.9% to $55.1 billion), and total loans (34.4% to $48.8 billion), largely due to strategic acquisitions.
• Organic deposit growth of 5% and organic loan growth of 5% (excluding Bremer acquisition).
• Improved efficiency ratio of 55.10% in 2025, demonstrating disciplined expense management.
• Tangible book value per share grew by 15% in 2025.
• Net interest margin increased to 3.54% in 2025 from 3.31% in 2024.
• Non-performing loans to ending loans improved to 1.07% from 1.23%.
• Allowance for credit losses on loans to nonaccrual loans increased to 109.26% from 87.62%, indicating stronger coverage.
• Successful integration of Bremer systems completed in mid-October 2025.
• New $400 million share repurchase program approved in Q1 2026.

Negatives

• Net charge-offs to average loans increased to 0.25% in 2025 from 0.17% in 2024.
• Merger-related expenses were substantial at $140.9 million in 2025.
• Provision for credit losses increased significantly to $197.7 million in 2025, partly due to acquisition-related provisions and credit migration.
• Return on average assets slightly decreased to 1.02% in 2025 from 1.03% in 2024.
• Return on average common equity slightly decreased to 8.86% in 2025 from 9.06% in 2024.
• Return on average tangible common equity slightly decreased to 15.27% in 2025 from 15.37% in 2024.
• Total criticized and classified assets increased to $3.1 billion at December 31, 2025, from $2.49 billion at December 31, 2024, primarily due to the Bremer acquisition.

Risks

• Economic conditions, including recession, unemployment, interest rates, inflation, and geopolitical uncertainties, could adversely affect revenues, profits, credit quality, and demand for products.
• Federal budget deficit concerns and potential for political conflict over U.S. government debt limit may increase default possibility, credit-rating downgrades, or economic recession.
• Regional concentrations in the Midwest and Southeast expose the company to adverse economic conditions in those areas.
• Mergers and acquisitions may not produce anticipated revenue enhancements or cost savings, and may result in unforeseen integration difficulties, dilution to existing shareholder value, and regulatory delays.
• Reliance on analytical and forecasting models for accounting estimates and risk management may be inaccurate, especially during market stress.
• Intense competition from other commercial banks, credit unions, FinTech companies, and other financial service providers, some with greater resources or fewer regulatory constraints.
• Failure to attract and retain skilled employees, exacerbated by work-from-home and hybrid arrangements.
• Inability to pay dividends in the future due to legal/regulatory restrictions, dependence on subsidiary bank dividends, or terms of junior subordinated debentures and preferred stock.
• Failure to realize expected benefits from strategic imperatives could affect market perception, growth, and profitability.
• Climate-related risks (physical and transition) could negatively impact the company and clients, leading to operational, credit, legal, regulatory, compliance, and reputational risks.
• Harm to reputation from negative public opinion, regulatory scrutiny, litigation, employee misconduct, or social media.
• Actual credit losses for loans or debt securities exceeding the allowance for credit losses could decrease net income.
• Loan portfolio includes higher-risk categories such as commercial real estate, commercial, consumer, and agricultural loans.
• Foreclosure on real property collateral may lead to increased ownership costs and reduced revenues.
• Soundness of other financial institutions could adversely affect Old National due to interrelationships and counterparty risk.
• Price volatility of Old National's Common Stock.
• Changes in interest rates, particularly Federal Reserve policy, could adversely affect net interest income and financial condition.
• Inability to maintain adequate sources of funding and liquidity, including potential loss of customer deposits or inability to access capital markets on favorable terms.
• Inability to maintain or grow deposits could lead to higher funding costs.
• Wholesale funding sources may prove insufficient to replace deposits or support future growth.
• Reliance on dividends from Old National Bank for parent company liquidity, subject to regulatory restrictions.
• A reduction in credit rating could adversely affect access to liquidity and capital, and increase cost of funds.
• Unrealized losses in the securities portfolio could affect liquidity, tangible capital ratios, borrowing capacity, and depositor confidence.
• Failure or breach of operational or security systems, including cyberattacks, could disrupt business, disclose confidential information, damage reputation, and create financial/legal exposure.
• Subject to laws and regulations relating to client/employee privacy, with non-compliance leading to liability and reputational damage.
• Reliance on third-party vendors exposes the company to additional cybersecurity and operational risks.
• Failure to keep pace with rapid technological change, including artificial intelligence and payment stablecoins, could adversely affect results.
• Controls and procedures may fail or be circumvented, and risk reduction methods may not be effective.
• Pandemics, acts of war or terrorism, and other adverse external events could significantly affect business operations.
• Environmental liability risk associated with lending activities.
• Reported financial condition and results depend on management's selection of accounting methods and estimates, which may prove incorrect.
• Changes in laws and regulations, or their interpretation, may adversely affect operations and increase costs.
• Incurrence of fines, penalties, and other negative consequences from regulatory violations.
• Risk related to legal proceedings.
• Changes in accounting policies, standards, and interpretations could materially affect financial reporting.
• Failure to meet regulatory capital requirements may force capital raises or asset sales.
• Adverse changes or interpretations of tax laws, tax audits, or challenges to tax positions.
• Earnings could be adversely impacted by incidences of fraud and compliance failure.

Future Outlook

Old National Bancorp is focused on disciplined organic growth, prudent capital deployment, and continued investment in talent, technology, and client-facing capabilities for 2026. The company aims to build on the 15% tangible book value per share growth achieved in 2025, leveraging a strong commercial pipeline and a loan-to-deposit ratio of 89% to fund future growth while navigating changes in interest rates and economic conditions.

Management Comments

• Our 2025 results were driven by the completion and successful integration of Bremer and a focus on fundamentals—core deposit growth to support loan expansion, positive operating leverage, disciplined credit management, and healthy liquidity and capital ratios.
• We once again showed our unwavering commitment to shareholders, clients, team members, and communities.
• Our peer-leading deposit franchise, disciplined loan growth, strong credit quality, well-managed expenses, and dedicated team members who are committed to our clients and communities enabled us to exceed our expectations that we set as we began 2025.
• The successful execution of this conversion reinforced the strength of our disciplined integration framework and enhanced our operating platform across the expanded footprint.
• Driving tangible book value per share growth remains a key priority in 2026 as we build on the 15% growth achieved in 2025 despite the impact of closing our Bremer partnership, the associated merger-related charges, and the repurchase of 2.2 million shares in the second half of the year.
• We closed 2025 with 5% loan growth excluding our Bremer partnership and move into 2026 with a strong commercial pipeline and a loan-to-deposit ratio of 89%, providing sufficient liquidity to fund growth.
• We will remain on offense and rely on our ability to navigate changes in short-term interest rates, shifts in the yield curve, and overall economic conditions as we have for the past 190 years.

Industry Context

StockSavvy.ai notes that Old National Bancorp's significant asset and deposit growth in 2025, largely driven by the Bremer acquisition, positions it as a major regional player in the Midwest and Southeast. The company's focus on integrating acquisitions and achieving organic growth aligns with broader banking industry trends of consolidation and expansion into high-growth markets. The mention of increased competition from FinTechs and the potential impact of payment stablecoins (following the GENIUS Act) highlights the evolving landscape, where traditional banks must innovate to retain deposits and market share. The proposed increase in the OCC's Heightened Standards threshold could reduce regulatory burden for banks of Old National's size, potentially enhancing their competitive flexibility against larger institutions.

Comparison to Industry Standards

• Old National Bancorp, with consolidated assets of $72.2 billion at December 31, 2025, ranks as the sixth largest Midwestern-headquartered bank by asset size and among the top 25 banking companies headquartered in the United States.
• The company's commercial real estate loans as a percentage of Tier 1 capital plus allowance for credit losses was 255% at December 31, 2025, remaining below the regulatory guideline limit of 300%. This indicates prudent management of a key risk area compared to regulatory benchmarks.
• The efficiency ratio of 55.10% in 2025 is generally considered competitive within the banking industry, especially for a company undergoing significant integration activities.
• The increase in net charge-offs to average loans from 0.17% in 2024 to 0.25% in 2025, while still relatively low, indicates a slight deterioration in credit quality compared to prior periods and potentially industry peers.

Management Changes

Corporate Governance

Legal Proceedings

• Involved in legal proceedings concerning matters arising from business activities and fiduciary responsibilities in the ordinary course of business.
• Management does not expect any potential liabilities from pending litigation to have a material adverse effect on the company's business, financial position, or results of operations.

Related Party Transactions

• Loans to executive officers and directors (related parties) were not greater than 5% of the company's shareholders' equity at December 31, 2025, or 2024.

Stakeholder Impact

• Shareholders: Experienced dilution from equity issuance for acquisitions but also benefited from a 15% growth in tangible book value per share and a new $400 million share repurchase program. Dividends were maintained at $0.56 per common share.
• Employees: Increased to 4,971 full-time equivalent team members, benefiting from competitive total rewards, professional development, and a paid volunteer program (67,700 hours in 2025).
• Customers: Gained access to an expanded network of 346 banking centers and a wider range of services due to strategic acquisitions. Subject to evolving data privacy regulations and increased competition from FinTechs and payment stablecoins.
• Communities: Benefited from the company's community reinvestment efforts, including tax credit investments in affordable housing and economic development initiatives, and significant employee volunteer hours.
• Creditors: The issuance of $450 million in subordinated notes impacts the company's debt structure. Credit ratings and access to liquidity are influenced by overall financial health and regulatory compliance.

Next Steps

• Focus on disciplined organic growth in 2026.
• Prudent capital deployment in 2026.
• Continued investment in talent, technology, and client-facing capabilities in 2026.
• Navigate changes in short-term interest rates, shifts in the yield curve, and overall economic conditions.
• First submission under FDIC resolution planning rule due April 1, 2026.
• FDIC to propose further amendments to resolution planning in 2026.
• Compliance with CFPB data availability rule required beginning April 1, 2027.
• Evaluate impact of adopting new FASB ASUs (2024-03, 2024-04, 2025-03, 2025-04, 2025-05, 2025-06, 2025-08, 2025-09, 2025-11, 2025-12) in future periods.

Key Dates

Recommendation

Old National Bancorp's 2025 performance, marked by substantial growth in assets, deposits, and loans driven by successful strategic acquisitions and solid organic expansion, indicates strong operational momentum. The improved efficiency ratio and increased net interest margin are positive indicators of profitability. While there's an increase in net charge-offs and merger-related expenses, these are largely offset by overall financial strength and strategic execution. The 15% tangible book value per share growth and the new $400 million share repurchase program demonstrate a commitment to shareholder value. The company's proactive approach to risk management and its strong capital position further support a positive outlook, making it an attractive investment for long-term growth.

Keywords

Old National Bancorp, ONB, Banking, Financial Services, Regional Bank, Midwest, Southeast, Acquisitions, Bremer Financial Corporation, CapStar Financial Holdings, Net Income, EPS, Assets, Deposits, Loans, Efficiency Ratio, Tangible Book Value, Credit Quality, Net Interest Income, Cybersecurity, Risk Management, SEC Filing, 10-K, Share Repurchase, Capital Raise, Subordinated Notes, Corporate Governance, Regulatory Compliance, Financial Performance, Wealth Management, Capital Markets, Commercial Banking, Consumer Banking, FinTech, Payment Stablecoins, Artificial Intelligence, ESG