8-K: Old National Bancorp Reports Strong First Quarter 2025 Results, Driven by Deposit Franchise and Expense Management

Old National Bancorp announces better-than-expected first-quarter 2025 results, with net income applicable to common shares of $140.6 million and diluted EPS of $0.44.

Summary

• Old National Bancorp reported a net income applicable to common shares of $140.6 million, or $0.44 per diluted share, for the first quarter of 2025.
• Adjusted net income was $145.5 million, or $0.45 per diluted share, excluding merger-related expenses of $5.9 million.
• Net interest income on a fully taxable equivalent basis was $393.0 million, with a net interest margin of 3.27%.
• Period-end total deposits reached $41.0 billion, up 2.1% annualized, and core deposits increased by 1.7% annualized.
• Total loans were $36.5 billion, up 1.5% annualized.
• The provision for credit losses was $31.4 million, and net charge-offs were $21.6 million, or 24 bps of average loans.
• The return on average tangible common equity was 15.0%, and the adjusted return was 15.5%.
• The preliminary regulatory Tier 1 common equity to risk-weighted assets ratio was 11.62%.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, strategic developments, and confidence in navigating the economic environment. The better-than-expected results and upcoming partnership contribute to the positive sentiment.

Positives

• The company reported better-than-expected first-quarter results.
• The deposit franchise is peer-leading.
• Loan growth was solid.
• Expense management was disciplined.
• Core deposits increased by 1.7% annualized.
• Total deposit costs decreased by 17 bps to 191 bps.
• Credit quality remains resilient.
• Capital ratios remain strong.
• Preliminary total risk-based capital is up 31 bps to 13.68%.

Negatives

• Net interest margin decreased by 3 bps to 3.27%.
• Net interest income decreased to $393.0 million compared to $400.0 million.
• Noninterest income decreased 2.1% due to seasonally lower bank fees and lower company-owned life insurance.
• Nonaccrual loans as a percentage of total loans were 1.29% compared to 1.23%.

Risks

• The company faces a challenging and uncertain economic environment.
• Lower accretion and fewer days in the quarter impacted net interest income and margin.
• The company is exposed to risks and uncertainties that could cause actual results to differ materially from forward-looking statements, including competition, government regulations, economic conditions, and cybersecurity threats.

Future Outlook

The company anticipates closing its partnership with Bremer Bank on May 1, 2025, and is set up favorably as it moves into the second quarter.

Management Comments

• Old National reported better-than-expected first-quarter results driven by our peer-leading deposit franchise, solid loan growth and disciplined expense management, said Chairman and CEO Jim Ryan.
• These results demonstrate our ability to navigate a challenging and uncertain economic environment, setting us up favorably as we move into the second quarter and, importantly, as we prepare for our partnership with Bremer Bank which we anticipate closing on May 1, 2025.

Industry Context

Old National Bancorp, as the sixth-largest commercial bank headquartered in the Midwest and ranking among the top 30 banking companies in the U.S., is navigating the current economic environment while preparing for a significant partnership, reflecting broader industry trends of consolidation and strategic alliances.

Comparison to Industry Standards

• The document does not contain specific comparisons to industry standards or comparable companies.
• However, it highlights Old National's peer-leading deposit franchise, suggesting a strong competitive position.
• The efficiency ratio of 51.8% (adjusted) indicates effective cost management compared to the industry average.
• The ROATCE of 15.0% (adjusted 15.5%) suggests strong profitability relative to peers.

Stakeholder Impact

• Shareholders will benefit from the strong financial performance and capital ratios.
• Employees will be impacted by the integration of Bremer Bank.
• Customers will benefit from the expanded services and capabilities resulting from the partnership.
• The company's focus on community support will continue to benefit the communities it serves.

Next Steps

• The company will continue to focus on integrating Bremer Bank.
• Old National will host a conference call and live webcast at 9:00 a.m. Central Time on Tuesday, April 22, 2025, to review first quarter financial results.

Key Dates

Keywords

financial results, earnings, net income, deposits, loans, credit quality, net interest margin, Old National Bancorp, ONB, banking