8-K: Old National Bancorp Reports Strong Q2 2025 Results, Names New President and COO

Old National Bancorp announced impressive second quarter 2025 financial results, driven by balance sheet growth and fee-based business expansion, alongside the appointment of Timothy M. Burke, Jr. as President and Chief Operating Officer.

Summary

• Net income applicable to common shares was $121.4 million, or $0.34 diluted EPS; adjusted figures were $190.9 million and $0.53, respectively.
• Net interest income on a fully taxable equivalent basis increased to $521.9 million, with net interest margin rising 26 basis points to 3.53%.
• Period-end total deposits grew by $13.3 billion to $54.4 billion, including $11.5 billion from the Bremer partnership, with core deposits up 0.8% annualized excluding Bremer.
• Period-end total loans increased by $11.5 billion to $48.0 billion, including $11.2 billion from Bremer, with loans up 3.7% annualized excluding the acquisition.
• Commercial loan production totaled $2.3 billion, and the commercial pipeline increased by approximately 40% to $4.8 billion.
• Provision for credit losses was $106.8 million, which included a $75.6 million CECL Day 1 non-PCD provision expense related to the Bremer transaction.
• Net charge-offs were $26.5 million, or 24 basis points of average loans, consistent with the prior quarter.
• Nonaccrual loans decreased to 1.24% of total loans from 1.29% in the prior quarter, while 30+ day delinquencies increased to 0.30% from 0.22%.
• Timothy M. Burke, Jr. was appointed President and Chief Operating Officer, effective July 22, 2025, bringing nearly 30 years of banking expertise.

Sentiment

Score: 8

Explanation: The filing presents strong adjusted financial results, significant strategic growth through the Bremer acquisition, and a positive outlook for the remainder of the year. While GAAP figures are impacted by expected merger-related charges and capital ratios saw a temporary dip due to the acquisition, the underlying operational performance and strategic positioning are highly positive. The appointment of a new, experienced COO further strengthens management.

Positives

• Adjusted net income applicable to common shares of $190.9 million and adjusted diluted EPS of $0.53 demonstrate strong underlying operational performance.
• Net interest margin (NIM) on a fully taxable equivalent basis increased by 26 basis points to 3.53%, indicating improved profitability from lending activities.
• Significant balance sheet growth with total deposits increasing by $13.3 billion to $54.4 billion and total loans growing by $11.5 billion to $48.0 billion, largely driven by the successful Bremer partnership.
• Strong commercial loan production of $2.3 billion and a 40% increase in the commercial pipeline to $4.8 billion suggest robust future loan growth.
• Resilient credit quality, with nonaccrual loans decreasing as a percentage of total loans to 1.24% from 1.29% linked-quarter.
• Adjusted efficiency ratio improved to 50.2%, reflecting disciplined expense management despite the acquisition.
• Appointment of Timothy M. Burke, Jr. as President and COO brings extensive banking expertise and strategic vision to a critical leadership role.
• Strong liquidity position with a loan to deposit ratio of 88%.

Negatives

• GAAP net income applicable to common shares of $121.4 million and diluted EPS of $0.34 were significantly lower than adjusted figures due to one-time charges.
• Incurred $75.6 million of pre-tax CECL Day 1 non-PCD provision expense and $41.2 million of pre-tax merger-related charges, impacting GAAP profitability.
• Preliminary regulatory Tier 1 common equity to risk-weighted assets decreased by 88 basis points to 10.74%, and tangible common equity to tangible assets decreased by 6.4% to 7.26%, primarily due to the Bremer transaction and loan growth.
• 30+ day delinquencies as a percentage of loans increased to 0.30% from 0.22% in the prior quarter.

Risks

• Competition within the banking industry.
• Impact of government legislation, regulations, and policies, including trade and tariff policies.
• Unanticipated changes in liquidity position, including access to sources of liquidity and capital.
• Changes in economic conditions and economic/business uncertainty, potentially impacting credit quality trends, loan generation, and deposit gathering.
• Inflation and governmental responses to inflation, including increasing interest rates.
• Market, economic, operational, liquidity, credit, and interest rate risks associated with the business.
• Ability to successfully manage credit risk and the sufficiency of the allowance for credit losses.
• Risks that expected cost savings, synergies, and other financial benefits from the Bremer merger may not be realized within expected timeframes, or integration costs/difficulties may be greater than expected.
• Potential adverse reactions or changes to business or employee relationships resulting from the merger.
• Impact of purchase accounting with respect to the merger, or changes in assumptions used for fair value and credit marks of acquired assets and liabilities.
• Potential impact of future business combinations on performance and financial condition, including integration challenges and diversion of management's attention.
• Failure or circumvention of internal controls.
• Operational risks or risk management failures by the company or third parties, including data processing, information systems, cybersecurity, technological changes, vendor issues, business interruption, and fraud risks.
• Significant changes in accounting, tax, or regulatory practices or requirements.
• New legal obligations or liabilities.
• Disruptive technologies in payment systems and other services traditionally provided by banks.
• Failure or disruption of information systems; computer hacking and other cybersecurity threats.
• Effects of climate change on Old National and its customers, borrowers, or service providers.
• Impacts of pandemics, epidemics, and other infectious disease outbreaks.

Future Outlook

Old National Bancorp is well-positioned for the remainder of the year, benefiting from a larger balance sheet and a stronger capital position following the successful closing of the Bremer partnership. The company anticipates continued focus on growing its balance sheet, expanding fee-based businesses, and controlling expenses.

Management Comments

• "Old National's impressive second quarter results were achieved through a strong focus on the fundamentals: Growing our balance sheet, expanding our fee-based businesses, and controlling expenses." Chairman and CEO Jim Ryan
• "Additionally, with the successful closing of our partnership with Bremer on May 1, 2025, Old National is well-positioned for the remainder of the year, benefiting from a larger balance sheet and a stronger capital position." Chairman and CEO Jim Ryan
• "We are thrilled to welcome Tim Burke as Old National's President and Chief Operating Officer. Tim brings nearly 30 years of extensive banking expertise to this critical role. I am confident that his infectious energy, strong strategic vision, and collaborative leadership approach will ensure that Old National continues to exceed client expectations for years to come, while also working to strengthen the communities we serve." Chairman and CEO Jim Ryan
• "I'm truly thrilled to join a team that's so deeply committed to relationship banking and making a real impact on our communities. Old National's core values and mission strongly align with my personal values, positioning me well to jump into the role, take care of clients and deliver standout products and services consistently across all of our markets." Timothy M. Burke, Jr.

Industry Context

Old National Bancorp, now the fifth largest commercial bank headquartered in the Midwest with approximately $71 billion in assets, significantly expanded its market presence and balance sheet through the Bremer partnership. This strategic acquisition positions the company among the top 25 banking companies in the U.S., reinforcing its commitment to relationship banking and community impact within its primary Midwest and Southeast service areas, aligning with broader industry trends of consolidation and regional expansion among super-regional banks.

Comparison to Industry Standards

• Old National Bancorp, with approximately $71 billion of assets, now ranks among the top 25 banking companies headquartered in the United States, indicating a significant scale increase post-Bremer acquisition.
• The company is positioned as the fifth largest commercial bank headquartered in the Midwest, suggesting a strong regional competitive standing.
• The adjusted ROATCE of 18.1% is a strong return metric, which would generally compare favorably to many regional and super-regional banks, though specific peer comparisons are not provided in the filing.
• The efficiency ratio (adjusted) of 50.2% is generally considered good for a bank, indicating effective cost management, especially post-merger integration.
• The company's recognition as one of "The Civic 50" in 2025 by Points of Light highlights its strong community engagement, a key differentiator in the banking sector.

Management Changes

Stakeholder Impact

• Shareholders: Positive impact due to strong adjusted earnings, significant balance sheet growth from the Bremer acquisition, improved net interest margin, and a positive outlook for future performance. The one-time merger costs are expected and do not detract from the underlying operational strength.
• Employees: The appointment of a new President and COO, Timothy M. Burke, Jr., signals a clear leadership structure and strategic direction, potentially fostering stability and new opportunities within the expanded organization.
• Customers: The successful integration of Bremer and the focus on relationship banking and community impact suggest continued or enhanced service offerings and a broader geographic reach, particularly in the Midwest and Southeast.
• Communities: Old National's continued commitment to strengthening communities, as evidenced by its recognition as one of "The Civic 50," indicates ongoing positive contributions.

Next Steps

• Host a conference call and live webcast on July 22, 2025, at 9:00 a.m. Central Time to review second quarter financial results.
• Continue to focus on growing the balance sheet, expanding fee-based businesses, and controlling expenses for the remainder of the year.
• Timothy M. Burke, Jr. will guide the success of Old National's Commercial, Community, and Wealth segments, and Credit and Marketing teams.

Key Dates

Recommendation

The filing demonstrates strong underlying operational performance, with adjusted EPS and net income significantly higher than GAAP figures, indicating the core business is performing well despite one-time merger-related charges. The successful integration of the Bremer partnership has substantially increased the company's balance sheet, making it a larger and more competitive entity in the Midwest and nationally. The improvement in Net Interest Margin and the robust commercial loan pipeline suggest continued revenue growth. While capital ratios saw a temporary dip post-acquisition, they remain strong, and the company's liquidity is solid. The appointment of an experienced President and COO further strengthens management. These factors collectively point to a positive trajectory and strong investment potential.

Keywords

Banking, Financial Services, Regional Bank, Commercial Banking, Wealth Management, Merger and Acquisition, Bremer Financial Corporation, Earnings Report, Q2 2025, Net Interest Income, Net Interest Margin, Deposits, Loans, Credit Quality, CECL, Executive Appointment, COO, Corporate Governance, Midwest Banking