Old National Bancorp (ONB) Q3 2025 Earnings Call Transcript
Adjusted Earnings Per Share (EPS) $0.59, an 11% increase over the prior quarter and a 28% increase year-over-year. This was driven by the full quarter impact of Bremer operations, margin expansion, better-than-expected growth in fee income, and well-controlled expenses.
Return on Average Tangible Common Equity 20%, reflecting strong profitability and operational efficiency.
Return on Assets (ROA) 1.3%, indicating strong asset utilization and profitability.
Efficiency Ratio Below 50%, showing improved operational efficiency.
CET1 Ratio Over 11%, a 28 basis points increase from the prior quarter, driven by strong retained earnings and capital generation despite merger-related charges and share repurchases.
Tangible Book Value Per Share Grew 4% from 2Q and 10% year-over-year, even with the impact of merger charges and share repurchases.
Loan Growth (Excluding Bremer) 3.1% annualized from last quarter, supported by a 20% increase in production from the prior quarter and a 40% year-over-year increase in the legacy Old National pipeline.
Deposit Growth 4.8% annualized, with core deposits (excluding brokered) growing 5.8% annualized, driven by growth from existing and new commercial clients.
Net Interest Income and Margin Increased due to the full quarter impact of Bremer, asset repricing, and organic growth.
Adjusted Noninterest Income $130 million for the quarter, exceeding guidance, driven by Bremer and organic growth in primary fee businesses, with strong performance in capital markets.
Adjusted Noninterest Expenses $376 million for the quarter, reflecting a full quarter impact of Bremer operations, with well-controlled run rate expenses and a low 48% efficiency ratio.
Credit Metrics Total net charge-offs were 25 basis points, with a 6% reduction in criticized and classified loans, reflecting active portfolio management.
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TD Cowen Upgrades Old National Bancorp (ONB) to Buy Amid Accelerating Loan Growth
- Accelerating Loan Growth: Old National Bancorp's Q4 2025 earnings exceeded expectations despite revenue falling short of consensus, with analysts noting an acceleration in lending growth, indicating enhanced competitive positioning in the market.
- Optimistic NII Outlook: Analysts highlighted that Q4 2025's net interest income (NII) is tracking ahead of prior guidance, coupled with strong capital markets and mortgage banking performance, suggesting emerging revenue momentum that could drive future growth.
- Management's Strategic Focus: CEO Jim Ryan emphasized during the earnings call a focus on core deposit growth, positive operating leverage, disciplined credit management, and robust liquidity and capital ratios, demonstrating the company's commitment to sound operations.
- Stock Performance Recovery: ONB shares rose 2.8% in midday trading, bringing the year-to-date increase to 10.6%, reflecting growing market confidence in the company's future prospects, while TD Cowen's Buy rating contrasts with the generally Hold ratings from other analysts.
Old National Bancorp Reports Record Q4 2025 Earnings with Adjusted EPS of $0.62
- Outstanding Earnings: Old National Bancorp reported an adjusted EPS of $0.62 for Q4 2025, reflecting a 5% quarter-over-quarter increase and a 27% year-over-year rise, showcasing significant improvements in profitability that solidify its competitive position in the industry.
- Loan Growth Outlook: Management anticipates loan growth of 4% to 6% in 2026, a positive outlook that reflects the success of the company's core deposit strategy execution, expected to drive future revenue growth and market share expansion.
- Capital Management Strategy: Despite merger-related charges, Old National Bancorp achieved a 15% increase in tangible book value per share and plans to be more active in share repurchases in 2026, indicating a strong balance between capital returns and organic growth.
- Efficiency Ratio Innovation: The adjusted efficiency ratio dropped to a record low of 46%, demonstrating ongoing improvements in cost control and operational efficiency, which further enhance its profitability and competitive edge in the market.
