Old National Bancorp(US:ONB)2025-02-19 19:19Financial Performance - Net income applicable to common shareholders for 2024 was $523.1 million, or $1.68 per diluted common share, with an adjusted net income of $578.1 million, or $1.86 per diluted common share [225][226]. - Diluted net income per share decreased to $1.68 in 2024 from $1.94 in 2023, representing a decline of approximately 13.4% [234]. - Net income applicable to common shares for 2024 was $523,053, down from $565,857 in 2023, reflecting a decrease of approximately 7.4% [244]. - Adjusted net income applicable to common shares for 2024 was $578,054, compared to $599,227 in 2023, indicating a decline of about 3.5% [244]. - Return on average common equity was 9.06% in 2024, down from 11.29% in 2023, but up from 8.92% in 2022 [246]. Asset and Loan Growth - Total loans reached $36.29 billion as of December 31, 2024, compared to $33.62 billion a year earlier [232]. - Total loans increased to $36,285,887 in 2024, up from $32,991,927 in 2023, indicating a growth of about 10.4% [234]. - Total assets grew to $53,552,272 in 2024, compared to $49,089,836 in 2023, marking an increase of approximately 9.9% [234]. - Average loans, including loans held-for-sale, increased by $3.3 billion in 2024, primarily due to loans acquired in the CapStar transaction, totaling $2.1 billion at transaction close [261]. - Total loan portfolio rose to $36.3 billion in 2024, an increase of $3.3 billion or 10.0% compared to 2023 [284]. Income and Expense Analysis - Net interest income increased by 2% to $1.5 billion in 2024, driven by strong loan growth and the interest rate environment [227]. - Noninterest income rose from $333.3 million in 2023 to $354.7 million in 2024, primarily due to the CapStar merger and higher wealth management fees [227]. - Noninterest expense increased by $68.1 million in 2024, including $37.3 million of merger-related expenses and $13.3 million related to pension asset distribution [227]. - The efficiency ratio improved to 55.85% in 2024 from 53.70% in 2023, indicating enhanced operational efficiency [234]. - The net interest margin for 2024 was 3.31%, a decrease from 3.54% in 2023, reflecting a decline of approximately 6.5% [244]. Credit Quality and Risk Management - The allowance for credit losses on loans increased to 1.08% of ending loans in 2024, compared to 0.93% in 2023, suggesting a more conservative approach to credit risk [234]. - Non-performing loans to ending loans increased to 1.23% in 2024 from 0.83% in 2023, indicating a rise in credit quality concerns [234]. - The allowance for credit losses on loans increased to $392.5 million from $307.6 million, reflecting organic loan growth and the CapStar acquisition [298]. - The net charge-offs to average loans ratio was 0.17% in 2024, reflecting a significant increase from 0.06% in 2023 [263]. - The company noted that future loan growth, a decline in recoveries, or an increase in charge-offs could lead to higher provision expenses [336]. Mergers and Acquisitions - Old National completed the acquisition of CapStar on April 1, 2024, enhancing its presence in Nashville and other Southeastern markets [228]. - The partnership with Bremer Bank was announced in 2024, expected to close in mid-2025, expanding opportunities in the upper Midwest [229]. - Goodwill and other intangible assets totaled $2.3 billion, an increase of $195.1 million due to the CapStar acquisition [301]. - Commercial and commercial real estate loans increased by $2.9 billion to $26.6 billion, primarily due to the acquisition of CapStar and balanced loan production across markets [287]. Regulatory and Tax Considerations - The effective tax rate decreased to 20.8% in 2024 from 22.5% in 2023, reflecting lower pre-tax book income and increased tax credits [273]. - The company reviews income tax expense and deferred tax assets quarterly, adjusting balances as new information becomes available, adhering to complex U.S. tax laws [378]. - Management believes that judgments and estimates regarding tax provisions are reasonable, but actual results could differ, impacting the effective income tax rate significantly [378]. Liquidity and Funding - Total funding increased to $46.24 billion at December 31, 2024, up 8.6% from $42.57 billion in 2023 [303]. - Total deposits rose to $40.82 billion, a 9.6% increase from $37.24 billion in 2023, driven by the CapStar transaction and organic growth [303]. - Old National Bancorp has available liquid funds totaling $299,179 from the parent company and $14,586,546 from subsidiaries, including cash and unencumbered securities [354]. - The company can pay dividends of $889.2 million without prior regulatory approval while maintaining capital levels above regulatory minimums [357]. Interest Rate Management - The yield on average earning assets increased by 41 basis points from 5.18% in 2023 to 5.59% in 2024, while the cost of interest-bearing liabilities rose by 73 basis points from 2.25% to 2.98% [259]. - Interest rate risk management includes using various techniques such as adjusting balance sheet mix and modifying investment securities characteristics [343]. - The company continues to model different interest rate scenarios to assess sensitivity to market changes, recognizing that model outputs are not guarantees of actual results [347].