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Old National Bancorp(ONB) - 2025 Q1 - Quarterly Results

Q1 2025 Earnings Overview CEO Commentary CEO Jim Ryan attributed strong Q1 results to a robust deposit franchise, solid loan growth, and disciplined expense management, preparing for the Bremer Bank partnership - The strong Q1 results are attributed to a peer-leading deposit franchise, solid loan growth, and disciplined expense management1 - The company is preparing for its partnership with Bremer Bank, with an expected closing date of May 1, 20251 First Quarter Highlights Old National Bancorp reported Q1 2025 net income of $140.6 million, with a 3.27% net interest margin and strong deposit and loan growth Q1 2025 Key Financial Results | Metric | Value | Adjusted Value | | :--- | :--- | :--- | | Net Income (common shares) | $140.6 million | $145.5 million | | Diluted EPS | $0.44 | $0.45 | | PPNR | $218.3 million | $224.3 million | | ROATCE | 15.0% | 15.5% | Q1 2025 Balance Sheet and Margin Highlights | Metric | Value | Change (Linked-Quarter) | | :--- | :--- | :--- | | Net Interest Margin (FTE) | 3.27% | Down 3 bps | | Total Deposits (Period-end) | $41.0 billion | Up 2.1% annualized | | Total Loans (Period-end) | $36.5 billion | Up 1.5% annualized | | Tier 1 Common Equity Ratio | 11.62% | Up 24 bps | Results of Operations Deposits and Funding Period-end total deposits grew 2.1% annualized to $41.0 billion, maintaining strong liquidity with an 89% loan-to-deposit ratio and reduced deposit costs Deposit Metrics (Q1 2025) | Metric | Value | Change (Linked-Quarter) | | :--- | :--- | :--- | | Period-end Total Deposits | $41.0 billion | Up 2.1% annualized | | Period-end Core Deposits | - | Up 1.7% annualized | | Average Total Deposits | $40.5 billion | Down 6.2% annualized | | Total Deposit Costs | 1.91% | Down 17 bps | - A loan-to-deposit ratio of 89% provides strong liquidity8 Loans Total loans increased 1.5% annualized to $36.5 billion, supported by $1.5 billion in commercial loan production and a robust pipeline Loan Metrics (Q1 2025) | Metric | Value | | :--- | :--- | | Period-end Total Loans | $36.5 billion | | Annualized Growth | 1.5% | | Commercial Loan Production | $1.5 billion | | Commercial Pipeline | $3.4 billion | Credit Quality Credit quality remained resilient with a $31.4 million provision for credit losses, 24 basis points in net charge-offs, and improved 30+ day delinquencies Credit Quality Metrics (Q1 2025 vs Q4 2024) | Metric | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Provision Expense | $31.4 million | $27.0 million | | Net Charge-offs (bps) | 24 bps | 21 bps | | 30+ Day Delinquencies | 0.22% | 0.27% | | Nonaccrual Loans % | 1.29% | 1.23% | | ACL / Total Loans | 1.16% | 1.14% | Net Interest Income and Margin Net interest income decreased to $393.0 million, with net interest margin compressing to 3.27%, primarily due to lower accretion income and fewer days Net Interest Income & Margin (Q1 2025 vs Q4 2024) | Metric | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Net Interest Income (FTE) | $393.0 million | $400.0 million | | Net Interest Margin (FTE) | 3.27% | 3.30% | | Accretion Income | $12.3 million | $18.5 million | | Cost of Total Deposits | 1.91% | 2.08% | Noninterest Income Total noninterest income decreased by 2.1% to $93.8 million, influenced by seasonal bank fees and a gain from commercial real estate loan sales - Total noninterest income decreased by 2.1% to $93.8 million compared to the prior quarter8 - The decrease was driven by seasonally lower bank fees and lower company-owned life insurance income8 - Other income included $4.8 million in gains from the sale of $71 million of commercial real estate loans9 Noninterest Expense Disciplined expense management led to adjusted noninterest expense decreasing to $262.6 million, maintaining a stable adjusted efficiency ratio of 51.8% Noninterest Expense & Efficiency Ratio (Q1 2025 vs Q4 2024) | Metric | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Noninterest Expense | $268.5 million | $276.8 million | | Adjusted Noninterest Expense | $262.6 million | $268.7 million | | Efficiency Ratio | 53.7% | 54.4% | | Adjusted Efficiency Ratio | 51.8% | 51.8% | - Q1 2025 expenses included $5.9 million of merger-related charges15 Income Taxes Income tax expense was $36.9 million, resulting in an effective tax rate of 20.3%, with the adjusted FTE rate at 22.6% Tax Metrics (Q1 2025 vs Q4 2024) | Metric | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Income Tax Expense | $36.9 million | $32.2 million | | Effective Tax Rate | 20.3% | 17.3% | | Adjusted FTE Tax Rate | 22.6% | 19.8% | Capital Capital ratios strengthened due to retained earnings, with the preliminary Tier 1 common equity ratio increasing to 11.62% and TCE to TA rising to 7.76% Key Capital Ratios (Q1 2025) | Ratio | Value | Change (Linked-Quarter) | | :--- | :--- | :--- | | Tier 1 Common Equity | 11.62% | Up 24 bps | | Tier 1 Capital | 12.23% | Up 25 bps | | Total Risk-Based Capital | 13.68% | Up 31 bps | | TCE / TA | 7.76% | Up from 7.41% | Financial Statements and Data Financial Highlights This section provides a five-quarter comparative summary of Old National's key financial metrics, including income statement, per-share data, and capital ratios Selected Performance Ratios (Q1 2025 vs Q4 2024) | Ratio | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | ROAA | 1.08% | 1.14% | | ROAE | 9.1% | 9.8% | | ROATCE | 15.0% | 16.4% | | NIM (FTE) | 3.27% | 3.30% | | Efficiency Ratio | 53.7% | 54.4% | Income Statement The detailed income statement for Q1 2025 shows net interest income of $387.6 million and net income applicable to common shares of $140.6 million Q1 2025 Income Statement Summary | Line Item | Amount (in thousands) | | :--- | :--- | | Net Interest Income | $387,643 | | Provision for Credit Losses | $31,403 | | Total Noninterest Income | $93,794 | | Total Noninterest Expense | $268,471 | | Net Income Applicable to Common Shares | $140,625 | End of Period Balance Sheet As of March 31, 2025, Old National's balance sheet showed total assets of $53.9 billion, with $41.0 billion in deposits and $6.5 billion in equity Balance Sheet Summary (as of March 31, 2025) | Account | Amount (in thousands) | | :--- | :--- | | Total Loans | $36,413,944 | | Total Investments | $11,167,096 | | Total Assets | $53,877,944 | | Total Deposits | $41,034,572 | | Total Borrowed Funds | $5,447,054 | | Total Shareholders' Equity | $6,534,654 | Average Balance Sheet and Interest Rates This schedule details average balances and interest rates, showing Q1 2025 total average earning assets at $48.1 billion with a 5.30% yield Q1 2025 Average Balances and Rates | Metric | Rate/Yield | | :--- | :--- | | Yield on Total Earning Assets | 5.30% | | Cost of Total Interest-Bearing Liabilities | 2.66% | | Net Interest Rate Spread | 2.64% | | Net Interest Margin (FTE) | 3.27% | Asset Quality (EOP) This section provides a detailed five-quarter analysis of asset quality, with ACL on loans increasing to $401.9 million and nonaccrual loans rising to 1.29% Allowance for Credit Losses on Loans Roll-Forward (Q1 2025) | Item | Amount (in thousands) | | :--- | :--- | | Beginning ACL | $392,522 | | Provision for credit losses | $31,026 | | Net Charge-offs (NCOs) | ($21,616) | | Ending ACL | $401,932 | Underperforming Assets (as of March 31, 2025) | Metric | Value (in thousands) | % of EOP Loans | | :--- | :--- | :--- | | Nonaccrual loans | $469,211 | 1.29% | | Total underperforming assets | $482,269 | 1.32% | Appendix Non-GAAP Measures This section provides detailed reconciliations for non-GAAP financial measures, aiding investors in assessing core operational performance by excluding specific items - The company provides non-GAAP results to assist investors in assessing underlying operating performance, excluding items that do not pertain to core business operations1417 Reconciliation of GAAP to Adjusted EPS (Q1 2025) | Item | Per Share Amount | | :--- | :--- | | EPS, diluted (GAAP) | $0.44 | | Merger-related charges, net | $0.01 | | Debt securities losses, net | $0.00 | | Adjusted EPS, diluted (Non-GAAP) | $0.45 | Forward-Looking Statements This section contains cautionary language regarding forward-looking statements, outlining risks and uncertainties that could cause actual results to differ from expectations - The report contains forward-looking statements that are not guarantees of future performance and are subject to risks and uncertainties2325 - Key risks include changes in economic conditions, competition, government regulation, and potential difficulties related to the integration of Bremer Financial Corporation2325