Financial Performance - Net interest income for Q1 2025 was $387,643,000, a slight decrease from $394,180,000 in Q4 2024, but an increase from $356,458,000 in Q1 2024[163] - Net income available to common shareholders for Q1 2025 was $140,625,000, down from $149,839,000 in Q4 2024 but up from $116,250,000 in Q1 2024[163] - Noninterest income decreased by $2.0 million to $93.8 million compared to Q4 2024, primarily due to lower company-owned life insurance and seasonally lower bank fees[178] - Noninterest income increased by $16.3 million to $93.8 million for the three months ended March 31, 2025, compared to $77.5 million in the same period of 2024, representing a 21.0% increase[200] - Total noninterest expense was $268.5 million for the three months ended March 31, 2025, up 2.3% from $262.3 million in the same period of 2024[203] Credit Losses and Provisions - Provision for credit losses increased to $31,403,000 in Q1 2025 from $27,017,000 in Q4 2024 and $18,891,000 in Q1 2024[163] - The provision for credit losses increased by 66.2% to $31.403 million for the three months ended March 31, 2025, compared to $18.891 million in 2024, primarily due to credit migration and higher net charge-offs[199] - The allowance for credit losses on loans was $401.9 million at March 31, 2025, an increase from $392.5 million at December 31, 2024, driven by macroeconomic factors and loan growth[244] - Net charge-offs on loans increased to $21.616 million for the three months ended March 31, 2025, compared to $11.750 million in 2024, reflecting a 84.0% increase[199] Loans and Deposits - Total loans as of March 31, 2025, were $36,413,944,000, compared to $36,285,887,000 at the end of 2024[163] - Total deposits rose to $41,034,572,000 as of March 31, 2025, compared to $40,823,560,000 at the end of 2024[163] - Loan balances increased by $128.1 million, or 1.4% annualized, to $36.4 billion at March 31, 2025, with a 2.3% annualized increase excluding $71 million of commercial real estate loans sold[176] - Total deposits increased by $211.0 million to $41.03 billion as of March 31, 2025, reflecting organic growth[225] Capital and Ratios - The Tier 1 common equity ratio improved to 11.62% in Q1 2025 from 11.38% in Q4 2024[163] - Shareholders' equity rose to $6.5 billion as of March 31, 2025, up from $6.3 billion at the end of 2024[227] - The Tier 1 capital to total average assets ratio was 9.44% as of March 31, 2025, exceeding the regulatory minimum of 4.00%[229] - The total capital to risk-weighted total assets ratio was 13.68% as of March 31, 2025, above the regulatory minimum of 10.50%[229] Efficiency and Management - The efficiency ratio for Q1 2025 was 53.74%, slightly improved from 54.37% in Q4 2024[163] - The efficiency ratio improved to 53.74% in Q1 2025 from 58.34% in Q1 2024, indicating better cost management[182] - The company performs stress testing periodically to ensure sufficient capital to continue operations during economic stress, evaluating decisions related to pricing, loan concentrations, and mergers and acquisitions[231] - The company maintains a Risk Appetite Statement to assess and mitigate various risks, including credit, market, liquidity, and operational risks[232] Strategic Initiatives - The acquisition of CapStar was completed on April 1, 2024, enhancing the company's presence in Nashville and other high-growth Southeastern markets[181] - A definitive merger agreement with Bremer Financial Corporation has been approved, with the transaction expected to close on May 1, 2025[181] Interest Income and Expense - Total interest income increased by $33.525 million, with loans contributing $24.702 million to this increase[191] - The yield on interest-earning assets decreased by 16 basis points, while the cost of interest-bearing liabilities decreased by 22 basis points in the three months ended March 31, 2025, compared to the same quarter a year ago[194] - Total interest expense is expected to rise from $737,428 thousand in 2025 to $3,357,153 thousand, indicating a significant increase in funding costs[252] Market Conditions and Projections - The Federal Funds Rate is projected to remain at 4.5% under the base scenario for March 31, 2025[253] - The company recognizes that deposit flows and loan prepayments are influenced by various market conditions, making them less predictable[258] - The credit ratings of Old National and Old National Bank are critical for acquiring funding at competitive prices[260]
OLD NATIONAL BAN(ONBPO) - 2025 Q1 - Quarterly Report