Old National Bancorp(ONB) - 2025 Q2 - Quarterly Results

Executive Summary & CEO Commentary Old National Bancorp reported strong Q2 2025 results, with adjusted diluted EPS of $0.53, driven by balance sheet growth, expanded fee-based businesses, and expense control, further strengthened by the Bremer partnership and new leadership appointment - Adjusted diluted EPS for Q2 2025 was $0.53[1] - The Bremer partnership successfully closed on May 1, 2025, contributing to a larger balance sheet and stronger capital position[1] - Tim Burke was named Old National's President and Chief Operating Officer[1] Second Quarter Highlights Old National Bancorp's Q2 2025 highlights reflect significant growth and operational performance, largely influenced by the Bremer partnership, with adjusted net income of $190.9 million and a net interest margin of 3.53% | Metric | Value | | :--- | :--- | | Net income applicable to common shares | $121.4 million | | Adjusted net income applicable to common shares | $190.9 million | | EPS, diluted | $0.34 | | Adjusted EPS | $0.53 | | Metric | Value | Change | | :--- | :--- | :--- | | Net interest income (FTE) | $521.9 million | | | Net interest margin (FTE) | 3.53% | Up 26 bps | | Metric | Value | Change | | :--- | :--- | :--- | | Period-end total deposits | $54.4 billion | Up $13.3 billion | | Period-end core deposits | Up $11.6 billion | | | Total deposit costs | 193 bps | Up 2 bps | | Metric | Value | | :--- | :--- | | End-of-period total loans | $48.0 billion | | Provision for credit losses | $106.8 million | | Net charge-offs | $26.5 million (24 bps of average loans) | | 30+ day delinquencies | 0.30% | | Nonaccrual loans | 1.24% of total loans | | Metric | Value | Change | | :--- | :--- | :--- | | ROATCE | 12.0% | | | Adjusted ROATCE | 18.1% | | | Preliminary regulatory Tier 1 common equity to risk-weighted assets | 10.74% | Down 88 bps | - Key events impacting Q2 results include the closing of the Bremer partnership on May 1, 2025, a $75.6 million pre-tax CECL Day 1 non-PCD provision expense, $41.2 million pre-tax merger-related charges, and a $21.0 million pre-tax pension plan gain[3] Leadership Update: Appointment of President and COO Timothy M. Burke, Jr. was appointed President and Chief Operating Officer, bringing nearly 30 years of banking experience to oversee Commercial, Community, Wealth, Credit, and Marketing segments - Timothy M. Burke, Jr. joined Old National Bancorp as President and Chief Operating Officer on July 22, 2025[4] - Mr. Burke brings nearly 30 years of extensive banking expertise, with prior leadership experience in commercial banking across 12 Midwestern markets[4][5] - As President and COO, Burke will be responsible for guiding the success of Old National's Commercial, Community, and Wealth segments, and Credit and Marketing teams[6] Results of Operations Old National Bancorp reported Q2 2025 net income of $121.4 million ($0.34 diluted EPS), with adjusted net income of $190.9 million ($0.53 diluted EPS) after excluding significant one-time items | Metric | Q2 2025 Value | | :--- | :--- | | Net income applicable to common shares | $121.4 million | | Diluted common share EPS | $0.34 | | Adjusted net income | $190.9 million | | Adjusted diluted common share EPS | $0.53 | - Adjusted results exclude $75.6 million of pre-tax CECL Day 1 non-PCD provision expense, $41.2 million of pre-tax merger-related expenses, and a $21.0 million pre-tax gain from freezing Bremer pension plan benefits[8] Deposits and Funding Total deposits increased significantly to $54.4 billion, primarily due to the Bremer transaction, which contributed $11.5 billion in core deposits | Metric | Value | | :--- | :--- | | Period-end total deposits | $54.4 billion (up $13.3 billion) | | Period-end core deposits | Up $11.6 billion (includes $11.5 billion from Bremer) | - Period-end core deposits, excluding Bremer, were up 0.8% annualized[11] - Total deposit costs were 193 bps, up 2 bps[11] Loans Total loans reached $48.0 billion, an increase of $11.5 billion, largely driven by the Bremer acquisition, with commercial loans showing strong annualized growth | Metric | Value | | :--- | :--- | | Period-end total loans | $48.0 billion (up $11.5 billion) | | Loans acquired in Bremer transaction | $11.2 billion | - Excluding loans acquired in the Bremer transaction, period-end total loans were up 3.7% annualized[11] - Commercial loans, excluding Bremer, grew 4.6% annualized, with a period-end commercial pipeline totaling $4.8 billion, up approximately 40%[11][17] Credit Quality Credit quality remained resilient, with a provision for credit losses of $106.8 million, primarily due to the CECL Day 1 non-PCD provision from the Bremer transaction | Metric | Value | | :--- | :--- | | Provision for credit losses | $106.8 million | | Provision excluding CECL Day 1 non-PCD | $31.2 million | | Net charge-offs | $26.5 million (24 bps of average loans) | | 30+ day delinquencies | 0.30% (compared to 0.22%) | | Nonaccrual loans to total loans | 1.24% (compared to 1.29%) | - The allowance for credit losses (ACL) stood at $594.7 million, or 1.24% of total loans, reflecting $75.6 million of CECL Day 1 non-PCD provision expense and $90.4 million of allowance related to acquired PCD loans[17] Net Interest Income and Margin Net interest income (FTE) increased significantly to $521.9 million, and net interest margin (FTE) rose by 26 bps to 3.53%, driven by balance sheet growth and higher asset yields | Metric | Q2 2025 Value | Change | | :--- | :--- | :--- | | Net interest income (FTE) | $521.9 million | Increased from $393.0 million | | Net interest margin (FTE) | 3.53% | Increased 26 bps | | Cost of total deposits | 1.93% | Increased 2 bps | | Cost of total interest-bearing deposits | 2.52% | Increased 6 bps | - The increase in net interest income was driven by the Bremer transaction, loan growth, higher asset yields, and more days in the quarter, partly offset by higher funding costs[17] Noninterest Income Total noninterest income was $132.5 million, with an adjusted increase of 18.8% (excluding a $21.0 million pension plan gain and debt securities losses), attributed to Bremer revenue and organic growth | Metric | Q2 2025 Value | | :--- | :--- | | Total noninterest income | $132.5 million | | Noninterest income excluding pension plan gain | $111.6 million | - Excluding the pension plan gain and realized debt securities losses, noninterest income was up 18.8%, driven by Bremer revenue, higher wealth fees, mortgage fees, and capital markets revenue[17] Noninterest Expense Noninterest expense totaled $384.8 million, including $41.2 million in merger-related charges, resulting in an adjusted efficiency ratio of 50.2% | Metric | Q2 2025 Value | | :--- | :--- | | Noninterest expense | $384.8 million | | Merger-related charges | $41.2 million | | Adjusted noninterest expense | $343.6 million | | Efficiency ratio | 55.8% | | Adjusted efficiency ratio | 50.2% | - Adjusted noninterest expense was driven primarily by elevated operating costs and additional intangibles amortization, both related to the Bremer transaction[17] Income Taxes Income tax expense was $30.3 million, resulting in an effective tax rate of 19.5%, impacted by the Bremer transaction and a tax credit benefit | Metric | Q2 2025 Value | | :--- | :--- | | Income tax expense | $30.3 million | | Effective tax rate