Old National Bancorp(US:ONB)2025-10-22 15:02Financial Data and Key Metrics Changes - Old National Bancorp reported GAAP earnings per share of $0.46 for Q3 2025, with adjusted earnings per share of $0.59, reflecting an 11% increase from the prior quarter and a 28% increase year over year [7][12] - The company achieved a 20% return on average tangible common equity and a 1.3% return on assets, with an efficiency ratio below 50% [3][5] - The CET1 ratio increased by 28 basis points to over 11%, and tangible book value per share grew by 4% from Q2 and 10% year over year [7][15] Business Line Data and Key Metrics Changes - Total loans grew 3.1% annualized from the previous quarter, with production up 20% from the prior quarter [8][9] - Adjusted non-interest income was $130 million for the quarter, exceeding guidance, driven by strong performance in capital markets [12][18] - Adjusted non-interest expenses were $376 million, reflecting a full quarter impact of Bremer operations, with a low efficiency ratio of 48% [13][19] Market Data and Key Metrics Changes - Total deposits increased by 4.8% annualized, with core deposits (excluding brokered) increasing by 5.8% annualized [10][11] - Non-interest bearing deposits remained at 24% of core deposits, and brokered deposits decreased modestly [10][11] - The company achieved an approximate 85% beta on its exception price book spot rate in conjunction with the Fed rate cut in September [11] Company Strategy and Development Direction - The company is focused on organic growth and returning capital to shareholders, emphasizing that the best acquisition is itself [5][25] - Management is strategically recruiting top-tier talent and investing in future growth opportunities while enhancing efficiency [4][6] - The company aims to leverage its leading market position and capitalize on market disruptions [4][5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the credit outlook, noting a decline in criticized and classified loans and stable credit metrics [15][19] - The company anticipates continued success in executing its deposit strategy and expects to meet or exceed industry growth in 2025 [18][19] - Management highlighted that the systems conversion for the Bremer Bank partnership was successful, with positive client sentiment and operational efficiency [36][38] Other Important Information - The company repurchased 1.1 million shares late in the quarter, reflecting confidence in capital levels and the trajectory of the business [16][102] - The full run-rate cost savings from the Bremer acquisition are expected to materialize in Q1 of the following year [95][96] Q&A Session Summary Question: What drove the reduction in NII expectations for the fourth quarter? - Management indicated that the reduction from $590 million to $585 million is minor relative to the overall balance sheet size and reflects stable dynamics [22][23] Question: What are the preferred uses for capital moving forward? - Management emphasized organic growth as the primary focus, with opportunistic buybacks based on capital generation [24][25] Question: How did the systems conversion go? - Management reported that the systems conversion was the best to date, with high client satisfaction and minimal issues [36][38] Question: What is the outlook for loan growth from Bremer? - Management expects consolidated loan growth to align with overall company growth, with no significant swings anticipated [70][73] Question: How does the company view the credit environment? - Management described the credit outlook as stable to improving, with a focus on active portfolio management [97][99]