Old National Bancorp(US:ONB)2026-01-21 16:02Financial Data and Key Metrics Changes - The company reported GAAP Q4 earnings per share of $0.55, with adjusted earnings per share of $0.62, reflecting a 5% increase quarter-over-quarter and a 27% increase year-over-year [8][10] - Adjusted return on average tangible common equity was nearly 20%, and adjusted return on assets was 1.37%, with an adjusted efficiency ratio of 46% [4][9] - Tangible book value per share grew by 15% year-over-year, despite the impact of merger-related charges and share repurchases [5][10] Business Line Data and Key Metrics Changes - Total loans grew 6.4% annualized from the previous quarter, with production up 25% across the commercial book [10] - Adjusted non-interest income was $126 million for the quarter, exceeding guidance, driven by strong performance in mortgage and capital markets [12][14] - Adjusted non-interest expenses were $365 million for the quarter, with a record low adjusted efficiency ratio of 46% [14] Market Data and Key Metrics Changes - Total deposits increased 0.6% annualized, with core deposits ex-brokered decreasing about 3% annualized due to seasonally lower public funds [11][12] - Non-interest-bearing deposits grew to 26% of core deposits from 24% in the prior quarter [11] - The cost of total deposits decreased by 17 basis points linked quarter, resulting in a spot rate of 1.68% on total deposits at December 31 [12] Company Strategy and Development Direction - The company aims to maintain a balance between organic capital growth and returning capital through share repurchases, focusing on maximizing shareholder value [7][21] - Investment in talent, technology, and client-facing capabilities is prioritized to ensure long-term success and scalability [7][21] - The company is not currently focused on M&A but is committed to organic growth and improving its existing operations [83] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the execution of their deposit strategy and anticipates meeting or exceeding industry growth in 2026 [20] - The outlook for loan growth is projected at 4%-6% for the full year 2026, supported by positive borrower sentiment and strategic hiring [18][81] - The company expects continued strong performance in fee income, particularly in mortgage and capital markets, due to a favorable rate backdrop [20][59] Other Important Information - The company completed the systems conversion and integration related to the Bremer Bank partnership, which is expected to yield cost savings fully realized in the first quarter of 2026 [5][15] - The capital position remains strong, with CET1 over 11% and tangible book value per share increasing [9][17] Q&A Session Summary Question: Margin projection for the year - Management indicated that the margin trajectory will be influenced by growth, the steepness of the yield curve, fixed asset repricing, and deposit beta management [24][26] Question: Share repurchase pace - The company plans to be more active in share repurchases in 2026 compared to the previous year, balancing capital needs for growth and returning capital to shareholders [27][28] Question: Credit and reserve coverage - Management noted improvements in criticized and classified loans, allowing for a slight reduction in reserve coverage ratio [36] Question: Deposit growth expectations - Management expects deposit growth to be stable as a percentage, with some seasonality in public funds [45] Question: Loan growth sources - Growth is expected from broad-based demand in C&I middle markets and commercial real estate, supported by strategic hiring [51][82] Question: Technology spending - The company is investing significantly in technology and innovation, ensuring that it is not underfunding new opportunities [77][78]