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ON

OLD NATIONAL BANCORP /IN/ (ONB)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered GAAP diluted EPS of $0.44 and adjusted EPS of $0.45; ONB beat S&P Global EPS consensus of ~$0.426 (9 estimates) by ~$0.02, while S&P revenue “actual” ($446.6M) came in below consensus ($478.1M, 7 estimates). Bold EPS beat; revenue miss likely reflects differing revenue definitions across sources *.
  • Net interest income (FTE) was $393.0M and NIM (FTE) dipped 3 bps to 3.27% due to lower accretion and fewer days; deposit costs fell 17 bps to 1.91%, underscoring successful deposit pricing execution .
  • Credit remained resilient: provision rose to $31.4M; NCOs were 24 bps of average loans (21 bps ex‑PCD), NPLs 1.29% of loans, and ACL/EOP loans rose to 1.16% (incl. unfunded) .
  • Bremer partnership expected to close May 1 (two months earlier than original Jul 1 assumption), creating NII upside optionality if ONB retains more CRE loans (management quantified ~$34.6M NII, ~$0.09–$0.10 EPS uplift hypothetically for $2.4B retained) and guiding NII/NIM growth in 2025; management expects FY EPS in line with consensus and positive operating leverage .
  • Capital is strong (Tier 1 CET1 11.62%); TCE/TA improved to 7.76%. Board authorized a $200M buyback program (effective through Feb 28, 2026) and maintained a $0.14 quarterly dividend; buybacks are a back-half 2025/2026 consideration after Bremer marks are finalized .

What Went Well and What Went Wrong

  • What Went Well

    • “Better-than-expected first-quarter results” driven by peer-leading deposits, solid loan growth, disciplined expenses; tangible book up meaningfully y/y and q/q .
    • Deposit costs fell 17 bps; core deposits grew 1.7% annualized; NIM would have been +6 bps absent lower accretion and fewer days, demonstrating deposit strategy efficacy .
    • Earlier Bremer close (May 1) enhances balance-sheet flexibility and 2025 NII/NIM trajectory; management confident NII/NIM will grow in 2025 .

  • What Went Wrong

    • NIM (FTE) down 3 bps to 3.27% and NII lower q/q due to reduced accretion and fewer days; noninterest income declined 2% on seasonally lower bank fees/COLI .
    • Credit costs higher: provision rose to $31.4M (from $27.0M), NCOs 24 bps (up from 21 bps), and NPLs increased modestly to 1.29% of loans .
    • S&P revenue “actual” ($446.6M) missed consensus ($478.1M), implying a top-line shortfall against external models despite strong PPNR and efficiency improvements *.

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Total revenue (FTE) ($USD Millions)$440.233 $495.723 $486.797
Net interest income (FTE) ($USD Millions)$362.711 $399.957 $393.003
Noninterest income ($USD Millions)$77.522 $95.766 $93.794
Provision for credit losses ($USD Millions)$18.891 $27.017 $31.403
EPS diluted ($USD)$0.40 $0.47 $0.44
Adjusted EPS diluted ($USD)$0.45 $0.49 $0.45
NIM (FTE) (%)3.28% 3.30% 3.27%
Efficiency ratio (%)58.3% 54.4% 53.7%
ROATCE (%)14.9% 16.4% 15.0%
Net charge-offs / avg loans (%)0.14% 0.21% 0.24%
ACL / EOP loans (%) (incl. unfunded)1.03% 1.14% 1.16%
Total deposits ($USD Billions)$37.70 $40.82 $41.03
Total loans ($USD Billions)$33.62 $36.29 $36.41
Total assets ($USD Billions)$49.53 $53.55 $53.88
Tier 1 common equity (%)10.76% 11.38% 11.62%

Estimates vs. Actuals (S&P Global)

MetricQ1 2025 ConsensusQ1 2025 Actual (S&P)Company-Reported
EPS Primary ($USD)0.4263*0.45*GAAP $0.44; Adjusted $0.45
Revenue ($USD Millions)478.1*446.6*Total revenue (FTE) $486.8

Values retrieved from S&P Global.*

Credit & Funding KPIs

KPIQ4 2024Q1 2025
Cost of total deposits (%)2.08% 1.91%
Cost of interest-bearing deposits (%)2.71% 2.46%
Noninterest-bearing deposits (% of core)24% 23%
Loan-to-deposit ratio (%)~89% ~89%

Noninterest Income Breakdown ($USD Millions)

CategoryQ1 2024Q4 2024Q1 2025
Wealth & investment services fees$28.304 $30.012 $29.648
Service charges on deposit accounts$17.898 $20.577 $21.156
Debit card & ATM fees$10.054 $10.991 $9.991
Mortgage banking revenue$4.478 $7.026 $6.879
Capital markets income$2.900 $5.244 $4.506
Company‑owned life insurance$3.434 $6.499 $5.381
Other income$10.470 $15.539 $16.309
Debt securities gains (losses), net$(16) $(122) $(76)
Total noninterest income$77.522 $95.766 $93.794

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Bremer close date2025Assumed Jul 1 close Legal close May 1 Raised/accelerated
NII/NIM trajectoryFY 2025Stable 1H; increase in 2H with repricing + Bremer Expect NII & NIM to grow in 2025; updated for earlier close Raised timing
Loan growth (ex‑Bremer)FY 20254%–6% ramp through year 4%–6% maintained; pipeline supports Maintained
Total deposit down beta2025Accelerate toward ~40% through 2025 ~40% by Q2; spot deposit rate 1.90% Pulled forward
Noninterest-bearing mix2025Stable ~24% of core Stable ~23% of core Maintained (slightly lower)
AOCI improvement12 months15% ($110M) improvement 10% ($65M) by year-end Lower
DividendOngoing$0.14/qtr maintained $0.14/qtr maintained (Q2 declared) Maintained
Share repurchase programThrough 2/28/2026N/AAuthorized up to $200M New authorization

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Bremer partnership timing & optionalityOriginal model assumed Jul 1 close; balance sheet optimization contemplated around CRE loan sales; capital accretive Close May 1; potential to retain more CRE (upside to NII/EPS); “day 1 capital” stronger than modeled; update at Q2 after marks Accelerating; optionality increasing
NII/NIM outlookStable in 1H 2025, improving in 2H with repricing & Bremer; curve belly sensitivity NII/NIM expected to grow in 2025; absent accretion/days, NIM would be +6 bps; fixed asset repricing supports Upward bias
Deposit pricing strategyDown beta to ~40% over 2025; spot deposit rate ~1.93% at 12/31 Down beta ~37% in Q1; expect ~40% by Q2; spot ~1.90%; exception book grind continues Ahead of plan
Loan growth & pipelinePayoffs/line utilization pressured Q4; pipeline ~$2.7B Pipeline up 30% y/y; accepted up 50%; commercial production strong; mid-single digit growth maintained Constructive
Credit qualityNormalizing but resilient; ACL/loans 1.14% at Q4; NCOs 21 bps NCOs 24 bps (21 bps ex‑PCD); ACL/EOP loans 1.16%; NPLs 1.29%; qualitative reserves ~25% Slightly softer but covered
Capital deploymentBuyback discussed as later-year option post‑Bremer $200M buyback authorized; management prefers growth first, revisit buybacks in back half Flexibility rising
Macro/tariffs & client toneCautiously optimistic; curve/long-end sensitivity “Pause” on activity amid uncertainty; plans unchanged; CRE competitive activity remains high Mixed macro; steady client plans

Management Commentary

  • “Old National reported better-than-expected first-quarter results driven by our peer-leading deposit franchise, solid loan growth and disciplined expense management.” – Jim Ryan, Chairman & CEO .
  • “Away from accretion and days net interest margin would have been up 6 basis points with lower deposit costs more than offsetting rate and volume dynamics on the asset side.” – John Moran, CFO .
  • “We expect full year results that yield earnings per share in line with current analyst consensus estimates…positive operating leverage and a peer-leading return profile.” – John Moran, CFO .
  • “We have received all necessary regulatory approvals and anticipate a legal close date of May 1 [for Bremer].” – Jim Ryan, Chairman & CEO .

Q&A Highlights

  • Bremer CRE loan sale optionality: If ONB retains the $2.4B CRE instead of selling, management acknowledged potential ~$34.6M NII and ~$0.09–$0.10 EPS uplift hypothetically; final decision to balance CET1, total capital, and CRE as % of RWA .
  • Deposit betas and pricing: Core ONB down beta targeted ~40% by Q2; exception-priced deposit book continues to be repriced down granularly; brokered kept short to capture declines .
  • Loan growth cadence: Pipeline up 30% y/y and accepted up 50% support mid-single-digit growth; CRE pull-through slower amid competition .
  • Capital allocation: Buyback considered later (after marks); immediate priority is optimizing balance sheet size and capital stack; stronger starting capital provides optionality .
  • Reserves and macro: Qualitative reserves ~25% of ACL; provision guide maintained despite uncertain global trade/macro; credit metrics in line with expectations .

Estimates Context

  • EPS: ONB’s adjusted EPS $0.45 exceeded S&P Global consensus of ~$0.426 (9 estimates), a positive surprise reflecting lower deposit costs and disciplined expenses. Company GAAP EPS was $0.44 *.
  • Revenue: S&P Global “Revenue” actual of $446.6M missed consensus of $478.1M (7 estimates), while company-reported total revenue (FTE) was $486.8M. The discrepancy likely reflects differing revenue definitions (e.g., FTE adjustments and categorization) in external models versus company reporting *.
  • Forward: Management reiterated FY EPS in line with consensus and NII/NIM growth in 2025 given earlier Bremer close and repricing; if fewer CRE loans are sold day 1, NII/EPS could see upside versus the original M&A model .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • ONB delivered an EPS beat versus consensus; revenue miss versus S&P’s construct was offset by strong PPNR and improved efficiency, suggesting upside leverage to deposit cost execution and repricing in 2025 *.
  • Deposit costs have turned decisively lower (1.91%) and are likely to fall further as exception-priced deposits reprice; this should support NIM expansion absent accretion headwinds .
  • Earlier Bremer close (May 1) provides near-term NII lift and optionality on CRE loan retention; legal day‑1 capital stronger than modeled, creating balance sheet flexibility for growth .
  • Credit normalization continues but remains manageable (NCOs 24 bps; NPLs 1.29%; ACL/EOP loans 1.16%); qualitative overlays account for macro/trade uncertainty, containing downside risk .
  • Capital is robust (Tier 1 CET1 11.62%, TCE/TA 7.76%); dividend held at $0.14; $200M buyback authorized but likely paced behind growth/marks—monitor for back-half activation .
  • Management expects FY EPS in line with consensus and positive operating leverage; watch Q2 update for final Bremer marks and any change in CRE sale sizing/NII guide .
  • Near-term trading catalysts: confirmation of Bremer close and integration progress, deposit cost trajectory, Q2 NII/NIM cadence update, and any signals on CRE loan sale sizing or buyback timing .

Footnotes:

  • All company figures and quotes cited from ONB Q1 2025 press release and 8‑K, Q1 2025 earnings call, Q4 2024 materials, and dividend/buyback releases .
  • S&P Global estimates and actuals included with explicit notation; definitions may differ from company “total revenue (FTE)” constructs.*