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OLD NATIONAL BANCORP /IN/ (ONB)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 EPS was $0.47 GAAP and $0.49 adjusted, with total revenue (FTE) of $495.7M; NIM (FTE) was 3.30% (-2 bps QoQ) and the efficiency ratio was 54.4% (adjusted 51.8%) .
  • Core funding and costs improved: total deposit costs fell 17 bps QoQ to 2.08%; core deposits rose 1.9% annualized, and NII (FTE) increased to $400.0M (from $397.9M) .
  • Credit normalized but remained resilient: NCOs were 0.21% (0.17% ex‑PCD), NPLs were 1.23% of loans; ACL/EOP loans was 1.14% (incl. unfunded) .
  • Capital strengthened: CET1 (Tier 1 common equity) rose to 11.38% (+38 bps QoQ); TBV/share grew 8% YoY; ONB priced a $400M forward equity raise in Nov. to bolster flexibility ahead of the Bremer partnership .
  • 2025 outlook: NII expected stable 1H25 and up in 2H25; full‑year loan growth guided to 4–6%; total deposit down‑beta expected to ~40%; management expects FY25 EPS above current analyst consensus (no figures provided) .

What Went Well and What Went Wrong

  • What Went Well

    • “Peer‑leading deposit franchise” with nearly 10% deposit and loan growth and 8% TBVPS growth in 2024; Q4 deposit costs fell 17 bps to 2.08% and NII (FTE) ticked up QoQ .
    • Fee momentum: noninterest income rose to $95.8M (+1.7% QoQ) on higher wealth fees and $8M discrete items; adjusted efficiency remained low at 51.8% .
    • Capital build: CET1 to 11.38% (+38 bps QoQ); management highlighted a strong return profile and neutral rate risk positioning heading into 2025 .

  • What Went Wrong

    • Modestly lower NIM (FTE) of 3.30% (-2 bps QoQ) as lower funding costs and higher accretion were offset by earning asset mix and lower line utilization .
    • Slightly higher credit costs: provision of $27.0M (vs. $28.5M in Q3); NCOs rose to 0.21% (0.17% ex‑PCD); nonaccruals edged to 1.23% of loans .
    • Loans declined 1.6% annualized QoQ on ~$600M outsized payoffs and lower line utilization despite $1.5B commercial production and a $2.7B pipeline .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Net Interest Income ($MM)$364.4 $391.7 $394.2
Noninterest Income ($MM)$100.1 $94.1 $95.8
Total Revenue (FTE) ($MM)$470.6 $492.0 $495.7
EPS (Diluted) ($)$0.44 $0.44 $0.47
Adjusted EPS (Diluted) ($)$0.46 $0.46 $0.49
NIM (FTE) (%)3.39% 3.32% 3.30%
Efficiency Ratio (%)59.0% 53.8% 54.4%

Noninterest income breakdown ($MM):

Line ItemQ4 2023Q3 2024Q4 2024
Wealth & Investment Services$27.7 $29.1 $30.0
Service Charges$18.7 $20.4 $20.6
Debit Card & ATM Fees$10.7 $11.4 $11.0
Mortgage Banking$3.7 $7.7 $7.0
Capital Markets Income$5.4 $7.4 $5.2
COLI$3.8 $5.3 $6.5
Other Income$9.4 $13.0 $15.5
Debt Securities Gains (Losses), net$(0.8) $(0.1) $(0.1)

Key KPIs:

KPIQ4 2023Q3 2024Q4 2024
End‑of‑Period Loans ($B)$33.0 $36.4 $36.3
End‑of‑Period Deposits ($B)$37.2 $40.8 $40.8
Total Deposit Cost (%)N/A2.25% 2.08%
NCOs / Avg Loans (%)0.12% 0.19% 0.21%
ACL / EOP Loans (%)1.03% 1.12% 1.14%
NPLs / EOP Loans (%)0.83% 1.22% 1.23%
ROATCE (%)18.1% 16.0% 16.4%
CET1 (Tier 1 Common Equity) (%)10.70% 11.00% 11.38%
Adjusted PPNR ($MM)$194.6 $229.3 $227.1

Vs Estimates

  • Wall Street consensus (S&P Global) for Q4 2024 was unavailable at the time of this report due to a data access limit. Values from S&P Global could not be retrieved.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest IncomeFY2025 cadenceN/AStable 1H25 (ex. fewer days in Q1), increasing in 2H25; guidance unchanged under 1 or 0 cuts; assumes two 25 bp cuts New
Loan GrowthFY2025N/A4%–6% FY25, ramping over the year New
Total Deposit Down‑BetaFY2024 → FY2025~30% declining rate beta by YE’24 ~40% total deposit beta across FY’25 Raised vs. prior period framework
Non‑interest‑bearing MixFY2024 → FY2025~24% stable in 2H’24 ~24% stable through FY’25 Maintained
Tax Rate (FTE)Run‑rate~24.8% adjusted FTE in Q3 ~25% excluding discrete items in Q4; Q4 benefited from tax matters resolution and higher credits Slightly higher normalized
Accretion Income1H 2025N/A~$10.5M in Q1 & Q2 (pre‑Bremer update) New
Capital/Buybacks2025N/ACapital building ahead of plan; buybacks possible later, but priority is growth and Bremer integration New color

Earnings Call Themes & Trends

TopicQ2 2024 (Prior-2)Q3 2024 (Prior-1)Q4 2024 (Current)Trend
Deposit Strategy & BetasCost 2.16%; exception‑priced book down‑beta ~85%; deposits to fund growth; moderating pressure Cost 2.25%; exception book down‑beta ~90%; spot 2.12% at 9/30 Cost 2.08%; Q4 down‑beta 28%; exception book down‑beta 93% Improving costs, plan to capture more down‑beta in 2025
NII/NIM OutlookNII to increase modestly in H2’24; neutral rate risk NII modestly up in Q4; belly of curve a key driver 2025 NII stable 1H, up 2H; accretion ~10.5M in Q1/2 Stable‑to‑improving trajectory
Credit QualityNPLs 0.94%; NCOs 16 bps; granular CRE disclosures NPLs 1.22%; NCOs 19 bps; reserve build QoQ NPLs 1.23%; NCOs 21 bps; reserve 1.14% (incl. unfunded) Normalizing but controlled
CapitalCET1 roughly unchanged post CapStar; TBVPS +10% YoY CET1 11.00%; TBVPS +21% YoY CET1 11.38%; TBVPS +8% YoY; priced $400M forward equity in Nov. Strong build continues
M&A/FootprintCapStar closed, conversion done in July Focus on organic growth Bremer announced (mid‑2025 close target) Expansion accelerates
Technology——Axletree/Swift collaboration to enhance secure messaging and client automation Tech enablement lifting treasury

Management Commentary

  • CEO Jim Ryan: “Old National's successful 4th quarter was driven by continued growth in our peer-leading deposit franchise, disciplined expense and credit management, and solid net interest income and margin performance…nearly 10% growth in total deposits, 10% total loan growth, and 8% growth in tangible book value” .
  • CFO John Moran: “Reported GAAP 4Q EPS of $0.47…Results…strong fee income and a favorable tax rate…Credit remained benign…our return profile…remained light [robust]” .
  • Deposit outlook: “Our fourth quarter total deposit beta came in at 28%…exception price deposits have experienced a 93% down beta” .
  • 2025 NII: “NII is expected to be relatively stable in the first half of 2025…then increasing in the back half…assumed 2 rate cuts of 25 bps each…total deposit beta…approximately 40%” .
  • Strategy/M&A: Strong enthusiasm for the Bremer partnership; closing targeted mid‑2025, integration in 2H25; focus remains on fundamentals and positive operating leverage .

Q&A Highlights

  • Margin/NII cadence: Stand‑alone NIM expected “stable to improving” in 2025; fixed asset repricing and a less inverted curve are tailwinds .
  • Deposit beta path: Expectation to “capture what we gave up on upside beta” over 2025; cadence may not be strictly linear .
  • Loan growth/payoffs: Q4 saw unusual ~$600M payoffs and lower line utilization; pipeline remains solid at $2.7B; 4–6% FY25 loan growth guide viewed as achievable .
  • Capital allocation: CET1 running ahead of plan; buybacks could enter the discussion later, but growth and Bremer integration prioritized .
  • Accretion: Expect ~$10.5M in Q1–Q2 2025 before incorporating Bremer .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 were unavailable to us at this time due to a data access limit; as such, we cannot definitively classify EPS or revenue as a beat/miss vs. consensus. Management indicated they expect FY2025 EPS to be above current analyst consensus, but did not provide specific figures .

Key Takeaways for Investors

  • Deposit cost downtrend and disciplined beta capture underpin stable‑to‑improving NII into 2H25; watch deposit remix and exception‑priced book progress .
  • Credit remains manageable amid normalization; reserves strengthened and NPLs stable; monitor criticized trends as maturities roll .
  • Capital build and the Nov. 2024 forward equity raise provide flexibility to close and integrate Bremer while preserving growth optionality .
  • Operating leverage intact: adjusted efficiency ratio at 51.8% with fee contributions improving; sustained low‑50s efficiency would support premium returns .
  • Bremer is a meaningful catalyst (mid‑2025 close target) for scale, revenue synergies and longer‑term NII uplift; regulatory timeline is a watch item .
  • Short‑term: trading set‑ups around rate path (belly of curve), deposit beta realization, and any incremental color on 1H25 NII cadence .
  • Medium‑term: execution on deposit growth at reasonable cost, credit normalization through cycle, and post‑Bremer integration/earnings trajectory should drive multiple and EPS durability .

Additional Relevant Q4 2024 Press Releases

  • Common stock offering priced at $21.00 per share for ~$400M via forward sale agreement (Nov 25, 2024), bolstering capital flexibility ahead of Bremer .
  • Bremer partnership announced (Nov 25, 2024): $16.2B assets, expands footprint in MN/ND/WI; anticipated mid‑2025 close, subject to customary approvals .
  • Axletree collaboration (Oct 28, 2024) to host Swift architecture for secure transaction messaging and improved client automation (treasury) .