Business Context and Reporting Period
Company: Old National Bancorp (ONB)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Overview: Old National Bancorp is the sixth largest Midwestern-headquartered bank by asset size, with consolidated assets of $72.2 billion at year-end. The company operates 346 banking centers primarily in the Midwest and Southeast. The 2025 fiscal year was defined by the successful completion and integration of the acquisition of Bremer Financial Corporation on May 1, 2025, which added approximately $16.3 billion in assets and solidified the company's position in Minnesota and North Dakota.
Key Financial Metrics
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Total Assets | $72.2 billion | $53.6 billion | +34.5% |
| Total Loans | $48.8 billion | $36.3 billion | +34.4% |
| Total Deposits | $55.1 billion | $40.8 billion | +35.0% |
| Net Interest Income | $2.06 billion | $1.53 billion | +34.4% |
| Net Income (Common) | $653.1 million | $523.1 million | +24.9% |
| Diluted EPS | $1.79 | $1.68 | +6.5% |
| Return on Average Assets (ROAA) | 1.02% | 1.03% | -0.01% |
| Return on Average Common Equity (ROAE) | 8.86% | 9.06% | -0.20% |
| Net Interest Margin (TE) | 3.54% | 3.31% | +23 bps |
| Efficiency Ratio | 55.10% | 55.85% | -75 bps |
| Non-Performing Loans to Total Loans | 1.07% | 1.23% | -16 bps |
| Allowance for Credit Losses to Loans | 1.17% | 1.08% | +9 bps |
Material Changes vs. Prior Period
- Acquisition Impact: The acquisition of Bremer Financial Corporation was the primary driver of balance sheet growth, contributing $11.1 billion in loans and $12.9 billion in deposits. Organic loan growth was 5% and organic deposit growth was 5% excluding the acquisition.
- Provision for Credit Losses: Increased to $197.7 million from $110.6 million. This increase included $75.6 million of CECL Day 1 non-PCD provision expense related to acquired Bremer loans and higher net charge-offs ($110.3 million vs. $62.0 million).
- Noninterest Expense: Rose to $1.49 billion from $1.09 billion. This included $140.9 million in merger-related expenses. Excluding these items and other one-time costs, operating expenses increased due to intangible amortization and higher salary/benefit accruals.
- Capital Ratios: The company maintained "well-capitalized" status. Tier 1 Common Equity to Risk-Weighted Assets was 11.08%, and Total Capital to Risk-Weighted Assets was 12.85%.
Guidance, Outlook, and Risks
Outlook: Management expects to continue driving tangible book value per share growth in 2026. The company enters the new year with a loan-to-deposit ratio of 89%, providing liquidity to fund growth. Strategic priorities include disciplined organic growth, prudent capital deployment, and investment in talent and technology.
Key Risks and Contingencies:
- Commercial Real Estate (CRE): CRE loans represent 45% of the total loan portfolio ($22.1 billion). Management notes risks related to office occupancy rates and work-from-home trends.
- Interest Rate Risk: The Federal Reserve decreased rates in late 2025. The company manages interest rate risk to maintain a neutral position, though sharp fluctuations could impact net interest income.
- Cybersecurity: The company faces persistent cyber threats. While no material breaches occurred in 2025, the risk of operational disruption and reputational harm remains high.
- Regulatory Environment: Changes in capital rules, consumer protection laws (CFPB), and potential new regulations regarding stablecoins (GENIUS Act) could impact operations and costs.
Investor Verification Checklist
- Merger Integration: Verify the realization of expected cost synergies and revenue enhancements from the Bremer acquisition in subsequent quarters.
- Credit Quality Trends: Monitor net charge-offs and non-performing loan ratios, specifically within the commercial real estate and commercial loan segments, to ensure the allowance for credit losses remains adequate.
- Deposit Stability: Assess the composition of deposits (insured vs. uninsured) and the cost of funds to ensure the low-cost deposit franchise remains stable in a competitive rate environment.
- Capital Deployment: Review the execution of the new $400 million share repurchase program authorized in Q1 2026 and dividend sustainability.
- Intangible Amortization: Track the impact of increased intangible asset amortization on the efficiency ratio and non-GAAP adjusted earnings.