ONB

Business Context and Reporting Period

Company: Old National Bancorp (ONB)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: March 31, 2026
Context: Old National is a large accelerated filer headquartered in Evansville, Indiana, operating primarily in the Midwest and Southeast. The reporting period reflects the full integration of the Bremer Financial Corporation acquisition completed on May 1, 2025. The company reported 386.4 million shares of common stock outstanding as of April 28, 2026.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Net interest income increased 47.7% year-over-year (YoY) driven by the Bremer acquisition and strong loan growth, though it decreased slightly quarter-over-quarter (QoQ) due to lower asset yields. Noninterest income rose 30.4% YoY, led by wealth management fees and capital markets income.
• Expense Management: Noninterest expense increased 35.8% YoY, primarily due to the inclusion of Bremer operations and higher amortization of intangibles ($25.6 million vs. $6.8 million in Q1 2025). On an adjusted basis excluding merger costs, expenses decreased QoQ.
• Profitability: Net income applicable to common shareholders increased 63.3% YoY to $229.6 million. Adjusted net income (excluding merger and pension items) was $237.7 million ($0.61 diluted EPS).
• Balance Sheet Expansion: Total assets grew to $73.0 billion, with loans increasing $967.7 million QoQ and deposits increasing $584.3 million QoQ.
• Capital Markets Activity: In January 2026, the company issued $450 million in 5.768% fixed-to-floating rate subordinated notes due 2036.

Guidance, Outlook, Risks, and Unusual Items

• Unusual Items:
  • Merger Costs: Q1 2026 included $7.3 million in pre-tax merger-related expenses related to the Bremer acquisition.
  • Pension Expense: A $3.4 million non-cash, pre-tax expense was recorded for the distribution of excess pension assets from the legacy First Midwest plan.
  • Q4 2025 Comparison: The prior quarter included $24.5 million in merger expenses and a $15.9 million pre-tax loss from the termination of the Bremer pension plan.
• Outlook & Commentary: Management highlighted solid loan and deposit growth, disciplined expense management, and strong credit quality. The Federal Reserve held rates steady in Q1 2026 (target range 3.50%-3.75%).
• Risks & Contingencies:
  • Credit Quality: Nonaccrual loans decreased to $512.0 million (1.03% of total loans). Net charge-offs were $32.0 million (0.26% annualized).
  • Interest Rate Risk: The company maintains a neutral interest rate risk position. Projected net interest income is sensitive to rate changes, with a -9.73% impact modeled for a 300 basis point immediate decrease.
  • Investment Portfolio: Available-for-sale securities held net unrealized losses of $656.3 million; held-to-maturity securities held net unrealized losses of $391.9 million. Management has no intent to sell securities in unrealized loss positions.

Investor Verification Checklist

• Merger Integration: Verify the trajectory of cost synergies and revenue accretion from the Bremer Financial Corporation acquisition.
• Intangible Amortization: Monitor the $25.6 million quarterly amortization of intangibles and its impact on non-GAAP efficiency ratios.
• Asset Quality Trends: Track the allowance for credit losses ($574.4 million) relative to nonaccrual loans and net charge-offs, particularly in the commercial real estate sector.
• Investment Portfolio Valuation: Assess the impact of interest rate fluctuations on the $1.05 billion in net unrealized losses within the investment securities portfolio.
• Share Repurchases: Confirm remaining authorization ($383.5 million) and execution of the new $400 million repurchase program approved in Q1 2026.