8-K: Old National Bancorp Reports Record 4Q25, Full-Year 2025

Old National Bancorp announced record adjusted EPS and net income for full-year 2025, driven by strong loan and deposit growth, disciplined expense management, and improved credit metrics.

Summary

• Achieved record adjusted EPS, net income, and efficiency ratio for full-year 2025.
• Reported 4Q25 adjusted Return on Average Assets (ROAA) of 1.37% and adjusted Return on Average Tangible Common Equity (ROATCE) of 19.9%.
• Experienced total loan growth of 5.1% year-over-year (excluding Bremer) and total deposit growth of 4.9% year-over-year (excluding Bremer).
• Maintained a disciplined expense management, reflected in a 4Q25 adjusted efficiency ratio of 46.0%.
• Allowance for credit losses stood at $605 million, representing 1.24% of total loans, with an additional $50 million credit discount remaining on Bremer non-PCD loans.
• Common Equity Tier 1 (CET1) capital to Risk-Weighted Assets (RWA) increased to 11.08%.
• Tangible Book Value (TBV) per share increased by 15% year-over-year.
• Repurchased 2.2 million shares of common stock during 2025.
• Maintaining a neutral rate risk position with 59% of loans being variable/floating-rate.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong positive report, highlighting record financial performance, robust capital generation, and excellent credit quality, positioning the company well for future growth despite some seasonal deposit outflows.

Positives

• Achieved record adjusted EPS, net income, and efficiency ratio for full-year 2025.
• Demonstrated peer-leading profitability with 4Q25 adjusted ROATCE of 19.9% and adjusted ROAA of 1.37%.
• Delivered strong loan and deposit growth: Total loan growth of 5.1% YoY (ex. Bremer) and total deposit growth of 4.9% YoY (ex. Bremer).
• Implemented disciplined expense management, resulting in a 4Q25 adjusted efficiency ratio of 46.0%.
• Showed significant improvement in credit metrics, including an 8% decline in criticized and classified loans and a 12% reduction in nonaccrual loans from 3Q25, alongside low net charge-offs of 16 bps (excluding PCD loans).
• Generated significant capital, with CET1 increasing 6 bps from 3Q25 to 11.08%, exceeding expectations set at the Bremer announcement.
• Tangible Book Value (TBV) per share increased by 15% YoY, including the impact of the Bremer close.
• Repurchased 2.2 million shares of common stock in 2025, indicating strong capital returns.
• Maintained a quality, low-cost deposit franchise with 75% of core deposits having tenure greater than 5 years and low total deposit costs of 180 bps for 4Q25.
• Possesses a granular and diversified loan portfolio with manageable CRE non-owner occupied maturities.

Negatives

• Core deposits decreased by 3.2% annualized in 4Q25, impacted by seasonal outflows of public funds.
• Adjusted return on average tangible common equity slightly decreased by 20 basis points from 20.1% in 3Q25 to 19.9% in 4Q25.
• Incurred a pension plan loss of $15.9 million in 4Q25.

Risks

• Competition within the financial services industry.
• Impacts from government legislation, regulations, and policies, including trade and tariff policies.
• Ability to successfully execute the business plan.
• Unanticipated changes in liquidity position, including access to sources of liquidity and capital.
• Changes in economic conditions and economic and business uncertainty, which could materially impact credit quality trends and the ability to generate loans and gather deposits.
• Inflation and governmental responses to inflation, including increasing interest rates.
• Market, economic, operational, liquidity, credit, and interest rate risks associated with the business.
• Ability to successfully manage credit risk and the sufficiency of the allowance for credit losses.
• Expected cost savings, synergies, and other financial benefits from the merger with Bremer Financial Corporation not being realized within expected time frames, or costs/difficulties relating to integration being greater than expected.
• Potential adverse reactions or changes to business or employee relationships resulting from the Bremer merger.
• Impact of purchase accounting with respect to the Bremer merger, or any change in assumptions used regarding the assets acquired and liabilities assumed to determine their fair value and credit marks.
• Potential impact of future business combinations on performance and financial condition, including the ability to successfully integrate businesses, the success of revenue-generating and cost reduction initiatives, and the diversion of management's attention.
• Failure or circumvention of internal controls.
• Operational risks or risk management failures by the company or critical third parties, including data processing, information technology systems, cybersecurity, technological changes, vendor issues, business interruption, and fraud risks.
• Significant changes in accounting, tax, or regulatory practices or requirements.
• New legal obligations or liabilities.
• Disruptive technologies in payment systems and other services traditionally provided by banks.
• Adverse effects on information technology systems, or those of third parties, resulting from failures, disruptions, or cybersecurity attacks, including ransomware, security breaches, hacking, social engineering attacks, and malware intrusion.
• Effects of climate change on the company and its customers, borrowers, or service providers.
• Political and economic uncertainty and instability.
• Impacts of pandemics, epidemics, and other infectious disease outbreaks.

Future Outlook

For full-year 2026, Old National Bancorp anticipates EOP loans (including HFS) to be up 4%-6% annualized, net interest income (FTE basis) around $2,415 million (+/2%), noninterest income between $485-$505 million, and noninterest expense between $1,435-$1,455 million. The company expects a net charge-off ratio of 0.25%-0.30% and provision for credit losses of $135-$145 million. GAAP income tax rates are projected at ~22% and adjusted FTE at ~24%. The outlook assumes two Fed rate cuts in 2026 (June, October, -25bps each) and a neutral balance sheet position for NII stability. This is expected to result in positive operating leverage and >15% EPS growth YoY.

Management Comments

• Old National's primary strategic objective is to be a top quartile performing basic bank that is a primary, trusted partner to our clients in the communities we serve, and a highly respected, highly valued employer that continually empowers our team members to grow, develop and succeed.
• Prioritizing organic growth and capital growth over M&A.
• Maintaining Neutral Rate Risk Position.
• Neutral balance sheet position provides NII stability if more or fewer rate cuts occur.

Industry Context

StockSavvy.ai notes that Old National Bancorp's strong performance in profitability, capital generation, and credit quality positions it favorably within the regional banking sector, especially given the current economic uncertainties and interest rate environment. The focus on organic growth and capital returns, rather than M&A, suggests a strategic pivot towards internal strength and shareholder value in a consolidating industry.

Comparison to Industry Standards

• Old National Bancorp achieved a 4Q25 adjusted ROATCE of 19.9%, which is higher than the peer average of 14.7% as of 9/30/2025 (based on S&P Capital IQ Pro data).
• The 4Q25 adjusted ROAA of 1.37% also surpasses the peer average of 1.2% as of 9/30/2025.
• The 4Q25 adjusted efficiency ratio of 46.0% is significantly better than the peer average of 55.6% as of 9/30/2025, indicating superior cost management.
• Old National's TBV per share CAGR of 11.7% over 2 years and 13.3% over 3 years outperforms the KRX index averages of 9.1% and 1.4% respectively.
• The company's stock has outperformed the KRX index since the 2021 First Midwest merger announcement, with ONB up 28% compared to KRX up 4%.
• Net Charge-Offs (excluding PCD) of 16 bps for 4Q25 are lower than the peer average of 27 bps.
• 30+ Day Delinquency and Non-Performing Loans are consistently below peer averages from FY18 to 4Q25.

Corporate Governance

Stakeholder Impact

• Shareholders: Positive impact due to record profitability, strong capital generation, 15% YoY TBV per share growth, and 2.2 million shares repurchased in 2025, indicating potential for continued capital returns.
• Clients: Commitment to being a primary, trusted partner in communities and strong client satisfaction scores (NPS = 50).
• Employees: Commitment to being a highly respected, highly valued employer that continually empowers team members to grow, develop, and succeed.
• Communities: Commitment to strengthening communities, as highlighted in the 2024 Community Action Report.

Next Steps

• Continue prioritizing organic growth and capital growth over M&A.
• Manage rate risk position, anticipating two Fed rate cuts in 2026 (June, October, -25bps each).
• Expect Accumulated Other Comprehensive Income (AOCI) to recover approximately 11% by year-end 2026.
• Consult further disclosures in SEC filings.

Key Dates

Recommendation

The filing demonstrates exceptional financial performance with record adjusted EPS, net income, and efficiency ratio for full-year 2025, coupled with peer-leading profitability metrics (ROAA, ROATCE). Strong capital generation, robust credit quality, and a disciplined approach to expense management further solidify the company's financial health. The commitment to organic growth and capital returns, including significant share repurchases, signals a clear focus on shareholder value. The positive outlook for 2026, despite anticipated rate cuts, suggests continued operational strength and profitability, making it a compelling investment opportunity.

Keywords

Old National Bancorp, ONB, Financial Results, Banking, Regional Bank, SEC Filing, Earnings, 4Q25, Full-Year 2025, Loan Growth, Deposit Growth, Credit Quality, Capital, Efficiency Ratio, ROAA, ROATCE, TBV, CET1, Merger Integration, Bremer Financial Corporation, Net Interest Income, Noninterest Income, Noninterest Expense, Allowance for Credit Losses, Share Repurchase, Corporate Governance, Risk Management