Old National Bancorp (NASDAQ:ONB) executives emphasized record profitability and a smooth integration of its Bremer Bank partnership during the company’s fourth-quarter and full-year 2025 earnings call, while outlining expectations for continued loan growth, stable-to-improving net interest margin, and ongoing capital return in 2026.
Record 2025 performance and strong fourth quarter
Chairman and CEO Jim Ryan said 2025 produced “new organizational records for adjusted earnings per share, net income, and the efficiency ratio,” attributing the year’s performance to core deposit growth that supported loan expansion, positive operating leverage, disciplined credit management, and “healthy liquidity and capital ratios.” He highlighted fourth-quarter profitability metrics including an adjusted return on average tangible common equity of nearly 20%, an adjusted return on assets of 1.37%, and an adjusted efficiency ratio of 46%.
Bremer conversion and balance sheet positioning
Management said the company completed the systems conversion and integration tied to its Bremer Bank partnership during the fourth quarter, calling it one of Old National’s “smoothest and most successful integrations ever.” Moran said the partnership “solidified our position in Minnesota while adding attractive funding in North Dakota,” including market share in several North Dakota markets.
On capital and liquidity, Moran said the company’s CET1 ratio finished the quarter “over 11%,” and the loan-to-deposit ratio was 89%. Tangible book value per share rose 4% from the third quarter and 15% year over year, despite the Bremer close, approximately $140 million of merger charges year to date, and repurchases of 2.2 million shares since the buyback restart in the third quarter of 2025. Ryan also pointed to tangible book value per share growth of 15% in 2025 while balancing integration impacts and share repurchases.
Loans, deposits, and margin outlook
Old National reported total loan growth of 6.4% annualized from the prior quarter, with Moran noting loan production was up 25% and “strong throughout our commercial book.” Despite that production, the pipeline rose nearly 15% from the prior quarter. Management also cited “strategic portfolio management,” including payoffs that contributed to lower criticized and classified loans.
On the securities portfolio, Moran said it was essentially unchanged from the prior quarter, with purchases offset by fair value changes. The company expects approximately $2.9 billion in securities cash flow over the next 12 months, with “new money yields” about 94 basis points above backbook yields. He also said loan repricing dynamics and loan growth should support “stable to improving” net interest income and margin through 2026, while noting the first quarter will be affected by two fewer days.
Deposits increased 0.6% annualized in the quarter, while core deposits excluding brokered deposits declined about 3% annualized, which Moran attributed primarily to seasonally lower public funds. Non-interest-bearing deposits grew to 26% of core deposits from 24% in the prior quarter. Brokered deposits increased in line with seasonality but remained 6.7% of total deposits, which management said was below peer levels.
Moran said the cost of total deposits decreased 17 basis points from the prior quarter, reflecting Fed rate cuts and the company’s client acquisition posture. He cited an approximate 87% beta on rates in the company’s exception-priced deposit book during the quarter, resulting in a total deposit spot rate of 1.68% at Dec. 31.
In Q&A, Moran said that after adjusting for day count effects, management’s view is that margin is “stable, if not a bit grinding higher” through 2026. He said the key variables shaping margin include:
- Loan growth (guided at 4%–6% for full-year 2026)
- The steepness of the yield curve
- The “belly of the curve” and fixed-asset repricing
- Downside deposit beta management
On securities strategy, Moran described the portfolio as “plain vanilla,” with a target duration around four years, and said the company does not intend to meaningfully grow or shrink cash and securities as a percentage of assets in 2026, instead reinvesting cash flows.
Fees, expenses, and technology investment
Adjusted non-interest income was $126 million in the fourth quarter, exceeding guidance, with Moran saying mortgage and capital markets were “better than expected” due to a somewhat more favorable rate backdrop. Asked about 2026 fee expectations, Moran said there is first-quarter seasonality in mortgage, but management is “cautiously optimistic” on mortgage for 2026 and cited mortgage and capital markets as areas with potential upside versus guidance.
Adjusted non-interest expenses were $365 million in the quarter. Management highlighted positive operating leverage and a record-low 46% adjusted efficiency ratio. Moran said Old National realized about 28% of anticipated Bremer cost savings in the fourth quarter and expects savings to be fully realized in the first quarter of 2026, which is incorporated into expense guidance.
On technology spend, Ryan said the company is “not underfunding new investments,” pointing to priorities including payments and client-facing capabilities, and noted Old National has been able to “self-fund” investments while maintaining efficiency. He also said he expects continued pressure in salaries as the company hires to grow the front line.
Credit trends and capital return priorities
Credit metrics improved in the fourth quarter. Moran reported net charge-offs of 27 basis points, or 16 basis points excluding charge-offs on purchased credit deteriorated (PCD) loans. Criticized and classified loans declined by $278 million, or about 8%, and non-accrual loans fell $70 million, or about 12%. In commercial real estate portfolios, management said upgrades and payoffs exceeded downgrades by a 2-to-1 ratio. The allowance for credit losses, including the reserve for unfunded commitments, was 124 basis points of total loans, down two basis points from the prior quarter, mainly due to lower criticized and classified loans. Moran added that qualitative reserves incorporate a 100% weighting on Moody’s S2 scenario, plus additional factors reflecting global uncertainty.
On capital return, management reiterated that it does not view capital build and capital return as “mutually exclusive” in 2026. In response to analyst questions, Moran said Old National plans to be more active with share repurchases in 2026 than in 2025, while still maintaining capital to support growth. He also said management is “very comfortable” with the current CET1 level and does not expect to target down to 10.5% “at this time.”
Looking ahead, Moran said the company’s pipeline supports first-quarter loan growth of 3%–5% and full-year loan growth of 4%–6%, with deposits expected to meet or exceed industry growth and generally track asset growth. He said net interest income is expected to increase, supported by fixed-asset repricing and continued growth, and noted that the company’s baseline assumptions include two additional 25-basis-point rate cuts in 2026 and a 40% total down-rate deposit beta.
About Old National Bancorp (NASDAQ:ONB)
Old National Bancorp (NASDAQ: ONB) is the bank holding company for Old National Bank, a regional financial services firm headquartered in Evansville, Indiana. Through its network of community banking offices, the company provides a full range of commercial and consumer banking services. Its offerings include checking and savings accounts, personal and business loans, and deposit products designed to meet the needs of individuals, small businesses, and larger corporate customers.
In addition to traditional banking, Old National Bancorp delivers specialty financial services such as treasury management, wealth management, mortgage loan production, and insurance solutions.
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