Key Highlights

  • Record net income of USD 250.0 million; EPS of USD 0.66 matched the estimate.
  • Revenue of USD 719.5 million trailed the USD 732.04 million estimate.
  • Net interest margin slipped 2 basis points to 3.52% as deposit costs rose.
  • Management maintained 2026 EPS growth guidance of more than 15%.

Old National Bancorp (NASDAQ:ONB) reported third-quarter results on Wednesday, Oct. 21, with record net income applicable to common shares of USD 250.0 million and diluted EPS of USD 0.66. EPS matched the estimate of about USD 0.66, while revenue of USD 719.5 million fell short of the USD 732.04 million estimate.

Old National is the holding company of Old National Bank, the sixth largest commercial bank headquartered in the Midwest, with about USD 74 billion of assets. Shares were down 2.92% at USD 24.60 in Wednesday trading.

Record Earnings and Efficiency

Adjusted EPS was also USD 0.66, a record, after excluding a USD 0.9 million pension settlement gain and USD 0.7 million of merger-related charges. EPS compares with USD 0.65 in the second quarter and USD 0.46 a year earlier. Pre-provision net revenue was USD 365.0 million.

The efficiency ratio reached a record 46.1%, and the adjusted ratio was a record 44.9%. Noninterest expense was USD 355.4 million, down from USD 372.2 million in the prior quarter. Return on average tangible common equity was 19.6%.

Margin, Deposits and Loans

Net interest income on a tax-equivalent basis rose to USD 592.0 million from USD 586.5 million, but the margin slipped 2 basis points to 3.52% as total deposit costs climbed 8 basis points to 179 basis points. Noninterest income was USD 128.4 million versus USD 153.6 million, with the second quarter lifted by about USD 10 million of elevated other income. Mortgage banking revenue was USD 9.0 million, and management cited softness from rising rates.

Period-end deposits reached USD 57.6 billion, up 10.6% annualized, helped by about USD 1 billion of organic growth in business accounts and seasonal public funds. Loans were USD 51.2 billion, up 2.9% annualized, led by commercial and industrial growth of USD 148.0 million and commercial real estate growth of USD 157.3 million. The commercial pipeline was USD 4.4 billion, up 6% from a year ago but down 20% from the record level at the end of the second quarter.

Credit and Capital

The provision for credit losses was USD 33.6 million, compared with USD 36.2 million in the second quarter. Net charge-offs were 27 basis points of average loans, or 24 basis points excluding purchased credit deteriorated loans. Delinquencies of 30 days or more were 0.25% and nonaccrual loans were 0.92% of total loans. The allowance stood at 1.20% of total loans.

Preliminary Tier 1 common equity was 11.11%, up 2 basis points. Old National repurchased USD 100 million of stock, or 3.9 million shares, and paid USD 55 million in dividends, a combined payout ratio of 62%. Tangible common equity to tangible assets fell to 7.28% from 7.68% because of a USD 391 million hit from higher rates on other comprehensive income.

Guidance Held, With Lower-End Landings

Management kept its outlook for EPS growth above 15% for 2026. It now projects fourth-quarter loan growth at a mid-single-digit pace, which puts the full year at the lower end of the 6% to 8% range. Net interest income and adjusted noninterest expense are projected near the lower end of their ranges, with expenses guided to USD 1.435 billion to USD 1.455 billion for the year.

Management also said current spot rates point to a margin improvement of about 2 basis points in the fourth quarter. CEO Jim Ryan said the bank is prioritizing organic growth and share repurchases over acquisitions. Remaining buyback capacity is USD 177 million, which the company plans to use opportunistically through February 2027.

Metrics to Watch

Fourth-quarter markers include the net interest margin against the projected 2 basis point gain, deposit cost trends after this quarter's 8 basis point rise, and conversion of the USD 4.4 billion commercial pipeline into loans. Mortgage fees, nonaccrual loans and the pace of buybacks are also on the list.