Old National Bancorp ((ONB)) has held its Q4 earnings call. Read on for the main highlights of the call.
Invest with Confidence:
- Follow TipRanks' Top Wall Street Analysts to uncover their success rate and average return.
- Join thousands of data-driven investors – Build your Smart Portfolio for personalized insights.
During the latest earnings call, Old National Bancorp conveyed a generally positive outlook with a strong emphasis on deposit and loan growth, successful acquisitions, and robust financial metrics. However, the call also highlighted some challenges, including loan growth issues due to payoffs and line utilization, potential impacts from interest rate changes, and leadership transitions, which tempered the overall enthusiasm.
Strong Deposit and Loan Growth
The company reported remarkable growth in its low-cost core deposits, which expanded by approximately 10% in 2024. This growth effectively funded a corresponding 10% increase in loans. Since 2022, Old National Bancorp’s total deposits and loans have enjoyed a compounded annual growth rate of 8%, underscoring the bank’s strong performance in this critical area.
Successful Acquisition and Integration
Old National Bancorp has successfully closed and converted CapStar Bank and Old National Bank, solidifying its presence in Nashville and other high-growth eastern markets. Additionally, the bank announced a new partnership with Bremer Bank, which will expand its footprint across Minnesota, North Carolina, and Wisconsin, further enhancing its market position.
Robust Financial Metrics
The bank reported impressive financial metrics, including an adjusted earnings per share of $1.86, an adjusted return on average tangible common equity at 16.9%, and an adjusted efficiency ratio of 52%. The tangible book value per share experienced an annual growth of 8%, reflecting strong financial health and operational efficiency.
Positive Operating Leverage
Old National Bancorp achieved positive linked quarter operating leverage, driven by controlled expenses and peer-leading deposit growth at reasonable costs. This operational strategy has positioned the bank well in its competitive landscape.
Loan Growth Challenges
The bank faced some challenges in loan growth, with total loans decreasing by 1.6% annualized from the last quarter due to $600 million in outsized payoffs and lower line utilization. This highlights a potential area of concern for the bank’s growth strategy moving forward.
Potential Interest Rate Impacts
Net interest income and margins were impacted by lower deposit costs and increased paydowns. The management expressed concerns over potential future income impacts due to anticipated rate cuts, indicating a cautious outlook on interest rate movements.
Leadership Transition
The planned retirement of President and COO, Mark Sander, set for June 30, 2025, marks a significant transition in leadership. The bank has initiated a search for his successor, a critical move to ensure continued stability and leadership strength.
Forward-Looking Guidance
Looking ahead, Old National Bancorp provided optimistic guidance for 2025. The bank anticipates stable to improving net interest margins and plans for a 4%-6% loan growth, underpinned by strong deposit strategies. The CET1 ratio remains robust at 11.38%, and the bank expects to surpass industry growth in deposits while maintaining disciplined expense management. The successful integration of CapStar Bank and the upcoming partnership with Bremer Bank are expected to drive full realization of cost savings by 2026.
In summary, Old National Bancorp’s earnings call presented a generally positive outlook with strong growth metrics and strategic expansions. While challenges such as loan growth issues and interest rate impacts were noted, the bank’s proactive approach and optimistic guidance for 2025 suggest a resilient trajectory. Investors and market watchers will be keenly observing how these strategic initiatives unfold in the coming year.
