• Revenue Growth: Total deposits and loans experienced a compounded annual growth rate of 8% since 2022.
• GAAP Earnings Per Share (EPS): $1.68 for the full year.
• Adjusted Earnings Per Share (EPS): $1.86 for the full year.
• Fourth Quarter GAAP EPS: $0.47.
• Fourth Quarter Adjusted EPS: $0.49, excluding $0.02 per share of merger charges.
• Return on Average Tangible Common Equity: 16.9% adjusted.
• Net Return on Average Assets: 1.14% adjusted.
• Adjusted Efficiency Ratio: 52%.
• Net Charge-Offs: 17 basis points.
• Tangible Book Value Per Share Growth: 8% year-over-year.
• Common Equity Tier 1 (CET1) Ratio: 11.38% at the end of 2024.
• Total Loan Growth: 10% for the full year, excluding CapStar.
• Total Loan-to-Deposit Ratio: 89%.
• Deposit Costs: Total deposit costs decreased in the quarter, with a spot rate of 193 basis points at December 31.
• Noninterest Income: $9 million for the fourth quarter.
• Adjusted Noninterest Expenses: $269 million for the fourth quarter.
• Allowance for Credit Losses to Total Loans: 114 basis points.
• Tangible Book Value Per Share: Up 8% year-over-year.

• Warning! GuruFocus has detected 7 Warning Signs with ONB.

Release Date: January 21, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Old National Bancorp (NASDAQ:ONB) reported strong results for the fourth quarter and full year 2024, with a 10% growth in both core deposits and loans.
• The company achieved a compounded annual growth rate of 8% in total deposits and loans since 2022.
• Old National Bancorp (NASDAQ:ONB) maintained a low cost of deposits at 1.93%, with a 93% down beta on exception price deposits.
• The adjusted return on average tangible common equity was 16.9%, and the adjusted efficiency ratio stood at 52%.
• The tangible book value per share grew by 8% year-over-year, and total shareholder return significantly outperformed the KRX and executive peer group in 2024.

Negative Points

• Loan growth was slightly muted with a 1.6% annualized decrease from the last quarter due to outsized payoffs and lower line utilization.
• The company experienced a 17 basis point decrease in deposit rates compared to the prior quarter.
• There were $600 million of outsized payoffs in the commercial book, which could pose a challenge if such trends continue.
• The fourth quarter allowance for credit losses to total loans increased by 2 basis points from the prior quarter.
• The company is facing leadership changes with the retirement of President and COO Mark Sander, which may impact strategic continuity.

Q & A Highlights

Q: Are merger-related expenses backed out from the expense guidance for 2025? A: Yes, merger-related expenses are backed out, and everything else is fully loaded. - John Moran, CFO

Q: How does Old National Bancorp plan to allocate capital over the next 12 to 24 months? A: It's early to decide on capital allocation, but growth is the first priority. We expect more capital flexibility by midyear, allowing better insights into capital management. - James Ryan, CEO

Q: What are the expectations for loan growth in 2025, and what factors could influence it? A: We are cautiously optimistic about loan growth, expecting 4% to 6% for the full year. The first quarter may be challenging due to outsized payoffs and decreased line utilization, but underlying fundamentals remain solid. - Mark Sander, President and COO

Q: Can you elaborate on the net interest income (NII) outlook for 2025 and potential influencing factors? A: NII is expected to be stable to improving, driven by asset growth and favorable fixed asset repricing dynamics. A steeper yield curve could provide additional tailwinds. - John Moran, CFO

Q: What is the current stance on capital levels, and how might they change with new regulatory outlooks? A: We need more time to assess capital needs, but capital is currently ahead of expectations. This provides flexibility for the Bremer partnership and balance sheet optimization. We'll manage stakeholder expectations, including shareholders and rating agencies. - James Ryan, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.