Old National Bancorp Q3 2024 Financial Results

Old National Bancorp (ONB) has announced its third-quarter financial results for 2024, with earnings per share (EPS) in line with market expectations. Chairman and CEO Jim Ryan reported a GAAP EPS of $0.44 and an adjusted EPS of $0.46, supported by a 10.1% annualized growth in core deposits and a 4.1% increase in commercial loans.

The bank also saw an 8% increase in tangible common book value per share since the second quarter of 2024, representing a 21% year-over-year rise. Despite a less optimistic outlook for the fourth quarter due to interest rate changes, the bank expects steady loan growth and net interest income (NII), aiming to maintain a strong capital position.

Key Takeaways

• GAAP EPS at $0.44 and adjusted EPS at $0.46, meeting expectations.
• Strong core deposit growth at 10.1% annualized and commercial loans increased by 4.1%.
• Adjusted return on tangible common equity at 16.8% and adjusted efficiency ratio at 51.2%.
• Tangible common book value per share increased by 8% since Q2 and 21% year-over-year.
• CET1 ratio stood at 11% with loan growth at 2.7% annualized.
• Anticipated $2 billion in cash flows from the investment portfolio to enhance NII.
• Charge-off guidance tightened to 17-20 basis points, reflecting normalized credit levels.
• Selective hiring with a focus on fee income businesses and expected annual savings of $30 million by Q4 from CapStar integration.

Company Outlook

• Modest NII growth expected in Q4 from $2 billion in cash flows from the investment portfolio.
• Anticipated increase in CET1 ratio by approximately 100 basis points annually.
• Plans for quick capital rebuilding with potential share buybacks next year.
• Emphasis on long-term investments for sustained positive operating leverage.

Bearish Highlights

• Softer outlook for Q4 compared to earlier expectations.
• Slight decline in fee income anticipated due to seasonal factors.
• Nonaccrual loans increased to $25 million, attributed to individual credit issues.

Bullish Highlights

• Strong capital position with a CET1 ratio of 11%.
• Continued positive operating leverage and low efficiency ratio maintained.
• Optimism for increasing commercial loan demand post-election.

Misses

• Fee income expected to decline by about $8 million in Q4 due to seasonality and softer mortgage activity.

Q&A Highlights

• Management addressed nonaccrual loans, emphasizing they reflect unique issues rather than systemic trends.
• Delinquency and nonperforming trends are manageable, with expectations for stability and potential upgrades.
• Selective hiring to enhance fee income businesses and monitor expenses.
• M&A opportunities are not a priority but will be considered for high shareholder value.

Old National Bancorp continues to navigate a challenging economic environment, focusing on core deposit growth, prudent loan expansion, and maintaining a robust capital position. Their conservative growth strategy aims to withstand interest rate fluctuations and seize opportunities in markets like Tennessee. Through disciplined hiring and investment strategies, the bank aspires to achieve sustainable growth and deliver shareholder value.

Full Transcript – Old National Bancorp (ONB) Q3 2024

Lynell Walton: Welcome to the Old National Bancorp Third Quarter 2024 Earnings Conference Call. This call is recorded for public access in accordance with the SEC's Regulation FD. Presentation slides can be found on the Investor Relations page at oldnational.com.

Jim Ryan: Good morning. Earlier today, Old National reported third-quarter results with earnings per share in line with expectations. These results were driven by our organic growth strategy and market investments. We reported GAAP earnings of $0.44 per share; adjusted EPS was $0.46. Our growth remains strong at 10.1% annualized for noninterest-bearing deposits. Our total CT1 ratio remains at 11% and loan growth is on track. We have shifted to capitalize on positive macroeconomic changes, focusing on steady growth strategies.

• Continued improvement in liquidity and capital position.
• We are positioned well as we transition through challenges, maintaining operational excellence.