Old National Bancorp (NASDAQ:ONB) Reports Mixed Q4 2025 Results; Shares Edge Higher
Old National Bancorp closed its 2025 fiscal year with a fourth-quarter earnings report that presented a nuanced picture for investors. The Midwestern regional bank delivered adjusted earnings that surpassed analyst expectations, while its top-line revenue fell short of consensus estimates. In pre-market trading following the release, the company's shares showed modest upward movement, indicating a market reaction that appears to weigh the profit beat more heavily than the revenue miss.
Earnings and Revenue Versus Expectations
The core of the market's immediate focus was on two key metrics: profitability and revenue growth. On the profitability front, Old National delivered a clear positive surprise.
- Adjusted Earnings Per Share (EPS): $0.62, beating the analyst consensus estimate of $0.5988.
- Reported Revenue: $698.6 million, falling short of the estimated $713.3 million.
This dynamic of a bottom-line beat coupled with a top-line miss suggests the bank effectively managed its expenses and credit costs to drive profitability, even as interest and non-interest income came in lighter than anticipated. For the full year 2025, the company reported adjusted EPS of $2.21, setting what management termed a new organizational record.
Key Highlights from the Quarter
Beyond the headline numbers, the earnings release detailed several fundamental strengths that underpin the bank's performance.
- Net Interest Margin Stability: The net interest margin (NIM) on a fully taxable equivalent basis held steady at 3.65%, showing resilience in a challenging interest rate environment. This was supported by a 17 basis-point reduction in total deposit costs.
- Controlled Credit Quality: Credit metrics remained a highlight. Net charge-offs represented 0.27% of average loans, and nonperforming loans declined to 1.07% of total loans from 1.23% in the prior quarter. The provision for credit losses was $32.7 million.
- Strong Capital Position: Preliminary regulatory capital ratios improved, with Tier 1 common equity rising to 11.08%. The tangible common equity ratio also increased to 7.72%.
- Expense Management: The adjusted efficiency ratio improved significantly to a record 46.0%, down from 48.1% in Q3, reflecting cost savings from the integration of the Bremer Bank acquisition.
Loan Growth and Outlook
Management highlighted solid commercial loan production during the quarter, which drove a 6.4% annualized increase in end-of-period total loans to $48.8 billion. The commercial loan pipeline also grew 15% to $4.8 billion, suggesting potential for continued growth.
The press release did not provide a formal quantitative financial outlook for 2026. Analysts currently project revenue of approximately $2.94 billion and EPS of around $2.64 for the full year 2026. For the upcoming first quarter, the consensus estimates are for revenue of $713.2 million and EPS of $0.627.
Market Reaction and Path Forward
The initial pre-market gain in Old National's stock points to investor approval of the bank's ability to navigate margin pressures and convert its operations into higher-than-expected earnings. The market's reaction seems to validate Chairman and CEO Jim Ryan's statement that the year's results were "driven by a focus on fundamentals."
The bank enters 2026 from a position of strength, with solid capital, a growing loan book, and improving efficiency. The primary challenge, as hinted by the revenue miss, will be generating stronger top-line growth in what remains a competitive deposit and lending landscape. Investors will likely watch for the bank's ability to sustain its net interest margin and translate its commercial pipeline into realized revenue in the coming quarters.
For a detailed breakdown of future quarterly estimates and historical earnings performance for Old National Bancorp, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, nor a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
