Old National (ONB) Q1 2026 earnings review
Boring is Beautiful: Unwavering Execution Offsets Margin Squeeze
Old National delivered exactly what regional bank investors crave right now: predictable, high-quality execution. Adjusted EPS of $0.61 was essentially flat sequentially, as strong loan growth and pristine expense management offset a 10 bps compression in the Net Interest Margin (NIM). The integration of Bremer is fully realized, culminating in a record adjusted efficiency ratio of 45.7%. While the macro rate environment is pressuring asset yields, management aggressively accelerated capital returns, buying back 3.9 million shares. The underlying machine is working perfectly; the only headwind is the yield curve.
🐂 Bull Case
Total loans grew 8.0% annualized to $49.8 billion, fueled primarily by $633.8 million in C&I growth. Even better, the commercial pipeline hit a record $5.5 billion (up 14%).
The adjusted efficiency ratio fell to 45.7%, proving that the Bremer acquisition synergies are 100% realized and management can rigorously control noninterest expenses.
🐻 Bear Case
NIM compressed 10 bps to 3.55%. Despite managing deposit costs down by 8 bps, asset yields fell faster, resulting in a slight miss versus previous NII expectations.
Noninterest income relied heavily on Wealth Management, as traditional bank fees, capital markets, and mortgage fees all declined sequentially.
⚖️ Verdict: 🟢
Bullish. ONB is generating organic growth, controlling what it can (expenses, credit quality, buybacks), and absorbing macro rate headwinds with minimal impact to the bottom line.
Key Themes
Loan Growth and Pipeline Momentum
Accelerating. Total loans reached $49.8 billion, representing an 8.0% annualized growth rate, up from the 6.4% annualized rate in 25Q4. This was primarily driven by C&I loan production. Furthermore, the commercial pipeline expanded 14% to a record $5.5 billion, indicating that customer demand and ONB's market share capture remain highly robust.
Bremer Cost Synergies Drive Record Efficiency
Stable. ONB reported 100% realization of Bremer cost savings, pushing the adjusted efficiency ratio to an incredibly lean 45.7% (down from 46.0% last quarter and 51.8% a year ago). Adjusted noninterest expense declined sequentially to $354.0 million. This operating leverage is the crucial shock absorber protecting earnings from margin compression.
Aggressive Acceleration of Share Repurchases
Accelerating. Management kept its prior promise to be 'more active' with capital returns. ONB repurchased 3.9 million shares in Q1, a massive step up from the 1.1 million shares repurchased in both 25Q3 and 25Q4. With CET1 stable at 11.11%, the bank has the excess capital to actively shrink the float while funding 8% loan growth.
Wealth Management Platforms Offset Fee Weakness
Stable. While overall fee income was pressured, ONB's ongoing investments in its Wealth Management platforms and personnel are paying off. Wealth and investment services fees rose to $39.7 million, helping to counterbalance seasonal drops in traditional bank fees and the normalization of capital markets revenue. This product diversification is essential to keeping noninterest income above $120 million.
Macro Rate Environment Sparks Margin Compression
Decelerating. Net Interest Margin (NIM) fell 10 bps sequentially to 3.55%. In a clear data contradiction to the positive narrative surrounding lower funding costs, the bank successfully reduced total deposit costs by 8 bps to 1.72%, yet still suffered margin compression. Why? Because the macro rate environment is causing asset yields (loans and securities) to reprice downward faster than the bank can lower its deposit pricing.
Noninterest Income Composition Quality
Decelerating. Excluding realized debt securities gains and the prior quarter's pension loss, noninterest income was down 2.6% sequentially. The bank explicitly cited lower capital markets and mortgage fees (which were elevated in Q4) and seasonally lower bank fees. If wealth management growth stalls, top-line revenue could struggle to outpace margin compression.
Seasonal Deposit Outflows Require Fill-Ins
Stable. Total deposits grew 4.2% annualized to $55.7 billion, but this required offsetting significant seasonal outflows of public funds with retail and commercial deposits. While ONB boasts a highly granular deposit base, maintaining liquidity in competitive markets will test the durability of their 1.72% cost of deposits.
Other KPIs
Stable. Down slightly from 0.27% in 25Q4. Excluding purchased credit deteriorated (PCD) loans that had an allowance established at acquisition, NCOs were an incredibly benign 0.19%. ONB's credit quality remains a hallmark of its conservative underwriting.
Accelerating (Improving). Nonaccruals fell sequentially from 1.07% to 1.03%, and are significantly lower than the 1.29% printed in Q1 of 2025. Delinquencies (30+ days) remain microscopic at 0.24%. There are no systemic credit cracks visible in this portfolio.
Guidance
Accelerating. While management simply stated that nothing changes their full-year expectations (which previously guided for 4-6% loan growth), Q1 delivered 8.0% annualized growth and the pipeline swelled by 14%. ONB is currently tracking to exceed its initial volume targets.
Stable. Q1 FTE NII came in at $580.4 million, which is slightly below the ~$590 million run-rate previously implied for the quarter. Achieving the full-year goal will require either an acceleration in volume or a stabilization of the NIM in the back half of the year.
Key Questions
NIM Floor and Trajectory
NIM compressed 10 bps this quarter despite strong efforts to lower deposit costs. What are the assumptions for the NIM floor, and at what point in the yield curve cycle will asset repricing turn from a headwind into a tailwind?
Commercial Pipeline Conversion
The commercial pipeline hit a record $5.5 billion. Is this pipeline being inflated by competitors pulling back from the market, and what is the expected conversion rate into funded loans over the next two quarters?
Pace of Share Repurchases
You executed 3.9 million share repurchases in Q1, a massive sequential increase. Given the 8% annualized loan growth, what is the sustainable quarterly run-rate for repurchases before you begin to draw down the 11.11% CET1 ratio?