Old National Bancorp Q4 2025 Earnings Report

Old National Bancorp EPS Results

• Actual EPS: $0.62
• Consensus EPS: $0.59
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: $0.49

Old National Bancorp Revenue Results

• Actual Revenue: $698.53 million
• Expected Revenue: $705.62 million
• Beat/Miss: Missed by -$7.09 million
• YoY Revenue Growth: N/A

Old National Bancorp Announcement Details

• Quarter: Q4 2025
• Date: 1/21/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, January 21, 2026
• Conference Call Time: 10:00AM ET

Old National Bancorp (NASDAQ:ONB) (NASDAQ: ONB) is a regional financial services holding company headquartered in Evansville, Indiana. Through its principal subsidiary, Old National Bank, the company provides banking and wealth management services to individuals, families, businesses and institutions.

Its offerings include checking and savings accounts, consumer and commercial lending, mortgages, treasury and cash management services, credit and debit cards, online and mobile banking, and investment and wealth management services. Old National also serves middle-market and specialized business clients through commercial banking and institutional banking capabilities.

Old National traces its history to 1834 and has expanded through organic growth and acquisitions. The company serves communities primarily across the Midwest, including markets in Indiana, Illinois, Iowa, Kentucky, Michigan, Minnesota, Ohio and Wisconsin. Jim Ryan serves as chairman and chief executive officer.

Old National Bancorp Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record 2025 performance — adjusted Q4 EPS of $0.62 (ex-items), up 27% YoY, with peer-leading profitability (adjusted ROTCE ~20%, adjusted ROA 1.37%) and a 46% adjusted efficiency ratio.
• Positive Sentiment: Successfully completed the Bremer systems conversion and integration, realizing ~28% of expected cost savings in Q4 and expecting full Bremer cost savings to be realized in Q1 2026.
• Positive Sentiment: Strong capital and shareholder returns — CET1 above 11%, tangible book value per share up ~15% year-over-year, and 2.2 million shares repurchased in 2025 with plans to be more active on buybacks in 2026.
• Positive Sentiment: Credit metrics improving — criticized/classified loans down ~8%, non-accruals down ~12%, low net charge-offs, and historically lower NPL-to-NCO conversion versus peers due to disciplined credit management.
• Neutral Sentiment: 2026 outlook calls for 4%–6% loan growth and stable-to-improving NII/NIM, contingent on assumptions (two 25bp rate cuts, ~40% deposit down-rate beta, and continued deposit management), with fee income and Bremer savings supporting EPS growth.

Presentation

[Operator]

Welcome to the Old National Bancorp Fourth Quarter and Full Year 2025 Earnings Conference call. This call is being recorded and has been made accessible to the public in accordance with the SEC's Regulation FD. Corresponding presentation slides can be found on the Investor Relations page at OldNational.com and will be archived there for 12 months. Management would like to remind everyone that certain statements on today's call may be forward-looking in nature and are subject to certain risks, uncertainties, and other factors that could cause actual results or outcomes to differ from those discussed. The company refers you to its forward-looking statement legend in the earnings release and presentation slides. The company's risk factors are fully disclosed and discussed within its SEC filings. In addition, certain slides contain non-GAAP measures which management believes provide more appropriate comparisons.

[Operator]

These non-GAAP measures are intended to assist investors in understanding performance trends. Reconciliations for those numbers are contained within the appendix of the presentation. I'd now like to turn the call over to Old National's Chairman and CEO, Jim Ryan, for opening remarks. Mr. Ryan.

[Jim Ryan, Chairman and CEO at Old National Bancorp]

Good morning. Before we get started, I want to congratulate the Indiana Hoosiers for a perfect season and winning the National College Football Championship. You've made our state incredibly proud. Earlier today, Old National announced strong fourth quarter earnings, marking an exceptional year that set new organizational records for adjusted earnings per share, net income, and the efficiency ratio. Our 2025 results were driven by a focus on the fundamentals: core deposit growth to support loan expansion, positive operating leverage, disciplined credit management, and healthy liquidity and capital ratios. Once again, we showed our unwavering commitment to shareholders, clients, team members, and communities. Our peer-leading fourth quarter profitability was highlighted by an adjusted return on average tangible common equity of nearly 20%, an adjusted ROA of 1.37%, and an adjusted efficiency ratio of 46%.

[Jim Ryan, Chairman and CEO at Old National Bancorp]

These outstanding quarterly results further reinforced the momentum behind our 2025 record performance that John will discuss later in the call. In the fourth quarter of 2025, we successfully completed the systems conversion and integration related to our Bremer Bank partnership. This was a major effort executed exceptionally well, and I want to thank our team members once again for the relentless focus and hard work throughout this process. The conversion reaffirmed the strength of our disciplined integration framework, which truly sets Old National apart. As we have stated, driving tangible book value per share growth is a key priority. This past year, we grew tangible book value per share by 15% despite the impact of closing our Bremer partnership, the associated one-time charges, and repurchasing 2.2 million shares in the back half of the year.

[Jim Ryan, Chairman and CEO at Old National Bancorp]

We remained committed to strengthening tangible book value per share while continuing to drive peer-leading profitability. Looking ahead to 2026, we will maintain the right balance between building capital organically and returning capital through share repurchases supported by our peer-leading return on average tangible common equity. As I mentioned last quarter, the best investment we can make is in ourselves. Our focus remains on organic growth and disciplined capital returns to maximize shareholder value. We started 2026 with strong momentum, and we will continue to strengthen our core fundamentals by investing in talent, technology, and client-facing capabilities. These efforts will ensure we remain strong, scalable, and positioned for long-term success. Thank you. I will now hand the call over to John to read the financial results in more detail.

[John Moran, CFO at Old National Bancorp]

Thanks. On slide five, as Jim mentioned, fourth quarter 2025 was a strong finish to a highly successful year marked by records in adjusted EPS and efficiency with peer-leading profitability, improvement in already durable credit metrics, and significant capital generation despite closing Bremer, which solidified our position in Minnesota while adding attractive funding in North Dakota. Speaking of our latest partnership, I'd be remiss if I didn't mention that the conversion of Bremer was one of our smoothest and most successful integrations ever. For the quarterly details on slide six, we reported GAAP Q4 earnings per share of $0.55. Excluding $0.07 of merger-related expenses, Bremer pension plan termination charges, and the reduction in our FDIC special assessment accrual, adjusted earnings per share were $0.62, a 5% increase over the prior quarter and a 27% increase year-over-year.

[John Moran, CFO at Old National Bancorp]

Results were driven by stable margin, better than expected growth in fee income, and well-controlled expenses. Importantly, credit improved with an 8% reduction in total criticized and classified loans and low levels of non-PCD charge-offs. Our profitability profile, as measured by return on assets and on tangible common equity, remained top decile against our peers. Lastly, our capital position has rebuilt quickly with CET1 over 11%, and we grew tangible book value per share over 17% annualized. On slide seven, you can see our quarterly balance sheet trends highlighting our strong liquidity and capital. Our deposit growth over the last year has continued to keep pace with asset growth, and the loan-to-deposit ratio is now 89%.

[John Moran, CFO at Old National Bancorp]

We grew tangible book value per share by 4% from 3Q and 15% over the last year, even with the impact of the Bremer close and absorbing approximately $140 million of merger charges year to date while repurchasing 2.2 million shares since we restarted the buyback in the third quarter of 2025. These liquidity and capital levels continue to provide a strong foundation as we head into 2026. On slide eight, we show trends in earning assets. Total loans grew 6.4% annualized from last quarter. Production was up 25% and was strong throughout our commercial book. Despite strong production, our pipeline is up nearly 15% from the prior quarter. Higher production levels were again partly offset by strategic portfolio management, as evidenced by our lower criticized and classified levels due to payoffs.

[John Moran, CFO at Old National Bancorp]

The investment portfolio was essentially unchanged from the prior quarter, with portfolio purchases offset by changes in fair values. We expect approximately $2.9 billion in cash flow over the next 12 months. Today, new money yields are running about 94 basis points above backbook yields on securities. The repricing dynamics for both loans and securities combined with loan growth continue to support stable to improving net interest income and net interest margin over the course of 2026, with the first quarter impacted by two fewer days. Moving to slide nine, we show trends in deposits. Total deposits increased 0.6% annualized, and core deposits ex-brokered decreased about 3% annualized, primarily driven by seasonally lower public funds balances. Non-interest-bearing deposits grew to 26% of core deposits from 24% in the prior quarter. Our use of brokered deposits increased in alignment with the aforementioned public funds seasonality.

[John Moran, CFO at Old National Bancorp]

Even with that increase, our brokered levels remain below peer levels at 6.7% of total deposits. The 17 basis point link quarter decrease in our cost of total deposits played out as we expected with Fed cuts and our offensive posture with respect to client acquisition. We achieved an approximate 87% beta on rates in our exception price book in conjunction with the Fed cuts in the quarter. These actions resulted in a spot rate of 1.68% on total deposits at December 31st. Overall, we remain confident in the execution of our deposit strategy, and we are prepared to proactively respond to the evolving rate environment. Slide 10 shows our quarterly income statement trends. As I mentioned earlier, adjusted earnings per share were $0.62 for the quarter, with all key line items in line or better than our prior guidance.

[John Moran, CFO at Old National Bancorp]

Moving on to slide 11, we present details of our net interest income and margin, both of which increased as we had expected and guided. Modest margin expansion was supported by deposit repricing. Slide 12 shows trends in adjusted non-interest income, which was $126 million for the quarter, exceeding our guidance. While most of our fee businesses performed in line with our expectations, we again saw better than expected performance within mortgage and capital markets. In both cases, this was driven by a somewhat more favorable rate backdrop for these businesses. Continuing to slide 13, we show the trend in adjusted non-interest expenses of $365 million for the quarter. Run rate expenses remain well controlled, and we generated positive operating leverage on an adjusted basis year-over-year with a record low 46% adjusted efficiency ratio.

[John Moran, CFO at Old National Bancorp]

We realized approximately 28% of the anticipated Bremer cost savings in the fourth quarter, and as a reminder, the savings from Bremer are expected to be fully realized in the first quarter. This is reflected in our 2026 guidance, which I'll get to in a few slides. On slide 14, we present our credit trends. Total net charge-offs were 27 basis points and were 16 basis points excluding charge-offs on PCD loans. Criticized and classified loans decreased $278 million, or approximately 8%, and non-accrual loans decreased $70 million, or approximately 12%. This improvement is reflective of the continued focus on active portfolio management. Notably, in our commercial real estate portfolios, we saw upgrades and payoffs exceed downgrades by a 2:1 ratio.

[John Moran, CFO at Old National Bancorp]

The fourth quarter allowance for credit losses to total loans, including the reserve for unfunded commitments, was 124 basis points, down two basis points from the prior quarter, primarily driven by the decrease in criticized and classified loans. Consistent with the third quarter, our qualitative reserves incorporate a 100% weighting on the Moody's S2 Scenario with additional qualitative factors to capture global economic uncertainty. Lastly, given the increased focus on loans to non-depository financial institutions, we'd like to emphasize, as we did last quarter, that our exposure is de minimis. Slide 15 presents key credit metrics relative to peers. As discussed in past calls, we have historically experienced a lower conversion rate of NPLs to NCOs as compared to our peers, driven by our approach to credit and client selection. That continues to be the case, and we remain comfortable around the credit outlook.

[John Moran, CFO at Old National Bancorp]

On slide 16, we review our capital position at the end of the quarter. All regulatory ratios increased link quarter due to strong retained earnings, partly offset by robust quarterly loan growth and Bremer merger-related charges. On the GAAP capital front, PCE was up about 20 basis points, and tangible book value per share was up 4% link quarter and 15% year-over-year. We expect AOCI to improve approximately 11%, or $55 million by year-end. Our strong profitability profile continues to generate significant capital, which opened the door for capital return earlier this year. As previously mentioned, late in the quarter, we repurchased an additional 1.1 million shares of common stock, taking our total to 2.2 million shares for the year. We don't view growing capital and returning capital as mutually exclusive in 2026. Slide 17 includes updated details on our rate risk position and net interest income guidance.

[John Moran, CFO at Old National Bancorp]

NII is expected to increase with the benefit of fixed asset repricing and continued growth. Our assumptions are listed on the slide, but as we do each quarter, we would highlight a few of the primary drivers. First, we assume two additional rate cuts of 25 basis points each in 2026, which aligns with the current forward curve. Second, we assume the five-year treasury rate at 375 basis points. Third, we anticipate our total down rate deposit beta to be approximately 40%, which is in line with our terminal up rate betas and our 4Q experience. And fourth, we expect non-interest-bearing deposits to remain relatively stable. Importantly, our balance sheet remains neutrally positioned to short-term interest rates.

[John Moran, CFO at Old National Bancorp]

As such, the path of NIM and NII in 2026 will depend on growth dynamics in the shape of the yield curve, the absolute level of the belly of the curve, and continued deposit beta management more than the absolute level of short-term rates. Slide 18 includes our outlook for the first quarter and full year 2026. We believe our current pipeline supports 1Q growth of 3%-5% and full-year loan growth of 4%-6%. We anticipate continued success in the execution of our deposit strategy and expect to meet or exceed industry growth in 2026 and generally in line with our asset growth. We expect fee income to remain strong given a supportive rate backdrop for mortgage and capital markets, as well as continued progress in wealth management and brokerage.

[John Moran, CFO at Old National Bancorp]

Expense guidance incorporates a full quarter run rate on Bremer cost savings and typical seasonal factors in the first quarter. Other key line items are highlighted on the slide. You'll note that we expect full-year results that yield significant growth in earnings per share and again feature positive operating leverage with a peer-leading return profile, good growth in fees, controlled expenses, and normalized credit. In summary, echoing Jim's opening comments, 2025 was exceptionally strong. We completed the core systems conversion and integration associated with our Bremer partnership. That partnership created a leading bank franchise in Minnesota and added valuable funding with good market share in several markets in North Dakota. We compounded tangible book value per share despite closing that deal and advanced our peer-leading return on tangible common equity and efficiency, and we funded our loan growth with deposit growth while improving our already resilient credit metrics.

[John Moran, CFO at Old National Bancorp]

In 2026, we remain focused on organic growth and returning capital shareholders, investing in ourselves to drive excellence in talent, operations, sales execution, and client-facing capabilities. This will ensure that we will remain strong, scalable, and positioned for long-term success. With those comments, I'd like to open the call for your questions.

[Operator]

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one in your telephone keypad. If you would like to withdraw your question, simply press star one again. Your first question today comes from the line of Scott Siefers from Piper Sandler. Your line is open.

[Jim Ryan, Chairman and CEO at Old National Bancorp]

Good morning, Scott.

[Scott Siefers, Managing Director and Senior Research Analyst at Piper Sandler]

Thanks for, hey, thank you for taking the question. Let's see. I guess, John, maybe first question for you was hoping you could maybe help with how you see the margin projecting through the year. Just notice on the sort of the NII walk on slide 17, you've got a much bigger step up in NII in the second half versus what we should see here in the next couple of quarters. Is that a function of sort of timing of asset repricing or your expectation for rate cuts? Just curious as to the nuance in there.

[John Moran, CFO at Old National Bancorp]

I think the bigger factor there, Scott, is actually day count, right? So just remember the first two quarters of next year, we got a couple less days in each of those quarters. I think when we think about the trajectory of margin in 2026, it's really four big factors on that. I think it's growth is number one, so we're sort of guiding 4%-6% on that side. The second would be steepness of the curve and how that plays out.

[John Moran, CFO at Old National Bancorp]

So, knock on wood, the forwards actually come true. Number three would be belly of the curve on fixed asset repricing. And then number four would be our continued ability to manage beta on the downside, which so far has gone really, really well. And so I think those are the big swings on the margin.

[Scott Siefers, Managing Director and Senior Research Analyst at Piper Sandler]

Okay. Perfect. Perfect. And then great to see the strong kind of end to the year just in terms of proactiveness of capital management. Maybe just sort of thoughts on pace of share repurchase throughout the year vis-à-vis the 1.1 million that you did in the kind of late in the fourth quarter.

[John Moran, CFO at Old National Bancorp]

Yeah, Scott, I would say this year we plan to be more active than we were last year. We obviously want to make sure we have enough capital to support growth. And then I think our next priority is making sure that we return it back to our shareholders. So we're going to see how the year plays out a little bit, but it would be a definitely more active year in 2026 versus last.

[Scott Siefers, Managing Director and Senior Research Analyst at Piper Sandler]

Gotcha. Perfect. All right. Thank you guys very much. Appreciate it. Thanks for the call, Scott.

[Operator]

Your next question comes from the line of Brendan Nosal from Hovde Group. Your line is open.

[Brendan Nosal, Director of Equity Research at Hovde Group]

Hey, good morning, folks. Hope you're doing well.

[John Moran, CFO at Old National Bancorp]

Good morning, Brendan.

[Brendan Nosal, Director of Equity Research at Hovde Group]

Maybe just to circle back to the margin, John, totally get your comments on day count. I mean, if we strip out day count factors from margin, because I think you guys use a simple multiply by four to get to your margin presentation, is it fair to say that a day count adjusted margin is stable, if not a bit grinding higher as we move through the year?

[John Moran, CFO at Old National Bancorp]

Very fair. I think you captured it.

[Brendan Nosal, Director of Equity Research at Hovde Group]

Okay. Okay. Then maybe moving to the credit side of things. I think if I interpolate the kind of the various pieces on the guide for loan growth, charge-offs, and provision, I think it implies a bit of a reduction in your reserve coverage ratio versus loans. So I guess just what are you seeing either in your own portfolio or the macro inputs that would let you slightly underprovide for both growth plus loss content?

[John Moran, CFO at Old National Bancorp]

Yeah, it's really the migration in the criticized and classified book and improvement on those measures. Two or three now quarters of really, really solid improvement there, close to $70 million lower on NPLs in this quarter. And when you've got that kind of fundamental improvement, it's just the model just spits out what it spits out. It kind of math, math, maths, right? And so clearly, I think we're through the peak in those categories of classification.

[Brendan Nosal, Director of Equity Research at Hovde Group]

Okay. Perfect. Thank you for taking the questions. Your next question comes from the line of Jared Shaw from Barclays. Your line is open.

[Jared Shaw, Managing Director at Barclays]

Hey, good morning.

[John Moran, CFO at Old National Bancorp]

Good morning, Jared.

[Jared Shaw, Managing Director at Barclays]

Just circling back on the capital and hearing what you're saying about the buyback, how should we think about sort of a good core target CET1 for you as we move through 2026 with sort of all those assumptions behind it?

[Jim Ryan, Chairman and CEO at Old National Bancorp]

Yeah. Yeah, Jared, very comfortable with where we are on CET1 today. And Jim said it well. First priority is ensuring we've got powder for organic growth, right? But left unchecked, this is going to grow quickly, arguably too quickly, and we're not going to let it go unchecked.

[Jared Shaw, Managing Director at Barclays]

But no, we shouldn't assume that you're trying to target back down to like a 10.5% from where we are right now.

[Jim Ryan, Chairman and CEO at Old National Bancorp]

No, I don't think so. Not at this time. And again, I think we said we don't view it as mutually exclusive to grow a little bit of capital and return capital in 2026.

[Jared Shaw, Managing Director at Barclays]

Okay. And then I guess shifting to deposits, you had really good growth in DDA on average and end of period, but then you call out sort of a relatively stable balance for 2026. How should we think about sort of seasonality? And is that stable as a percentage of deposits, or is that stable as sort of dollars of deposits from here?

[Jim Ryan, Chairman and CEO at Old National Bancorp]

Yeah, I'm thinking that it's stable as a percentage. We've got some seasonality, obviously, in the public funds book, but other than that, nothing to really talk about on the deposit side in terms of seasonality.

[Jared Shaw, Managing Director at Barclays]

Great. Thank you.

[Operator]

Your next question comes from the line of Ben Gerlinger from Citi. Your line is open.

[Ben Gerlinger, VP of Equity Research at Citigroup]

Hey, good morning.

[John Moran, CFO at Old National Bancorp]

Good morning, Ben.

[Ben Gerlinger, VP of Equity Research at Citigroup]

I was wondering if you could talk to the growth a little bit. I know that some of your larger competitors in the area have acquisitions pending, and maybe they're taking their eye off the ball or different markets, or is it just hiring or potentially just kind of deepening relationships with kind of the new Bremer customers? I'm just kind of curious where's the growth coming from, like existing or new areas? Just kind of unpack that a little bit would be helpful.

[Tim Burke, President and COO at Old National Bancorp]

Sure. Good morning, Ben. This is Tim. We're seeing broad-based growth from the C&I middle markets standpoint. We're also seeing enhancements from CRE demand drivers. We're going to continue to be opportunistic and aggressive from a talent perspective. So we think as the year unfolds and we continue to add talent that will also help drive consumer sentiment is showing that demand is growing.

[Ben Gerlinger, VP of Equity Research at Citigroup]

Gotcha. That's helpful. And then you could think about just kind of the pricing. Is there any areas where it's become a little bit more overly competitive or any geographies where it's just like you're not getting the ROSI adjusted to rather not play? Or I mean, it's always competitive, so I'm just kind of layering that in. Any thoughts on just pricing within the loan categories or geographies?

[Tim Burke, President and COO at Old National Bancorp]

Yeah. We continue to be very disciplined in our pricing model. Obviously, where you see disruption, I think there is opportunity as banks are playing defense with the disruption, but we're being opportunistic in certain high-growth markets, but across the board, very disciplined approach to pricing as we look to grow loans.

[Ben Gerlinger, VP of Equity Research at Citigroup]

Got it. Thank you.

[Jim Ryan, Chairman and CEO at Old National Bancorp]

Ben, I reiterate the point that Tim made earlier, and we tried to highlight that in our remarks. Our plan is to invest heavily in talent. Tim's been on the ground about six months now, got his feet wet, thinking about how do we best organize for success and really get after it, and I think this year, I think, will be like some of our past years where we're going to highlight some real growth in talent. And so we're excited about what that might bring for us.

[Ben Gerlinger, VP of Equity Research at Citigroup]

Thank you.

[Operator]

Your next question comes from the line of Terry McEvoy from Stephens. Your line is open.

[Terry McEvoy, Managing Director at Stephens]

Thanks. Good morning, everybody. Hey, maybe start with just a question on fees. If I annualize the fourth quarter, it's kind of at the high end of your 2026 outlook. And I'm wondering, is there a bit of conservatism built into your outlook or maybe mortgage returns to more normal levels? I was hoping to get your thoughts there.

[John Moran, CFO at Old National Bancorp]

Yeah. Terry, there's a little bit of seasonality, obviously, in first quarter on the mortgage line. Mortgage was good last year. I wouldn't say great, but good. We've got a constructive or more constructive anyway rate backdrop on that line of business. So I'd say we're cautiously optimistic on mortgage for 2026. But what you see in the guide is if I were going to pick on two places where maybe we've got some upside, it would be mortgage and cap markets, both of which have been really good in the back half of 2025.

[Terry McEvoy, Managing Director at Stephens]

Yep. Agreed. And then as a follow-up, new production yields were 6% last quarter, I think, in the presentation. Could you just run through what's the incremental kind of repricing benefit that you're seeing? And John, could you run through the securities repricing as well? I couldn't get all those. Couldn't write everything down as you were going through your prepared remarks.

[John Moran, CFO at Old National Bancorp]

Yeah, no problem. In total, there's on the loan side, 70 basis points in terms of spread to new yields against the portfolio, about $5 billion of that over the next 12 months. And then on the investment portfolio, $2.9 billion of cash flow over the next 12 months. And those new money yields are 94 basis points above the backbook yield.

[Terry McEvoy, Managing Director at Stephens]

Perfect. Thanks for taking my questions.

[John Moran, CFO at Old National Bancorp]

Thanks, Terry.

[Operator]

Your next question comes from the line of Janet Lee from TD Cowen. Your line is open.

[Janet Lee, Director and US Mid-Cap Banks Equity Research at TD Securities]

Good morning.

[John Moran, CFO at Old National Bancorp]

Good morning, Janet.

[Janet Lee, Director and US Mid-Cap Banks Equity Research at TD Securities]

For your securities portfolio, the new money yields of 5%. It seems pretty solid. What's the underlying drivers behind the securities yields that you're earning? And is it fair to assume the securities investment portfolio stays around this level or running down as your expectation for deposit growth appears to be in line with your loan growth for 2026?

[John Moran, CFO at Old National Bancorp]

Yeah. I think securities is a percentage of earning assets, or the way that we kind of look at it is cash and securities is a percentage of total assets. I think that that's going to be pretty stable over 2026. We don't really intend to grow it nor shrink it. I think we'll just continue to invest cash flow. In terms of where we're going, it's really plain vanilla stuff. I mean, we're targeting kind of a four duration, and Mike and his team do a good job managing that for us. I don't think there's going to be big changes in our securities book.

[Janet Lee, Director and US Mid-Cap Banks Equity Research at TD Securities]

Got it. Thank you. Just to follow up on deposit costs, in your expectation for your NIM of stable to moving higher throughout 2026, so the spot rate of 1.68%, that seems, I mean, given the strength of your deposit franchise, it seems lower than it looks lower on an absolute basis. Is there an expectation that the total deposit cost could creep down more from the current levels given the amount of exception pricing deposits that you have on your balance sheet, or is more of the benefit coming from the fixed-rate asset repricing?

[John Moran, CFO at Old National Bancorp]

I think it's both. Look, where we managed all of our up beta in the deposit book was via that exception price book. That book today is 36% of total deposits. It's about 45% of our transactional accounts. And that price, we think we still have room to pull down. And look, we're continuing to work that book really hard. We've realized almost a 90% beta on that one, kind of point to point, and we're ready to move proactively with rates.

[Janet Lee, Director and US Mid-Cap Banks Equity Research at TD Securities]

Thank you.

[Operator]

Your next question comes from the line of Chris McGratty from KBW. Your line is open.

[Chris McGratty, Head of US Bank Research at KBW]

Hello. Good morning. Thanks for the question.

[John Moran, CFO at Old National Bancorp]

Good morning, Chris.

[Chris McGratty, Head of US Bank Research at KBW]

Jim or John, one of your peers made a comment recently that said deposit pricing, and particularly Chicago, was actually pretty reasonable, which is something I haven't really heard in my career. Any comments on deposit repricing by your markets, which span the Midwest?

[Jim Ryan, Chairman and CEO at Old National Bancorp]

Yeah. Look, I would suggest that it's still competitive, but I think almost everywhere it has been very, very rational. There are a handful of markets out there that are a little bit spicier, but I think for the vast majority of our footprint, and certainly any place where we've got meaningful deposits and meaningful share, things have been very rational.

[Chris McGratty, Head of US Bank Research at KBW]

Okay. And then just quickly on the expenses, technology spend's gotten a lot of attention this quarter. I'm not sure if I've seen a number from you, what piece of the expenses are going into tech investments, but any color there, either percent of revenues, rate of growth, any kind of color to kind of give us some context there? Thanks.

[Jim Ryan, Chairman and CEO at Old National Bancorp]

Maybe just let me give you a 50,000-foot view. I think we're spending as much as we can at this point in time. We're not underfunding new investments. We're thinking about innovation in the payment space, innovation in the client-facing capabilities. And we're really good at self-funding a lot of that. Even though we keep grinding on the efficiency ratio, we're really good about self-funding those new investments. If there's anything that I think we're going to continue to put pressure on, it's probably that salaries line item.

[Jim Ryan, Chairman and CEO at Old National Bancorp]

As I said earlier, I want to make John uncomfortable with the amount of people that we plan to hire to really grow the front line. So I'm very comfortable with our technology spend, and I'm even more comfortable that we couldn't spend any more really and handle the organizational change that comes out of that. So I think we're at the right level, and we're certainly not underfunding any opportunities that are in front of us.

[Chris McGratty, Head of US Bank Research at KBW]

All right. Great. Thank you.

[Operator]

Your next question comes from the line of David Chiaverini from Jefferies. Your line is open.

[David Chiaverini, Equity Research Analyst at Jefferies]

Hi. Thanks for taking the question. So I wanted to circle back to loan growth, the 4%-6% guide. Can you talk about what could lead to the high end versus the low end, and also talk about borrower sentiment on the commercial side?

[Tim Burke, President and COO at Old National Bancorp]

Sure thing. Good morning, David. This is Tim. I'll start with the sentiment side. We think customers are feeling more optimistic about 2026 than the prior few years. Part of the contributing factors would be lower rates, more experience dealing with tariffs, clarity on the tax bill, and certainly M&A heating up. So we think from a demand perspective, sentiment is driving that higher. As far as some of the factors that could drive the higher end of that, we're seeing middle market C&I picking up. We think our message of being a community bank, very client-centric, is one that plays very well in that space. To continue to build on Jim's comment, talent is a big factor. I think continuing to add bankers strategically in high-growth markets will help drive that, and I think our expansion markets continue to show really good loan growth and opportunity as we continue to build out those teams.

[David Chiaverini, Equity Research Analyst at Jefferies]

Great. Thanks for that. And then on the outlook for M&A, so the Bremer integration has gone well. Can you give us your latest thoughts on your appetite for M&A going forward?

[Jim Ryan, Chairman and CEO at Old National Bancorp]

Yeah. I think it's like we said last quarter, we're really focused in on investing in ourselves, being a better version of ourselves. I think that's the best return we can provide for our shareholders today is continue to work on ourselves and grow organically. And it's not a focus. It's not something we're spending a lot of time on today. And nothing would make me happier if we finished the year just by being a better version of ourselves.

[David Chiaverini, Equity Research Analyst at Jefferies]

Very helpful. Thank you.

[Jim Ryan, Chairman and CEO at Old National Bancorp]

Thank you.

[Operator]

Your next question comes from the line of Jon Arfstrom from RBC. Your line is open.

[Jon Arfstrom, Managing Director and Financial Services Equity Research Analyst at RBC Capital Markets]

Hey, thanks. Good morning.

[John Moran, CFO at Old National Bancorp]

Good morning. Good to hear from you.

[Jon Arfstrom, Managing Director and Financial Services Equity Research Analyst at RBC Capital Markets]

Yep. John, the strategic portfolio management that you referenced earlier, how much is left to do there?

[John Moran, CFO at Old National Bancorp]

I think it's kind of constant, ongoing. Jon, it's just like the inflow into the classified buckets that we saw starting kind of 18 months ago. We really feel like we got our arms around that. Obviously, the loss content there has been de minimis, and I think we're through the worst of it, but ongoing active portfolio management like we always do.

[Jon Arfstrom, Managing Director and Financial Services Equity Research Analyst at RBC Capital Markets]

Yep. Okay. Maybe Jim, can you talk a little bit more about the wealth strategy and outlook and what kind of expectations you have for that business?

[Jim Ryan, Chairman and CEO at Old National Bancorp]

Yeah. I think we're doing really well there. But again, I would reiterate my comments around the talent. That's really a talent play. Tim's spending a lot of time with our wealth teams. In fact, he's meeting with the sales team here next week, really trying to ramp up expectations around ongoing hiring in that space. We've been successful and probably more successful than many of our peers have been in that space, but I think we can do even better. I really see great opportunities for us there. So I think we've built the product capabilities to be successful. We've got the right business model. I think we're organized for success.

[Jim Ryan, Chairman and CEO at Old National Bancorp]

But really, what we can do is I think we're underpenetrated in some of our biggest markets with talent. And I think if we can pull that part off, which I believe we can, I think we can even see higher growth coming out of that business line.

[Tim Burke, President and COO at Old National Bancorp]

And one thing I would add, this is Tim. I think our partnership and collaboration with the commercial bank. There continues to be opportunities to more fully deliver the entire bank into our wealth clients and into our commercial clients. And we're seeing partnerships and those referral activities really drive good results there.

[Jon Arfstrom, Managing Director and Financial Services Equity Research Analyst at RBC Capital Markets]

Yep. Okay. Fair enough. And Jim, congratulations to the Hoosiers. I know you're pushing Moran on expenses, but hopefully there's room for some Hoosier game day water in the budget.

[Jim Ryan, Chairman and CEO at Old National Bancorp]

I like it. I like it. We're very excited, and we're so proud of them. What a great story, and can't wait for the movie Hoosiers 2 to come out soon.

[Jon Arfstrom, Managing Director and Financial Services Equity Research Analyst at RBC Capital Markets]

Great story. Thank you.

[Jim Ryan, Chairman and CEO at Old National Bancorp]

Thanks.

[Operator]

And there are no further questions at this time. I'd like to turn the call back over to Jim Ryan for closing remarks.

[Jim Ryan, Chairman and CEO at Old National Bancorp]

Thank you all for your support and participation. The team will be available for calls all day today. Thanks so much.

[John Moran, CFO at Old National Bancorp]

Go Hoosiers.

[Operator]

This concludes Old National's call. Once again, a replay along with the presentation slides will be available for 12 months on the investor relations page of Old National's website.

Participants

Executives

• Jim Ryan, Chairman and CEO
• John Moran, CFO
• Tim Burke, President and COO

Analysts

• Scott Siefers, Managing Director and Senior Research Analyst at Piper Sandler
• Brendan Nosal, Director of Equity Research at Hovde Group
• Jared Shaw, Managing Director at Barclays
• Ben Gerlinger, VP of Equity Research at Citigroup
• Terry McEvoy, Managing Director at Stephens
• Janet Lee, Director and US Mid-Cap Banks Equity Research at TD Securities
• Chris McGratty, Head of US Bank Research at KBW
• David Chiaverini, Equity Research Analyst at Jefferies
• Jon Arfstrom, Managing Director and Financial Services Equity Research Analyst at RBC Capital Markets