Old National Bancorp: EPS Surges, Driven by Strategic Acquisitions and Balance Sheet Management

Old National Bancorp (NASDAQ: ONB) reported strong full-year 2024 earnings, with earnings per share (EPS) surpassing analyst estimates by 1.2%. The company's success can be attributed to its strategic acquisitions, such as CapStar Bank and Bremer Bank, as well as its effective balance sheet management. This article will delve into the factors contributing to Old National Bancorp's impressive EPS growth and its overall financial health.



Old National Bancorp's strategic acquisitions have significantly contributed to its earnings growth and overall financial health. The acquisition of CapStar Bank strengthened the company's presence in Nashville and other high-growth Southeastern markets, while the partnership with Bremer Bank enhanced its presence in the upper Midwest. These acquisitions have expanded Old National's footprint, driving growth in deposits and loans.

Quote: "Our successful 4th quarter was driven by continued growth in our peer-leading deposit franchise, disciplined expense and credit management, and solid net interest income and margin performance," said Chairman and CEO Jim Ryan.



The acquisitions have also allowed Old National to tap into new markets and customer segments, diversifying its revenue streams and improving efficiency. The company anticipates realizing 100% of the cost savings from the Bremer Bank partnership by 2026, further enhancing its financial health.



Old National Bancorp's balance sheet management, particularly its loan-to-deposit ratio (LDR) and cost of deposits, has significantly influenced its net interest margin and earnings potential. The company maintained an LDR of 89% at the end of 2024, indicating a strong balance sheet with a healthy mix of loans and deposits. This LDR allows Old National to generate interest income from loans while maintaining sufficient deposits to cover potential outflows.

Quote: "A loan to deposit ratio of 89%, combined with existing funding sources, provides strong liquidity." (Old National Bancorp 4Q24 Earnings Release)

Old National's granular, low-cost deposit franchise helped it maintain a total deposit cost of 208 basis points (bps) in the fourth quarter, down 17 bps from the previous quarter. Lower deposit costs enable the bank to lend more at higher interest rates, thereby increasing its net interest income.

Quote: "Granular low-cost deposit franchise; total deposit costs of 208 bps, down 17 bps." (Old National Bancorp 4Q24 Earnings Release)

The bank's ability to manage its LDR and cost of deposits positively impacts its net interest margin (NIM). In the fourth quarter of 2024, Old National reported a NIM of 3.30%, down 2 bps from the previous quarter. Despite the slight decrease, the NIM remains robust, contributing to the bank's earnings potential.

Quote: "Net interest margin on a fully taxable equivalent basis1 ("NIM") of 3.30%, down 2 basis points ("bps")" (Old National Bancorp 4Q24 Earnings Release)

In summary, Old National Bancorp's strategic acquisitions, such as CapStar Bank and Bremer Bank, have contributed to its earnings growth and overall financial health by expanding its footprint, driving loan and deposit growth, diversifying revenue streams, improving efficiency, and maintaining strong credit quality. The company's effective balance sheet management, particularly its loan-to-deposit ratio and cost of deposits, has also played a crucial role in maintaining a strong net interest margin and enhancing its earnings potential. By effectively managing these aspects, Old National Bancorp has generated interest income and maximized shareholder value.