Old National (ONB) Q1 2026 Earnings Transcript

Old National is turning into a self-funding compounder: faster loan growth, stable credit, and a still-sub-50% efficiency ratio imply incremental revenue should convert to capital at a higher rate than peers. The subtle positive is mix — the pipeline is shifting toward community markets and core middle market, which should support both spread and operating deposit capture, so the reported NII “miss” is likely more a timing/seasonality artifact than a deterioration in franchise economics.

The bigger second-order effect is capital optionality. If the proposed rule changes are finalized, the bank’s deployable capital could expand enough to force a strategic choice between a materially higher repurchase cadence and an acceleration of organic growth investment; management is signaling it will likely choose both, but the market may be underestimating how quickly buybacks can become the dominant EPS lever once the current authorization is exhausted. That matters because the stock may re-rate on a lower sustainable payout-adjusted ROE hurdle, not just on near-term earnings growth.

The contrarian risk is that the current setup is more cyclical than the commentary suggests. Deposit betas can re-accelerate if the Fed stays on hold longer than expected and competition in the Midwest remains frothy, while the loan mix benefit could fade if larger C&I production stays weighted to lower-spread, investment-grade borrowers. Over the next 1-2 quarters, the key catalyst is whether margin stabilizes as promised; if it does not, investors will likely start discounting the bank as a growth story with mediocre net interest sensitivity rather than a true operating leverage winner.