Loan growth is real, funding risk still matters
- Q1 2026 loans rose 8% annualized to $49.7 billion, led by C&I growth of 16.9% annualized.
- Deposits grew 4.2% annualized to $55.7 billion, keeping the loan-to-deposit ratio near 89%.
- Management kept 2026 loan growth guidance at 4% to 6% and said results may land near the high end.
- Net interest margin slipped to 3.55% in Q1 2026 from 3.65% in Q4 2025, so funding cost still matters.
- Buybacks continued, with $104.1 million of common stock repurchased in Q1 2026.
- Credit looks watchable, with non-performing loans at 1.03% of ending loans in Q1 2026.
A good start needs deposits to keep up
Old National started 2026 with real lending momentum. Total loans rose 8% annualized in Q1, above its full-year target of 4% to 6%. The best part was commercial lending, where C&I loans grew 16.9% annualized and management pointed to record pipelines of $5.5 billion.
That supports the bull case. The bank is showing it can grow on its own after the Bremer partnership, not only by buying other banks. Deposits also grew to $55.7 billion, and the loan-to-deposit ratio stayed near 89%, which means loans are still mostly funded by customer deposits rather than more costly borrowing.
The bear case is not gone. Net interest margin, the spread between what the bank earns on loans and pays on funding, fell to 3.55% in Q1 from 3.65% in Q4. If deposit competition heats up, loan growth could become less valuable. Finn's view is mixed: growth is improving, but financial health and sentiment are not yet strong enough to call this a clean win.
Classic banking, spread-driven profits
Old National makes most of its money the old bank way. It gathers deposits from households and businesses, lends that money out, and keeps the spread. That spread shows up in net interest income, which was $572.6 million in Q1 2026.
The simple model can work well when deposits are stable, borrowers are healthy, and loan rates stay above funding costs. It can break when the bank must pay more for deposits, when borrowers miss payments, or when the economy in its markets slows.
Fees add a second income stream. In Q1 2026, noninterest income was $122.3 million, including wealth and investment services fees, deposit service charges, debit card and ATM fees, mortgage banking revenue, and capital markets income. These help, but the loan book and deposit base still drive the story.
Loans first, fees second
Commercial loans
Commercial loans were $15.6 billion at March 31, 2026. C&I lending led the quarter, with 16.9% annualized growth.
Commercial real estate loans
Commercial real estate was the largest loan category at $22.2 billion. It is a major earnings source, but it also carries cycle risk if property values or rents weaken.
Residential real estate loans
Residential real estate loans were $8.6 billion at March 31, 2026. This gives the bank exposure to local housing markets across its footprint.
Consumer loans
Consumer loans were $3.3 billion at March 31, 2026. They are smaller than the commercial books and matter more for diversification than for the main growth story.
Deposits
Deposits were $55.7 billion at March 31, 2026. Low-cost core deposits are the key input that lets the bank fund loans without giving up too much margin.
Wealth, payments, mortgage, and capital markets fees
Fee income gives Old National more ways to earn than lending alone. In Q1 2026, wealth and investment services fees were $39.7 million, while service charges on deposits were $26.9 million.
Loan book mix
Old National does not present separate operating segments in the Q1 2026 10-Q. The mix below uses loan categories disclosed at March 31, 2026, so it shows where credit exposure sits rather than where every dollar of revenue comes from.
What could break the story
Deposit cost squeeze
High impact · Medium oddsOld National needs deposits to fund loan growth at good spreads. Deposits grew in Q1, but net interest margin still fell to 3.55% from 3.65% in the prior quarter. If customers demand higher rates or move money elsewhere, loan growth could add less profit than expected.
Commercial credit turns
High impact · Medium oddsThe bank has a large commercial and commercial real estate loan book. That is where growth is strongest, but it is also where a slower economy can show up quickly. Non-performing loans were 1.03% of ending loans in Q1 2026, so credit is not flashing red, but it is worth tracking.
Loan pipeline fades
Medium impact · Medium oddsManagement said the $5.5 billion pipeline supports 2026 loan growth of 4% to 6%, with a bias toward the high end. If business confidence falls, borrowers may delay projects and draw fewer loans. That would weaken the main bull point from Q1.
Bremer stock overhang
Medium impact · Low oddsThe Bremer Trust stock position is a technical overhang because a large holder can affect trading if it sells. Management sounded calm and said Old National has a right of first refusal. Still, any surprise sale could pressure the stock even if the bank's operations are fine.
Capital rules tighten
Medium impact · Low oddsBanks must hold enough capital against risk-weighted assets. Old National reported a common equity Tier 1 ratio of 11.11% in Q1 2026. Changes to Basel III rules could affect how much capital it needs and how much cash it can use for buybacks.
In one breath
What does Old National Bancorp do?
Old National Bancorp is a regional bank based in Indiana with banking operations in the Midwest and Southeast. It takes deposits, makes commercial and consumer loans, and earns money from the interest spread and banking fees.
Why did ONB's thesis improve in 2026?
Q1 loan growth came in at 8% annualized, above the bank's 4% to 6% full-year target. C&I lending was the standout, with 16.9% annualized growth and record pipelines of $5.5 billion.
What is the biggest risk for ONB stock?
The key risk is that funding gets more expensive or credit weakens. If deposit costs rise faster than loan yields, net interest margin can shrink and earnings growth can slow.
Is Old National mainly a commercial real estate bank?
Commercial real estate is the largest loan category, at $22.2 billion as of March 31, 2026. The bank is broader than that, with commercial, residential real estate, and consumer loans as well.