Old National Booked $45.9 Million On Troubled Business Loans As It Rebuilt Its Reserve Models
Third-quarter provisions on collateral-dependent commercial loans rose from $7.7 million a year earlier, while the bank says its overall reserve barely moved.
Old National Bancorp, the Evansville, Indiana, bank holding company, recorded $45.9 million of provision expense on collateral-dependent commercial and commercial real estate loans in the third quarter, up from $7.7 million a year earlier, its 10-Q filed Wednesday shows. The bank says model and segment changes left its reserve essentially unchanged.
Troubled loans grew, and so did their cushion
Collateral-dependent loans, those expected to be repaid mainly from the collateral itself, carried a principal amount of $239.4 million with a $97.9 million valuation allowance at September 30. The second-quarter filing showed $183.8 million and $87.3 million.
Nonaccrual loans, which have stopped accruing interest, rose to $470.2 million from $461.7 million at June 30. Total allowance coverage slipped to 1.20% of loans from 1.21%, according to the earnings release filed October 21.
The bank's overall provision for credit losses was $33.6 million, down from $36.2 million in the second quarter. Net charge-offs were $34.1 million, or 0.27% of average loans.
Models recalibrated, segments realigned
The loan allowance stood at $579.7 million against $569.5 million at December 31.
Management describes credit quality as stable. Old National says its business is consumer and commercial banking, wealth management and capital markets, mainly in the Midwest and Southeast.
Bremer costs fade, borrowings climb
Merger-related expenses tied to the May 2025 Bremer acquisition were $0.7 million in the quarter. Third-quarter net income applicable to common shares was $250.0 million, or $0.66 a share.
Overnight borrowings used to collateralize derivative positions reached $235.1 million at September 30, against $10.8 million at December 31. The bank's market value was about $9.4 billion in Wednesday trading.
The 10-K for the fiscal year will be the next full look at whether the realigned segments change reserve levels.
Sources
- 10-Q Filing — Old National Bancorp (ONB) — SEC EDGAR
- 10-Q Filing — Old National Bancorp (ONB), Q2 FY2026 filed 2026-07-29 (comparison basis) — SEC EDGAR
- Earnings release (8-K Item 2.02, onb_exhibit991er3q26.htm) — Old National Bancorp, filed 2026-10-21 — SEC EDGAR
- Old National Chairman and CEO Jim Ryan Named Chair-Elect of the American Bankers Association – Company Announcement - FT.com — Financial Times
- Old National Chairman and CEO Jim Ryan Named Chair-Elect of — globenewswire.com
