Old National Bancorp 7.00% Non-Cumulative Perpetual Preferred Stock, Series A

Company Overview

Business Model: Old National Bancorp, a financial holding company, operates primarily through its wholly owned banking subsidiary, Old National Bank, providing a comprehensive suite of services across the Midwest and Southeast regions of the United States. The core business encompasses consumer and commercial banking, wealth management, and capital markets services. Revenue is generated through interest income on loans and investment securities, loan origination fees, and service fees on deposit accounts. Lending activities include home equity lines of credit, residential real estate loans, consumer loans, commercial loans, commercial real estate loans, agricultural loans, letters of credit, and lease financing. Deposit products include noninterest-bearing demand, interest-bearing checking and NOW, savings and money market, and time deposits. Additional services include treasury management, merchant services, capital markets, and community development lending and equity investment solutions.

Market Position: Old National Bancorp is the sixth largest Midwestern-headquartered bank by asset size, with consolidated assets of $72.2 billion at December 31, 2025, and ranks among the top 25 banking companies headquartered in the United States. The Company maintains a peer-leading, low-cost deposit franchise, reflected in a loan to deposit ratio of 89%. It operates in a highly competitive market against various financial service providers, including larger institutions with greater resources and fewer regulatory constraints. The Company's strategy includes expanding its footprint through strategic mergers and acquisitions in markets with average to above-average growth rates.

Recent Strategic Developments:

• Acquisition of CapStar Financial Holdings, Inc.: Completed on April 1, 2024, this all-stock transaction enhanced Old National Bancorp's presence in Nashville, Tennessee, and expanded into new high-growth markets. CapStar Financial Holdings, Inc. contributed $3.1 billion in total assets, $2.1 billion in total loans, and $2.6 billion in total deposits at closing.
• Acquisition of Bremer Financial Corporation: Completed on May 1, 2025, this acquisition solidified Old National Bancorp's position in Minnesota and added attractive funding sources in North Dakota. Bremer Financial Corporation contributed approximately $16.3 billion of total assets, $11.1 billion of total loans, and $12.9 billion of deposits at closing. The majority of system conversions related to this transaction were completed in mid-October 2025.
• Strategic Focus: For 2026, Old National Bancorp is prioritizing disciplined organic growth, prudent capital deployment, and continued investment in talent, technology, and client-facing capabilities to support sustainable performance and long-term value creation.

Geographic Footprint: Old National Bancorp's corporate headquarters and principal executive office are located in Evansville, Indiana, with commercial and consumer banking operations headquartered in Chicago, Illinois. As of December 31, 2025, Old National Bank operated 346 banking centers primarily across the Midwestern and Southeastern United States, including Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, North Carolina, North Dakota, Tennessee, and Wisconsin. The loan portfolio is substantially concentrated in these regions. Key deposit markets (as of June 30, 2025) include Chicago-Naperville-Elgin, IL-IN-WI (32.8% of total deposits), Minneapolis-St. Paul-Bloomington, MN-WI (15.0%), and Evansville, IN (9.9%).

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: N/A
• Operating Margin: 33.33%
• Net Margin: 26.51%

Investment in Growth:

• R&D Expenditure: Not explicitly stated.
• Capital Expenditures: $44,064k
• Strategic Investments:
  • Bremer Financial Corporation acquisition: $1,347,895k (total consideration)
  • CapStar Financial Holdings, Inc. acquisition: $417,598k (total consideration)
  • Investments in partnerships, limited liability companies, and other ownership interests that support affordable housing: $606.5 million
  • Economic development and community revitalization initiatives in low-to-moderate income neighborhoods: $410.0 million

Business Segment Analysis

Old National Bancorp has determined that it has only one reportable segment, as its business activities are predominantly similar in nature, operations, and economic characteristics, largely serving commercial and specialty banking clients with products and services offered through overall similar processes and platforms.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $71,799k (2.2 million shares)
• Dividend Payments: $225,117k (including $208,982k common and $16,135k preferred)
• Dividend Yield: 2.51% (based on $0.56 common dividend per share and $22.31 stock price at December 31, 2025)
• Future Capital Return Commitments: A new share repurchase program was approved in the first quarter of 2026, authorizing the Company to repurchase up to $400 million of its outstanding common stock through February 28, 2027.

Balance Sheet Position (as of December 31, 2025):

• Cash and Equivalents: $1,826,177k
• Total Debt: $7,451,367k
• Net Cash Position: -$5,625,190k (Net Debt)
• Credit Rating:
  • Old National Bancorp: Baa1 (Long-term) by Moody's Investors Service
  • Old National Bank: A1 (Long-term) and P-1 (Short-term) by Moody's Investors Service
• Debt Maturity Profile:
  • Time deposits: $9,271,979k due in 2026, $389,045k due thereafter.
  • Federal Home Loan Bank advances: $2,405,000k due in 2026, $3,832,375k due thereafter.
  • Other borrowings: $169,740k due in 2026, $682,689k due thereafter.
  • Subsequent Event: On January 29, 2026, Old National Bancorp issued $450.0 million aggregate principal amount of 5.768% fixed-to-floating rate subordinated notes due 2036.

Cash Flow Generation (Year Ended December 31, 2025):

• Operating Cash Flow: $681,472k
• Free Cash Flow: $637,408k (Operating Cash Flow less Capital Expenditures)
• Cash Conversion Metrics: Not explicitly provided.

Operational Excellence

Production & Service Model: Old National Bancorp's operational philosophy centers on community and commercial banking, fostering long-term, highly valued partnerships with clients. The Company delivers a broad spectrum of services, including consumer and commercial lending, deposit services, wealth management, and capital markets. Operational efficiency is enhanced through 24-hour telephone access, online banking, and mobile banking services. For businesses, the Company provides treasury management, merchant services, and capital markets solutions, alongside community development lending and equity investment initiatives aimed at job creation and community revitalization.

Supply Chain Architecture: Key Suppliers & Partners: Old National Bancorp relies on third-party vendors for critical business infrastructure, including data processing and information services. While specific company names are not disclosed, these partnerships are integral to operations and expose the Company to cybersecurity and operational risks.

Facility Network:

• Manufacturing: Not applicable.
• Research & Development: Not explicitly detailed as a separate facility type.
• Distribution: The Company operates 346 banking centers primarily across the Midwest and Southeast regions of the United States. Its corporate headquarters is in Evansville, Indiana, and its commercial and consumer banking operations are headquartered in Chicago, Illinois.

Operational Metrics:

• Full-time equivalent employees: 4,971 (as of December 31, 2025)
• Banking centers: 346 (as of December 31, 2025)
• Employee volunteer hours: 67,700 hours in 2025, supporting nearly 2,700 organizations.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Old National Bancorp engages in direct sales through its banking centers and enterprise sales force, fostering direct customer relationships.
• Channel Partners: The Company partners with third-party registered broker/dealers and investment advisers to offer investment products and originates automobile loans indirectly through selected dealerships.
• Digital Platforms: Online and mobile banking services provide broad digital access for customers.

Customer Portfolio: Enterprise Customers: The Company serves a diverse portfolio of commercial and specialty banking clients, providing loans to individuals and commercial entities across various industries, including real estate rental and leasing, manufacturing, healthcare, wholesale trade, construction, and agriculture. Customer Concentration: As of December 31, 2025, the average commercial loan size was approximately $771,000, and the average commercial real estate loan size was approximately $1,486,000. The Company reports minimal exposure to foreign borrowers and no sovereign debt.

Geographic Revenue Distribution (Loan Portfolio by State, as of December 31, 2025):

• Minnesota: 18% of total loans
• Illinois: 17% of total loans
• Indiana: 11% of total loans
• Wisconsin: 9% of total loans
• Michigan: 6% of total loans
• Tennessee: 5% of total loans
• North Dakota: 4% of total loans
• Kentucky: 3% of total loans
• Texas: 3% of total loans
• Florida: 2% of total loans
• Ohio: 2% of total loans
• California: 2% of total loans
• Other: 15% of total loans

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The financial services industry is highly competitive and undergoing rapid technological change, including the development and implementation of artificial intelligence solutions. The growth of marketplace lenders and other financial technology ("FinTech") companies, along with the emergence of new technologies like distributed ledgers and payment stablecoins, is intensifying competition and could lead to deposit withdrawals from traditional banks. Regulatory changes may also facilitate FinTech partnerships with banks.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: Old National Bancorp faces significant competition from other commercial banks, savings and loan associations, credit unions, mortgage banking firms, FinTech companies, consumer finance companies, securities brokerage firms, insurance companies, money market mutual funds, private equity and debt funds, and other financial services companies. Many of these competitors are larger and possess substantially greater resources.

Emerging Competitive Threats: New entrants, disruptive technologies (e.g., artificial intelligence, distributed ledgers), and alternative financial solutions such as payment stablecoins pose evolving competitive threats.

Competitive Response Strategy: The Company's strategy to maintain its competitive advantage includes disciplined organic growth, prudent capital deployment, and continuous investment in talent, technology, and client-facing capabilities.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: Old National Bancorp's financial performance is highly dependent on the economic environment in its operating markets and the broader U.S. economy. Economic downturns, sustained high unemployment, stock market volatility, and high inflation have historically and may continue to negatively impact operating results, credit quality, and demand for products. Geopolitical uncertainties, including tariffs, trade policies, global military conflicts, and pandemics, can create or prolong economic and financial disruptions. The Company's regional concentrations in the Midwest and Southeast expose it to adverse local economic conditions. Concerns over the U.S. federal budget deficit and debt limit also pose risks to financial markets. Technology Disruption: The rapid pace of technological change, including the development and use of artificial intelligence, presents risks of competitive disadvantage if the Company fails to keep pace. The use of AI also introduces potential liabilities related to enhanced governmental/regulatory scrutiny, litigation, ethical concerns, security risks, intellectual property, and biased algorithms. Customer Concentration: Old National Bancorp manages credit exposure concentrations by industry, product, geography, client relationship, and loan size.

Operational & Execution Risks

Supply Chain Vulnerabilities: Reliance on third-party vendors for critical business infrastructure, data processing, and information services exposes the Company to cybersecurity and operational risks, including potential breaches, system failures, or non-performance by vendors. Geographic Concentration: A substantial portion of Old National Bancorp's loan portfolio is concentrated in the Midwest and Southeast regions of the United States, making it vulnerable to adverse economic changes in these specific areas. Capacity Constraints: Not explicitly mentioned.

Financial & Regulatory Risks

Demand Volatility: Changes in consumer banking habits, spending, and savings patterns could adversely affect financial results, including loss of fee income and deposits. Foreign Exchange: The Company manages foreign currency risk through derivative instruments. Credit & Liquidity: The Company faces credit risk if actual credit losses exceed its allowance for credit losses. Maintaining adequate funding and liquidity is critical, as deposit outflows (due to competitor rates or market perception) or insufficient wholesale funding could adversely affect operations. Old National Bancorp relies on dividends from Old National Bank for its liquidity. A reduction in credit ratings or unrealized losses in the securities portfolio could also impact liquidity and capital access. Regulatory & Compliance Risks: Old National Bancorp operates in a highly regulated environment under federal and state laws, including supervision by the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Consumer Financial Protection Bureau. Changes in laws, regulations, or their interpretation can increase costs, limit permissible activities, and affect profitability. Non-compliance, even inadvertent, can result in significant fines, penalties, lawsuits, and reputational damage. The Company is subject to capital adequacy requirements (Basel III, Prompt Corrective Action) and risks if it fails to meet these. Changes in accounting policies can also materially affect financial reporting.

Geopolitical & External Risks

Geopolitical Exposure: Economic conditions and financial markets can be adversely affected by geopolitical uncertainties, including tariffs, trade policy, global military conflicts, and pandemics. Such events can significantly impact the Company's ability to conduct business, affecting its deposit base, loan repayment capabilities, asset values, revenues, and expenses. Trade Relations: Changes in trade and tariff policies are identified as a risk factor. Sanctions & Export Controls: The Company is subject to U.S. Treasury's Office of Foreign Assets Control regulations, and failure to comply could lead to financial, legal, and reputational consequences. Geographic Dependencies: The concentration of operations and loan portfolio in the Midwest and Southeast regions exposes the Company to specific regional risks.

Innovation & Technology Leadership

Research & Development Focus: While not explicitly categorized as R&D, Old National Bancorp's strategy includes continued investment in technology and client-facing capabilities. The Company acknowledges the rapid technological change in the financial services industry, including the development and implementation of artificial intelligence solutions, as a key area for efficiency and client service. Core Technology Areas: The Company focuses on leveraging technology to meet client needs, enhance operational efficiency, and reduce costs. This includes exploring and implementing artificial intelligence solutions. Innovation Pipeline: Not explicitly detailed. Intellectual Property Portfolio: Not explicitly detailed. Technology Partnerships: The Company's competitive landscape includes FinTech companies that partner with existing banks to offer deposit products, indicating a dynamic environment for technology collaboration.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: Old National Bancorp prioritizes attracting, developing, and retaining top talent through integrated talent and succession planning, structured hiring practices, comprehensive total rewards, and meaningful growth opportunities. Board Composition: The Board of Directors includes an Audit Committee, comprised solely of independent directors, which oversees financial reporting responsibilities. The Enterprise Risk Committee of the Board is responsible for oversight of enterprise-wide risks, including cybersecurity.

Human Capital Strategy

Workforce Composition:

• Total Employees: 4,971 full-time equivalent team members as of December 31, 2025.
• Geographic Distribution: Employees are primarily located across the Midwest and Southeast regions of the United States.
• Skill Mix: Not explicitly detailed.

Talent Management: Acquisition & Retention: The Company's strategy focuses on attracting, developing, and retaining talent through integrated talent and succession planning, structured hiring, competitive total rewards, and professional development programs. These programs include career skills training, peer mentoring, engagement with senior leaders, structured leadership development, and impact networks. Retention Metrics: Not explicitly provided. Employee Value Proposition: Old National Bancorp offers a competitive total rewards package, including base pay, incentive opportunities, and comprehensive benefits (health, wellness, retirement plan with company matching contributions, paid time off, and paid leave). Medical programs enhance access to quality care, mental well-being resources, specialized support for complex conditions, and employer-sponsored healthcare clinics in certain areas.

Diversity & Development: The Company supports team member development through professional development programs, leadership development initiatives, and associate and community engagement teams. Diversity metrics are not explicitly provided. Culture & Engagement: Team members are encouraged to make a positive community impact through volunteer activities. In 2025, team members logged approximately 67,700 volunteer hours in support of nearly 2,700 organizations, with a program offering up to 24 paid volunteer hours per year.

Environmental & Social Impact

Environmental Commitments: Climate Strategy: Old National Bancorp acknowledges the multi-faceted physical and transition risks associated with climate change, including operational, credit, legal, regulatory, and reputational impacts. The Company is working to enhance its governance of climate-related risks and integrate climate considerations into its risk governance framework. Emissions Targets: Not explicitly provided. Carbon Neutrality: Not explicitly provided. Renewable Energy: Old National Bancorp invests in tax-advantaged limited partnerships focused on renewable energy projects.

Supply Chain Sustainability: Supplier Engagement: Not explicitly detailed. Responsible Sourcing: Not explicitly detailed.

Social Impact Initiatives: Community Investment: The Company is a limited partner in tax-advantaged limited partnerships that invest in qualified affordable housing ($606.5 million at December 31, 2025) and economic development and community revitalization initiatives in low-to-moderate income neighborhoods ($410.0 million at December 31, 2025). Team members contributed 67,700 volunteer hours in 2025 to community organizations. Product Impact: Not explicitly detailed.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Mortgage originations and sales are influenced by interest rate fluctuations, with potential increases in refinancings and new originations during periods of decreasing interest rates, and declines during periods of increasing rates.
• Economic Sensitivity: Old National Bancorp's financial performance is highly sensitive to the overall business environment, including economic growth, inflation, and unemployment levels.
• Industry Cycles: Not explicitly detailed.

Planning & Forecasting: Management actively monitors liquidity, asset and liability maturities, funding sources, and loan and deposit forecasts. The Company continuously tracks marketplace trends to improve the predictability of deposit flows and asset prepayments.

Regulatory Environment & Compliance

Regulatory Framework: Old National Bancorp operates in a highly regulated environment, subject to extensive federal and state laws and supervision by the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Consumer Financial Protection Bureau. Key regulations include the Bank Holding Company Act of 1956, the Gramm-Leach-Bliley Act of 1999, the U.S. Bank Secrecy Act, the USA PATRIOT Act, Office of Foreign Assets Control regulations, the Community Reinvestment Act of 1977, and the Federal Deposit Insurance Act. Industry-Specific Regulations: The Company is subject to capital adequacy requirements (Basel III Capital Rules, Prompt Corrective Action), dividend limitations, restrictions on transactions with affiliates, financial privacy laws, interchange fee limitations, employee incentive compensation rules, cybersecurity standards, safety and soundness standards, Federal Home Loan Bank System requirements, enhanced prudential standards, resolution planning, and the Volcker Rule. International Compliance: Not explicitly detailed.

Trade & Export Controls: The Company is subject to U.S. economic sanctions administered by the Office of Foreign Assets Control, which impose restrictions on transactions with designated foreign countries and nationals. Compliance with trade and tariff policies is also a regulatory consideration.

Legal Proceedings: As of December 31, 2025, Old National Bancorp and its subsidiaries were involved in certain legal proceedings arising in the ordinary course of business. Management does not anticipate that any potential liabilities from pending litigation will have a material adverse effect on the Company's business, financial position, or results of operations.

Tax Strategy & Considerations

Tax Profile: Old National Bancorp's effective tax rate was 20.5% in 2025, compared to 20.8% in 2024. The Company is subject to complex federal and state income tax laws and regulations, requiring significant judgment in determining its effective tax rate and evaluating tax positions. Geographic Tax Planning: For the year ended December 31, 2025, Illinois and Minnesota collectively accounted for over 50% of the Company's state income tax expense, reflecting its operations and taxable income generated in these jurisdictions. Tax Reform Impact: Changes in tax laws, interpretations, or regulations could negatively impact current and future financial performance. Tax Audits: The Company is routinely subject to examinations and challenges from federal and state taxing authorities regarding its tax positions.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Old National Bancorp requires borrowers to maintain collision insurance on automobiles securing consumer loans. For real estate collateral, the Company typically requires title insurance, fire and extended coverage casualty insurance, and flood insurance (if applicable), and may require business interruption insurance.
• Risk Transfer Mechanisms: The Company utilizes derivative instruments, primarily interest rate swaps, collars, and floors, to mitigate interest rate risk. Counterparty risk in derivative transactions is managed by engaging with highly-rated counterparties and requiring collateralization for exposures exceeding agreed thresholds. Old National Bancorp also participates in risk participation transactions of interest rate swaps, with total notional amounts of $1.3 billion at December 31, 2025.