Head start: Old National says Bremer deal will close early

Old National Bancorp is entering the second quarter with the wind at its back. 

The Evansville, Indiana-based company revealed Tuesday that it expects to close its $1.4 billion deal for Bremer Financial in St. Paul, Minnesota, two months sooner than anticipated, on May 1. An earlier close is a boon to profitability since it provides more time to operate with a larger, combined balance sheet. Old National, accordingly, boosted its full-year 2025 net interest income guidance by $100 million to $2.1 billion.

The banks have received “all necessary regulatory approvals” and anticipate a May 1 closing date , with systems conversion set for mid-October, Old National CEO Jim Ryan said Tuesday on a conference call with analysts to discuss the company’s first-quarter earnings. 

“I’ve traveled extensively throughout the Bremer footprint meeting team members and clients, and I’m even more convinced this partnership will be one of our best,” Ryan said. 

Old National and the $16.4 billion-asset Bremer would join what appears to be an emerging trend of earlier-than-anticipated deal completions so far this year.

First Busey Corp. in Champaign, Illinois, closed its $917 million deal for CrossFirst Bancshares of Leawood, Kansas, on March 1 after initially predicting a mid-2025 completion. Likewise, Richmond, Virginia-based Atlantic Union Bankshares’ acquisition of Sandy Spring Bancorp in Olney Maryland — initially slated to close in October — was completed ahead of schedule on April 1. 

The more rapid regulatory decision making may be putting an end to several years marked by lengthening delays that sparked grumbling by banks and the introduction of legislation in Congress to require quicker deliberation on merger-and-acquisition applications.

The $53.9 billion-asset Old National completed its most recent deal prior to Bremer on April 1, 2024, when it acquired the $3 billion-asset CapStar Financial Holdings in Nashville, Tennessee. 

On Tuesday, Old National reported first-quarter net income totaling $145 million, driven by linked-quarter increases in loans and deposits. Credit quality remained “benign” according to Chief Financial Officer John Moran, as first-quarter net chargeoffs of $21.6 million totaled 24 basis points of average loans. 

“Another solid quarter from Old National, with net interest income, fees, and expenses all coming in better than we had anticipated,” Scott Siefers, a Piper Sandler analyst, wrote in a research note. 

Hovde’s Brendan Nosal characterized Old National’s results as “down the fairway” in his research note. 

Old National and Bremer have both generated more capital than expected since announcing plans to combine in November, according to Moran. Their stronger positions “create significant balance sheet optionality,” which could permit Old National to reduce the scale of the commercial real estate loan sale it’s planning as part of the merger process. A downsized loan sale would boost the combined entity’s asset size, further improving profitability.

“While our guidance continues to incorporate up to $2.4 billion of loan sales, we believe more … capital can support a larger pro forma balance sheet,” Moran said on the conference call. The post-close loan sale is intended to manage the bank’s ratio of CRE loans to total risk-based capital. 

“We think the preference today is clearly to retain more Bremer loans,” Nosal wrote. 

Despite the attention Old National is paying to Bremer and the Upper Midwest, it hasn’t forgotten about the markets entered by acquiring CapStar last year, executives said Tuesday.

“That would be an area we want to continue to grow and invest in,” Ryan said on the conference call, referring to Capstar’s markets in Tennessee and North Carolina. “We still feel really good about that initial investment and the investments we made so far. I think that will be an area that will get an outsized portion of investment going forward.”