"Any future M&A opportunities really have a high hurdle. And as we try to convey, we've got plenty of organic growth opportunities today that we just need to execute on," Chairman and CEO James Ryan said during a call with analysts after the Evansville, Indiana-based regional bank posted third-quarter earnings.
"However," he added, "to the extent that there are opportunities that come along and exceed those very high hurdles we have in place" — larger, high-performing targets in growth markets — "I think all of our shareholders will want us to look at those things opportunistically."
The $53.6 billion-asset Old National in April closed its
The acquisition gave Old National more than $2 billion of loans and nearly $3 billion of deposits. The bank gained a top-10 deposit market share presence in the Nashville metropolitan area. It also picked up CapStar's footprint in Asheville, North Carolina, helping the historically Midwest-focused bank further an ongoing march into the Southeast.
For the immediate future, Ryan said Old National's principal focus is on bolstering organic growth in Nashville and other growth markets in its footprint.
"We'll prioritize investments in that newer part of our franchise," he said.
Old National reported third quarter net income of $143.8 million, down from $147.9 million a year earlier. It posted earnings per share of 44 cents, compared with 49 cents in the third quarter of 2023.
Included in the third quarter results were pre-tax charges of $6.9 million primarily related to the CapStar deal. Excluding one-time costs, adjusted net income was $147.2 million, or 46 cents,
The company reported total revenue of $492 million, up from $462 million in the year-ago period, boosted by the CapStar acquisition. Total loans of $36.4 billion were up from $32.6 billion.
Old National posted net interest income of $391.7 million, up from $375.1 million. Its net interest margin of 3.32%, however, was down from 3.44% a year earlier, reflecting higher funding costs this year.
M&A prospects pick up at other banks
Amid increasing bank M&A activity, other dealmakers that have reported their earnings this quarter said they are hunting for more targets.
Equity Bancshares,
The Fed reduced its
"I would say that the M&A pipeline is strong," Equity Bancshares Chairman and CEO Brad Elliott said on the company's earnings call this month. "The number of conversations that we have going on have honestly picked up in the last few weeks. Some of them are clean deals, some of them are stressed deals. … The number of conversations is pretty strong right now."
Wichita, Kansas-based Equity has completed 12 acquisitions since 2015 across a footprint that spans its home state, Missouri, Oklahoma and Arkansas. Elliott said there is the potential for failed-bank purchases to increase as some small banks struggle with fallout from the high-rate and lofty inflationary period of the past couple years.
Fulton Financial, for one, picked up a failed bank earlier this year and could soon be on the lookout for more M&A.
Lancaster, Pennsylvania-based Fulton in April acquired the
"We would be able to do" deals at "some point next year if we want to pursue any opportunities," Fulton Chairman and CEO Curtis Myers said.
He said the company would focus on community bank targets with between $1 billion and $5 billion of assets, but could potentially pursue sellers with as much as $15 billion of assets.
"We feel we could be a good partner for banks of that size and would evaluate that," Myers said.
Through the first three quarters of this year, 93 banks announced plans to sell. That put the industry on track to surge beyond the 98 deals announced all of last year, according to data from S&P Global Market Intelligence.
The acquisitions announced in the first nine months of this year had an aggregate deal value of $11.42 billion, more than double the total of $4.15 billion in 2023, according to S&P.
Several deals have since been announced in October, including the proposed merger of
