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Income Taxes | 9 Months Ended
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Sep. 30, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The following is a summary of the major items comprising the differences in taxes from continuing operations computed at the federal statutory rate and as recorded in the consolidated statements of income:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(dollars in thousands) | 2025 |  | 2024 |  | 2025 |  | 2024
Provision at statutory rate of 21% | $ | 48,846 |  |  | $ | 38,867 |  |  | $ | 119,672 |  |  | $ | 103,810 |
Tax-exempt income: |  |  |  |  |  |  |
Tax-exempt interest | (6,318) |  |  | (4,871) |  |  | (16,169) |  |  | (14,856) |
Section 291/265 interest disallowance | 1,733 |  |  | 927 |  |  | 3,766 |  |  | 2,768 |
Company-owned life insurance income | (1,594) |  |  | (1,089) |  |  | (4,126) |  |  | (2,961) |
Tax-exempt income | (6,179) |  |  | (5,033) |  |  | (16,529) |  |  | (15,049) |
State income taxes | 11,144 |  |  | 7,485 |  |  | 23,139 |  |  | 18,965 |
Interim period effective rate adjustment | 1,556 |  |  | 1,096 |  |  | 1,250 |  |  | 1,969 |
Tax credit investments - federal | (8,904) |  |  | (3,619) |  |  | (18,162) |  |  | (9,780) |
Officer compensation limitation | 904 |  |  | 765 |  |  | 2,712 |  |  | 3,021 |
Non-deductible FDIC premiums | 2,960 |  |  | 2,462 |  |  | 7,813 |  |  | 6,241 |
Other, net | (296) |  |  | (743) |  |  | (2,662) |  |  | (159) |
Income tax expense | $ | 50,031 |  |  | $ | 41,280 |  |  | $ | 117,233 |  |  | $ | 109,018 |
Effective tax rate | 21.5 | % |  | 22.3 | % |  | 20.6 | % |  | 22.1 | %
Net Deferred Tax Assets Net deferred tax assets are included in other assets on the balance sheet. At September 30, 2025, net deferred tax assets totaled $482.6 million, compared to $456.4 million at December 31, 2024. No valuation allowance was required on the Company’s deferred tax assets at September 30, 2025 or December 31, 2024. The Company’s retained earnings at September 30, 2025 included an appropriation for acquired thrifts’ tax bad debt allowances totaling $58.6 million for which no provision for federal or state income taxes has been made. If in the future, this portion of retained earnings were distributed as a result of the liquidation of the Company or its subsidiaries, federal and state income taxes would be imposed at the then applicable rates. Old National has federal net operating loss carryforwards totaling $84.1 million at September 30, 2025 and $60.2 million at December 31, 2024. This federal net operating loss was acquired from the acquisition of Anchor BanCorp Wisconsin Inc. in 2016, First Midwest Bancorp, Inc. in 2022, CapStar in 2024, and Bremer in 2025. If not used, the federal net operating loss carryforwards will begin expiring in 2032 and later. Old National has recorded state net operating loss carryforwards totaling $120.3 million at September 30, 2025 and $106.0 million at December 31, 2024. If not used, the state net operating loss carryforwards will expire from 2028 to 2044. The federal and recorded state net operating loss carryforwards are subject to an annual limitation under Internal Revenue Code section 382. Old National believes that all of the federal and recorded state net operating loss carryforwards will be used prior to expiration. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which contains numerous tax provisions. The Company does not believe the OBBBA will have a material impact on its 2025 consolidated financial statements and will continue to evaluate its longer-term impact.

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