Tax changes drop Old National Bancorp income

EVANSVILLE — Old National Bancorp, the holding company of Old National Bank, reported a fourth quarter 2017 net loss of $18.5 million, or 13 cents per diluted share, due to changes required by the new federal tax law.

The fourth quarter results included an estimated revaluation of the company’s deferred tax asset due to the new federal tax law, according to a news release. Old National recorded $39.3 million of additional tax expense to estimate the impact of a reduction to its deferred tax asset.

Also included in the fourth quarter were pre-tax charges:

  • $11.9 million for merger and integration
  • $3 million for branch consolidations
  • $1.6 million in severance
  • $1.3 million for foundation funding
  • $700,000 for a client experience improvement initiative

Excluding those items from the current quarter and netting out securities gains, Old National would have reported net income of $32.7 million or 22 cents per share, the company said. That’s compared to $33.5 million or 25 cents a share during the fourth quarter of 2016.

Old National CEO Bob Jones said the fourth quarter saw a continuation of strong operating results highlighted by double-digit commercial loan group coupled with strong credit quality, controlled deposit costs and steady core expenses.

“We accomplished all of this while expanding into Minnesota with the successful closing of our Anchor-Minnesota partnership,” he said.

“While the immediate impact of the Tax Cut and Jobs Act is the necessary write-down of a portion of our deferred taxes, the positive impact that reduced taxes will have on Old National and our clients will be significant in 2018 and beyond,” Jones said. “We are already hearing from clients about increased investments in technology and other capital expenditures.

This is a similar story for us, as we expect to use some of the benefit to enhance our client experience through increased investments in technology.”

Full-year 2017 net income was $95.7 million, or 69 cents per diluted share. That’s compared to $134.3 million, or $1.05 per share, in 2016.

Afterward, Old National declared a dividend of 13 cents per share payable March 15 to stockholders of record as of March 1.

Evansville-based Old National has banking centers in Indiana, Kentucky, Michigan, Wisconsin and Minnesota. The company operates four bank branches in Columbus.