Why Old National Bancorp (NASDAQ: ONB) stock is soaring

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Old National Bancorp (NASDAQ: ONB) stock rose over 5.8% on 21st October, 2019 (as of 11:24 am GMT-4; Source: Google finance) after the company posted better than expected results for the third quarter of FY 19. Net interest income fell to $153.1 million in the third quarter of 2019 compared to $155.2 million in the second quarter of 2019. The net interest margin on a fully taxable equivalent basis contracted by 9 basis points to 3.57% compared to 3.66% in the second quarter of 2019. ONB has collected interest on nonaccrual loans of $2 million, or 5 basis points of net interest margin, in the third quarter of 2019 compared to $5.7 million, or 13 basis points of net interest margin, in the second quarter of 2019. The cost of total deposits was almost flat at 0.52% in the third quarter of 2019 and the cost of total interest-bearing deposits rose by 1 basis point to 0.71%. At the end of the third quarter 2019, the company’s total risk-based capital was 13% and regulatory tier 1 capital was 12%. At the end of the third quarter 2019, tangible common equity to tangible assets was 8.95% compared to 8.92% in the second quarter of 2019.

Moreover, ONB’s asset quality is strong as the net charge-offs in the third quarter was of $0.8 million, or 0.03% of total average loans, and 30-89 day delinquencies of 0.21%. The provision expense has increased to $1.4 million in the third quarter compared to $1 million in the second quarter. The company’s non-performing loans have declined as a percentage of total loans to 1.31%. Further, the loans acquired from recent acquisitions were recorded by the company at fair value with no allowance recorded at the acquisition date. Therefore, as of September 30, 2019, the remaining discount on these acquired loans was $87.1 million.

ONB in the third quarter of FY 19 has reported the adjusted earnings per share of 41 cents, beating the analysts’ estimates for the adjusted earnings per share of 34 cents, as per Zacks Investment Research. The company had reported the adjusted revenue of $207.1 million in the third quarter of FY 19, beating the analysts’ estimates for revenue of $199.6 million. For the third quarter the company has reported 36% rise in the net income to $69.8 million.

During the third quarter, the Company had repurchased 2.2 million shares of common shares at a weighted average price of $16.80 per share, excluding commissions.

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