OLD NATIONAL BANCORP /IN/
For the period ended Sep 30, 2026. Filed Oct 28, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Oct 28, 2026
Extracted filing text, with the paragraph anchors used by the comparison.
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Item 2. Results of Operations
RESULTS OF OPERATIONS
The following table sets forth certain income statement information of Old National:
| (dollars in thousands, except per share data) · Three Months EndedSeptember 30, · %Change · Nine Months EndedSeptember 30, · %Change | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2026 · 2025 · 2026 · 2025 | |||||||||||||
| Income Statement Summary: | |||||||||||||
| Net interest income | $584,287 | $574,609 | 1.7 | % | $1,735,848 | $1,477,042 | 17.5 | % | |||||
| Provision for credit losses | 33,580 | 26,738 | 25.6 | 104,732 | 164,976 | (36.5) | |||||||
| Noninterest income | 128,446 | 130,461 | (1.5) | 404,356 | 356,772 | 13.3 | |||||||
| Noninterest expense | 355,380 | 445,734 | (20.3) | 1,092,245 | 1,098,971 | (0.6) | |||||||
| Net income applicable to common shareholders | 249,960 | 178,533 | 40.0 | 728,979 | 440,533 | 65.5 | |||||||
| Net income per common share - diluted | 0.66 | 0.46 | 43.5 | 1.90 | 1.23 | 54.5 | |||||||
| Other Data: | |||||||||||||
| Return on average common equity | 12.03 | % | 9.01 | % | 11.72 | % | 8.26 | % | |||||
| Return on average tangible common equity (1) | 19.59 | 15.87 | 19.28 | 14.30 | |||||||||
| Efficiency ratio (1) | 46.09 | 58.84 | 47.12 | 56.43 | |||||||||
| Tier 1 leverage ratio | 8.98 | 8.72 | 8.98 | 8.72 | |||||||||
| Net charge-offs to average loans | 0.27 | 0.25 | 0.26 | 0.24 | |||||||||
(1)Represents a non-GAAP financial measure. Refer to “Non-GAAP Financial Measures” section for reconciliations to GAAP financial measures.
Net Interest Income
Net interest income is the most significant component of our earnings, comprising 81% of revenues for the nine months ended September 30, 2026. Net interest income and net interest margin are influenced by many factors, primarily the volume and mix of earning assets, funding sources, and interest rate fluctuations. Other factors include the level of accretion income on purchased loans, prepayment risk on mortgage and investment-related assets, and the composition and maturity of interest-earning assets and interest-bearing liabilities.
The Federal Reserve increased interest rates during the third quarter of 2026, but interest rates remained lower compared to those in effect as of September 30, 2025. The Federal Reserve’s Federal Funds Rate is currently in a target range of 3.75% to 4.00%, with the Effective Federal Funds Rate of 3.88% at September 30, 2026 compared to 4.09% at September 30, 2025. Management actively takes balance sheet restructuring, derivative, and deposit pricing actions to help mitigate interest rate risk. See the section of this Item 7 titled “Market Risk” for additional information regarding this risk.
Loans typically generate more interest income than investment securities with similar maturities. Funding from client deposits generally costs less than wholesale funding sources. Factors such as general economic activity, Federal Reserve monetary policy, and price volatility of competing alternative investments can also exert significant influence on our ability to optimize our mix of assets and funding, net interest income, and net interest margin.
Net interest income is the excess of interest received from interest-earning assets over interest paid on interest-bearing liabilities. For analytical purposes, net interest income is presented in the table that follows, adjusted to a taxable equivalent basis to reflect what our tax-exempt assets would need to yield in order to achieve the same after-tax yield as a taxable asset. We used the current federal statutory tax rate in effect of 21% for all periods. This analysis portrays the income tax benefits related to tax-exempt assets and helps to facilitate a comparison between taxable and tax-exempt assets. Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully taxable equivalent basis and that it may enhance comparability for peer comparison purposes for both management and investors.
The following tables present the average balance sheet for each major asset and liability category, its related interest income and yield, or its expense and rate.
| (Tax equivalent basis,dollars in thousands) · Three Months EndedSeptember 30, 2026 · Three Months EndedSeptember 30, 2025 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Earning Assets · Average Balance · Income (1)/Expense · Yield/Rate · Average Balance · Income (1)/Expense · Yield/Rate | |||||||||||
| Money market and other interest-earning investments | $1,170,557 | $10,979 | 3.72% | $1,159,564 | $12,207 | 4.18% | |||||
| Investment securities: | |||||||||||
| Treasury and government sponsored agencies | 2,358,480 | 19,370 | 3.29% | 2,391,564 | 20,721 | 3.47% | |||||
| Mortgage-backed securities | 10,479,035 | 114,368 | 4.37% | 9,854,107 | 105,596 | 4.29% | |||||
| States and political subdivisions | 1,417,175 | 11,844 | 3.34% | 1,577,384 | 13,109 | 3.32% | |||||
| Other securities | 824,408 | 12,488 | 6.06% | 874,728 | 16,265 | 7.44% | |||||
| Total investment securities | 15,079,098 | 158,070 | 4.19% | 14,697,783 | 155,691 | 4.24% | |||||
| Loans: (2) | |||||||||||
| Commercial | 16,207,022 | 248,740 | 6.14% | 14,722,785 | 249,569 | 6.78% | |||||
| Commercial real estate | 22,660,192 | 346,840 | 6.12% | 21,999,016 | 356,014 | 6.47% | |||||
| Residential real estate loans | 8,800,325 | 104,378 | 4.74% | 8,287,155 | 95,129 | 4.59% | |||||
| Consumer | 3,383,853 | 55,490 | 6.51% | 3,166,508 | 56,557 | 7.09% | |||||
| Total loans | 51,051,392 | 755,448 | 5.92% | 48,175,464 | 757,269 | 6.28% | |||||
| Total earning assets | 67,301,047 | $924,497 | 5.49% | 64,032,811 | $925,167 | 5.78% | |||||
| Deduct: Allowance for credit losses on loans | (592,670) | (566,102) | |||||||||
| Non-Earning Assets | |||||||||||
| Cash and due from banks | 526,400 | 492,415 | |||||||||
| Other assets | 7,040,733 | 7,177,663 | |||||||||
| Total assets | $74,275,510 | $71,136,787 | |||||||||
| Interest-Bearing Liabilities | |||||||||||
| Checking and NOW accounts | $11,217,310 | $52,484 | 1.86% | $10,807,113 | $52,301 | 1.92% | |||||
| Savings accounts | 4,878,272 | 3,071 | 0.25% | 5,009,293 | 3,866 | 0.31% | |||||
| Money market accounts | 17,085,773 | 104,643 | 2.43% | 17,007,426 | 125,717 | 2.93% | |||||
| Time deposits | 10,831,986 | 96,449 | 3.53% | 9,337,597 | 90,717 | 3.85% | |||||
| Total interest-bearing deposits | 44,013,341 | 256,647 | 2.31% | 42,161,429 | 272,601 | 2.57% | |||||
| Federal funds purchased and interbank borrowings | 9,668 | 90 | 3.69% | 157,192 | 1,816 | 4.58% | |||||
| Securities sold under agreements to repurchase | 258,721 | 577 | 0.88% | 289,323 | 731 | 1.00% | |||||
| FHLB advances | 6,068,074 | 59,292 | 3.88% | 5,552,780 | 57,143 | 4.08% | |||||
| Other borrowings | 1,449,183 | 15,937 | 4.36% | 871,996 | 10,292 | 4.68% | |||||
| Total borrowed funds | 7,785,646 | 75,896 | 3.87% | 6,871,291 | 69,982 | 4.04% | |||||
| Total interest-bearing liabilities | $51,798,987 | $332,543 | 2.55% | $49,032,720 | $342,583 | 2.77% | |||||
| Noninterest-Bearing Liabilities and Shareholders’ Equity | |||||||||||
| Demand deposits | $12,837,453 | $12,731,654 | |||||||||
| Other liabilities | 1,083,626 | 1,203,838 | |||||||||
| Shareholders’ equity | 8,555,444 | 8,168,575 | |||||||||
| Total liabilities and shareholders’ equity | $74,275,510 | $71,136,787 | |||||||||
| Net interest income - taxable equivalent basis | $591,954 | 3.52% | $582,584 | 3.64% | |||||||
| Taxable equivalent adjustment | (7,667) | (7,975) | |||||||||
| Net interest income (GAAP) | $584,287 | 3.47% | $574,609 | 3.59% | |||||||
(1)Interest income is reflected on a fully taxable equivalent basis.
(2)Includes loans held-for-sale.
| (Tax equivalent basis,dollars in thousands) · Nine Months EndedSeptember 30, 2026 · Nine Months EndedSeptember 30, 2025 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Earning Assets · Average Balance · Income (1)/Expense · Yield/Rate · Average Balance · Income (1)/Expense · Yield/Rate | |||||||||||
| Money market and other interest-earning investments | $1,199,047 | $33,044 | 3.68% | $1,126,460 | $35,813 | 4.25% | |||||
| Investment securities: | |||||||||||
| Treasury and government sponsored agencies | 2,375,485 | 57,484 | 3.23% | 2,369,307 | 61,560 | 3.46% | |||||
| Mortgage-backed securities | 10,392,449 | 332,990 | 4.27% | 8,249,480 | 247,853 | 4.01% | |||||
| States and political subdivisions | 1,463,885 | 36,402 | 3.32% | 1,594,912 | 39,753 | 3.32% | |||||
| Other securities | 830,985 | 38,260 | 6.14% | 872,430 | 42,547 | 6.50% | |||||
| Total investment securities | 15,062,804 | 465,136 | 4.12% | 13,086,129 | 391,713 | 3.99% | |||||
| Loans: (2) | |||||||||||
| Commercial | 15,771,532 | 720,843 | 6.09% | 12,803,059 | 634,610 | 6.61% | |||||
| Commercial real estate | 22,319,323 | 1,022,713 | 6.11% | 19,432,867 | 918,371 | 6.30% | |||||
| Residential real estate loans | 8,686,561 | 306,493 | 4.70% | 7,636,955 | 251,629 | 4.39% | |||||
| Consumer | 3,326,422 | 163,409 | 6.57% | 3,030,102 | 160,814 | 7.10% | |||||
| Total loans | 50,103,838 | 2,213,458 | 5.89% | 42,902,983 | 1,965,424 | 6.11% | |||||
| Total earning assets | 66,365,689 | $2,711,638 | 5.45% | 57,115,572 | $2,392,950 | 5.59% | |||||
| Deduct: Allowance for credit losses on loans | (582,180) | (457,192) | |||||||||
| Non-Earning Assets | |||||||||||
| Cash and due from banks | 540,143 | 430,891 | |||||||||
| Other assets | 7,025,532 | 6,331,698 | |||||||||
| Total assets | $73,349,184 | $63,420,969 | |||||||||
| Interest-Bearing Liabilities | |||||||||||
| Checking and NOW | $11,097,532 | $146,128 | 1.76% | $9,512,075 | $123,627 | 1.74% | |||||
| Savings | 4,916,410 | 9,114 | 0.25% | 4,891,083 | 11,251 | 0.31% | |||||
| Money market | 16,706,478 | 304,502 | 2.44% | 14,697,398 | 328,533 | 2.99% | |||||
| Time deposits | 10,246,260 | 267,738 | 3.49% | 8,215,063 | 239,773 | 3.90% | |||||
| Total interest-bearing deposits | 42,966,680 | 727,482 | 2.26% | 37,315,619 | 703,184 | 2.52% | |||||
| Federal funds purchased and interbank borrowings | 18,532 | 504 | 3.64% | 131,341 | 4,394 | 4.47% | |||||
| Securities sold under agreements to repurchase | 258,927 | 1,732 | 0.89% | 286,137 | 1,918 | 0.90% | |||||
| FHLB advances | 6,310,172 | 179,088 | 3.79% | 5,355,597 | 158,081 | 3.95% | |||||
| Other borrowings | 1,328,586 | 43,958 | 4.42% | 792,708 | 27,933 | 4.71% | |||||
| Total borrowed funds | 7,916,217 | 225,282 | 3.80% | 6,565,783 | 192,326 | 3.92% | |||||
| Total interest-bearing liabilities | $50,882,897 | $952,764 | 2.50% | $43,881,402 | $895,510 | 2.73% | |||||
| Noninterest-Bearing Liabilities and Shareholders’ Equity | |||||||||||
| Demand deposits | $12,862,492 | $11,145,709 | |||||||||
| Other liabilities | 1,067,798 | 1,041,715 | |||||||||
| Shareholders’ equity | 8,535,997 | 7,352,143 | |||||||||
| Total liabilities and shareholders’ equity | $73,349,184 | $63,420,969 | |||||||||
| Net interest income - taxable equivalent basis | $1,758,874 | 3.53% | $1,497,440 | 3.50% | |||||||
| Taxable equivalent adjustment | (23,026) | (20,398) | |||||||||
| Net interest income (GAAP) | $1,735,848 | 3.49% | $1,477,042 | 3.45% | |||||||
(1)Interest income is reflected on a fully taxable equivalent basis.
(2)Includes loans held-for-sale.
The following table presents the dollar amount of changes in taxable equivalent net interest income attributable to changes in the average balances of assets and liabilities and the yields earned or rates paid.
| From Three Months EndedSeptember 30, 2025 to ThreeMonths Ended September 30, 2026 · From Nine Months EndedSeptember 30, 2025 to NineMonths Ended September 30, 2026 | ||||||
|---|---|---|---|---|---|---|
| TotalChange (1) · Attributed to · TotalChange (1) · Attributed to | ||||||
| (dollars in thousands) · Volume · Rate · Volume · Rate | ||||||
| Interest Income | ||||||
| Money market and other interest-earning investments | $(1,228) | $103 | $(1,331) | $(2,769) | $2,163 | $(4,932) |
| Investment securities (2) | 2,379 | 4,018 | (1,639) | 73,423 | 60,104 | 13,319 |
| Loans (3) | (1,821) | 43,851 | (45,672) | 248,034 | 324,063 | (76,029) |
| Total interest income | (670) | 47,972 | (48,642) | 318,688 | 386,330 | (67,642) |
| Interest Expense | ||||||
| Checking and NOW deposits | 183 | 1,937 | (1,754) | 22,501 | 20,767 | 1,734 |
| Savings deposits | (795) | (94) | (701) | (2,137) | 55 | (2,192) |
| Money market deposits | (21,074) | 439 | (21,513) | (24,031) | 40,909 | (64,940) |
| Time deposits | 5,732 | 13,822 | (8,090) | 27,965 | 56,296 | (28,331) |
| Federal funds purchased and interbank borrowings | (1,726) | (1,533) | (193) | (3,890) | (3,425) | (465) |
| Securities sold under agreements to repurchase | (154) | (73) | (81) | (186) | (182) | (4) |
| FHLB advances | 2,149 | 5,136 | (2,987) | 21,007 | 27,681 | (6,674) |
| Other borrowings | 5,645 | 6,549 | (904) | 16,025 | 18,335 | (2,310) |
| Total interest expense | (10,040) | 26,183 | (36,223) | 57,254 | 160,436 | (103,182) |
| Net interest income | $9,370 | $21,789 | $(12,419) | $261,434 | $225,894 | $35,540 |
(1)The variance not solely due to rate or volume is allocated equally between the rate and volume variances.
(2)Interest income on investment securities includes taxable equivalent adjustments of $2.4 million and $7.3 million during the three and nine months ended September 30, 2026, respectively, and $2.6 million and $7.9 million during the three and nine months ended September 30, 2025, respectively; using the federal statutory rate in effect of 21%.
(3)Interest income on loans includes taxable equivalent adjustments of $5.3 million and $15.7 million during the three and nine months ended September 30, 2026, respectively, and $5.4 million and $12.5 million during the three and nine months ended September 30, 2025, respectively; using the federal statutory rate in effect of 21%.
The increase in net interest income for the three and nine months ended September 30, 2026 compared to the same periods in 2025 was driven by strong loan growth and core deposit pricing, partly offset by deposit growth and funding mix. In addition, the comparison between the nine months ended September 30, 2026 to the same period in 2025 was impacted by the acquisition of Bremer.
The decrease in net interest margin on a fully taxable equivalent basis for the three months ended September 30, 2026 compared to the same period in 2025 was primarily due to deposit growth and lower yields on loans, partly offset by loan growth and core deposit pricing. The increase in net interest margin on a fully taxable equivalent basis for the nine months ended September 30, 2026 compared to the same period in 2025 was primarily due to the impact of Bremer, loan growth, and lower core deposit pricing, partly offset by deposit growth and lower yields on loans. The yield on interest earning assets decreased 29 basis points and the cost of interest-bearing liabilities decreased 22 basis points in the three months ended September 30, 2026 compared to the same quarter a year ago. The yield on interest earning assets decreased 14 basis points and the cost of interest-bearing liabilities decreased 23 basis points in the nine months ended September 30, 2026 compared to the same period a year ago.
Average earning assets increased $3.3 billion and $9.3 billion for the three and nine months ended September 30, 2026, respectively, compared to the same periods in 2025 reflecting strong loan growth. In addition, the nine months ended September 30, 2026 was impacted by the acquisition of Bremer loans and securities acquired.
Average loans, including loans held-for-sale, increased $2.9 billion and $7.2 billion for the three and nine months ended September 30, 2026, respectively, compared to the same periods in 2025 reflecting strong commercial and commercial real estate loan growth. The increase for the nine months ended September 30, 2026 compared to the same period in 2025 also reflected Bremer loans acquired.
Average noninterest-bearing deposits increased $105.8 million while average interest-bearing deposits increased $1.9 billion for the three months ended September 30, 2026 when compared to the same period in 2025 reflecting organic growth. Average noninterest-bearing deposits increased $1.7 billion while average interest-bearing deposits increased $5.7 billion for the nine months ended September 30, 2026 when compared to the same period in 2025 reflecting Bremer deposits assumed and organic growth.
Provision for Credit Losses
The following table details the components of the provision for credit losses:
| Three Months EndedSeptember 30, · % · Nine Months EndedSeptember 30, · % | ||||||||
|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) · 2026 · 2025 · Change · 2026 · 2025 · Change | ||||||||
| Provision for credit losses on loans | $33,237 | $24,003 | 38.5 | % | $108,491 | $154,292 | (29.7) | % |
| Provision (release) for credit losses on unfunded loan commitments | 343 | 2,735 | (87.5) | (3,759) | 10,684 | (135.2) | ||
| Total provision for credit losses | $33,580 | $26,738 | 25.6 | % | $104,732 | $164,976 | (36.5) | % |
| Net (charge-offs) recoveries on non-PCD loans | $(29,970) | $(19,000) | 57.7 | % | $(78,421) | $(61,199) | 28.1 | % |
| Net (charge-offs) recoveries on PCD loans | (4,120) | (11,038) | (62.7) | (19,932) | (16,983) | 17.4 | ||
| Total net (charge-offs) recoveries on loans | $(34,090) | $(30,038) | 13.5 | % | $(98,353) | $(78,182) | 25.8 | % |
| Net charge-offs (recoveries) to average loans | 0.27% | 0.25% | 7.1 | % | 0.26% | 0.24% | 7.7 | |
Total provision for credit losses on loans increased in the three months ended September 30, 2026 compared to the same period in 2025 primarily due to loan growth and higher net charge-offs. Total provision for credit losses on loans decreased in the nine months ended September 30, 2026 compared to the same period in 2025 primarily due to $75.6 million to establish an allowance for credit losses on non-PCD Bremer loans and unfunded loan commitments acquired in the nine months ended September 30, 2025, partly offset by loan growth. Continued loan growth in future periods, a decline in our current level of recoveries, or an increase in charge-offs could result in an increase in provision expense. Additionally, provision expense may be volatile due to changes in CECL model assumptions of credit quality, macroeconomic factors and conditions, and loan composition, which drive the allowance for credit losses balance.
Noninterest Income
We generate revenues in the form of noninterest income through client fees, sales commissions, and gains and losses from our core banking franchise and other related businesses, such as wealth management, investment consulting, and investment products. The following table details the components in noninterest income:
| Three Months EndedSeptember 30, · % · Nine Months EndedSeptember 30, · % | ||||||||
|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) · 2026 · 2025 · Change · 2026 · 2025 · Change | ||||||||
| Wealth and investment services fees | $42,244 | $39,684 | 6.5 | % | $124,057 | $105,149 | 18.0 | % |
| Service charges on deposit accounts | 29,187 | 27,856 | 4.8 | 84,133 | 72,890 | 15.4 | ||
| Debit card and ATM fees | 13,325 | 13,197 | 1.0 | 38,455 | 36,110 | 6.5 | ||
| Mortgage banking revenue | 8,966 | 10,442 | (14.1) | 29,683 | 27,353 | 8.5 | ||
| Capital markets income | 12,348 | 12,629 | (2.2) | 35,693 | 24,249 | 47.2 | ||
| Company-owned life insurance | 7,326 | 7,565 | (3.2) | 23,418 | 19,571 | 19.7 | ||
| Debt securities gains (losses), net | 5 | 7 | (28.6) | 46 | (110) | (141.8) | ||
| Other income | 15,045 | 19,081 | (21.2) | 68,871 | 71,560 | (3.8) | ||
| Total noninterest income | $128,446 | $130,461 | (1.5) | % | $404,356 | $356,772 | 13.3 | % |
Noninterest income for the three months ended September 30, 2026 included a $0.9 million gain in other income associated with the settlement of the Bremer pension plan. Strong year-over-year growth in fee-based businesses was partly offset by lower mortgage banking and capital markets volumes. In addition, other income was elevated for the three months ended September 30, 2025.
Noninterest income for the nine months ended September 30, 2026 included a $14.1 million gain in other income associated with the settlement of the Bremer pension plan. Noninterest income for the nine months ended September 30, 2025 included a $21.0 million gain in other income associated with the freezing of benefits of the Bremer pension plan. Excluding these gains, noninterest income increased $54.5 million for the nine months ended September 30, 2026, compared to the same period in 2025 driven by the acquisition of Bremer in May 2025, as well as organic growth of fee-based businesses.
Noninterest Expense
The following table details the components in noninterest expense:
| Three Months EndedSeptember 30, · % · Nine Months EndedSeptember 30, · % | ||||||||
|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) · 2026 · 2025 · Change · 2026 · 2025 · Change | ||||||||
| Salaries and employee benefits | $180,018 | $211,345 | (14.8) | % | $548,856 | $561,762 | (2.3) | % |
| Occupancy | 34,784 | 34,442 | 1.0 | 105,231 | 93,927 | 12.0 | ||
| Equipment | 11,326 | 12,703 | (10.8) | 34,478 | 34,170 | 0.9 | ||
| Marketing | 16,462 | 15,093 | 9.1 | 48,497 | 40,792 | 18.9 | ||
| Technology | 27,529 | 36,122 | (23.8) | 86,184 | 89,594 | (3.8) | ||
| Communication | 6,323 | 7,742 | (18.3) | 18,649 | 16,890 | 10.4 | ||
| Professional fees | 12,260 | 13,598 | (9.8) | 35,351 | 43,448 | (18.6) | ||
| FDIC assessment | 13,243 | 14,095 | (6.0) | 40,591 | 37,204 | 9.1 | ||
| Amortization of intangibles | 23,331 | 26,184 | (10.9) | 72,946 | 52,644 | 38.6 | ||
| Amortization of tax credit investments | 8,131 | 7,057 | 15.2 | 23,049 | 16,296 | 41.4 | ||
| Other expense | 21,973 | 67,353 | (67.4) | 78,413 | 112,244 | (30.1) | ||
| Total noninterest expense | $355,380 | $445,734 | (20.3) | % | $1,092,245 | $1,098,971 | (0.6) | % |
Noninterest expense included $0.7 million and $69.3 million of merger-related expenses for the three months ended September 30, 2026 and 2025, respectively. Excluding these expenses, noninterest expense decreased to $354.7 million for the three months ended September 30, 2026, compared to $376.5 million for the three months ended September 30, 2025. This decrease was driven primarily by disciplined expense management.
Noninterest expense included $20.1 million and $116.3 million of merger-related expenses for the nine months ended September 30, 2026 and 2025, respectively. Noninterest expense for the nine months ended September 30, 2026 also included a $3.4 million non-cash, pre-tax expense associated with the distribution of excess pension assets with the resolution of the legacy First Midwest plan. Excluding these expenses, noninterest expense increased to $1.1 billion for the nine months ended September 30, 2026, compared to $982.6 million for the nine months ended September 30, 2025. This increase was driven primarily by operating costs and additional amortization of intangibles related to the acquisition of Bremer.
Amortization of tax credit investments increased $1.1 million and $6.8 million for the three and nine months ended September 30, 2026, respectively, compared to the same periods in 2025 primarily due to additional amortization related to the Bremer acquisition. In addition, the recognition of tax credit amortization expense is contingent upon the successful completion of the rehabilitation of a historic building or completion of a solar project within the reporting period. Many factors including weather, labor availability, building regulations, inspections, and other unexpected construction delays related to a rehabilitation project can cause a project to exceed its estimated completion date. See Note 9 to the consolidated financial statements for additional information on our tax credit investments.
Provision for Income Taxes
We record a provision for income taxes currently payable and for income taxes payable or benefits to be received in the future, which arise due to timing differences in the recognition of certain items for financial statement and income tax purposes. The major difference between the effective tax rate applied to our financial statement income and the federal statutory tax rate is caused by a tax benefit from our tax credit investments and interest on tax-exempt securities and loans. The effective tax rate was 21.6% and 21.4% for the three and nine months ended
September 30, 2026, respectively, compared to 21.5% and 20.6% for the three and nine months ended September 30, 2025, respectively. The increase in the effective tax rate for the nine months ended September 30, 2026 compared to the same period in 2025 reflected an increase in state income taxes. See Note 14 to the consolidated financial statements for additional information. In accordance with ASC 740-270, Accounting for Interim Reporting, the provision for income taxes was recorded at September 30, 2026 based on the current estimate of the effective annual rate.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.