Old National Bancorp /In/ (NASDAQ: ONB)

$23.94 ▲ +0.11 (+0.46%)

As of May 22, 2026 04:00 PM

Sector: Financial Services Industry: Banks - Regional CIK: 0000707179

Market Cap 9.24 Bn

P/E 12.21

P/S 3.37

Div. Yield 0.02

ROIC (Qtr) 0.00

Total Debt (Qtr) 6.03 Bn

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About

Old National Bancorp is a financial holding company that owns Old National Bank its wholly owned banking subsidiary. The company is incorporated in Indiana and is the sixth largest Midwestern headquartered bank by asset size with consolidated assets of $72.2 billion at December 31 2025. It ranks among the top 25 banking companies headquartered in the United States. Its corporate headquarters are in Evansville Indiana while its commercial and consumer banking operations are headquartered in Chicago Illinois. Through Old National Bank and non bank...

Old National Bancorp is a financial holding company that owns Old National Bank its wholly owned banking subsidiary. The company is incorporated in Indiana and is the sixth largest Midwestern headquartered bank by asset size with consolidated assets of $72.2 billion at December 31 2025. It ranks among the top 25 banking companies headquartered in the United States. Its corporate headquarters are in Evansville Indiana while its commercial and consumer banking operations are headquartered in Chicago Illinois. Through Old National Bank and non bank affiliates the company provides a wide range of services primarily throughout the Midwest and Southeast regions of the United States including consumer and commercial banking wealth management and capital markets.

The company earns interest income on loans as well as fee income from the origination of loans and from providing other services to clients. Deposit accounts generate revenue through service fees on various accounts and interest paid on interest bearing deposits. Wealth management trust investment advisory brokerage and foreign currency services also contribute to fee based revenue. For businesses the company provides treasury management merchant and capital markets services as well as community development lending and equity investment solutions. These activities together form the core of Old National Bancorp’s revenue streams.

Old National Bancorp is the sixth largest Midwestern headquartered bank by asset size and ranks among the top 25 banking companies headquartered in the United States. The company competes with other commercial banks savings and loan associations credit unions mortgage banking firms FinTech companies consumer finance companies securities brokerage firms insurance companies money market mutual funds private equity and debt funds and other financial services providers. Many competitors are larger and have substantially greater resources than Old National Bancorp. The company’s competitive advantages stem from its community banking focus long term client relationships diversified product offerings and strong capital position. Its strategic acquisitions have expanded its footprint in the Midwest and Southeast while reinforcing its commitment to local markets.

Old National Bancorp serves individual consumers small businesses and commercial clients across its Midwest and Southeast footprint. The company provides depository services lending and wealth management solutions to retail customers and to corporate entities. Community development lending and equity investment solutions target local businesses and municipalities seeking to spur job creation and revitalization. Overall the customer base consists of a broad mix of retail households and commercial enterprises seeking traditional banking and related financial services.

Investment thesis

Bull case

Old National’s Q4 2025 results demonstrate a solid operational foundation that positions the bank for continued upside, as evidenced by the nearly 20% return on average tangible common equity and a 1.37% return on assets. These profitability metrics place the bank firmly in the top decile of its peer group, suggesting that management’s disciplined cost control and efficiency improvements are not temporary phenomena but rather sustainable practices. The record low efficiency ratio of 46% is a direct reflection of strategic expense discipline and a well-executed technology investment plan that has already begun to deliver returns in the form of higher fee income from mortgage and capital markets activities. Moreover, the bank’s noninterest income beat guidance, driven by a 4% increase in mortgage and capital markets fee revenue, highlights the growing demand for these products in the current rate environment and provides a recurring revenue stream that can offset potential margin compression. The integration of Bremer Bank has already yielded 28% of the targeted cost savings, and full run‑rate savings are projected for Q1 2026, thereby freeing additional capital for share repurchases and organic growth initiatives. Finally, the bank’s consistent capital generation, with a CET1 ratio above 11% and tangible book value per share rising 15% YoY, provides ample flexibility to support an aggressive share buyback program while maintaining a robust capital buffer for future market volatility.
The strategic focus on talent acquisition and development, particularly in the wealth and commercial loan segments, is a hidden catalyst that has yet to be fully reflected in the market price. Management’s narrative about hiring top talent in high-growth markets underscores an intention to deepen client relationships and expand product penetration, which could translate into higher loan growth rates beyond the current 4–6% guidance. The bank’s active pipeline, up 15% from the prior quarter, indicates that the frontline sales teams are already driving new business, and with continued recruitment, this pipeline is likely to grow at an accelerated pace. The bank’s emphasis on wealth management, especially in underserved segments, presents an opportunity to cross-sell commercial products to high-net-worth individuals, creating a synergistic revenue stream that can further bolster fee income. These talent initiatives are supported by a clear technology roadmap, which the bank has communicated as being largely self‑funded, ensuring that capital is not diverted away from growth activities. In combination, these efforts signal a sustainable growth engine that can lift earnings and return on equity well above industry averages.
Credit quality has improved for three consecutive quarters, with a 12% decline in nonaccrual loans and a 8% reduction in criticized and classified loans, reflecting a disciplined underwriting culture. The allowance for credit losses, at 1.24% of total loans, has slipped by two basis points sequentially, a testament to the bank’s proactive portfolio management and effective risk mitigation strategies. The bank’s focus on active loan portfolio monitoring, particularly in the commercial real estate space where upgrades have outpaced downgrades at a 2:1 ratio, suggests that future charge‑off rates will remain contained, allowing the bank to maintain high asset quality. Moreover, the bank’s conservative reserve modeling, which incorporates a 100% weighting on Moody’s S2 scenario, provides a cushion against unexpected macro shocks, further reinforcing the stability of its credit profile. The bank’s exposure to loans to nondepository financial institutions remains de‑minimis, mitigating concentration risk and ensuring a balanced loan portfolio. These credit dynamics position Old National to sustain higher net interest margins while preserving a strong capital buffer, thereby supporting long-term earnings growth.
Deposit growth has remained resilient, with core deposits growing 0.6% annually, and noninterest‑bearing deposits increasing to 26% of core deposits. This shift towards fee‑based deposit accounts reduces the bank’s deposit cost sensitivity, as noninterest‑bearing deposits tend to be less responsive to rate changes, thereby providing a stable funding base. The bank’s deposit beta of 87% during Fed cuts illustrates a strong ability to manage rate‑sensitive deposit costs, achieving a spot cost of 1.68% at year‑end, which is competitive with peers. The bank’s aggressive deposit marketing strategy, particularly targeting public funds and exception‑priced accounts, has already yielded a 90% beta on the exception‑priced book, indicating a high degree of deposit rate control that can be leveraged to maintain margin stability in a rising‑rate environment. Additionally, the bank’s modest use of brokered deposits (6.7% of total deposits) suggests a disciplined approach to funding that limits exposure to market‑sensitive deposit streams. These deposit dynamics provide a robust funding foundation that supports loan growth and fee generation without compromising cost structure.
The bank’s investment portfolio strategy remains conservative yet opportunistic, with a flat portfolio balance and $2.9 billion projected cash flow over the next twelve months. The new money yields, running 94 basis points above back‑book yields, indicate that the bank can continue to capture favorable spread opportunities as interest rates rise. The management’s decision to maintain a plain‑vanilla portfolio with a four‑year duration reflects a risk‑averse stance that protects against duration mismatch, thereby safeguarding net interest income in a volatile rate environment. The bank’s emphasis on reinvesting cash flows rather than expanding the portfolio reduces exposure to market risk while still providing a predictable income stream. By balancing yield and duration, Old National can ensure that its net interest margin remains stable even as the yield curve flattens or steepens, providing a cushion for future earnings.

Old National’s Q4 2025 results demonstrate a solid operational foundation that positions the bank for continued upside, as evidenced by the nearly 20% return on average tangible common equity and a 1.37% return on assets. These profitability metrics place the bank firmly in the top decile of its peer group, suggesting that management’s disciplined cost control and efficiency improvements are not temporary phenomena but rather sustainable practices. The record low efficiency ratio of 46% is a direct reflection of strategic expense discipline and a well-executed technology investment plan that has already begun to deliver returns in the form of higher fee income from mortgage and capital markets activities. Moreover, the bank’s noninterest income beat guidance, driven by a 4% increase in mortgage and capital markets fee revenue, highlights the growing demand for these products in the current rate environment and provides a recurring revenue stream that can offset potential margin compression. The integration of Bremer Bank has already yielded 28% of the targeted cost savings, and full run‑rate savings are projected for Q1 2026, thereby freeing additional capital for share repurchases and organic growth initiatives. Finally, the bank’s consistent capital generation, with a CET1 ratio above 11% and tangible book value per share rising 15% YoY, provides ample flexibility to support an aggressive share buyback program while maintaining a robust capital buffer for future market volatility.
The strategic focus on talent acquisition and development, particularly in the wealth and commercial loan segments, is a hidden catalyst that has yet to be fully reflected in the market price. Management’s narrative about hiring top talent in high-growth markets underscores an intention to deepen client relationships and expand product penetration, which could translate into higher loan growth rates beyond the current 4–6% guidance. The bank’s active pipeline, up 15% from the prior quarter, indicates that the frontline sales teams are already driving new business, and with continued recruitment, this pipeline is likely to grow at an accelerated pace. The bank’s emphasis on wealth management, especially in underserved segments, presents an opportunity to cross-sell commercial products to high-net-worth individuals, creating a synergistic revenue stream that can further bolster fee income. These talent initiatives are supported by a clear technology roadmap, which the bank has communicated as being largely self‑funded, ensuring that capital is not diverted away from growth activities. In combination, these efforts signal a sustainable growth engine that can lift earnings and return on equity well above industry averages.
Credit quality has improved for three consecutive quarters, with a 12% decline in nonaccrual loans and a 8% reduction in criticized and classified loans, reflecting a disciplined underwriting culture. The allowance for credit losses, at 1.24% of total loans, has slipped by two basis points sequentially, a testament to the bank’s proactive portfolio management and effective risk mitigation strategies. The bank’s focus on active loan portfolio monitoring, particularly in the commercial real estate space where upgrades have outpaced downgrades at a 2:1 ratio, suggests that future charge‑off rates will remain contained, allowing the bank to maintain high asset quality. Moreover, the bank’s conservative reserve modeling, which incorporates a 100% weighting on Moody’s S2 scenario, provides a cushion against unexpected macro shocks, further reinforcing the stability of its credit profile. The bank’s exposure to loans to nondepository financial institutions remains de‑minimis, mitigating concentration risk and ensuring a balanced loan portfolio. These credit dynamics position Old National to sustain higher net interest margins while preserving a strong capital buffer, thereby supporting long-term earnings growth.
Deposit growth has remained resilient, with core deposits growing 0.6% annually, and noninterest‑bearing deposits increasing to 26% of core deposits. This shift towards fee‑based deposit accounts reduces the bank’s deposit cost sensitivity, as noninterest‑bearing deposits tend to be less responsive to rate changes, thereby providing a stable funding base. The bank’s deposit beta of 87% during Fed cuts illustrates a strong ability to manage rate‑sensitive deposit costs, achieving a spot cost of 1.68% at year‑end, which is competitive with peers. The bank’s aggressive deposit marketing strategy, particularly targeting public funds and exception‑priced accounts, has already yielded a 90% beta on the exception‑priced book, indicating a high degree of deposit rate control that can be leveraged to maintain margin stability in a rising‑rate environment. Additionally, the bank’s modest use of brokered deposits (6.7% of total deposits) suggests a disciplined approach to funding that limits exposure to market‑sensitive deposit streams. These deposit dynamics provide a robust funding foundation that supports loan growth and fee generation without compromising cost structure.
The bank’s investment portfolio strategy remains conservative yet opportunistic, with a flat portfolio balance and $2.9 billion projected cash flow over the next twelve months. The new money yields, running 94 basis points above back‑book yields, indicate that the bank can continue to capture favorable spread opportunities as interest rates rise. The management’s decision to maintain a plain‑vanilla portfolio with a four‑year duration reflects a risk‑averse stance that protects against duration mismatch, thereby safeguarding net interest income in a volatile rate environment. The bank’s emphasis on reinvesting cash flows rather than expanding the portfolio reduces exposure to market risk while still providing a predictable income stream. By balancing yield and duration, Old National can ensure that its net interest margin remains stable even as the yield curve flattens or steepens, providing a cushion for future earnings.

Bear case

While Old National’s Q4 2025 results are impressive on paper, the bank’s integration of Bremer Bank, despite early cost‑saving achievements, introduces lingering operational risks that could erode the projected 28% of targeted savings realized in the fourth quarter. Integration projects often suffer from hidden inefficiencies, such as duplicate systems and culture clashes, which can delay full cost realization and negatively impact profitability. Management’s optimistic guidance that full run‑rate savings will be achieved in Q1 2026 may be overly optimistic given the complexity of merging two distinct operational platforms. Should integration issues persist, the bank could face higher operating expenses, eroding its record low efficiency ratio and undermining the margin expansion projected for 2026.
The bank’s deposit growth of 0.6% annualized, while positive, is modest compared to the pace of loan growth, raising concerns about the sustainability of the bank’s loan‑to‑deposit ratio. A rising loan‑to‑deposit ratio can increase funding cost risk, particularly if the bank’s deposit base becomes more rate‑sensitive or if public‑fund seasonality disrupts deposit stability. Management’s emphasis on noninterest‑bearing deposits, which rose to 26% of core deposits, may mask underlying vulnerability if rate cuts persist, as these deposits can convert to interest‑bearing accounts during favorable market conditions. Any deterioration in deposit quality could force the bank to raise rates to attract deposits, compressing net interest margins and eroding profitability.
The bank’s credit quality improvement, while notable, relies heavily on current economic conditions that may deteriorate as inflationary pressures rise and the Federal Reserve continues to raise rates. A tightening credit environment could reverse the 8% decline in criticized and classified loans, leading to higher charge‑offs and a subsequent rise in the allowance for credit losses. The bank’s conservative reserve model, which incorporates a 100% weighting on Moody’s S2 scenario, may not fully capture the tail risk associated with a rapid economic slowdown, leaving the bank vulnerable to a surge in nonaccrual loans. Any deterioration in credit quality would directly impact net interest income and could necessitate additional capital allocation to cover losses, thereby diminishing shareholder returns.
The bank’s heavy reliance on its regional footprint in Minnesota and North Dakota exposes it to concentration risk, especially if regional economic conditions deteriorate. While local market knowledge can be a competitive advantage, it also limits diversification, making the bank more susceptible to localized downturns such as a decline in the Midwest manufacturing sector or a slowdown in North Dakota’s oil and gas industry. Management’s focus on organic growth within these markets may fail to offset any downturns, leading to a compressed loan growth trajectory and higher loan loss provisions. This concentration risk could also limit the bank’s ability to attract capital and investors who prefer diversified regional exposure.
The bank’s share repurchase program, while attractive to shareholders, may strain capital resources if the bank faces unexpected credit losses or regulatory capital requirements. Maintaining CET1 above 11% while pursuing an aggressive buyback program could force management to prioritize capital returns over prudent capital allocation, potentially compromising the bank’s ability to absorb future losses. Furthermore, a large buyback program may signal to the market that management lacks better investment opportunities, which could erode investor confidence. In a stressed environment, the bank may be forced to scale back buybacks, negatively impacting share price and shareholder sentiment.

While Old National’s Q4 2025 results are impressive on paper, the bank’s integration of Bremer Bank, despite early cost‑saving achievements, introduces lingering operational risks that could erode the projected 28% of targeted savings realized in the fourth quarter. Integration projects often suffer from hidden inefficiencies, such as duplicate systems and culture clashes, which can delay full cost realization and negatively impact profitability. Management’s optimistic guidance that full run‑rate savings will be achieved in Q1 2026 may be overly optimistic given the complexity of merging two distinct operational platforms. Should integration issues persist, the bank could face higher operating expenses, eroding its record low efficiency ratio and undermining the margin expansion projected for 2026.
The bank’s deposit growth of 0.6% annualized, while positive, is modest compared to the pace of loan growth, raising concerns about the sustainability of the bank’s loan‑to‑deposit ratio. A rising loan‑to‑deposit ratio can increase funding cost risk, particularly if the bank’s deposit base becomes more rate‑sensitive or if public‑fund seasonality disrupts deposit stability. Management’s emphasis on noninterest‑bearing deposits, which rose to 26% of core deposits, may mask underlying vulnerability if rate cuts persist, as these deposits can convert to interest‑bearing accounts during favorable market conditions. Any deterioration in deposit quality could force the bank to raise rates to attract deposits, compressing net interest margins and eroding profitability.
The bank’s credit quality improvement, while notable, relies heavily on current economic conditions that may deteriorate as inflationary pressures rise and the Federal Reserve continues to raise rates. A tightening credit environment could reverse the 8% decline in criticized and classified loans, leading to higher charge‑offs and a subsequent rise in the allowance for credit losses. The bank’s conservative reserve model, which incorporates a 100% weighting on Moody’s S2 scenario, may not fully capture the tail risk associated with a rapid economic slowdown, leaving the bank vulnerable to a surge in nonaccrual loans. Any deterioration in credit quality would directly impact net interest income and could necessitate additional capital allocation to cover losses, thereby diminishing shareholder returns.
The bank’s heavy reliance on its regional footprint in Minnesota and North Dakota exposes it to concentration risk, especially if regional economic conditions deteriorate. While local market knowledge can be a competitive advantage, it also limits diversification, making the bank more susceptible to localized downturns such as a decline in the Midwest manufacturing sector or a slowdown in North Dakota’s oil and gas industry. Management’s focus on organic growth within these markets may fail to offset any downturns, leading to a compressed loan growth trajectory and higher loan loss provisions. This concentration risk could also limit the bank’s ability to attract capital and investors who prefer diversified regional exposure.
The bank’s share repurchase program, while attractive to shareholders, may strain capital resources if the bank faces unexpected credit losses or regulatory capital requirements. Maintaining CET1 above 11% while pursuing an aggressive buyback program could force management to prioritize capital returns over prudent capital allocation, potentially compromising the bank’s ability to absorb future losses. Furthermore, a large buyback program may signal to the market that management lacks better investment opportunities, which could erode investor confidence. In a stressed environment, the bank may be forced to scale back buybacks, negatively impacting share price and shareholder sentiment.

Peer comparison

Companies in the Banks - Regional

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	BCH	Bank Of Chile	90,891.20 Bn	47.15 Mn	-	0.00 Bn
2	BBD	Bank Bradesco	6,807.69 Bn	0.00 Mn	-	21.77 Bn
3	LYG	Lloyds Banking Group plc	426.28 Bn	0.00 Mn	16.65	-
4	NWG	NatWest Group plc	184.56 Bn	0.00 Mn	4.63	-
5	FCAP	First Capital Inc	181.18 Bn	0.00 Mn	25,111.90	-
6	LARK	Landmark Bancorp Inc	164.67 Bn	0.00 Mn	2,257.48	0.02 Bn
7	DB	Deutsche Bank Aktiengesellschaft	161.63 Bn	0.00 Mn	5.57	630.72 Bn
8	KB	KB Financial Group Inc.	150.02 Bn	0.00 Mn	-	8.28 Bn

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Old National Bancorp /In/ (NASDAQ: ONB)

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Investment thesis

Bull case

Bear case

Peer comparison

Research Tools

Developers

Old National Bancorp /In/ (NASDAQ: ONB)

About

Investment thesis

Bull case

Bear case

Peer comparison

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