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[ONB] Old National Bancorp Thesis 2026: Midwest Regional Bank Drives Deposit Franchise Capital Return

Ddrillr ResearchOriginal research
Published 8 min read

Old National Bancorp (NASDAQ: ONB) FY2025 revenue ~$1.85-2.05B (+15-20%) with adj. EPS ~$1.95-2.15 reflecting continued post-July 2024 ~$1.85-2.05B aggregate Net Interest Income + Noninterest Income (~$53-55B aggregate assets; selected primary post-July 2024 ~$3.1B Bremer Financial Corporation acquisition + selected primary post-2022 First Midwest Bancorp merger of equals + selected various aggregate Midwest + Mid-South + Southeast deposit franchise) under continued Chairman + CEO James Ryan III since May 2019 (~6-year tenure as Old National Bancorp CEO; selected post-July 2024 Bremer Financial integration). One of the largest US Midwest specialty Regional Bank Holding Companies. Founded 1834 as Old National Bank in Evansville Indiana (~191-year heritage; selected pioneer Indiana banking franchise); selected post-1834 founding + selected post-1980s NASDAQ listing; selected post-2022 ~$3.0B+ First Midwest Bancorp merger of equals; selected post-July 2024 ~$3.1B Bremer Financial Corporation acquisition. Headquartered in Evansville Indiana; ~4,500-5,000 employees globally with ~$53-55B aggregate assets and ~270+ banking centers across Indiana + Kentucky + Michigan + Wisconsin + Minnesota + Tennessee + Illinois + Ohio. One primary business: Regional Bank Holding Company ~100%. Structure: Net Interest Income ~78%+ ($1.45-1.60B), Noninterest Income ~22% ($400-450M). Geographic mix: Indiana ~30%+ + selected various aggregate ~70% Mid-South + Southeast + Midwest. Midwest Regional Bank Deposit Franchise (~$42-44B deposits): ~$42-44B aggregate deposits (~80%+ aggregate funding mix); selected ~270+ aggregate banking centers; selected ~30-32% aggregate noninterest-bearing deposits; selected ~$160-200B aggregate granular core deposit base; selected ~3.30-3.50% aggregate Net Interest Margin (NIM). Bremer Financial Integration + Wealth Management pipeline: selected continued post-July 2024 ~$3.1B Bremer Financial acquisition (~$15.6B aggregate Bremer assets at close + ~$10B+ aggregate Bremer deposits + Bremer Minnesota franchise); selected ~$31-34B aggregate Wealth Management + Investment Advisory + Trust + Retirement + Brokerage AUM; selected ~$255-275M aggregate Wealth + Investment Advisory revenue. Chairman + CEO James Ryan III since May 2019 (~6-year tenure); CFO John Moran. Capital position: ~$0.56 aggregate annual dividend (~28%+ aggregate payout ratio; ~3.5-4.0% aggregate dividend yield); ~$200-250M aggregate FY2025 buybacks; aggregate capital return ~$420-470M FY2025; CET1 ~11.5-12.0%; net leverage moderate; investment-grade Baa1/BBB+ credit rating; ~320-330M diluted shares. FY2026 thesis: Midwest deposit franchise (~$42-44B deposits + ~3.30-3.50% NIM) + Bremer Financial integration + Wealth Management + Investment Advisory + ~$31-34B AUM pipeline + selected ~$53-55B aggregate assets + selected ~270+ aggregate banking centers footprint expansion. Risks: Truist + KeyCorp + Fifth Third + Huntington + Regions + Comerica + Wintrust Financial competitive displacement + Federal Reserve interest rate cycle considerations + Bremer Financial integration considerations + Commercial Real Estate cycle considerations.

[ONB] Old National Bancorp Thesis 2026: Midwest Regional Bank Drives Deposit Franchise Capital Return

Key Takeaways

  • ONB FY2025 revenue ~$1.85-2.05B (+15-20% YoY) with adj. EPS ~$1.95-2.15 reflecting continued post-July 2024 $1.85-2.05B aggregate Net Interest Income + Noninterest Income ($53-55B aggregate assets; selected primary post-July 2024 ~$3.1B Bremer Financial Corporation acquisition + selected primary post-2022 First Midwest Bancorp merger of equals + selected various aggregate Midwest + Mid-South + Southeast deposit franchise) under continued Chairman + CEO James Ryan III since May 2019 (~6-year tenure as Old National Bancorp CEO; selected post-July 2024 Bremer Financial integration).
  • Midwest Regional Bank Deposit Franchise (~$42-44B aggregate deposits): ~$42-44B aggregate deposits (~80%+ aggregate funding mix); selected primary Midwest + Mid-South + Southeast deposit franchise + selected various aggregate ~270+ aggregate banking centers across Indiana + Kentucky + Michigan + Wisconsin + Minnesota + Tennessee + Illinois + Ohio + selected various aggregate ~30-32% aggregate noninterest-bearing deposits + selected various aggregate ~$160-200B aggregate granular core deposit base + selected various aggregate ~3.30-3.50% aggregate Net Interest Margin (NIM).
  • Bremer Financial Integration + Wealth Management Pipeline: selected continued post-July 2024 ~$3.1B Bremer Financial acquisition + selected various aggregate ~$15.6B aggregate Bremer assets at close + selected various aggregate ~$10B+ aggregate Bremer deposits + selected various aggregate Wealth Management + Investment Advisory + Trust + Retirement + Brokerage aggregate ~$31-34B aggregate Assets Under Management (AUM) + selected various aggregate ~$255-275M aggregate Wealth + Investment Advisory revenue.
  • Capital position + balance sheet: ~$0.56 aggregate annual dividend (~28%+ aggregate payout ratio; ~3.5-4.0% aggregate dividend yield); ~$200-250M aggregate FY2025 buybacks; aggregate capital return ~$420-470M FY2025; CET1 ~11.5-12.0%; net leverage moderate; investment-grade Baa1/BBB+ credit rating; ~320-330M diluted shares.
  • FY2026 thesis catalysts: Midwest deposit franchise (~$42-44B deposits + ~3.30-3.50% NIM) + Bremer Financial integration + Wealth Management + Investment Advisory + ~$31-34B AUM pipeline + selected ~$53-55B aggregate assets + selected ~270+ aggregate banking centers footprint expansion.

Company Background

Old National Bancorp (NASDAQ: ONB) is one of the largest US Midwest specialty Regional Bank Holding Companies, founded 1834 as Old National Bank in Evansville Indiana (~191-year heritage; selected pioneer Indiana banking franchise). Selected post-1834 founding + selected post-1980s NASDAQ listing; selected post-2022 ~$3.0B+ aggregate First Midwest Bancorp merger of equals (selected ~$24B+ aggregate First Midwest assets at close creating ~$45B+ aggregate combined assets); selected post-July 2024 ~$3.1B Bremer Financial Corporation acquisition (selected ~$15.6B Bremer assets at close creating ~$53-55B aggregate combined assets); selected post-May 2019 James Ryan III CEO appointment; HQ Evansville Indiana; ~4,500-5,000 employees globally; selected various aggregate Indiana + Kentucky + Michigan + Wisconsin + Minnesota + Tennessee + Illinois + Ohio aggregate ~270+ banking centers footprint.

ONB operates 1 primary business: Regional Bank Holding Company ~100% revenue. Net Interest Income revenue 78%+ revenue mix ($1.45-1.60B; selected primary Midwest + Mid-South + Southeast Commercial + Commercial Real Estate + Consumer + Residential Mortgage lending franchise). Noninterest Income revenue 22% revenue mix ($400-450M; selected primary Wealth Management + Investment Advisory + Trust + Retirement + Treasury Management + Service Charges + Brokerage + Insurance fee aggregate). Geographic mix: Indiana ~30%+ + Kentucky + Michigan + Wisconsin + Minnesota + Tennessee + Illinois + Ohio + selected various aggregate ~70% Mid-South + Southeast + Midwest aggregate.

Capital position: ~$0.56 aggregate annual dividend (~28%+ aggregate payout ratio; ~3.5-4.0% aggregate dividend yield); ~$200-250M aggregate FY2025 buybacks; aggregate capital return ~$420-470M FY2025; CET1 ~11.5-12.0%; net leverage moderate; investment-grade Baa1/BBB+ credit rating; ~320-330M diluted shares.

Midwest Regional Bank Deposit Franchise (~$42-44B Deposits)

The Midwest Regional Bank Deposit Franchise is ONB's foundation thesis: ~$42-44B aggregate deposits (~80%+ aggregate funding mix) + selected primary Midwest + Mid-South + Southeast deposit franchise + selected various aggregate ~270+ aggregate banking centers across Indiana + Kentucky + Michigan + Wisconsin + Minnesota + Tennessee + Illinois + Ohio + selected various aggregate ~30-32% aggregate noninterest-bearing deposits + selected various aggregate ~$160-200B aggregate granular core deposit base + selected various aggregate ~3.30-3.50% aggregate Net Interest Margin (NIM). Selected primary ONB platform: Indiana 30%+ aggregate deposit franchise + selected primary Bremer Financial Minnesota franchise ($10B+ Bremer deposits at close).

FY2025 deposit dynamics ($42-44B aggregate deposits): selected continued post-July 2024 ~$10B+ Bremer aggregate deposit accretion + ~$42-44B aggregate revenue + selected various aggregate ~30-32% aggregate noninterest-bearing deposits + selected various aggregate ~3.30-3.50% aggregate Net Interest Margin (NIM) + selected various aggregate ~$1.45-1.60B aggregate Net Interest Income. Selected post-July 2024 ~$0.30-0.45 incremental annual EPS contribution as Bremer Financial integration drives incremental Net Interest Income + cost synergies.

FY2026 catalyst: continued Midwest Regional Bank Deposit Franchise + ~$0.30-0.45 incremental annual EPS contribution under continued James Ryan III leadership (~6-year tenure). Selected aggregate ~$43-46B aggregate deposits + selected various ~30-32% aggregate noninterest-bearing deposits + selected various aggregate ~3.40-3.60% aggregate Net Interest Margin + selected various aggregate ~$1.55-1.75B aggregate Net Interest Income. Risks: Truist + KeyCorp + Fifth Third + Huntington + Regions + Comerica + selected various aggregate Midwest + Mid-South + Southeast Regional Bank competitive displacement + selected various aggregate Federal Reserve interest rate cycle considerations.

Bremer Financial Integration + Wealth Management Pipeline

The Bremer Financial Integration + Wealth Management pipeline is ONB's primary growth thesis: selected continued post-July 2024 ~$3.1B Bremer Financial acquisition (selected ~$15.6B aggregate Bremer assets at close + selected ~$10B+ aggregate Bremer deposits + selected various aggregate Bremer Minnesota franchise) + selected various aggregate Wealth Management + Investment Advisory + Trust + Retirement + Brokerage aggregate ~$31-34B aggregate Assets Under Management (AUM) + selected various aggregate ~$255-275M aggregate Wealth + Investment Advisory revenue.

FY2025 Bremer integration + Wealth Management dynamics: selected primary post-July 2024 Bremer Financial acquisition closing + selected various aggregate ~$15.6B Bremer aggregate assets accretion + selected various aggregate ~$10B+ Bremer aggregate deposits accretion + selected various aggregate ~$31-34B aggregate Wealth Management AUM + selected various aggregate ~$255-275M aggregate Wealth + Investment Advisory revenue. Selected post-July 2024 ~$0.20-0.35 incremental annual EPS contribution as Bremer Financial integration + Wealth Management pipeline drives incremental Net Interest Income + Noninterest Income + cost synergies.

FY2026 catalyst: continued Bremer Financial Integration + Wealth Management pipeline + ~$0.20-0.35 incremental EPS contribution. Selected aggregate ~$33-36B aggregate Wealth Management AUM + selected various aggregate $275-300M aggregate Wealth + Investment Advisory revenue + selected various aggregate Bremer Financial cost synergy realization ($80-100M aggregate annual run-rate cost synergies). Risks: Truist + KeyCorp + Fifth Third + Huntington + Regions + Comerica + selected various aggregate Wealth Management + Investment Advisory competitive displacement + selected various aggregate Bremer Financial integration considerations.

Capital Position + Balance Sheet

Capital position + balance sheet: ~$0.56 aggregate annual dividend (~28%+ aggregate payout ratio; ~3.5-4.0% aggregate dividend yield) + ~$200-250M aggregate FY2025 buybacks + aggregate capital return ~$420-470M FY2025 + CET1 ~11.5-12.0% + net leverage moderate + investment-grade Baa1/BBB+ credit rating + ~320-330M diluted shares.

FY2026 catalyst: continued ~$420-500M aggregate annual capital return + selected continued ~3.5-4.0% aggregate dividend yield + selected continued ~$0.56-0.60 aggregate annual dividend + selected continued CET1 ~11.5-12.0% + selected various aggregate ~$200-300M aggregate annual buybacks. Selected ~28%+ aggregate payout ratio + selected CET1 ~11.5-12.0% support continued capital return + Bremer Financial integration capacity + tuck-in M&A optionality.

Key Core Metrics

  • FY2025 revenue ~$1.85-2.05B (+15-20% YoY) vs $1.74B FY2024; adj. EPS ~$1.95-2.15
  • 1 segment: Regional Bank Holding Company ~100% (Net Interest Income ~78%+ + Noninterest Income ~22%)
  • Geographic mix: Indiana ~30%+ + Kentucky + Michigan + Wisconsin + Minnesota + Tennessee + Illinois + Ohio + selected various aggregate ~70%
  • Deposits: ~$42-44B aggregate; ~30-32% aggregate noninterest-bearing; ~$160-200B aggregate granular core deposit base
  • NIM: ~3.30-3.50% aggregate
  • Wealth Management: ~$31-34B aggregate AUM; ~$255-275M aggregate Wealth + Investment Advisory revenue
  • ~$53-55B aggregate assets; ~270+ aggregate banking centers
  • Capital: CET1 ~11.5-12.0%; ~320-330M diluted shares
  • Dividend ~$0.56 annual (~28%+ payout; ~3.5-4.0% yield)
  • ~$200-250M aggregate FY2025 buybacks; total capital return ~$420-470M FY2025
  • Investment-grade Baa1/BBB+ credit rating

Market Evaluation

ONB FY2026 market evaluation: at ~$15-17 share price + ~320-330M diluted shares = ~$4.8-5.5B market cap; ~$0.56 aggregate annual dividend + ~3.5-4.0% aggregate dividend yield. Selected primary ONB peers: Truist (TFC, ~$60-70B Mcap) + KeyCorp (KEY, ~$15-18B) + Fifth Third (FITB, ~$25-30B) + Huntington (HBAN, ~$20-25B) + Regions (RF, ~$20-25B) + Comerica (CMA, ~$8-10B) + Wintrust Financial (WTFC, ~$8-9B) + selected various aggregate Midwest + Mid-South + Southeast Regional Bank Holding Companies. Selected ONB ~7-8x P/E + selected ~1.0-1.1x P/Tangible Book + selected ~3.5-4.0% dividend yield + selected aggregate ~$1.55-1.75B aggregate FY2026 NII + selected ~$0.56-0.60 aggregate annual dividend + selected aggregate ~$420-500M aggregate FY2026 capital return + selected aggregate Bremer Financial integration + Wealth Management + Investment Advisory pipeline. FY2026 base case: ~$2.0-2.20B aggregate revenue + ~$2.10-2.30 adj. EPS + ~$420-500M aggregate capital return. Bull case: Bremer Financial cost synergies + Wealth Management AUM + Federal Reserve interest rate cycle + tuck-in M&A drives ~$2.10-2.40B aggregate revenue + ~$2.20-2.45 EPS. Bear case: Federal Reserve interest rate cuts + Truist + KeyCorp + Fifth Third + Huntington + Regions + Comerica competitive intensification + Bremer Financial integration considerations + Commercial Real Estate cycle considerations drives ~$1.85-2.05B revenue + ~$1.90-2.10 EPS. The thesis depends on ~$42-44B deposit franchise + Bremer Financial integration + Wealth Management + Investment Advisory pipeline.

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