OLD NATIONAL BANCORP /IN/ (ONB): what the price assumes

In the published model solve dated 2026-Q2, anchored at $26.99, OLD NATIONAL BANCORP /IN/ (ONB) is priced for 11.8% return on equity. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/ONB

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Solve inputs: computed at a 10.2% cost of equity; ROE searched up to the 11.7% ROE ceiling.

How unusual the bet is: elevated

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.1%); the inversion above states its own rate.

Per-Model Detail (n=4)

Economic-Unit Decomposition (Sum Of The Parts)

The issuer is a funded financial business. Debt, interest, and cash flows are operating inputs, so industrial EV, net-debt, WACC, and free-cash-flow lenses do not apply; value the common-equity claim with book, earnings, capital, and payout economics.

No unit-level total common-equity value is stated. Each financial unit requires supported standalone common equity, normalized earnings, capital adequacy, and payout capacity. Consolidated debt, interest, and cash are operating balances, not an enterprise-to-equity bridge; company-level book, earnings, capital, and payout lenses remain the coherent cross-checks.

Solvency

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

At $24.76 Old National trades above the methods, not below them. The supported range runs from about $10 to $15 with a base near $13, and the price sits above the top of that band. The market is paying a premium for the post-Bremer earnings power the bank just demonstrated.

The demonstrated quarter is genuinely strong. Q1 2026 brought $0.59 diluted EPS ($0.61 adjusted), a return on average tangible common equity of 18.4%, an efficiency ratio of 45.7%, and 8% annualized loan growth. Management is targeting more than 15% EPS growth in 2026.

The tension is durability. The implied return on equity embedded in the price sits far above the bank's own multi-year history, which is why the rarity check flags it. The price assumes the elevated post-merger profitability persists; a regional bank's returns tend to revert toward the cost of equity as deposit competition and the rate cycle do their work.

Bull Case

Start with where the price sits against the methods, because for a bank trading above its valuation range, that premium has to be explained. At $24.76 (June 27, 2026) Old National sits above a supported range of roughly $10 to $15, and the implied-expectations read for a financial backs out a return on equity well above the bank's historical average. The market is not mispricing a sleepy regional; it is paying up for a specific thesis, that the bank's profitability has stepped to a structurally higher level after integrating Bremer. The bull case is that the recent results justify that premium.

The results are hard to argue with. Q1 2026 produced $0.59 diluted EPS and $0.61 adjusted, a return on average tangible common equity of 18.4%, an efficiency ratio of 45.7% that the company called a record, and annualized loan and deposit growth of 8.0% and 4.2%. Net interest income on a taxable-equivalent basis was $580.4 million at a 3.55% margin. The bank's own disclosures show return on common equity in the mid-teens and net charge-offs of only 0.25% of average loans, the profile of a disciplined lender (FY2025 10-K, accession 0000707179-26-000010). A mid-40s efficiency ratio means the bank converts a large share of revenue to profit, which is the engine behind the high ROTCE.

The Bremer acquisition is the value-creation story. Completed May 1, 2025, it expanded Old National's Midwest footprint, and management projects cost savings of roughly 30% of Bremer's expense base, about $111 million pre-tax, with full realization in 2026 and beyond. That cost-out is the bridge from the deal's dilution to accretive earnings, and the Q1 efficiency ratio suggests it is landing. With management guiding to positive operating leverage and more than 15% EPS growth in 2026, and the share count having absorbed the stock consideration, the bull case is that a well-run, low-cost, growing regional bank deserves to trade at a premium to a generic bank valuation, and that the post-merger ROTCE is the proof.

Bear Case

The bear case starts with the competitors at the door, because a regional bank's profitability is contested from several directions at once. Old National's own filing lists the field plainly: it competes with banks, "money market mutual funds, and other financial services companies," and warns that "our competitors may have substantially greater resources and lending limits than Old National does" (FY2025 10-K, accession 0000707179-26-000010). The largest national banks bring scale, technology budgets and brand that a Midwest regional cannot match. On the deposit side the pressure is sharper still: the same filing notes the Company "competes with banks and other financial services companies for deposits" and that rate moves have driven "higher funding costs." Fintech and money-market alternatives have made deposits more rate-sensitive than they used to be, which threatens the cheap funding that powers the net interest margin.

That competition is already visible in the numbers. The Q1 2026 net interest margin slipped 10 basis points to 3.55% as asset yields softened and the loan mix tilted toward lower-spread, near-investment-grade floating-rate commercial credit. Growing the loan book at 8% while the margin compresses is the classic regional-bank squeeze: volume offsets price, until it does not. If deposit competition forces funding costs higher or the rate cycle turns against the asset side, the margin and the ROTCE that justify the premium both come under pressure.

The valuation is where these risks concentrate. The price sits above the supported range, and the implied return on equity is more than two standard deviations above the bank's own history, which is why the rarity check trips. Old National's disclosed return on common equity has run in the mid-teens, not the 18%-plus the recent quarter showed, and bank returns mean-revert toward the cost of equity as competition and credit costs normalize. The price assumes the post-Bremer profitability is the new baseline; the methods, and the bank's own history, suggest it is more likely a peak. A regional bank priced for permanently elevated returns has limited margin for a deposit war, a credit downturn, or simple reversion.

Valuation

Old National is valued on the bank framework, which inverts price-to-book through the return on equity rather than running an operating-margin DCF. On that basis the supported range is roughly $10 to $15 with a base near $13, and the price of $24.76 sits above the top of the band. The bank-specific fair value, anchored on tangible book value and a normalized ROE, lands near $12, while the more generous earnings-and-growth reads stretch higher. The blended picture is a price that the asset, earnings-power and relative families partly support but that the central estimate does not reach.

The key diagnostic is the implied return on equity. The price embeds an ROE more than two standard deviations above Old National's own multi-year history, which is what the elevated rarity flag with the ownZ trip is signaling. The recent quarter delivered an 18.4% return on average tangible common equity, but the bank's disclosed return on common equity has historically run in the mid-teens (FY2025 10-K, accession 0000707179-26-000010). The valuation, in other words, is extrapolating the post-merger peak rather than the through-cycle average. For a bank, that distinction is everything, because returns above the cost of equity attract competition and tend to fade.

The credit and capital picture supports the business without resolving the price. Net charge-offs of 0.25% of average loans and a Tier 1 leverage ratio near 9% indicate a soundly capitalized, well-underwritten bank (same 10-K). That quality is real and is part of why the market pays a premium. But it does not change the arithmetic: the price requires the elevated ROE to persist, and the methods say a more normal ROE produces a value below where the stock trades. Paid at this level, an investor is underwriting that the Bremer integration permanently raised Old National's return profile, against a base rate in which bank returns revert.

Catalysts

Old National reported Q1 2026 with net income to common of $229.6 million, diluted EPS of $0.59 and adjusted EPS of $0.61, a return on average tangible common equity of 18.4%, an efficiency ratio of 45.7%, and 8% annualized loan growth (StockTitan). Net interest margin was 3.55%, down 10 basis points as asset yields softened (Yahoo Finance).

The catalysts ahead center on the Bremer integration and the rate cycle. The acquisition closed May 1, 2025, and Old National projects about $111 million of pre-tax cost savings, roughly 30% of Bremer's expense base, fully realized in 2026 and beyond, with 2026 guidance targeting positive operating leverage and more than 15% EPS growth on about $2,415 million of taxable-equivalent net interest income (StockTitan results). Watch three things over the next two quarters: whether the net interest margin stabilizes or keeps slipping as deposit competition and the rate path play out, whether the efficiency ratio holds in the mid-40s as the cost synergies fully land, and whether credit costs stay near the current low charge-off rate. Sustained synergy realization with a stable margin would support the premium the price assumes; margin erosion or rising credit costs would pull the stock back toward the valuation range, which sits below the current price.

Peer Cohorts (Per Segment, With Filing Citations)

Old National Bancorp (banking, one reportable segment) (reported)

• SSB (SOUTHSTATE BANK CORP)
• FY2025 10-K: ​ 1,644,381 ​ ​ - ​ ​ 2,782 (e) ​ 1,647,163 ​ ​ ( 56,711 ) (i) ​ - ​ ​ 1,590,452 ​ Loans held for sale ​ ​ 12,430 ​ ​ - ​ ​ - ​ ​ 12,430 ​ ​ - ​ ​ - ​ ​ 12,430 ​ Loans held for investment, net of allowance for credit losses ​ 13,452,928 ​ - ​ 750 (f) 13,453,678 ​ ​ ( 445,321 ) (j) ( 16,798 ) (j) 12,991,559 ​ Premises…
• FY2025 10-K: -occupied ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current-period gross charge-offs ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk rating: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $…
• INDB (Independent Bank Corp.)
• FY2025 10-K: 4 (Dollars in thousands) Commitments to extend credit $ 6,378,011 $ 4,663,314 Loan exposures sold with recourse $ 131,108 $ 141,151 Standby letters of credit $ 65,559 $ 24,863 Deferred standby letter of credit fees $ 432 $ 213 Other Contingencies At December 31, 2025, the Bank was involved in pending lawsuits, which…
• FY2025 10-K: Company assumes, or participates in, a portion of the credit risk associated with the interest rate swap position with the commercial borrower for a fee received from the other bank. 117 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The following tables reflect the Company's customer…
• GBCI (GLACIER BANCORP, INC.)
• FY2025 10-K: …are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance…
• FY2025 10-K: (U.S. PCAOB Auditor Firm ID 686 ). Information regarding "Principal Accounting Fees and Services" is set forth under the heading "Auditors - Fees Paid to Independent Registered Public Accounting Firm" of the Company's 2026 Proxy Statement and is incorporated herein by reference. 122 PART IV Item 15. Exhibits,…
• NBTB (NBT BANCORP INC)
• FY2025 10-K: …us-gaap:OperatingSegmentsMember 2024-01-01 2024-12-31 0000790359 nbtb:RetirementPlanAdministrationSegmentMember us-gaap:OperatingSegmentsMember 2025-01-01 2025-12-31 0000790359 nbtb:RetirementPlanAdministrationSegmentMember us-gaap:OperatingSegmentsMember 2023-01-01 2023-12-31 0000790359…
• FY2025 10-K: .1 Restated Certificate of Incorporation of NBT Bancorp Inc. as amended through July 1, 2015 (filed as Exhibit 3.1 to Registrant's Form 10-Q, filed on August 10, 2015, and incorporated herein by reference). 3.2 Amended and Restated Bylaws of NBT Bancorp Inc. effective May 22, 2018 (filed as Exhibit 3.1 to Registrant's…
• BUSE (First Busey Corporation)
• FY2025 10-K: …Cash and cash equivalents: Cash and due from banks $ 181,041 $ 129,444 Interest-bearing deposits 113,011 568,215 Total cash and cash equivalents 294,052 697,659 Debt securities available for sale 2,162,548 1,810,221 Debt securities held to maturity 746,385 826,630 Equity securities 14,916 15,862 Loans held for sale…
• FY2025 10-K: …mortgage loans 105,280 104,670 35,018 (Increase) decrease in other assets ( 10,319 ) 19,752 ( 17,888 ) Increase (decrease) in other liabilities ( 27,199 ) ( 8,517 ) 12,365 Net cash provided by operating activities $ 192,571 $ 178,267 $ 173,390 (continued) First Busey Corporation (BUSE) | 2025 - 100 Table of Contents…
• CNOB (CONNECTONE BANCORP, INC.)
• FY2025 10-K: …Comprehensive Income 82 Consolidated Statements of Changes in Stockholders' Equity 83 Consolidated Statements of Cash Flows 84 Notes to Consolidated Financial Statements 85 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 166 Item 9A Controls and Procedures 166 Item 9B Other…
• FY2025 10-K: …and subordinated debentures were calculated using a discounted cash flow approach and applying discount rates currently offered based on weighted remaining maturities. Accrued Interest Receivable/Payable. The carrying amounts of accrued interest approximate fair value resulting in a Level 2 or Level 3 classification…
• FBNC (FIRST BANCORP)
• FY2025 10-K: …Financial, Inc. Carolina Bank Carolina Bank Holdings, Inc. and it subsidiary Carolina Bank MD&A Management's Discussion and Analysis of Results of Operations and Financial Condition CDARS Certificate of Deposit Account Registry Service NASDAQ National Association of Securities Dealers Automated Quotations Stock…
• FY2025 10-K: …primarily unrealized gain (loss) on available for sale securities and unrealized and realized gains and losses on postretirement benefit plans. Variable Interest Entities - The Company's statutory trust subsidiaries (First Bancorp Capital Trust II, Trust III and Trust IV, Carolina Capital Trust, New Century Statutory…
• GABC (German American Bancorp, Inc.)
• FY2025 10-K: …to one of the parties if those statements prove to be inaccurate; • may have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; • may apply standards of materiality in a way…
• FY2025 10-K: …at February 23, 2026. Transfer Agent: Computershare Priority Processing 150 Royall St., Suite 101 Canton, MA 02021 (800) 884-4225 Shareholder Information: German American Bancorp, Inc. P.O. Box 810 Jasper, Indiana 47547-0810 (812) 482-1314 (800) 482-1314 Stock Performance Graph The following graph compares the…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.