Old National Bancorp
NASDAQ:ONB
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Intrinsic Value
The intrinsic value of one ONB stock under the Base Case scenario is 27.67 USD. Compared to the current market price of 21.65 USD, Old National Bancorp is Undervalued by 22%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
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Old National Bancorp
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Fundamental Analysis
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Old National Bancorp
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Old National Bancorp, a prominent player in the Midwest banking sector, has carved out a significant niche with its robust portfolio of financial services aimed at individuals, businesses, and institutions. Founded in 1834 and headquartered in Evansville, Indiana, the company has consistently demonstrated a commitment to community-focused banking. Old National boasts a diverse array of offerings, including traditional banking services, wealth management, and commercial financing, which not only cater to the financial needs of its clients but also enhance the local economies in which it operates. This emphasis on community engagement combined with prudent financial practices has enabled Old N...
Old National Bancorp, a prominent player in the Midwest banking sector, has carved out a significant niche with its robust portfolio of financial services aimed at individuals, businesses, and institutions. Founded in 1834 and headquartered in Evansville, Indiana, the company has consistently demonstrated a commitment to community-focused banking. Old National boasts a diverse array of offerings, including traditional banking services, wealth management, and commercial financing, which not only cater to the financial needs of its clients but also enhance the local economies in which it operates. This emphasis on community engagement combined with prudent financial practices has enabled Old National to foster long-term relationships, positioning itself as a trusted partner for countless customers throughout the region.
For investors, Old National Bancorp presents a compelling opportunity characterized by steady growth and strategic expansion. The company has made significant strides in recent years through a series of strategic acquisitions, effectively broadening its market footprint and enhancing its service capabilities. With a focus on maintaining a conservative risk profile and improving operational efficiency, Old National has demonstrated resilience even in challenging economic climates. As interest rates fluctuate and economic conditions shift, Old National's diversified revenue streams and commitment to customer service signal a potential for sustained profitability and shareholder value enhancement, making it an attractive consideration for those looking to invest in the financial services sector.
Old National Bancorp is a financial services company primarily engaged in providing a range of banking and financial products and services. Its core business segments typically include:
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Commercial Banking: This segment includes lending services to businesses, such as commercial loans, lines of credit, and treasury management services. It serves various industries and focuses on providing tailored financial solutions to meet the needs of small to mid-sized businesses.
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Retail Banking: This segment focuses on providing banking services to individual consumers. It typically includes checking and savings accounts, personal loans, mortgages, and credit cards. Retail banking aims to attract and retain individual customers through convenience and customer service.
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Wealth Management: Old National Bancorp offers investment management, trust services, estate planning, and financial advisory services. This segment caters to high-net-worth individuals, businesses, and institutions looking for asset management and financial planning solutions.
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Mortgage Banking: This segment involves originating, underwriting, and servicing residential mortgages. Old National Bancorp provides various mortgage products to help customers acquire homes, including fixed-rate and adjustable-rate mortgages.
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Insurance Services: Though a smaller segment, Old National may offer insurance products through subsidiaries or partnerships, providing various types of coverage, such as personal and commercial insurance.
By focusing on these core segments, Old National Bancorp aims to provide comprehensive financial services that meet the diverse needs of its customers, while also driving growth and profitability.
Old National Bancorp, like many regional banks, may have several competitive advantages that differentiate it from its rivals. Here are some potential unique competitive advantages:
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Local Market Presence: Old National Bancorp has a strong presence in certain Midwestern states, particularly in Indiana, Kentucky, and Illinois. This regional focus allows for deeper relationships with local customers and a better understanding of their needs.
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Community Engagement: Emphasizing community involvement can enhance customer loyalty. Old National may participate in local initiatives and charitable activities, strengthening its brand presence and trust in the community.
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Diverse Financial Services: Offering a wide range of products and services, including commercial banking, retail banking, wealth management, and insurance, helps Old National meet various customer needs under one roof.
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Superior Customer Service: Focusing on providing exceptional customer service can set Old National apart from larger, more impersonal banks. Personalized service can lead to higher customer satisfaction and retention.
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Strong Digital Banking Capabilities: Investment in technology and digital banking can provide Old National with a competitive edge. A user-friendly online and mobile banking platform can attract tech-savvy customers.
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Risk Management Expertise: A solid reputation for prudent risk management can provide a competitive advantage, especially in fluctuating economic conditions. A history of conservative lending practices might bolster investor confidence.
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Focus on Small and Mid-sized Businesses: Catering to the needs of small and mid-sized enterprises (SMEs) can create loyal business relationships and a strong mortgage lending portfolio more effectively than larger banks which may focus on larger corporate clients.
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M&A Experience: Old National Bancorp has a history of strategic acquisitions, allowing for enhanced market share and operational efficiency through economies of scale while also broadening their geographic reach.
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Strong Capitalization: Maintaining a solid capital base can provide stability, allowing Old National to navigate economic downturns better than some of its competitors.
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Brand Heritage and Trust: Being a regional bank with a long history can enhance brand trust and recognition, appealing to customers who prefer dealing with established institutions.
These advantages can help Old National Bancorp maintain competitiveness and grow in an ever-evolving financial landscape.
As a business analyst focusing on financial institutions, evaluating the risks and challenges Old National Bancorp may face in the near future involves a comprehensive analysis of several factors:
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Economic Environment:
- Interest Rate Volatility: Changes in interest rates can affect net interest margins and loan demand. In a rising rate environment, there is a risk of reduced borrower demand and challenges in managing interest rate risk.
- Economic Downturn: A potential recession could lead to higher default rates on loans and decreased profitability. Economic challenges can also reduce consumer spending and business investment.
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Regulatory Compliance:
- Regulatory Changes: Financial institutions often face changes in regulations such as capital requirements, consumer protection laws, and anti-money laundering standards. Compliance with these regulations can be costly and complex.
- Increased Scrutiny: There may be heightened scrutiny from regulators due to past banking crises or shifts in political landscapes, requiring an increased focus on compliance and risk management.
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Competition:
- Increased Competition: Old National Bancorp competes with national banks, regional banks, credit unions, and fintech companies. The entry of technology-driven financial services can erode traditional banking margins and customer base.
- Digital Transformation: Keeping pace with technological advancements and digital banking innovations is crucial. Failing to do so can result in a loss of market share to more agile competitors.
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Credit Risk:
- Loan Portfolio Quality: Maintaining the quality of the loan portfolio is vital. An economic downturn could lead to increased defaults, particularly if Old National has significant exposure to certain sectors.
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Operational Risks:
- Cybersecurity Threats: Financial institutions are prime targets for cyberattacks. Ensuring robust cybersecurity measures and protocols is critical to prevent data breaches and protect customer information.
- Operational Inefficiencies: The risk of internal operational failures can impact service delivery, costs, and customer satisfaction.
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Market Dynamics:
- Stock Market Volatility: As a publicly traded company, Old National Bancorp may face pressures from market volatilities that can impact its stock price and valuation.
- Credit Market Conditions: The overall health of credit markets can significantly impact the bank’s ability to lend and generate income from interest.
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Customer Expectations:
- Changing Consumer Preferences: With a shift towards digital solutions, meeting the evolving expectations of customers regarding service delivery and digital offerings is essential. Failure to adapt can result in customer attrition.
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Geopolitical Factors:
- Trade Policies and Tariffs: Changes in trade policies can impact the local economy, which, in turn, can affect the performance of borrowers and businesses within Old National's lending portfolio.
In summary, Old National Bancorp must navigate a complex landscape of economic conditions, regulatory pressures, competition, and technological advancements to mitigate risks and capitalize on growth opportunities. Proactive risk management strategies and a focus on innovation will be critical for sustaining its performance in the near future.
Balance Sheet Decomposition
Old National Bancorp
Net Loans | 36B |
Investments | 11.8B |
PP&E | 599.5m |
Intangibles | 2.3B |
Other Assets | 2.9B |
Total Deposits | 40.8B |
Short Term Debt | 379.9m |
Long Term Debt | 598.1m |
Other Liabilities | 5.4B |
In Q3 2024, Old National Bancorp reported GAAP earnings per share of $0.44, driven by 10.1% annualized core deposit growth and a 4.1% increase in commercial loans. The company's tangible book value per share rose 21% year-over-year. The adjusted return on average tangible common equity stood at a substantial 17%, supported by an efficiency ratio of 51.2%. Despite net charge-offs reaching 19 basis points, credit quality remains strong. Looking ahead, net interest income is expected to grow modestly in Q4, with full-year net income remaining consistent with initial expectations. Management emphasizes a disciplined approach to expense management and continued investment in organic growth.
What is Earnings Call?
Wall St
Price Targets
ONB Price Targets Summary
Old National Bancorp
According to Wall Street analysts, the average 1-year price target for ONB is 23.27 USD with a low forecast of 21.21 USD and a high forecast of 25.2 USD.
Dividends
Current shareholder yield for ONB is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Ownership
ONB Insider Trading
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Profile
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Description
Old National Bancorp operates as a financial holding company. The company is headquartered in Evansville, Indiana and currently employs 2,374 full-time employees. The Company, through its wholly owned banking subsidiary, Old National Bank, provides a range of services, including commercial and consumer loan and depository services, private banking, brokerage, trust, investment advisory, and other banking services. Its banking centers focuses on providing a group of community banking services. The company provides treasury management, merchant, health savings, and capital markets services as well as community development lending and equity investment solutions for businesses. Its loans consist primarily of loans made to consumers and commercial clients in various industries, including manufacturing, transportation, mining, wholesaling and retailing. In addition to providing various services in retail and commercial banking, it offers wealth management, investment and capital market services. Its banking centers are located in Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota and Wisconsin.
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The intrinsic value of one ONB stock under the Base Case scenario is 27.67 USD.
Compared to the current market price of 21.65 USD, Old National Bancorp is Undervalued by 22%.