Old National Bancorp "Best Value Among SMIDs - Reiterate Buy" (Buy) Braziler

Research evidence excerpt

Old National Bancorp "Best Value Among SMIDs - Reiterate Buy" (Buy) Braziler

Forecast returns

Forecast price appreciation 22.6%

Forecast dividend yield 2.3%

Forecast stock return 24.8%

Market return assumption 9.4%

Forecast excess return 15.5%

Company Description

Old National is a Midwest-focused commercial bank with a strong efficiency profile and a

relationship-driven model. Headquartered in Evansville, Indiana, ONB has ~$73bn in assets

and ~$39bn in AUM, serving clients through commercial and consumer banking, wealth

management, and capital markets. The bank has expanded through the First Midwest,

CapStar, and Bremer acquisitions. We view ONB as differentiated by its low-cost deposit

franchise, disciplined credit culture, sub-50% efficiency ratio, and strong capital generation,

supporting shareholder returns.

Valuation Method and Risk Statement

Our ONB price target is derived by applying a target P/E multiple on our 2027 EPS estimate.

Our target P/E multiple is informed by the company's historical P/E multiple, its historical

multiple vs. peers, and market multiples for the banking industry. Downside risks include: 1)

lower deposit levels resulting from decreased liquidity levels in the financial system; 2) credit

deterioration and reduced industry-wide loan demand resulting from a potential recession; 3)

net interest margin pressure resulting from an accelerated pace of rate cuts related to a

potential recession, and 4) lower profitability and capital returns resulting from a more

rigorous regulatory environment. Upside risks include: 1) enhanced deposit gathering, loan

production, and credit performance resulting from continued economic growth; 2) net

interest margin expansion resulting from a more moderate pace of rate cuts; and 3) improved