Old National Bancorp: A Midwest Banking Gem Ignored by the Crowd—Time to Pounce!

The banking sector has been a minefield since the Fed’s rate hike blitz began, but one regional player is flying under the radar with a valuation so cheap, even a contrarian legend like me is shouting BUY NOW. Old National Bancorp (ONB) isn’t just a play on regional banking stabilization—it’s a textbook Aristotle Capital bet, and here’s why you should follow their lead before the crowd catches on.

The Contrarian Case: ONB’s P/B Ratio Is a Bargain

Let’s start with the cold, hard numbers. Old National’s Price-to-Book (P/B) ratio is 1.07, a 29% discount to the KBW Regional Bank Index’s average of 1.5. This isn’t a typo. While Wall Street frets over macro uncertainty, ONB’s tangible book value per share has surged 13% year-over-year to $12.54, yet its stock trades at just $21.19—a 5% premium to tangible book, not even a full multiple.

This is a valuation anomaly. The bank’s loan portfolio grew 2.3% annualized (excluding CRE sales), with a $3.4 billion commercial pipeline—a sign of corporate confidence in the Midwest’s agriculture and manufacturing hubs. Meanwhile, credit metrics are bulletproof: net charge-offs are just 24 basis points, and nonaccrual loans sit at 1.29%, well below peers.

Aristotle’s Playbook: Contrarian, Catalyst-Driven, and Right

Aristotle Capital’s small-cap strategy isn’t random—it’s quality-first, catalyst-obsessed. Their criteria? Low expectations, high upside, and limited downside. ONB checks every box:
- Undervalued: P/B of 1.07 vs. a sector average of 1.5.
- Catalyst: The Bremer Bank merger (closing May 2025) adds $20 billion in deposits and 200 branches, instantly boosting scale and cross-selling power.
- Management: CEO Joe Swell has delivered 13% annualized tangible book growth since 2019, even through the pandemic and rate hikes.

This isn’t just a merger—it’s a regional banking consolidation play. With smaller banks struggling to compete in the digital age, the Midwest’s $1.2 trillion GDP (and rising) is a fortress for a well-positioned player like ONB.

Macro Tailwinds: Fed Policy and Regional Resilience

The Fed’s pivot to a “lower-for-longer” rate stance is a gift for banks. While the Fed’s terminal rate peaks at 5.5%, ONB’s net interest margin (NIM) is 3.3%, a decade-high, thanks to sticky core deposits (costing just 1.91%). With the Midwest’s unemployment at 3.1%—below the national average—the region’s $250 billion in annual agricultural output and manufacturing boom ensure steady loan demand.

Why This Is a Now Play

• Post-Merger Catalyst: The Bremer deal adds $41 billion in deposits and boosts ONB’s scale to $76 billion in assets, making it a top 25 U.S. regional bank.
• Sentiment Shift: Small-cap banks like ONB have lagged the broader market by 20% since 2023—a contrarian’s dream.
• Margin of Safety: At $21.19, the stock trades at 1.07x book, leaving room for multiple expansion as the merger closes and NIMs stabilize.

Action Alert: Dive In Before the Crowd

The market’s ignoring ONB’s midwest banking dominance, its cheap valuation, and its Bremer merger upside. But not for long. When investors realize this isn’t just a Midwest play but a national consolidation leader, this stock will soar.

Buy ONB now at $21.19. Set a target of $28 by year-end. The Fed’s pause, the merger’s close, and the Midwest’s economic strength are all lining up. This is a once-in-a-cycle opportunity to own a banking gem at a discount. Don’t let it slip away—act now!

Risk Warning: Bank stocks are sensitive to interest rate changes and economic downturns. Always diversify and consult a financial advisor before investing.