Old National Bancorp's Q2 2025 Earnings: A Catalyst for Growth in the Midwest Banking Sector

Old National Bancorp (NASDAQ: ONB) is poised to release its Q2 2025 earnings on July 22, 2025, marking a critical juncture for investors evaluating its near-term valuation opportunities and long-term strategic positioning in the Midwest banking sector. With a $70 billion asset footprint and a focus on organic growth, disciplined deposit management, and strategic acquisitions, ONB is well-positioned to capitalize on regional economic trends. This article analyzes the catalysts for growth, evaluates valuation metrics, and assesses the investment case for this Midwest banking powerhouse.

Near-Term Catalysts: Q2 2025 Earnings and Strategic Momentum

The earnings report will likely highlight progress in three key areas critical to ONB's growth narrative: net interest income (NII) expansion, loan growth, and Bremer Bank integration benefits.

1. Net Interest Margin (NIM) Resilience
ONB's Q1 2025 NIM of 3.27% (down 3 bps sequentially) reflects the challenging rate environment, but management has signaled optimism for improvement. Fixed asset repricing and loan growth could drive NII expansion in Q2. A would clarify this trajectory. Analysts project a mid-single-digit loan growth rate, supported by a robust $3.4 billion commercial loan pipeline.

2. Deposit Growth and Funding Costs
ONB's deposit franchise remains a strength. Q1 deposits grew 2.1% annualized to $41 billion, with core deposits up 1.7% annualized. Management's focus on reducing deposit costs—via repricing and noninterest-bearing deposits—could lower funding costs further. This strategy is crucial to offsetting NIM pressures.

3. Bremer Bank Integration
The acquisition of Bremer Financial Corporation, closing in May 2025, adds $14 billion in assets and strengthens ONB's Midwest footprint. The integration's success—particularly in cross-selling wealth management and capital markets services—will be a key Q2 data point. A underscores its dominance.

Strategic Positioning: Midwest Leadership and Diversification

ONB's long-term edge lies in its regional focus and diversified revenue streams:
- Midwest Resilience: The Midwest economy, driven by agriculture, manufacturing, and energy, offers stability. ONB's branch network (spanning 17 states) and strong community ties () position it to capture local growth.
- Wealth Management Growth: Assets under management rose to $37 billion, benefiting from rising client demand for advisory services.
- Bremer Synergies: The Bremer deal expands ONB's presence in Minnesota and Wisconsin, adding scale in commercial lending and public sector banking.

Valuation: Attractive Multiples Amid Growth Prospects

ONB's valuation appears compelling relative to peers. As of Q1 2025:
- Price/Book Ratio: 1.0x, below the industry average of ~1.3x.
- P/E Ratio: ~15x (adjusted EPS of $0.45), compared to regional peers at ~17–19x.
- ROE: 10.6%, with potential to rise post-Bremer integration.

A would highlight its undervalued status. The stock's YTD performance (+8%) lags peers, suggesting pent-up upside if Q2 results beat expectations.

Investment Thesis: Buy the Dip, Hold for the Long Game

Near-Term Catalysts to Watch in Q2 Results:
- NII and NIM trends.
- Loan growth (mid-single-digit target).
- Deposit cost reductions and loan-to-deposit ratio (target <90%).
- Credit quality metrics (NPA ratio near 1.3%).

Long-Term Drivers:
- Bremer Integration: Synergies could add 5–10% to earnings over two years.
- Midwest Market Share Expansion: ONB's focus on community banking and wealth management aligns with regional demand.
- Capital Flexibility: Tier 1 capital at 12.23% allows for future acquisitions or buybacks.

Risks and Considerations

• Economic Uncertainty: A slowdown in Midwest agriculture or manufacturing could pressure loan demand.
• Interest Rate Volatility: Fluctuations could impact NIM.
• Integration Risks: Bremer's system conversion (targeted for October 2025) must be seamless.

Conclusion: A Strategic Buy for Patient Investors

Old National Bancorp's Q2 earnings could be a catalyst to validate its growth trajectory. With an attractive valuation, robust deposit franchise, and strategic Midwest dominance, ONB presents a compelling opportunity for investors seeking exposure to a resilient regional bank. A buy rating is warranted for those willing to hold through near-term macroeconomic headwinds, with a target price of $24–26 by year-end 2025.

Final Advice:
- Buy: Accumulate positions ahead of the earnings release if valuation multiples remain compressed.
- Hold: For long-term investors already positioned in ONB, given its structural growth drivers.
- Avoid: If macroeconomic risks (e.g., recession) materialize, leading to credit downgrades or NIM contraction.

Old National Bancorp's Q2 results will be a litmus test for its ability to navigate challenges and capitalize on Midwest opportunities. Stay tuned.