ONB: Fee Strength And NIM Resilience Will Support Upside Ahead

Analysts have modestly increased their price target on Old National Bancorp to $26.00, citing solid fee income and net interest margin performance, despite slightly softer net interest income guidance and loan growth weighed down by Bremer run offs.

Analyst Commentary

Analysts are digesting Old National Bancorp's latest quarter as a solid, if mixed, performance, prompting modest recalibration of price targets around the mid 20 dollar range.

Bullish Takeaways

• Bullish analysts highlight that the quarter demonstrated resilient fee income and net interest margin, which supports the view that earnings power remains intact despite balance sheet headwinds.
• The company delivered an earnings beat, reinforcing confidence in management's execution and cost discipline, which underpins current valuation levels.
• The updated price targets, while only modestly higher or lower, cluster near 26 dollars and suggest that analysts see fair value as supported by stable core profitability.
• Integration of Bremer, even with associated run offs, is viewed by some as a medium term opportunity to enhance scale and drive incremental growth once the portfolio normalizes.

Bearish Takeaways

• Bearish analysts point to slightly lowered net interest income guidance for the coming quarter, which raises questions about the sustainability of recent margin strength.
• Loan growth lagged expectations as Bremer related run offs weighed on balances, tempering the perceived momentum in the lending franchise.
• Price target adjustments, while constructive, remain modest and are accompanied by cautious ratings. This signals limited near term upside from current trading levels.
• Management's more conservative outlook on NII suggests that future earnings growth may rely more on fees and efficiency gains than on robust balance sheet expansion.

What's in the News

• Reported third quarter 2025 net charge offs of 30.0 million dollars, or 25 basis points of average loans, slightly higher than 24 basis points in the prior quarter. This highlights a modest uptick in credit costs (Key Developments).
• Completed a share repurchase tranche between July 1, 2025 and September 30, 2025, buying back 1,112,964 shares, or 0.28 percent of shares outstanding, for 25.02 million dollars under the February 19, 2025 authorization (Key Developments).

Valuation Changes

• Fair Value Estimate remains unchanged at 25.75 dollars per share, indicating no revision to the core valuation anchor.
• Discount Rate has fallen slightly from 7.57 percent to 7.53 percent, reflecting a marginally lower perceived risk or cost of capital.
• Revenue Growth Forecast is effectively unchanged at approximately 17.76 percent, suggesting stable expectations for top line expansion.
• Net Profit Margin Assumption is essentially unchanged at about 39.49 percent, indicating continued confidence in profitability levels.
• Future P/E Multiple has edged down slightly from 11.25 times to 11.24 times, implying a modestly lower valuation multiple applied to forward earnings.