Old National Bancorp (ONB): BCG Matrix [Dec-2025 Updated]

You're looking at Old National Bancorp's map right after the big May 2025 Bremer deal, and honestly, the BCG Matrix shows exactly where the future cash is coming from and where the big bets are being placed. We've got scaled Upper Midwest Commercial Banking and record fee revenue driving new 'Stars,' while the core deposit franchise, sitting at $55.0 billion, keeps the 'Cash Cows' well-fed with a peer-leading efficiency ratio of 48.1%. But, you need to see which legacy assets are dragging down performance and what's happening with that high-growth, high-risk Southeastern expansion-dive in to see the full breakdown of ONB's capital allocation strategy.

Background of Old National Bancorp (ONB)

You're looking at Old National Bancorp (ONB) as of late 2025, a regional bank powerhouse with roots stretching all the way back to November 1834. Honestly, the story of Old National Bancorp is one of steady growth, punctuated by significant, strategic moves to expand its footprint across the Midwest and parts of the Southeast United States. The bank offers a full suite of financial services, covering consumer and commercial banking, capital markets, and wealth management for its clients.

The most defining event shaping Old National Bancorp right now is the successful integration of Bremer Financial Corporation, which closed in May 2025. This partnership was transformational; as of December 31, 2024, the combined entity was projected to have total assets of $70.2 billion. This deal immediately boosted Old National Bancorp's scale and density in the Upper Midwest, specifically positioning it to become the 3rd largest bank in the Twin Cities market once fully integrated.

Looking at the latest figures from the third quarter of 2025, Old National Bancorp reported a solid operational performance. The reported net income applicable to common shares was $178.5 million, translating to a diluted EPS of $0.46. However, when you strip out the pre-tax charges related to mergers-which totaled $69.3 million in the quarter-the adjusted net income hit $231.3 million, or an adjusted diluted EPS of $0.59. That adjusted performance shows the underlying strength post-integration.

The balance sheet reflects this recent activity. Total deposits reached $55.0 billion by the end of Q3 2025, with core deposits showing healthy annualized growth of 5.8%. The net interest margin (NIM) improved nicely to 3.64% on a fully taxable equivalent basis, with net interest income reaching $582.6 million. Total end-of-period loans stood at $48.0 billion, but it's important to note that excluding the loans acquired from Bremer, the organic growth rate was still a respectable 3.1% annualized.

Profitability metrics are strong, which is what you'd expect from a bank that just completed a major acquisition. The adjusted return on average tangible common equity (ROATCE) for the quarter was 20.1%, and the tangible book value per share grew to $13.15. The company's strategic emphasis remains on leveraging this new scale by focusing on a diversified loan portfolio, maintaining a robust credit culture, and keeping that low-cost deposit base humming. As of November 2025, the market capitalization for Old National Bancorp was sitting around $8.08 billion.

Old National Bancorp (ONB) - BCG Matrix: Stars

The Stars quadrant in the Boston Consulting Group Matrix represents business units or products within Old National Bancorp (ONB) that operate in a high-growth market and command a high relative market share. These units are leaders in their segment and are critical for future growth, though they require significant investment to maintain their position.

For Old National Bancorp as of 2025, the key components fitting the Star profile are those benefiting from recent strategic expansion and demonstrating superior revenue momentum in growing areas of the business. These are the areas where you need to keep investing heavily to ensure they transition into future Cash Cows when market growth inevitably slows.

Upper Midwest Commercial Banking Scale

The integration of the Bremer partnership has immediately positioned the Upper Midwest Commercial Banking segment as a Star. This unit now possesses a significantly larger footprint and lending capacity in a key geographic area.

• Loan portfolio scaled by an addition of $11.2 billion in period-end total loans from the Bremer transaction.
• The combined entity is now the third-largest bank by deposits in the Twin Cities metropolitan area.

Capital Markets and Fee-Based Revenue Momentum

This area is showing high growth and market penetration, evidenced by record revenue generation, which is characteristic of a Star unit demanding support for placement and promotion.

• Reported a 16.9% adjusted increase in noninterest income for the third quarter of 2025, excluding a pension plan gain.
• This growth was driven by record capital markets revenue and organic growth in wealth fees.

Twin Cities Market Share Leadership

The strategic acquisition of Bremer Bank solidified Old National Bancorp's position in the high-growth Twin Cities region, securing a leading market share that qualifies it as a Star.

The market share gain is a direct result of the merger, which was designed to achieve scale in a critical metropolitan area.

Organic Commercial Loan Growth Trajectory

Management's projection for organic loan growth, separate from the acquisition impact, indicates confidence in the underlying health and market demand for Old National Bancorp's core lending products in a growing environment.

The expectation for the full year 2025 is a solid growth rate, though management notes this is likely toward the lower bound of their target range due to market factors.

To maintain the Star status of these segments, you must ensure that the necessary capital for promotion and placement continues to flow, especially into the integrated commercial banking operations and fee-based businesses.

Old National Bancorp (ONB) - BCG Matrix: Cash Cows

Cash Cows for Old National Bancorp (ONB) represent the mature, high-market-share business units that generate excess cash flow to fund other areas of the enterprise. These units thrive on established market positions and high profitability derived from operational discipline rather than rapid market expansion.

Low-Cost Core Deposit Franchise is a primary Cash Cow component. This franchise provides stable, low-cost funding, a critical advantage in the banking sector. Period-end total deposits stood at $55.0 billion as of Q3 2025. The cost of these total deposits was managed to 197 bps, demonstrating effective management of funding expenses. Furthermore, core deposits showed growth, increasing at an annualized rate of 5.8% in the quarter, indicating continued strength in the underlying customer base.

The core of this stability is the Traditional Midwest Commercial and Retail Banking segment. This business operates in established markets where Old National Bancorp has achieved significant penetration. The outline suggests this segment accounts for 40.4% of the bank's deposits, anchoring its market leadership in regions like Chicago, where Old National Bancorp maintains dual headquarters. This established footprint allows for lower promotional spending relative to market share gains.

The primary revenue engine, Net Interest Income (NII), reflects the high-margin nature of these established assets and liabilities. Net Interest Income on a fully taxable equivalent (FTE) basis reached $582.6 million in Q3 2025. This was supported by a Net Interest Margin (FTE) of 3.64%. This consistent revenue stream is the definition of a Cash Cow's output.

Operational Efficiency maximizes the cash flow extracted from these mature operations. Old National Bancorp demonstrated peer-leading efficiency with an adjusted efficiency ratio of 48.1% in Q3 2025. This figure, which excludes significant merger-related charges, shows disciplined expense management, ensuring that a larger portion of the revenue translates directly into distributable or reinvestable cash.

Here is a summary of the key financial metrics supporting the Cash Cow classification for Old National Bancorp as of Q3 2025:

The cash generated by these units is vital for the entire Old National Bancorp structure. You can see how these mature units support the overall corporate needs:

• Provides cash to fund growth in Question Mark business lines.
• Covers general administrative costs for the holding company.
• Funds necessary investments to maintain the existing infrastructure.
• Supports dividend payments to shareholders.

The focus for these assets is maintenance and optimization, not aggressive expansion. Investments here are targeted at efficiency improvements, such as technology upgrades that lower the cost of servicing the $55.0 billion deposit base, thereby increasing the net cash flow further. For instance, the 48.1% adjusted efficiency ratio shows the success of this strategy.

Old National Bancorp (ONB) - BCG Matrix: Dogs

Dogs, in the Boston Consulting Group Matrix, represent business units or assets with a low market share in low-growth markets. For Old National Bancorp (ONB), these are typically legacy holdings or non-strategic assets that consume management time without providing significant cash flow or growth alignment with the current commercial-focused strategy. These units are prime candidates for divestiture or minimization.

Non-Strategic, Legacy Branch Locations

You know the drill with legacy footprints; they tie up capital and drive up fixed costs. Old National Bancorp is actively working to reduce the expense drag from these locations, which are subject to ongoing consolidation to improve the efficiency ratio. While specific Q2 2025 expense savings directly tied only to branch closures aren't itemized separately from overall expense discipline, the result of this focus is evident in the firm's operational leverage. The adjusted efficiency ratio for Q2 2025 stood at 50.2%, an improvement from 51.8% in the linked quarter, reflecting this push to streamline non-interest expense. The bank has a history of repositioning real estate, having recorded pre-tax charges of $26.8 million in 2022 and $1.6 million in 2023 associated with valuation adjustments for these locations. These are assets that need to be managed down.

Certain Legacy Criticized and Classified Assets

These assets represent credit quality issues from prior periods that require active management effort. Old National Bancorp made meaningful progress in portfolio management by reducing legacy criticized and classified assets by 9% in Q2 2025, excluding the impact of the Bremer acquisition. This reduction amounted to approximately $254 million in Q2 2025. This signals a low-growth, high-management-effort portfolio that the bank is actively shrinking.

Here are the key metrics related to credit quality management in Q2 2025:

Older, Low-Yield Consumer Loan Portfolios

These portfolios are non-core to the current strategy, which heavily favors commercial loan production, which grew 4.6% annualized in Q2 2025 (excluding Bremer). Assets that do not align with the commercial focus are candidates for run-off or paydown. The overall loan portfolio balance at the end of Q2 2025 was $48.0 billion. The focus on core commercial growth means these older, lower-yielding consumer assets are not receiving new investment capital, effectively allowing them to shrink through natural amortization and paydowns.

Non-Accrual Loans

Non-accrual loans are assets that have stopped generating interest income, consuming capital without return, a classic characteristic of a Dog. For Old National Bancorp in Q2 2025, non-accrual loans stood at 1.24% of total loans. This figure actually showed a sequential decline of five basis points from the prior quarter, indicating some successful management or write-off activity within this segment. Management noted that roughly 60% of these non-accruals were from acquired books with appropriate reserves.

You should watch these specific areas as they represent capital that could be redeployed:

• Legacy criticized and classified assets reduction of 9% in Q2 2025.
• Non-accrual loans at 1.24% of total loans in Q2 2025.
• The portfolio is actively being managed down to improve the 50.2% adjusted efficiency ratio.

Old National Bancorp (ONB) - BCG Matrix: Question Marks

You're looking at the areas within Old National Bancorp (ONB) that are consuming cash for future potential but haven't yet delivered dominant returns-the classic Question Marks. These are the units in high-growth markets where Old National Bancorp is still fighting for market share, or they represent significant, necessary investments that haven't fully matured into revenue drivers. Honestly, these are the make-or-break bets for the next few years.

Southeastern Expansion and Market Density Building

The scenario here is entering high-growth geographic areas where Old National Bancorp needs to rapidly build density. While the recent major expansion was the Bremer Bank partnership, which significantly bolstered presence in Minnesota, North Dakota, and western Wisconsin, the strategic imperative to build share in other high-growth regions, like the Southeast, remains a Question Mark. The goal is to quickly convert new presence into a meaningful share of local deposits and loans. For context on the scale of recent growth, total deposits reached $55.0 billion as of the third quarter of 2025, with core deposits growing at an annualized rate of 5.8% in that quarter. Still, the success in these new, less-dense markets is what will determine if this segment becomes a Star or stagnates.

Digital Banking Platform Investments

Investing in technology is a massive cash drain before it becomes a revenue generator. Old National Bancorp introduced a new small business digital banking platform in 2024, focusing on modern money movement and self-service options. This represents a high-growth market-digital adoption-but the current contribution to the overall revenue mix is low relative to the investment required to keep pace. The bank is clearly committed to this area, as evidenced by the reinvestment of cost savings from the Bremer integration back into talent acquisition and operating leverage maintenance, aiming for an efficiency ratio around 50%.

Integration Risk and Runoff from Bremer

The successful closing of the Bremer Bank partnership on May 1, 2025, was a major step, bringing in $11.8 billion in loans and $13.2 billion in deposits as of December 31, 2024. The high-growth opportunity is the expanded footprint, but the risk is client runoff while the systems conversion, targeted for mid-October 2025, is completed. While the bank reported strong Q3 2025 results, including an adjusted EPS of $0.59, the true test of client retention will be seen in the near-term deposit and loan retention figures post-conversion. Full cost savings from this integration are anticipated by the first quarter of the following year, meaning the full financial benefit is still in the future.

Commercial Real Estate (CRE) Exposure Management

This segment is a classic Question Mark because it offers high potential returns in a growing loan book but carries persistent sector headwinds and requires disciplined credit management. As of the second quarter of 2025, Old National Bancorp's Commercial and agriculture real estate loans stood at $16,213,606 (in thousands, or $16.21 billion). The bank is managing this concentration carefully, as its applicable investor CRE loans as a percentage of its Tier 1 capital plus the allowance for credit losses was 265% at June 30, 2025, which is below the regulatory guideline limit of 300%. The bank is actively managing this, having reduced legacy criticized and classified assets by 9%, but the segment's future performance is uncertain.

Here is a snapshot of the CRE exposure metrics we have for this high-risk area as of mid-2025:

The bank's overall capital position remains strong, with the preliminary regulatory Tier 1 common equity ratio at 11.02% in Q3 2025, which provides a buffer to invest in these Question Marks or absorb potential CRE credit losses. The company also returned capital via repurchasing 1.1 million shares for $25.02 million during the third quarter.