The banking crisis earlier this year created a lot of turmoil with some banks failing and others experiencing significant downward pressure, suggests Kelley Wright, editor of Investment Quality Trends — a service focused on blue chip dividend-paying stocks.

The market has yet to fully stabilize in this space as evidenced by many regional banks not yet having recovered on a per share price basis. Old National Bancorp (ONB) is one that was a victim of the "throw the baby out with the bath water" mentality that gripped Wall Street after the Silicon Bank debacle, among others. ONB is not a large bank, but it is growing, and growth has always been part of its history, engaging in purchases and mergers in order to expand.

By example, in February of 2022 the bank merged with First Midwest. This resulted in the bank becoming the 6th largest commercial bank headquartered in the Midwest and, with $48.5 billion in assets, one of the 30 largest in the country.

ONB has about 256 branches, from which it offers all of the traditional bank services and products along with wealth management, investment, and foreign currency services. The company will sell assets when they no longer fit their long-term vision. By example, the bank sold its operations as a qualified custodian for health savings accounts in November of 2022.

Over the last 3 years ONB has had substantial growth in loans, securities, and cash, which has been made possible by a significant increase in deposits, which have remained stable where others haven’t.

On a dividend yield basis ONB is not a barn burner, but its internal cash flow metrics are strong with an ROIC, FCFY, and PVR of 13%, 10%, and 0.4 respectively. This is to say when this sector fully stabilizes there is ample growth prospects for this company.

I also note that Old National is a member of our Timely Ten list of blue chip stocks. These stocks represent our current top recommendations among all stocks chosen from among those that we rank in the the "Undervalued" category.

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