Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (May 2011)
40 slides from Old National Bancorp's investor presentation, May 20, 2011
Slide 1: Old National Bancorp Investment Thesis
Old National Bancorp Investment Thesis Financial Data as of 3-31-2011
Slide 2: Forward-Looking Statement
Forward-Looking Statement This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements relating to Old National's financial condition, asset and credit quality tr
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures These slides contain non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of the registrant's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adj
Slide 4: The Old National Distinction
The Old National Distinction Through execution of a sound strategy, ONB is well positioned for the future Strengthen the risk profile Consistent application of conservative underwriting standards has led to strong loan quality relative to peers 1Q11 net charge-offs of .27% vs. peer average of .89% 1
Slide 5: Strong 1Q11 Performance
Strong 1Q11 Performance Net income of $16.4 million, or $.17 per share Vs. $5.7 million, or $.07 per share, in 4Q10 Vs. $10.1 million, or $.12 per share, in 1Q10 Earnings driven by Reduction in credit costs 1Q11: Net charge-offs of $2.9 million and provision expense of $3.3 million 4Q10: Net charge-
Slide 6: Adapting and Reshaping our Business For Growth
Adapting and Reshaping our Business For Growth Streamlining processes to make it simple, easy and fast for clients to do business with Old National Commercial Banking Unit 2nd review committee for new lending opportunities Focus on cross sell of insurance and wealth management Introduction of Quick
Slide 7: Corporate Summary
Corporate Summary MARKET STATISTICS AND SUMMARY OVERVIEW ($ in millions) MARKET STATISTICS AND SUMMARY OVERVIEW ($ in millions) MARKET STATISTICS AND SUMMARY OVERVIEW ($ in millions) Headquarters Headquarters Evansville, Indiana Evansville, Indiana Evansville, Indiana Evansville, Indiana Stock Excha
Slide 8: The Old National Footprint
The Old National Footprint The Old National Footprint ONB Headquarters
Slide 9: Local Unemployment
Local Unemployment Local Unemployment 44.6% / 7.4% ..7% / 9.2% 2.8% / 10.0% 0% / 9.4% 50.9% / 8.5% 1.0% / 9.1% % of ONB's Indiana deposits* / Regional unemployment Unemployment data provided by Indiana Department of Workforce Development and Bureau of Labor Statistics March 2011 Unemployment: Indian
Slide 10: Asset/Liability Composition
Asset/Liability Composition Investments Commercial Loans Commercial Real Estate Loans Consumer Loans* Residential Real Estate Other Asset 0.418 0.163 0.133 0.134 0.052 0.1 NOW & Savings Demand Deposits Money Markets Other Time Borrowings Brokered CDs Other Liability 0.37176 0.20016 0.04984 0.22118 0
Slide 11: Loan Concentrations
Loan Concentrations At March 31, 2011 Commercial Commercial Real Estate Diversified Commercial Loan Portfolio
Slide 12: Conservative Lending Limits
Conservative Lending Limits Borrower* Asset Quality Rating In-House Lending Limit* ($ in millions) 0 $25 1, 2, or 3 $20 4 $15 5 $10 6 (Watch) $7.5 7 (Special Mention) $5 In-house lending limits conservative relative to ONB's legal lending limit at 3-31-2011 of $91.9 million per borrower *Includes en
Slide 13: Proactive Risk Management
Proactive Risk Management No subprime business line Conservative stance on commercial real estate Starting mid-year 2006 Reduction in higher-risk residential loans Sold $405.6 million in 2004 Sale of credit card portfolio June 2000 Minimal construction and land loan exposure 1Q11 at 3.22% vs. 4Q10 p
Slide 14: Credit Quality: Provision Expense and Net Charge-Offs
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 Provision Expense 21.9 5.7 6.8 17 17.3 12 12.2 21.8 9.3 8 6.4 7.1 3.3 Quarterly Net Charge-Offs 6.1 15.9 5.5 13.4 12.6 13.6 12.7 21.8 6.7 8.2 6.1 6.9 2.9 2008 2009 2010 $40.8 $60.8 $28.0 $51.5 > $63.3 > $30.8 > $ in millions Long-term
Slide 15: Credit Quality: 30+ Day Delinquent Loans
Credit Quality 30+ Day Delinquent Loans Specific Segment Overview 30+ Day Delinquent Loans 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 Commercial .51% .32% .36% .29% .26% .35% Commercial Real Estate .44% .26% .52% .23% .12% .36% First Mortgage Residential Real Estate 1.97% 1.31% 1.85% 1.73% 1.59% .98% Home Equity
Slide 16: Credit Quality
2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 ONB Consolidated 97.542 114.321 124.855 86.587 101.019 94.607 103.5 104.861 100.652 75 84 115.8 ONB Excluding Monroe 94.6 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality
Slide 17: Credit Quality
2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 ONB Consolidated 81.7 105.4 116.1 122.4 113.6 101 90.1 92.4 88.8 101 103.4 102 ONB Excluding Monroe 83 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality
Slide 18: Credit Quality
2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 ONB Consolidated 68.1 68.4 64 77.4 77.7 73.7 67 68.1 68.86 69.8 70.9 121.4 ONB Excluding Monroe 82.4 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality
Slide 19: Reduction of Noninterest Expenses
Reduction of Noninterest Expenses 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 FTE's 2875 2828 2812 2708 2646 2585 2491 2618 2557 2441 Decrease of 15.1% or 434 FTE2 1 Includes 177 FTE acquired with the Monroe transaction 2 Excludes impact of FTE acquired with the Monroe transaction 3 Reflects antici
Slide 20: Capital Management - Recent Actions
Capital Management - Recent Actions Approved share repurchase program 1-27-2011 Up to 2.25 million shares of ONB common stock Ends 1-31-2012 Redemption of ONB Capital Trust II $100 million at 8.00% called 12-15-2010 Termination of $50 million of FHLB advances at an average rate of 1.90% and restruct
Slide 21: Capital Ratios
Capital Ratios 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 ONB 0.075 0.0779 0.1225 0.1244 0.1304 0.1398 0.1458 0.145 0.1408 Peer Group Average 0.0866 0.0892 0.0963 0.0987 0.1097 0.1129 0.1152 0.1134 ONB Minimum Guideline 0.09 0.09 0.09 0.09 0.09 0.09 0.09 0.09 0.09 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q1
Slide 22: Investment Portfolio
Investment Portfolio ($ in millions) Book Value Dec. 31, 2010 Book Value Mar. 31, 2011 Market Value* Dec. 31, 2010 Market Value* Mar. 31, 2011 Market Value $ Change Federal National Mortgage Association $558.2 $580.9 Federal Home Loan Mortgage Corporation 49.0 54.4 Federal Home Loan Bank 9.7 15.2 Fe
Slide 23: Municipal Bond Portfolio by State
Municipal Bond Portfolio by State IN TX PA KY MO All Other 0.395 0.062 0.069 0.053 0.059 0.362 Based on book value at 3-31-2011 Illinois exposure consists of 1 bond representing .24% of entire municipal portfolio
Slide 24: Monthly Net Interest Margin
Monthly Net Interest Margin* *Fully taxable-equivalent basis Steady improvement in NIM despite decline in average earning assets. Average earning assets increased 1Q11 with Monroe acquistion 1Q10 2Q10 3Q10 4Q10 1Q11 ONB 0.0333 0.034 0.0342 0.0346 0.0362
Slide 25: M&A Strategy
M&A Strategy Branch acquisition FDIC assisted transaction Whole bank purchase Must enhance Old National's mission of being a true "community bank" Must align both strategically and culturally Must meet/exceed financial targets Must pass rigorous due diligence process
Slide 26: M&A Strategy
M&A Strategy Focus on community banking, client relationships and consistent quality earnings Target geographic markets Mid-sized markets within or near existing franchise with average to above average growth rates In market community banks where significant cost saves could be achieved
Slide 27: ONB Acquired Monroe Bancorp
ONB Acquired Monroe Bancorp Transaction closed 1-1-2011 Provides #1 market share in Monroe County (Bloomington, Indiana) Systems conversion occurred 5-14-2011 Balance sheet acquired* $419.4 million in total loans $574.0 million in total deposits 15 branch locations Consolidated 6 locations at conver
Slide 28: Integra Trust Acquisition
Integra Trust Acquisition Transaction announced April 11 Anticipated to close by June 30 Assets under management = $386.8 million* Purchase price of $1.25 million Accretion less than $.01 per share Currently operating under a service agreement *Based on 12-31-2010 Call Report
Slide 29: Appendix
Appendix Old National Bancorp
Slide 30: 1Q11 Balance Sheet Review-Loans
1Q11 Balance Sheet Review-Loans $ in millions-period end balances ONB Consolidated at 12/31/2010 ONB Consolidated at 3/31/2011 Consolidated Change Monroe Organic Change Commercial Loans $1,211.4 $1,274.3 $62.9 $63.5 $(.6) Commercial Real Estate Loans 942.4 1,218.4 276.0 277.8 (1.8) Other Consumer Lo
Slide 31: 1Q11 Balance Sheet Review-Deposits
1Q11 Balance Sheet Review-Deposits $ in millions-period end balances ONB Consolidated at 12/31/2010 ONB Consolidated at 3/31/2011 Consolidated Change Monroe Organic Change Noninterest-bearing demand deposits $1,276.0 $1,421.4 $145.4 $128.4 $17.0 NOW Accounts 1,297.4 1,448.0 150.6 200.8 (50.2) Saving
Slide 32: CD Maturity Schedule
CD Maturity Schedule Bucket Amount ($ in 000's) Rate 0-30 days $77,459 .94% 31-60 days 64,601 1.18% 61-90 days 54,013 1.08% 91-120 days 121,429 2.35% 121-150 days 107,532 2.43% 151-180 days 100,012 1.79% 181-210 days 56,448 2.04% 211-240 days 60,148 1.33% 241-270 days 63,303 .87% 271-300 days 40,061
Slide 33: Minimal Shared National Credits
Minimal Shared National Credits *All but one in ONB footprint of Indiana, Kentucky or Illinois **Refer to Appendix for ONB Loan Risk Grade Table ($ in millions) 1Q10 2Q10 3Q10 4Q10 1Q11 Count (#)* 12 12 10 8 7 Total exposure $134.6 $133.2 $118.2 $83.4 $68.2 Dollar outstanding $54.4 $50.8 $38.7 $23.0
Slide 34: ONB Loan Risk Grades
ONB Loan Risk Grades Grade Name 0 Investment Grade 1 Minimal Risk 2 Modest Risk 3 Average Risk 4 Monitor 5 Weak Monitor 6 Watch 7 Criticized (Special Mention) 8 Classified (Problem) 9 Nonaccrual
Slide 35: Other Classified Assets
Other Classified Assets ($ in millions) Book Value Dec. 31, 2010 Book Value Mar. 31, 2011 Market Value Dec. 31, 2010 Market Value Mar. 31, 2011 Corporate Bonds $3.3 $3.3 $2.5 $2.7 Pooled Trust Preferred Securities $27.4 $27.4 $8.4 $9.3 Non-Agency Mortgage Backed Securities $74.9 $61.8 $70.3 $61.2 To
Slide 36: Securities with OTTI
Securities with OTTI *Lowest credit rating provided by any nationally recognized credit rating agency. Vintage Lowest Credit Rating* Book Value at Mar. 31, 2011 OTTI 1Q11 OTTI Life to Date BAFC Ser 4 2007 CCC $14,026 $- $142 CWALT Ser 73CB 2005 CCC 4,945 - 290 CWALT Ser 73CB 2005 CCC 5,721 - 609 CWH
Slide 37: Loan Yields and Deposit Costs
Loan Yields and Deposit Costs Peer Group data per SNL Financial See Appendix for definition of Peer Group 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 ONB Loan Yields 0.0681 0.0629 0.0611 0.0597 0.0521 0.0514 0.0514 0.0508 0.0507 0.0508 0.0502 0.0495 0.0513 Peer Group Average 0.0
Slide 38: The Old National Peer Group
The Old National Peer Group Name Ticker Name Ticker 1st Source Corporation SRCE Heartland Financial USA, Inc. HTLF BancFirst Corporation BANF IBERIABANK Corporation IBKC BancorpSouth, Inc. BXS MB Financial, Inc. MBFI Bank of Hawaii Corporation BOH Park National Corporation PRK Chemical Financial Cor
Slide 39: Non-GAAP Reconciliations
Non-GAAP Reconciliations 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 Total Shareholders' Equity $631.8 $634.6 $865.4 $843.8 $855.5 $874.7 $895.7 $878.8 $984.0 Deduct: Goodwill and Intangible Assets (205.6) (204.0) (202.4) (200.2) (198.6) (197.1) (195.6) (194.1) (271.0) Tangible Common Shareholders'
Slide 40: Investor Contact
Investor Contact Additional information can be found on the Investor Relations web pages at www.oldnational.com Investor Inquiries: Lynell J. Walton, CPA SVP - Director of Investor Relations 812-464-1366 lynell.walton@oldnational.com
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