Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (November 2014)
49 slides from Old National Bancorp's investor presentation, Nov 10, 2014
Slide 1: Investment Thesis
Investment Thesis Financial Data as of 9-30-14 Dated: November 10, 2014 Exhibit 99.1 ******** ******** ******** ******** ******** ********
Slide 2: Investment Thesis: Executive Summary
Investment Thesis Executive Summary Slides 2 to 17 Financial Data as of 9-30-14 Dated: November 10, 2014 ******* ******* ******* ******* ******* *******
Slide 3: Forward-Looking Statement
3 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, descriptions of Old National Bancorp’s (“Old National’s”) financial condition, resul
Slide 4: Non-GAAP Financial Measures
4 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 a
Slide 5: Snapshot of Old National
5 Snapshot of Old National Summary Overview Company Description Asset Mix Liability Breakdown Revenue Breakdown Source: SNL Financial, Company filings, FactSet Estimates Note: Market data as of November 6, 2014; financial information as of September 30, 2014. Headquarters Evansville, IN Market Cap (
Slide 6: Investment Thesis
6 Investment Thesis Attractive footprint that offers both leading share in mature markets and room to expand in higher growth markets Consistent financial performance with distinct revenue streams and improving efficiency Diverse loan portfolio with growth accelerating while maintaining strong credi
Slide 7: Ethisphere World's Most Ethical Companies
ETHISPHERE 201.4. INSIDE CERTIFICATION be VolunteerMatch =| WORLD'S MOST AWARD OF = SETH ICAL o|COMPANIES WWW.ETHISPHERE.COM Corporate Engagement
Slide 8: Our Indiana Footprint
8 Our Indiana Footprint Indicator Outlook Latest Statistics (September 2014) Trend (YoY change from Sept. 2013) Economic Vital Signs Jobs Employment Unemployed 3,046,944 184,550 • Labor Force increased 50,366 • Unemployment rate decreased to 5.7% (September 2013 rate was 7.3%) Unemployment Insurance
Slide 9: Our Michigan Footprint
9 Our Michigan Footprint Projected 2019 Median Household Income Projected 2014-2019 Median HHI Growth 4.6% 2.6% 2.2% 5.7% 0.0% 4.7% USA Indiana Michigan Ann Arbor Kalamazoo Grand Rapids Highest median household income MSA in Michigan September 2014 unemployment rate of 4.7%, compared to the national
Slide 10: Indiana's Economic Achievements
10 Indiana’s Economic Achievements “AAA” Credit Rating – Fitch, Moody’s and Standard and Poor’s Best U.S. State for Manufacturing Jobs Best State for Business – CEO Magazine 280 new manufacturing jobs created – Berry Plastics, Evansville, Indiana 200 new jobs created – General Electric, Lafayette, I
Slide 11: Executing the Plan – 3Q14 Highlights
11 Executing the Plan – 3Q14 Highlights Continue to Grow Core Revenue Reduce Operating Expenses Transform the Franchise Into Higher- Growth Markets • Execution of our M&A strategy of adding higher-growth markets Ann Arbor, MI – United Bancorp acquisition closed and fully converted Lafayette, IN – Ga
Slide 12: 3Q14 Financials
12 3Q14 Financials Net income of $29.1 million or $.26 per share – 44% increase over $.18 per share in 2Q14 – 13% increase over $.23 per share in 3Q13 Included in 3Q14 are the following pre-tax items – $3.6 million in merger and integration charges – $19.1 million amortization of the indemnification
Slide 13: Basic Banking
13 Basic Banking 1 $ in millions See appendix for non-GAAP reconciliations End of period and average balances, respectively
Slide 14: Update on New Markets
14 Update on New Markets Ft Wayne, IN Ann Arbor, MI Columbus, IN MI / Northern IN $721.5 3Q14 $631.0 3Q14 $70.0 $89.3 2Q14 3Q14 $466.7 $450.8 2Q14 3Q14 $352.7 $335.8 2Q14 3Q14 $440.4 $429.6 2Q14 3Q14 $355.2 $346.2 2Q14 3Q14 $ in millions End of period balances $148.4 $152.7 2Q14 3Q14 (Indiana Commun
Slide 15: Fee-Based Business Revenue
15 Fee-Based Business Revenue $ in millions $0.9 $0.6 $5.5 $7.2 3Q13 3Q14 Wealth Management $8.9 $9.8 3Q13 3Q14 Insurance $4.5 $4.7 $0.3 $0.2 3Q13 3Q14 Investments
Slide 16: Net Charge-Offs / Provision
16 Net Charge-Offs / Provision $ in millions Excludes FDIC-covered loans 0.02% 0.07% 0.03% 3Q13 2Q14 3Q14 Consolidated NCOs 3Q13 2Q14 3Q14 Provision for Loan Losses ¹ ($1.3) $1.1 $3.0 Consolidated Provision for Loan Losses ($1.7) ($0.4) $2.6
Slide 17: Credit Quality – Excluding Covered Loans
17 Credit Quality – Excluding Covered Loans ONB Risk Grade Grade Name $ in millions Loans less those acquired through Tower and United transactions Investment Grade Minimal Risk Modest Risk Average Risk Monitor Weak Monitor Watch Criticized (Special Mention) Classified (Substandard Accruing) Nonaccr
Slide 18: Investment Thesis
Investment Thesis Financial Data as of 9-30-14 Dated: November 10, 2014 ******** ******** ******** ******** ******** ********
Slide 19: Adjusted Income – Strong Growth
19 Adjusted Income 1 – Strong Growth $ in millions Non-GAAP financial measure which Management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliation Adjusted income represents income before taxes less accretion income, change in indemnificat
Slide 20: Net Interest Margin
20 Net Interest Margin 1 3Q13 2Q14 3Q14 Total NIM 3.96% 4.07% 4.78% United Accretion 0.00% 0.00% 0.14% Tower Accretion 0.00% 0.06% 0.11% IN Community Accretion 0.23% 0.15% 0.13% Integra Accretion 0.31% 0.56% 1.05% Monroe Accretion 0.09% 0.04% 0.03% ONB Core 3.33% 3.26% 3.32% 3.96% 4.07% 4.78% Fully
Slide 21: Loan Growth – Excluding Covered Loans
21 Loan Growth – Excluding Covered Loans End of Period Balance Average Balance $4,909.0 $5,818.2 $775.3 $133.9 3Q13 Loans Obtained Through Tower & United Acquisitions Organic Growth 3Q14 $5,194.1 $5,818.2 $418.4 $205.7 2Q14 Loans Obtained Through United Acquisition Organic Growth 3Q14 $ in millions
Slide 22: Commercial Loan Pipeline and Line Utilization
22 $239 $349 $356 35.8% 36.6% 37.9% Commercial Line Utilization Commercial Loans $118 $83 $106 $87 $98 $115 $444 $530 $577 3Q13 2Q14 3Q14 Commercial Loan Pipeline Discussed Proposed Accepted 1.2% 3Q13 2Q14 3Q14 $ in millions 1% of line utilization = $13.6 million in outstandings 39.1% 2007-2008 Aver
Slide 23: Loan Concentrations – Excluding Covered Loans
23 Loan Concentrations – Excluding Covered Loans Diversified Commercial Loan Portfolio At 9-30-14 Commercial Commercial Real Estate
Slide 24: Credit Quality – Excluding Covered Loans
24 Credit Quality – Excluding Covered Loans See Appendix for definition of Peer Group As a % of end of period total loans Peer Group data per SNL Financial 0.02% 0.01% 0.01% 0.39% 0.30% 3Q13 2Q14 3Q14 90+ Day Delinquent Loans ONB Peer Group Average
Slide 25: Slide 25
Slide 26: Conservative Lending Limits/Risk Grades
26 Conservative Lending Limits/Risk Grades Borrower Asset Quality Rating (Risk Grades) In-House Lending Limit 1 ($ in millions) Borrower Asset Quality Rating (Risk Grades) 1 1 0 – Investment Grade $30 1 – Minimal Risk $25 2 – Modest Risk $25 3 – Average Risk $22.5 4 – Monitor $15 5 – Weak Monitor $1
Slide 27: Investment Portfolio Purchases 3Q14
27 Investment Portfolio Purchases 3Q14 1 Data as of September 30, 2014 Q3 2014 Purchases- Book Value Treasuries Agencies* 18,790,895 Pools 1,010,313 CMOs Municipals Corporates 9,507,255 ABS 2,967,188 Equity Total 32,275,650 2.97%
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Slide 29: Tangible Common Book Value
29 Tangible Common Book Value 1 $7.66 $8.04 $7.96 $8.08 $7.92 $7.69 3Q11 3Q12 3Q13 3Q14 FDIC- Assisted Acquisition Of Integra Bank 7-29-11 Non-GAAP financial measure management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliation Acquired I
Slide 30: Capital Ratios
30 Capital Ratios Peer Group data per SNL Financial See Appendix for definition of Peer Group See Appendix for Non-GAAP reconciliation ONB repurchased 1.0 million shares of stock during 3Q14, pursuant to a Rule 10b5-1 plan On October 23, 2014, ONB Board of Directors authorized the repurchase of up t
Slide 31: Modeled Interest Rate Sensitivity
31 Modeled Interest Rate Sensitivity $17,527 $8,540 $25,053 $11,516 $13,032 $12,541 1Q14 2Q14 3Q14 Two Year Projected Change to Net Interest Income (Historical) Up 200 bps Forward Curve Total non-maturity, interest- bearing accounts increase from 0.08% to 0.80% in the “Up 200 bps” scenario 21.5% of
Slide 32: Interest Rate Curves
32 Interest Rate Curves 0% 1% 2% 3% 4% 5% 6% 1M 2M 3M 4M 5M 6M 9M 1Y 1.5Y 2Y 2.5Y 3Y 4Y 5Y 7.5Y 10Y 15Y 20Y 30Y Up 200 vs. Base Base Up 200 0% 1% 1% 2% 2% 3% 3% 4% 4% 1M 2M 3M 4M 5M 6M 9M 1Y 1.5Y 2Y 2.5Y 3Y 4Y 5Y 7.5Y 10Y 15Y 20Y 30Y Forward Curves 9/30/2014 9/30/2015 9/30/2016
Slide 33: Total Revenue – Increasing Core Revenue
33 Total Revenue – Increasing Core Revenue $114.6 $115.3 $124.9 $0.2 $1.7 $2.7 $ in millions ($2.1) ($10.5) ($19.1) $13.1 $17.6 $34.3 $125.8 $124.1 $142.8 3Q13 2Q14 3Q14 Core Revenue Growth – 8.3% from 2Q14 – 9.0% from 3Q13
Slide 34: Transforming Old National's Landscape
34 Acquired St. Joseph Capital – Entry into Northern IN market February, 2007 Acquired 65 Charter One branches throughout Indiana March, 2009 Acquired Monroe Bancorp – Enhanced Bloomington, IN presence January, 2011 Acquired Indiana Community – Entry into Columbus, IN September, 2012 FDIC-assisted a
Slide 35: Strategy Process, Emerging Trends, M&A Partnerships
35 Strategy Process Emerging Trends M&A – Partnerships Represents MSAs with more than 15,000 households in IN,KY,IL, southern MI, Cincinnati and St. Louis. MSA quartile rankings weighted as follows: 25% number of households, 20% median HH income, 10% unemployment, 10% median HH income 5-year growth,
Slide 36: Old National's Landscape
36 36 Old National’s Landscape Shifting to higher-growth markets from lower-growth markets – Entry and fill-in of existing higher-growth markets through strategic acquisitions Acquired 205 branches + 4 pending – Sale or consolidations in lower-growth, non-core markets Consolidated 129 branches Sold
Slide 37: Completed and Pending Acquisitions
37 Completed and Pending Acquisitions Acquisition RBS Citizens 65 Branches Monroe Integra Bank Indiana community BofA - 24 Branches Tower Financial United Bancorp LSB Founders $ in millions N/A equals not applicable (1) Based on end of quarter assets immediately preceding announcement date Deal Type
Slide 38: Committed to Strong Corporate Governance
38 Committed to Strong Corporate Governance Position or Salary Target Ownership Guidelines Stock ownership guidelines have been established for named executive officers as follows: As of September 30, 2014, each named executive officer has met their stock ownership requirement Chief Executive Office
Slide 39: Executive Compensation
39 Executive Compensation Short Term Incentive Plan (CEO, CFO, Chief Legal Counsel) Performance Measure Weight Long Term Incentive Plan (CFO,CBA, CCO, Chief Legal Counsel) Performance Measure Weight Short Term Incentive Plan (CBA, CCO) Performance Measure Weight Long Term Incentive Plan (CEO) Perfor
Slide 40: Old National Bancorp
Ml OLD NATIONAL BANCORP” NASDAQ: ONB oldnational.com
Slide 41: Noninterest Income
41 Noninterest Income $ in millions
Slide 42: Noninterest Expense
42 $89.7 $88.8 $90.3 Noninterest Expense *Other Expenses include: In 3Q13, $2.7 million for branch closures, $1.2 million in contribution to ONB Foundation, $.5 million provision for unfunded commitments and $.3 million in pension adjustments In 2Q14, $.4 million in accelerated retirement expenses a
Slide 43: Tangible Common Equity
43 Tangible Common Equity Tangible Common Equity – 6/30/2014 $838.1 3Q Earnings 29.1 3Q Dividend (12.6) 3Q14 Share Repurchase (13.7) Issuance of Shares from Acquisition 123.8 Changes in OCI – Securities 2.1 Changes in OCI – Other 1.1 Increase in Goodwill & Intangibles (91.2) Tangible Common Equity –
Slide 44: Non-GAAP Reconciliations
44 Non-GAAP Reconciliations $ in millions
Slide 45: Non-GAAP Reconciliations
45 Non-GAAP Reconciliations $ in millions
Slide 46: Non-GAAP Reconciliations
46 Non-GAAP Reconciliations $ in millions
Slide 47: Non-GAAP Reconciliations
47 Non-GAAP Reconciliations
Slide 48: ONB's Peer Group
48 ONB’s Peer Group Like-size, publicly-traded financial services companies, generally in the Midwest, serving comparable demographics with comparable services as ONB 1st Source Corporation SRCE Heartland Financial USA, Inc. HTLF BancFirst Corporation BANF IBERIABANK Corporation IBKC BancorpSouth, I
Slide 49: Investor Contact
49 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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