Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (August 2016)
47 slides from Old National Bancorp's investor presentation, Aug 15, 2016
Slide 1: Investment Thesis
Investment Thesis Financial Data as of 6-30-16 Dated: August 15, 2016 Exhibit 99.1
Slide 2: Investment Thesis Executive Summary
Investment Thesis Executive Summary Slides 2 to 15 Financial Data as of 6-30-16 Dated: August 15, 2016
Slide 3: Forward-Looking Statements
Forward-Looking Statements 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 about the expected financial benefits and other effects of the divestiture
Slide 4: 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 5: Snapshot of Old National
Snapshot of Old National Largest financial services bank holding company headquartered in Indiana with financial centers located in Indiana, Kentucky, Michigan and Wisconsin 200+ financial centers, including newly acquired in Wisconsin 225+ ATMs, including newly acquired in Wisconsin Focused on comm
Slide 6: A Strategic Framework for Creating Long-Term Shareholder Value
A Strategic Framework for Creating Long-Term Shareholder Value 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 actions taken to improve efficiency Diverse loan portfol
Slide 7: Commitment to Excellence
Commitment to Excellence ja) 4 ETHISPHERE QuickScore Q r 20 15 || DISTINCTION INSIDE & WORLD’S MOST ™ COMPANIES’ COM Corporate Engagement AWARD OF = Points of Light Institute =|2016] m
Slide 8: Old National's Landscape
Old National’s Landscape
Slide 9: Unemployment Rates in Top Growth Markets
Unemployment Rates in Top Growth Markets Unemployment rates have consistently been below the national average
Slide 10: 2Q16 Highlights
2Q16 Highlights Net income of $39.1 million, or $0.31 per share 49.6% increase in net income and 40.9% increase in EPS Y/Y Notable items in the quarter include gain on the sale of ONB Insurance, merger and integration charges, Old National Foundation funding and community support and branch consolid
Slide 11: 2Q16 vs. 1Q16 Highlights
2Q16 vs. 1Q16 Highlights Solid fundamentals driven by disciplined execution Organic Loan Growth +11.3%(annualized) Q/Q TBV +5.5% Q/Q 1 Non-GAAP financial measure which Management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliations $ in mi
Slide 12: Strategic Actions
Strategic Actions Continue investment in higher growth markets Investing in higher growth markets as a result of the closing of the Anchor partnership on May 1 Improve operating leverage Expect an approximately 150 basis point improvement in 2017’s efficiency ratio from the sale of Old National Insu
Slide 13: Sale of Insurance Subsidiary – May 31, 2016
Sale of Insurance Subsidiary – May 31, 2016 Cash Proceeds $91.8 Less: Book Value (50.3) Less: Costs of Sale/Misc (2.4) Plus: Deferred Gain on Sale Leaseback 2.8 Book Gain (Pre-Tax) $41.9 Less: Tax on Book Gain (16.0) Less: Tax on Non-Deductible Goodwill (8.3) Book Gain (After Tax) $17.6 $ in million
Slide 14: Anchor Partnership – May 1, 2016
Anchor Partnership – May 1, 2016 Day 1 balance sheet Loans (net of discount) of $1,645.9 million Deposits of $1,852.7 million Loan mark of $77.3 million, or 4.5% Goodwill recorded of $111.9 million Intangibles recorded of $21.6 million Issued 20.4 million shares of common stock Conversion set for mi
Slide 15: Why Wisconsin?
Why Wisconsin? Cultural similarities to newly entered growth markets Comparable competitive dynamics and client opportunities Wisconsin’s forecasted job picture has improved dramatically to No. 21 this year.1 Ranked #1 in the East North Central Region by Site Selection for top Workforce Development
Slide 16: Investment Thesis
Investment Thesis Financial Data as of 6-30-16 Dated: August 15, 2016
Slide 17: Loan Growth – End of Period Balances
Loan Growth $ in millions – End of Period Balances 1 Includes Loans Held for Sale 1 1 Annualized Organic Loan Growth of 11.3%
Slide 18: Commercial & Commercial Real Estate Loans
Commercial & Commercial Real Estate Loans $ in millions 1New Quarterly Production includes 50% credit for line of credit unfunded commitments 2Yield is based on funded balances only New Quarterly Production1 Production Yield 2 Average loan size of 2Q16 production is less than $520,000 Loan Pipeline
Slide 19: Consumer Loan Production & Yield Trends
Consumer Loan Production & Yield Trends $ in millions New quarterly production includes unfunded commitments – Yield is based on funded balances only Quick Home Refinance (residential mortgage product) is included in the Residential Mortgage graph Direct Consumer includes Home Equity Lines of Credit
Slide 20: Auto Loan Portfolio
Auto Loan Portfolio1 $ in millions 1 Excludes $2.7 million of Anchor auto loans Total portfolio average original loan term of 70 months and weighted average FICO score of 767 Total Portfolio yield of 2.65% 30+ Days Delinquency at 6/30/2016 is 0.33% Loans are originated within the ONB footprint
Slide 21: Loan Concentrations
Loan Concentrations1 As of June 30, 2016 1 Excludes Anchor Commercial Commercial Real Estate Diversified Commercial Loan Portfolio Healthcare/Social Services, 8% Public Admin, 9% Manufacturing, 14% Educational Services, 8% Wholesale Trade, 8% Retail, 6% Other, 22% Real Estate Rental & Leasing, 5% Ag
Slide 22: Credit Quality Trends
$ in millions Credit Quality Trends
Slide 23: Net Charge-Offs / Provision
Net Charge-Offs / Provision $ in millions 2Q16 allowance to pre-discount end of period loans = 0.58% 2Q16 allowance + discount to pre-discount end of period loans = 2.35%1 1 Non-GAAP financial measure which Management believes is useful in evaluating the financial results of the Company – see Append
Slide 24: ALLL and Remaining Purchase Discount Summary
ALLL and Remaining Purchase Discount Summary $ in millions 1 Includes discount on loans acquired through previous partnerships 2 Non-GAAP financial measure which Management believes useful to demonstrate that the remaining discount considers credit risk and should be included as part of total covera
Slide 25: Conservative Lending Limits/Risk Grades
Conservative Lending Limits/Risk Grades Borrower Asset Quality Rating (Risk Grades) In-House Lending Limit1 ($ in millions) 0 – Investment Grade $30 1 – Minimal Risk $25 2 – Modest Risk $25 3 – Average Risk $22.5 4 – Monitor $17.5 5 – Weak Monitor $12.5 6 – Watch $7.5 7 – Criticized (Special Mention
Slide 26: Investment Portfolio Purchases 2Q16
Investment Portfolio Purchases 2Q161 1 Data as of June 30, 2016 Q2 2016 Purchases- Book Value Treasuries 31,998,200 Agencies 247,376,039 Pools - CMO 189,147,518 Municipals 30,771,534 Corporates 11,521,392 ABS - Equity - Total 510,814,683
Slide 27: Investment Portfolio
Investment Portfolio 1Includes market value for both available-for-sale and held-to-maturity securities
Slide 28: Net Interest Margin
Net Interest Margin1 1 Fully taxable equivalent basis, non-GAAP financial measure which Management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliation 2 ONB Core includes contractual interest income of prior acquisitions 2
Slide 29: Acquired Loans – as of June 30, 2016
Acquired Loans $ in millions – as of June 30, 2016 Note: Includes $1.7 billion of Anchor loans with a remaining discount of $73 million PCI = Purchased Credit Impaired
Slide 30: Projected Purchase Accounting Impact
Projected Purchase Accounting Impact Actual Accretion Projected Accretion1 Actual Discount Projected Discount1 $ in millions 1 Updated quarterly – subject to change IA = Indemnification Asset Manageable declines in purchase accounting impact expected in future periods Actual IA Amortization Projecte
Slide 31: Modeled Interest Rate Sensitivity
$ in millions Change to Net Interest Income based on a two year time horizon Refer to slide 32 for rate curves Total non-maturity, interest-bearing accounts increase from 0.08% to 0.35% in the “Up 100 bps” scenario 18.8% of total non-interest bearing DDA are considered rate sensitive Investment port
Slide 32: Up vs. Base Forward Curves
Up 100 vs. Base 1M 2M 3M 4M 5M 6M 9M IY 15Y 2¥ 2SY 3Y 4Y SY 7.5Y 10Y 15Y 20Y 30Y —base ——-up100 Forward Curves 3.0% 2.5% 2.0% 15% az a —— — 05% — NN 1M 2M 3M 4M 5M 6M 9M ly 15Y 2¥ 25Y 3Y 4Y SY 7.5Y 10Y 15Y 20Y 30Y — 6/30/2016 6/30/2017 6/30/2018
Slide 33: Tangible Common Equity
Tangible Common Equity There is currently no share repurchase plan in place. $ and shares in millions
Slide 34: Total Revenue
$ in millions Total Revenue $150.8 The Durbin Amendment reduced 1Q16 and 2Q16 interchange income each by $2.7 million and $2.9 million, respectively 11.6% increase excluding Gain on Sale of Insurance
Slide 35: Fee-Based Business Revenue
Fee-Based Business Revenue $ in millions 1 Insurance subsidiary sold as of May 31, 2016 Asset Under Management at 6/30/2016 = $8,413 million 6/30/2015 = $8,073 million 1
Slide 36: Noninterest Expense
$ in millions 1Operational expenses = total noninterest expense less Anchor operating expense, merger/integration costs , Foundation/Community Support, Branch Consolidations and severance 2Q16 includes annual merit increases of approximately $1.0 million Anticipate Operational Expenses (including An
Slide 37: Improving Efficiency Trends
Improving Efficiency Trends Core Deposits per Branch Branches $ in millions
Slide 38: Rationalizing Distribution Channels
Rationalizing Distribution Channels Driving efficiencies through increased branch size and investment in mobile and online banking Consolidated 27 branches since Jan 1, 2014 Increased average deposits per branch by almost 17% Launched new online and mobile solution January 16, 2016 Increased online
Slide 39: Returned to community bank model
Returned to community bank model 2004 2005 Sold non-strategic market – Clarksville, TN – 5 branches 2006 Sold non-strategic market – O’Fallon, IL – 1 branch 2007 2008 2009 2010 2011 2012 2013 Acquired St. Joseph Capital – Entry into Northern IN market February, 2007 Acquired 65 Charter One branches
Slide 40: Commitment to Strong Corporate Governance
Position or Salary Target Ownership Guidelines Chief Executive Officer 5X salary in stock or 200,000 shares Chief Operating Officer 4X salary in stock or 100,000 shares Salary equal to or greater than $250,000 3X salary in stock or 50,000 shares Salary below $250,000 2X salary in stock or 25,000 sha
Slide 41: Executive Compensation
Executive Compensation Short Term Incentive Plan (CEO, CFO, CBA, CCO, Chief Legal Counsel) Performance Measure Weight Corporate Net Income 60% Net Charge-Offs 15% Efficiency Ratio 25% Tied to long term shareholder value: Long Term Incentive Plan (CFO,CBO, CCO, Chief Legal Counsel) Performance Measur
Slide 42: Appendix
Appendix Ml OLD NATIONAL BANCORP
Slide 43: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 44: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions Shares in thousands
Slide 45: GAAP Reconciliations
GAAP Reconciliations 2015 1016 2016 [Net Interest Income ($ in 000's) $92,097} $85,643) $99,340 Taxable Equivalent Adjustment 4,757} 5,200} 5,267} $96,854) $90,843} $104,607) Assets $10,325,938} $10,331,029] $11,726,38: 3.32% Fully Taxable Equivalent 3.75% 3.52% 3.57% 2015 1016 2016 Net Interest Inc
Slide 46: Old National's 2016 Peer Group
Old National’s 2016 Peer Group Like-size, publicly-traded financial services companies, generally in the Midwest, serving comparable demographics with comparable services as ONB
Slide 47: 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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