Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (November 2012)
54 slides from Old National Bancorp's investor presentation, Nov 8, 2012
Slide 1: Old National Bancorp Investment Thesis
Old National Bancorp Investment Thesis Financial Data as of 9-30-12 Dated: November 8, 2012
Slide 2: Commitment to Excellence
Commitment to Excellence Commitment to Excellence
Slide 3: 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, descriptions of Old National's financial condition, results of operations, asset and c
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: 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 (excluding covered loans) 3Q12 net charge-offs of (.03%
Slide 6: 3Q12 Earnings Performance
3Q12 Earnings Performance Net income of $19.7 million, or $.20 per share vs. $27.2 million, or $.29 per share, in 2Q12 vs. $16.8 million, or $.18 per share, in 3Q11 Successful acquisition and conversion of Indiana Community Bancorp Period end, noncovered loans increased $94.4 million from 2Q12 Net i
Slide 7: Adapting and Reshaping our Business For Growth
Adapting and Reshaping our Business For Growth Streamlining processes to make it simple, easy and fast for clients to do business with Old National Commercial Banking Unit 2nd review committee for new lending opportunities Focus on cross sell of insurance and wealth management Introduction of Quick
Slide 8: Pre-Tax, Pre-Provision Income
Pre-Tax, Pre-Provision Income1 1 Non-GAAP financial measures management believes is useful in evaluating the financial results of the Company - see Appendix for Non-GAAP 1 Pre-Tax, Pre-Provision Income, Net of Securities Gains and Merger and Integration Expenses 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q
Slide 9: Net Interest Margin
Net Interest Margin1 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 ONB Core 0.0333 0.034 0.0342 0.0346 0.0341 0.0329 0.0328 0.0351 0.0352 0.035 0.0347 Monroe Accretion 0.0021 0.0038 0.0029 0.0037 0.0016 0.0021 0.0012 Integra Accretion 0.0039 0.0032 0.0052 0.0055 0.0048 IN Community Accretio
Slide 10: Corporate Summary
Corporate Summary MARKET STATISTICS AND SUMMARY OVERVIEW ($ 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 11: The Old National Landscape
The Old National Landscape The Old National Landscape
Slide 12: Deposit / Unemployment Distribution
Deposit / Unemployment Distribution Deposit / Unemployment Distribution 43.9% / 6.8% .6% / 7.7 1.9% / 8.1% 0% / 8.2% 40.7% / 7.5% 12.9% / 6.8% % of ONB's Indiana deposits1 / Regional unemployment Unemployment data provided by Indiana Department of Workforce Development and Bureau of Labor Statistics
Slide 13: Our Indiana Footprint Economic Vital Signs
Our Indiana Footprint Economic Vital Signs Indicator Outlook Latest Statistics (September 2012) Latest Statistics (September 2012) Trend (YOY change from Sept. 2011) Jobs Nonfarm Employment* Unemployed* 2,899,600 256,400 Jobs increased 65,100 Unemployment rate decreased to 8.2 % (Sept. 2011 rate was
Slide 14: Asset/Liability Composition
Asset/Liability Composition NOW & Savings Demand Deposits Money Markets Other Time Borrowings Brokered CDs Other Liability 0.44343 0.23712 0.03444 0.16568 0.09036 0.00038 0.02859 Investments Commercial Loans Commercial Real Estate Loans Consumer Loans* Residential Real Estate Covered Loans Other Ass
Slide 15: Loan Concentrations - Excluding Covered Loans
Loan Concentrations - Excluding Covered Loans At 9-30-12 Commercial Commercial Real Estate Diversified Commercial Loan Portfolio
Slide 16: Conservative Lending Limits
Conservative Lending Limits Borrower1 Asset Quality Rating In-House Lending Limit1 ($ in millions) 0 $30 1 or 2 $25 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 9-30-12 of $105.3 million per borrower 1Includes e
Slide 17: 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 2Q12 at 3.16% vs. 2Q12 p
Slide 18: Credit Quality - Net Charge-Offs
Credit Quality - Net Charge-Offs 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 ONB Core 0.0031 0.0053 0.0053 0.0055 0.002 0 0.0006 Monroe -0.0009 0.0075 0.0018 0.0322 0.0127 0.0099 0.0075 Integra - - -0.0036 0.002 0.0078 0.005 -0.0063 IN Comm. - - - - - - 0.0006 $5.2 $4.9 $5.0 $3.0 $1.8 $ in millions ($.1) $.8
Slide 19: Credit Quality - Excluding Covered Loans
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 ONB Consolidated 0.9273 0.9477 0.9527 0.9448 0.5366 0.547 0.486 0.4615 0.454 0.4525 0.2707 ONB Excluding Monroe and IN Community 0.84 0.83 0.68 0.65 0.67 0.59 0.54 Peer Group data per SNL Financial See Appendix for definition of Peer Group Credi
Slide 20: Credit Quality - Excluding Covered Loans
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Provision Expense 17.3 12 12.2 21.8 9.3 8 6.4 7.1 3.3 3.2 0 0.1 1 -3.4 -0.3 Quarterly Net Charge-Offs 12.6 13.6 12.7 21.8 6.7 8.2 6.1 6.9 2.9 5.8 4.9 8.2 3.4 0.9 -0.4 $ in millions 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
Slide 21: Credit Quality - ALLL and Mark Summary
Credit Quality - ALLL and Mark Summary Allowance For Loan and Lease Loss/Loan Mark Summary Allowance For Loan and Lease Loss/Loan Mark Summary Allowance For Loan and Lease Loss/Loan Mark Summary Allowance For Loan and Lease Loss/Loan Mark Summary Allowance For Loan and Lease Loss/Loan Mark Summary A
Slide 22: Covered Assets
Covered Assets Grades 1 through 6 $281.9 $230.5 $179.5 $160.4 $147.0 Criticized - Grade 7 26.9 23.0 20.2 16.2 14.3 Classified - Grade 8 16.5 16.7 27.5 23.3 24.7 Nonaccrual - Grade 9 196.4 179.7 158.5 137.7 120.6 Retail Loans 189.6 176.5 162.9 151.7 142.2 Total Covered Loans $711.3 $626.4 $548.6 $489
Slide 23: Agricultural Portfolio
Agricultural Portfolio Effect of drought on row crop farmers appears less severe than originally anticipated due predominately to crop insurance Recent strong years will also help cushion impact Non-contract grower livestock farms experiencing significant issues $ of Exposure % of Comm'l Exposure %
Slide 24: Credit Quality - 30+ Day Delinquent Loans
Credit Quality - Excluding Covered Loans 30+ Day Delinquent Loans Specific Segment Overview 30+ Day Delinquent Loans 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Commercial .32% .36% .29% .26% .35% .35% .51% .29% .16% .24% .16% Commercial Real Estate .26% .52% .23% .12% .36% .19% .34% .78%
Slide 25: Credit Quality - Excluding Covered Loans
4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 ONB Consolidated 124.855 86.587 101.019 94.607 103.5 104.861 100.652 75 84 115.8 105.6 98.5 80.1 77.1 103.1 135.253 ONB Excluding Indiana Community 110.8 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Qu
Slide 26: Credit Quality - Excluding Covered Loans
4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 ONB Consolidated 116.1 122.4 113.6 101 90.1 92.4 88.8 101 103.4 102 110.9 101.6 88.8 71 46.9 98.453 ONB Excluding Indiana Community 69.2 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excluding
Slide 27: Credit Quality - Excluding Covered Loans
4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 ONB Consolidated 64 77.4 77.7 73.7 67 68.1 68.86 69.8 70.9 121.4 118.4 124.8 115.3 113 99.5 161.594 ONB Excluding Indiana Community 94.5 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excluding
Slide 28: Purchased Impaired Loans
Purchased Impaired Loans 1/1/2011 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Non Accretable Difference 39.8 39.8 27.6 21.1 17.2 15.4 12.3 12.2 Accretable Difference 7 5.8 14 16.2 15.5 16.2 16 15.1 Loan Interest Income 0 1.2 5.2 9.5 14.1 15.2 18.5 19.5 7/29/2011 3Q11 4Q11 1Q12 2Q12 3Q12 Non Accretable Differ
Slide 29: Loan Portfolio at September 30, 2012
Loan Portfolio at September 30, 2012 Commercial Commercial Real Estate Consumer Residential Mortgage HELOC Covered Loans 3Q11 1294 1291.1 666.3 1289.1 263.8 448.8 Commercial $1,294.0 Commercial Real Estate 1,291.1 Consumer 666.3 Residential Mortgage 1,289.1 HELOC 263.8 Covered Loans (Integra) 448.8
Slide 30: Credit Area Enhancements
Credit Area Enhancements Separate Loss Share Division created Commercial credit underwriting officers and special assets associates Engaged a third-party firm with FDIC Loss Share experience to provide guidance to include Actions necessary to preserve Loss Share coverage Types of actions/decisions p
Slide 31: Credit Area Enhancements
Credit Area Enhancements Separate staff allows Focus on FDIC requirements in workout (and currently performing) to maximize Loss Share benefits Separation of Loss Share bank efforts from legacy portfolio credit administration to insure we don't diminish strong underwriting practices and management o
Slide 32: Capital Management - Recent Actions
Capital Management - Recent Actions Redeemed $13 million of 10% subordinated notes on 6-30-12 Approved share repurchase program 1-26-12 Up to 2.0 million shares of ONB common stock Ends 1-31-13 Approved 28.6% increase in cash dividend to $.09 from $.07 per common share Retirement of $150 million of
Slide 33: Tangible Common Book Value
Tangible Common Book Value1 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 ONB Consolidated 7.54 7.77 8.03 7.85 7.53 7.79 7.66 7.89 8.09 8.35 8.04 Acquired Monroe Bancorp 1-1-11 FDIC acquisition of Integra Bank 7-29-11 1 Non-GAAP financial measure management believes is useful in evaluating
Slide 34: Capital Ratios
Capital Ratios 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 ONB 0.1304 0.1398 0.1458 0.145 0.1408 0.1482 0.1342 0.1446 0.1488 0.155 0.1455 Peer Group Average 0.1071 0.1113 0.1139 0.1125 0.1146 0.1176 0.1186 0.1184 0.1189 0.1195 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 ONB 0.0
Slide 35: Investment Portfolio
Investment Portfolio ($ in millions) Book Value June 30, 2012 Book Value Sept. 30, 2012 Market Value* June 30, 2012 Market Value* Sept. 30, 2012 Market Value $ Change Federal National Mortgage Association $452.0 $387.8 Federal Home Loan Mortgage Corporation 79.5 170.9 Federal Home Loan Bank 3.0 -0-
Slide 36: Municipal Bond Portfolio by State
Municipal Bond Portfolio by State Based on book value at 9-30-12 Illinois exposure consists of 28 bonds representing 1.5% of entire municipal portfolio IN TX PA KY MO All Other 0.359 0.103 0.054 0.064 0.048 0.332
Slide 37: 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 38: 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 39: ONB Acquired Monroe Bancorp
ONB Acquired Monroe Bancorp Transaction closed 1-1-11 Provides #1 market share in Monroe County (Bloomington, Indiana) Home to Indiana University Market has above-average growth rates and lower unemployment vs. state of Indiana Systems conversion occurred 5-14-11 Balance sheet acquired1 $419.4 milli
Slide 40: FDIC Acquisition of Integra Bank, NA
FDIC Acquisition of Integra Bank, NA Transaction Due Diligence Financial Impact Capital Closing / Conversion Purchased $1.8 billion in assets1 and assumed $1.8 billion of liabilities2 from the FDIC as receiver of Integra Bank, NA, Evansville, IN Approximately $.7 billion in loans covered by FDIC los
Slide 41: ONB Acquired Indiana Community
ONB Acquired Indiana Community Transaction Due Diligence Financial Impact Capital TARP Repayment Acceptable Risk Profile Closing Consideration: 100% stock transaction at an exchange ratio of 1.9455, resulting in 6.6 million shares issued Deal value = $88.5 million based on average ONB closing price
Slide 42: Appendix
Appendix Old National Bancorp
Slide 43: Committed to Strong Corporate Governance
Committed to Strong Corporate Governance Stock ownership guidelines have been established for named executive officers as follows: As of December 31, 2011, each named executive officer has met their stock ownership requirement Position or Salary Target Ownership Guidelines Chief Executive Officer 5X
Slide 44: Pre-Tax, Pre-Provision Income
Pre-Tax, Pre-Provision Income1 ($ in millions) 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Total Revenues $91.6 $98.1 $98.1 $96.1 $96.2 $104.2 $105.9 $119.9 $125.7 $123.4 $124.5 $115.0 Less: Provision for Loan Losses (21.8) (9.3) (8.0) (6.4) (7.1) (3.3) (3.2) .1 (1.0) (2.1) (.4) (.4)
Slide 45: CD Maturity Schedule
CD Maturity Schedule Bucket Amount ($ in 000's) Rate 0-30 days $50,068 .86% 31-60 days 55,584 1.18% 61-90 days 71,657 .85% 91-120 days 56,110 .81% 121-150 days 51,018 .84% 151-180 days 85,665 .91% 181-210 days 64,637 1.03% 211-240 days 43,392 .64% 241-270 days 36,136 .64% 271-300 days 82,629 2.49% 3
Slide 46: Other Classified Assets
Other Classified Assets ($ in millions) Book Value June 30, 2012 Book Value Sept. 30, 2012 Market Value June 30, 2012 Market Value Sept. 30, 2012 Corporate Bonds $9.8 $7.9 $9.6 $7.2 Pooled Trust Preferred Securities $25.3 $25.3 $8.5 $9.1 Non-Agency Mortgage Backed Securities $67.3 $23.2 $63.9 $23.8
Slide 47: Shared National Credits - Excludes Covered Loans
Shared National Credits - Excludes Covered Loans ($ in millions) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Count (#)* 7 7 7 7 7 7 7 Total exposure $68.2 $70.6 $70.5 $65.0 $64.5 $63.8 $63.3 Dollar outstanding $24.4 $21.4 $22.9 $19.1 $18.0 $22.1 $23.1 Largest exposure $15.0 $15.0 $15.0 $10.0 $10.0 $10.0 $10.
Slide 48: ONB Loan Risk Grades
ONB Loan Risk Grades Grade Name 0 Investment Grade 1 Minimal Risk 2 Modest Risk 3 Average Risk 4 Monitor 5 Weak Monitor 6 Watch 7 Criticized (Special Mention) 8 Classified (Problem) 9 Nonaccrual
Slide 49: Securities with OTTI
Securities with OTTI *Lowest credit rating provided by any nationally recognized credit rating agency. ($ in thousands) Vintage Lowest Credit Rating* Book Value at Sept. 30, 2012 OTTI 3Q12 OTTI YTD 2012 OTTI Life to Date BAFC Ser 4 2007 CCC $12,319 $139 $299 $441 CWALT Ser 73CB 2005 D 2,613 23 140 4
Slide 50: Quick Home Refi (QHR) Product Statistics
Quick Home Refi (QHR) Product Statistics Term 10 years 28% 15 years 38% 20 years 14% 25 years 5% 30 years 15% Based on September 30, 2012 portfolio data Average loan outstanding $78,246 Average yield of closed loans 4.11% Average Credit Score 779 Average FICO 301 Average debt to income 20% Average l
Slide 51: Non-GAAP Reconciliations
Non-GAAP Reconciliations (end of period balances- $ in millions) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Total Shareholders' Equity $855.5 $874.7 $895.7 $878.8 $984.0 $1,008.3 $1,027.7 $1,033.6 $1,050.4 $1,073.7 $1,186.8 Deduct: Goodwill and Intangible Assets (198.6) (197.1) (195.6) (
Slide 52: Non-GAAP Reconciliations
Non-GAAP Reconciliations (end of period balances- $ in millions) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Total Shareholders' Equity $855.5 $874.7 $895.7 $878.8 $984.0 $1,008.3 $1,027.7 $1,033.6 $1,050.4 $1,073.7 $1,186.8 Deduct: Goodwill and Intangible Assets (198.6) (197.1) (195.6) (
Slide 53: ONB's Peer Group
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, Inc.
Slide 54: 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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