Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (May 2018)
60 slides from Old National Bancorp's investor presentation, May 4, 2018
Slide 1: Investment Thesis
Investment Thesis FINANCIAL DATA AS OF MARCH 31, 2018 DATED: MAY 4, 2018 Exhibit 99.1
Slide 2: Executive Summary
Executive Summary SLIDES 2 TO 22
Slide 3: Forward-Looking Statements; Use of Non-GAAP Financial Measures
Forward-Looking Statements; Use of Non-GAAP Financial Measures Forward Looking Information: 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
Slide 4: 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, Wisconsin and Minnesota 191 financial centers 233 ATMs Focused on community banking with a full suite of product offerings: Retail and smal
Slide 5: Old National's Footprint
Old National’s Footprint 75 69 74 70 64 57 39 75 64 65 90 94 43 65 74 35 94 Indiana1 $7.0 billion deposits 57% of total franchise Michigan $1.3 billion deposits 10% of total franchise Wisconsin $1.7 billion deposits 13% of total franchise Kentucky $0.8 billion deposits 6% of total franchise Minnesot
Slide 6: Old National's Top MSAs
Old National’s Top 10 MSAs Demographics in Top 5 (50% of deposits) and Top 10 (65% of deposits) markets are more in line with national averages Expansion markets tend to be better than national average demographics Source: SNL Financial
Slide 7: Strategy to Drive Long-Term Shareholder Value
Strategy to Drive Long-Term Shareholder Value Larger balance sheet capabilities with a strong product offering, delivered in-market with unequalled client care – “Out-product Community Banks, Out-service Large Regionals” Basic Bank…Broader Reach M&A Repositioned Franchise with Better Growth Dynamics
Slide 8: Successful Execution and Integration Has Driven Improved Profitability
Successful Execution and Integration Has Driven Improved Profitability 1 Non-GAAP financial measure which Management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliations Peer Group data per SNL Financial and as of most recent quarter avail
Slide 9: Franchise Evolution Built a Better Bank
Franchise Evolution Built a Better Bank… Source: SNL Financial
Slide 10: With Improved Scale
… With Improved Scale…. Source: SNL Financial 33% increase 89% increase
Slide 11: and Better Efficiency
… and Better Efficiency Branches $ in millions CAGR: 15.2% CAGR: 1.0% CAGR: -8.0% -408 bps 1 Non-GAAP financial measure which Management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliations
Slide 12: Quality Low-Cost Deposit Franchise
Deposit Composition Deposit Growth 2012 – 1Q18 CAGR: 11.0% Cost of Total Deposits Peer Group data per SNL Financial - See Appendix for definition of Peer Group $ in millions 1 As of March 31, 2018 Quality Low-Cost Deposit Franchise
Slide 13: Low Deposit Betas
Low Deposit Betas Deposit Beta1 Analysis – 3Q 2015 to Most Recent Quarter 1 Deposit beta defined as increase in cost of interest bearing deposits divided by increase in fed funds rate since 3Q15 2 ONB & Peer data as of 03/31/18 3Last rate hike cycle from 1Q04 to 2Q07 4 No financial disclosure during
Slide 14: Improved Balance Sheet Mix
Improved Balance Sheet Mix Increase of 12.5% 1 Includes loans held for sale
Slide 15: Credit
Credit $ in millions Peer Group data per SNL Financial - See Appendix for definition of Peer Group 1Peer Data is through 12/31/2017 Make this look like the 4Q17 thesis. Add peer info 1 Net Charge-Offs
Slide 16: Strong Credit Culture
Strong Credit Culture Peer Group data per SNL Financial as of 12/31/2017 - See Appendix for definition of Peer Group 1 Excludes loans held for sale 2 Source: Regulatory Call Report Legal lending limit at March 31, 2018 of $226.7 million per borrower 3-Year Cumulative NCOs / Avg. Loans1 CRE Concentra
Slide 17: Low-Risk Balance Sheet
Low-Risk Balance Sheet Implies $1.3 billion increase in RWA to meet peer average Peer Group data per SNL Financial - See Appendix for definition of Peer Group 1 Peer data as of December 31, 2017 Risk Weighted Assets / Total Assets
Slide 18: First Quarter 2018 Key Performance Indicators
First Quarter 2018 Key Performance Indicators Earnings: Record net income of $48.0mm, a 33% increase over first quarter of 2017 Earnings per share of $0.31 Adjusted net income1 was $51.2 million and adjusted EPS1 was $0.34 when excluding the following pre-tax items: $0.8mm in securities gains $2.3mm
Slide 19: Branch Actions
Branch Actions Entered into a branch purchase and assumption agreement for the sale of 10 Old National branches in Wisconsin to Marine Credit Union of La Crosse, Wisconsin Sale of approximately $274 million in deposits No loans are associated with the deal Anticipated closing1 in the third quarter P
Slide 20: Tax Matters
Tax Matters Full-year 2018 tax credit business forecast After-tax impact of tax credits: ~$3mm or ~$0.02 per share Tax credit amortization (recognized in noninterest expense): $25mm to $30mm 2Q18 tax credit business forecast After-tax impact of tax credits: ~($0.06) per share Tax credit amortization
Slide 21: Outlook
Outlook Mid-single digit organic total loan growth 10% organic commercial & commercial real estate growth 4.3% annualized total loan growth2 10.7% annualized commercial/CRE loan growth2 1Q18 Adjusted1 Results Outlook Loan growth 2Q18 FTE NIM, excluding accretion income, should be 3.18%: + 2 bps for
Slide 22: Commitment to Excellence
Commitment to Excellence ( ae | & Haat Corporate Engagement AWARD OF Points of Light Institute WorldatWork. 2017 WaTONALoRGANZATIONON | H DISABILITY Jasssuny Bloomberg = Gender-Equality Index BEST BANKS TO WORK FOR 2017 ETHISPHERE 2017 ETHICS INSIDE 2 CERTIFICATION ae BANKING INDUSTRY elabe Voluntee
Slide 23: Financial Details
Financial Details FINANCIAL DATA AS OF MARCH 31, 2018 DATED: MAY 4, 2018
Slide 24: First Quarter 2018 Results
First Quarter 2018 Results Performance Drivers Total loan growth3 of 4.3% annualized C&I/CRE growth3 of 10.7% annualized Full quarter benefit from newest partnership vs. 2 months in 4Q17 (closed November 1, 2017) Credit metrics remain strong – net charge-offs of 0.01%; NPL’s declined 2 basis points
Slide 25: Pre-Provision Net Revenue
Pre-Provision Net Revenue Adjusted pre-provision net revenue1 has increased 16.6% Y/Y Improvement driven by successful execution of our stated strategy Loan growth Improved balance sheet mix Low cost core deposit funding Strong expense management Positive operating leverage continues 184 bps Y/Y imp
Slide 26: Average Earning Asset Mix
Average Earning Asset Mix $ in millions 1 On the available-for-sale (AFS) portfolio Loans Loans: 73.5% of earning assets, up 2.2% Total commercial loans: 47% of earning assets, up 7.3% Indirect auto: 7.0% of earning assets, down 1.8% Securities Duration of 4.30 1Q18 yield was 2.74% 1Q18 new money yi
Slide 27: Loans
Loans $ in millions 1 Includes loans held for sale; based on period-end balances; growth is annualized 2 Reflects closing of Minnesota Partnership Average Balances Period-End Balances Total loans increased 4.3%1 + 13.9% Commercial & industrial + 8.8% Commercial real estate - 11.0% Indirect consumer
Slide 28: Commercial Loan Portfolio Concentrations
Commercial Loan Portfolio Concentrations As of March 31, 2018 $ in millions 1 Includes held for sale Total C&I and CRE - $7,262 (Classed by Product Type)
Slide 29: Commercial Real Estate Loan Concentrations
Commercial Real Estate Loan Concentrations As of March 31, 2018 $ in millions CRE - $4,450 (Classed by Property Type) Multifamily by Product Type - $1,199 Multifamily by State - $1,199 (State Determined by Primary Address of Pledged Collateral)
Slide 30: Auto Loan Portfolio
Auto Loan Portfolio $ in millions as of March 31, 2018 Total portfolio average original loan term of 70 months and weighted average FICO score of 764 Total Portfolio yield of 3.16% 30+ Days Delinquency at 3/31/2018 is 0.56% Loans are originated within the ONB footprint
Slide 31: Investment Portfolio Purchases 1Q18
Investment Portfolio Purchases 1Q181 1 Data as of March 31, 2018
Slide 32: Investment Portfolio
Investment Portfolio $ in millions 1 Includes market value for both available-for-sale and held-to-maturity securities Investment Portfolio yield of 2.74% in 1Q18 vs. 2.89% in 4Q17
Slide 33: Stable Funding Costs
Stable Funding Costs Average Balances Period-End Balances Total deposits increased 5.8%1 Non-maturity deposits increased 1.5%1 Total deposit costs increased 3 basis point to 23 bps Strong market share helps drive low deposit costs 6.7% deposit beta through the current interest rate cycle $ in millio
Slide 34: Net Interest Income & Net Interest Margin
Net Interest Income & Net Interest Margin1 $ in millions 1Tax 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 Total Earning Assets Yield Net Interest Margin Interest-Bearing
Slide 35: Projected Purchase Accounting Impact
Projected Purchase Accounting Impact Actual Accretion Projected Accretion1 Actual Discount Projected Discount1 Manageable declines in purchase accounting impact expected in future periods Actual IA Amortization Net Income Statement Contribution $ in millions 1 Projections are updated quarterly, assu
Slide 36: Modeled Interest Rate Sensitivity
$ in millions Change to Net Interest Income based on a two year time horizon Modeled Interest Rate Sensitivity Interest Rate Sensitivity models use a 37% beta with no lag on non-maturity, interest bearing deposits 19% of total non-interest bearing DDA are considered rate sensitive Investment portfol
Slide 37: Noninterest Income
Noninterest Income $ in millions 1Non-GAAP financial measure which management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliation Residential mortgage production includes quick home refinance product Key Performance Drivers Adjusted nonint
Slide 38: Noninterest Expense
Noninterest Expense $ in millions 1Non-GAAP financial measure which management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliation Key Performance Drivers Faster than anticipated cost savings from most recent partnership Disciplined expens
Slide 39: 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 $60.0 1 – Minimal Risk $52.5 2 – Modest Risk $47.5 3 – Average Risk $40.0 4 – Monitor $32.5 5 – Weak Monitor $22.5 6 – Watch $10.0 7 – Criticized (Special
Slide 40: Capital Trends
Capital Trends 1 Non-GAAP financial measure which Management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliation The estimated $39.3 million deferred tax asset revaluation recorded in 4Q17 reduced TBV by $0.26
Slide 41: Our Transformational Journey
Our Transformational Journey 2011 Monroe Bancorp $771M 15 Branches 2012 Indiana Community $818M 17 Branches 2014 Tower Financial $618M 7 Branches 2014 United Bancorp $851M 18 Branches 2013 24 Branches (Bank of America) 2011 Integra Bank (FDIC) $1.8B 52 Branches 2014 LSB Financial $337M 5 Branches 20
Slide 42: Transforming Old National's Landscape
2011 2012 2013 Acquired Monroe Bancorp – Enhanced Bloomington, IN presence January, 2011 Acquired Indiana Community – Entry into Columbus, IN September, 2012 FDIC-assisted acquisition of Integra Bank July, 2011 Sold non-strategic market – Chicago-area - 4 branches Consolidation of 21 branches Acquir
Slide 43: Expanding Big 10 Presence in Growth Markets
90 90 94 35 94 72 74 70 64 57 39 43 75 69 75 64 65 65 74 Expanding Big 10 Presence in Growth Markets ONB Minnesota Pro Forma Branch Footprint Minneapolis MSA Deposit Market Share 1 1 Source: SNL Financial; based on Summary of Deposits as of 6/30/17 Consistent with our strategy of expansion into metr
Slide 44: Indiana at a Glance
by the numbers Population: 6.7 million Total Resident Labor Force: 3.3 million Unemployment Rate:4.1% (Mar. ‘18, Seasonally Adjusted) GDP: $341.9B Exports: $34.7B Land Area:35,867 sq mi crossroads of America $4.6 billion and 13,300 new jobs from international investment (2012 – 2014) Home to the 2nd
Slide 45: Growth Opportunities in the Midwest
Growth Opportunities in the Midwest Louisville, Kentucky Highest population MSA and highest median household income MSA in Kentucky Grand Rapids, Michigan 2nd best large city to start a business – Wallet Hub, 2016 7th “Best Places to Live” – U.S. News and World Report, 2016 Ann Arbor, Michigan Highe
Slide 46: Attractive Midwest Markets
Attractive Midwest Markets Source: SNL Financial, based on MSAs $ in thousands Average of ONB Footprint Average of ONB Footprint
Slide 47: Attractive Midwest Markets
Attractive Midwest Markets Minneapolis, MN Indianapolis, IN Milwaukee, WI Louisville, KY Grand Rapids, MI MSA Population: 3.6 million MSA Population: 2.0 million MSA Population: 1.6 million MSA Population: 1.3 million MSA Population: 1.1 million Major industries include: Manufacturing, applied resea
Slide 48: 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 49: 2018 Executive Compensation
2018 Executive Compensation Short Term Incentive Plan (CEO, CFO, COO, CCE, Chief Legal Counsel) Performance Measure Weight Corporate EPS 60% ROATCE 20% Efficiency Ratio 20% Tied to long term shareholder value: Long Term Incentive Plan (CFO, COO, CCE, Chief Legal Counsel) Performance Measure Weight P
Slide 50: Appendix
Appendix Hi OLD NATIONAL BANCORP’
Slide 51: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 52: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 53: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions 1 Year-over-year basis point change in noninterest expenses plus change in total revenue 2 Year-over-year basis point change in adjusted noninterest expense plus change in adjusted total revenue
Slide 54: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions, except per-share data
Slide 55: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 56: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 57: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 58: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 59: Old National's Peer Group
Old National’s Peer Group Like-size, publicly-traded financial services companies, generally in the Midwest, serving comparable demographics with comparable services as ONB
Slide 60: Old National Investor Relations Contact
Old National Investor Relations 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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