Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (May 2016)
50 slides from Old National Bancorp's investor presentation, May 16, 2016
Slide 1: Investment Thesis
Investment Thesis Financial Data as of 3-31-16 Dated: May 16, 2016 Exhibit 99.1
Slide 2: Investment Thesis Executive Summary
Investment Thesis Executive Summary Slides 2 to 18 Financial Data as of 3-31-16 Dated: May 16, 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 timing, completion, financial benefits, and other effec
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) ey ” ae ETHISPHERE Quicks 4 P2015 ETHICS) WiickScore 20's INSIDE & DISTINCTION CERTIFICATION Corporate —_ Engagement o WORLD'S MOST MosT a AWARD OF E IE VolunteerMatch cu COMPANIES” Points of Light Institute
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: 1Q16 Highlights
1Q16 Highlights Net income of $27.0 million, or $0.24 per share 29.0% increase in net income and 33.3% increase in EPS Y/Y Adjusted earnings1 of $28.1 million, or $0.25 per share Continue to grow organic revenue 4.6% annualized organic loan growth ($79.6 million), net of change in covered loans Impr
Slide 11: 1Q16 vs. 4Q15 Highlights
1Q16 vs. 4Q15 Highlights Solid fundamentals driven by disciplined execution Organic Loan Growth +5%(annualized) Q/Q TBV +2% 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 million
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 Bank partnership Improve operating leverage Approximately 150 basis point improvement in 2017’s efficiency ratio from the announced agreement to sell Old Nationa
Slide 13: Old National to Sell Insurance Subsidiary
Old National to Sell Insurance Subsidiary Divest non-core business with low return on invested capital (goodwill + operating capital) Pre-tax contribution1 of $6.3 million for 2015 $42.7 million in revenues for 2015 Old National Insurance 2015 efficiency ratio2 of approximately 85% Additional invest
Slide 14: Pro Forma Balance Sheet Impact
Pro Forma Balance Sheet Impact Selected Financial Data Pro Forma for Insurance Subsidiary Sale March 31, 2016 Pro Forma March 31, 2016 Including Sale of Insurance Tangible Assets: Total Assets $11,932.3 $11,943.2 Deduct Goodwill and Intangible Assets (617.1) (569.3) Tangible Assets: $11,315.2 $11,37
Slide 15: Wisconsin Leadership
Wisconsin Leadership Len Devaisher Region CEO - Wisconsin Len Devaisher is Old National’s Wisconsin Region CEO and a member of the Executive Leadership Group. Previously, he served as the SVP Business Partner Executive. Devaisher joined Old National in 2000 and served as a Commercial Relationship Ma
Slide 16: Update on Anchor Partnership
Update on Anchor Partnership Partnership completed May 1, 2016 60% stock / 40% cash 3.5505 common shares of ONB or $48.50 (fixed) in cash for each share of Anchor 124% price / tangible book value1 Announced Leadership Positions Len Devaisher – Wisconsin Region CEO Kevin Anderson – Milwaukee Region P
Slide 17: Anchor Financial Trends
Anchor Financial Trends $ in millions 1 Includes $3.8 million in merger-related expenses
Slide 18: 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 19: Investment Thesis
Investment Thesis Financial Data as of 3-31-16 Dated: May 16, 2016
Slide 20: Loan Growth
Loan Growth $ in millions – End of Period 1 Includes Loans Held for Sale and Covered Loans 1 1 Annualized Organic Loan Growth of 4.6%
Slide 21: 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 1Q16 production is less than $400,000 Loan Pipeline
Slide 22: 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 Direct Indirect Residential Mortgage
Slide 23: Auto Loan Portfolio
Auto Loan Portfolio $ in millions Total portfolio average original loan term of 70 months and weighted average FICO score of 766 Total Portfolio yield of 2.53% 30+ Days Delinquency at 3/31/2016 is 0.29% Loans are originated within the ONB footprint
Slide 24: Loan Concentrations
Loan Concentrations As of March 31, 2016 Commercial Commercial Real Estate Diversified Commercial Loan Portfolio Healthcare/Social Services, 9% Public Admin, 9% Manufacturing, 14% Educational Services, 8% Wholesale Trade, 7% Retail, 6% Other, 21% Real Estate Rental & Leasing, 5% Agriculture, 7% Cons
Slide 25: Credit Quality Trends
$ in millions Credit Quality Trends
Slide 26: Net Charge-Offs / Provision
Net Charge-Offs / Provision $ in millions
Slide 27: ALLL and Remaining Purchase Discount Summary
ALLL and Remaining Purchase Discount Summary $ in millions 1 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 coverage N/A = not applicable Excludes impact from Anchor partnership
Slide 28: Anchor Credit Quality Trends
Anchor Credit Quality Trends $ in thousands
Slide 29: Conservative Lending Limits/Risk Grades
Conservative Lending Limits/Risk Grades Borrower1 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 $15 5 – Weak Monitor $10 6 – Watch $7.5 7 – Criticized (Special Mention) $
Slide 30: Investment Portfolio Purchases 1Q16
Investment Portfolio Purchases 1Q161 1 Data as of March 31, 2016
Slide 31: Investment Portfolio
Investment Portfolio 1Includes market value for both available-for-sale and held-to-maturity securities
Slide 32: 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 33: Acquired Loans
Acquired Loans $ in millions – as of March 31, 2016 1 1$6 million is considered nonaccrual PCI = Purchased Credit Impaired
Slide 34: 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 35: Modeled Interest Rate Sensitivity (Two Year)
$ in thousands Change to Net Interest Income based on a two year time horizon Refer to slide 37 for rate curves Modeled Interest Rate Sensitivity Total non-maturity, interest-bearing accounts increase from 0.06% to 0.31% in the “Up 100 bps” scenario 18.7% of total non-interest bearing DDA are consid
Slide 36: Modeled Interest Rate Sensitivity (One Year)
$ in thousands Change to Net Interest Income based on a one year time horizon Refer to slide 37 for rate curves Modeled Interest Rate Sensitivity
Slide 37: Interest Rate Curves
Interest Rate Curves Up 100 vs. Base 1M 2M 3M 4M 5M 6M 9M 1Y 15Y 2¥ 25Y 3Y 4Y SY 7.SY 1oY 15Y 20Y 30¥ —sase ——up100 Forward Curves 3.0% 25% 2.0% 15% ae 1.0% 1M 2M 3M 4M SM 6M 9M 1Y 15Y 2 25Y 3Y 4Y SY 7.SY 10Y 15Y 20Y 30¥ — 3/31/2016 3/31/2017 3/31/2018
Slide 38: Tangible Common Equity
Tangible Common Equity There is currently no board-authorized share repurchase plan in place. $ and shares in millions
Slide 39: Total Revenue
$ in millions Total Revenue The Durbin Amendment reduced 4Q15 and 1Q16 interchange income each by $2.7 million $135.4 $135.1
Slide 40: Fee-Based Business Revenue
Fee-Based Business Revenue $ in millions Asset Under Management at 3/31/2016 = $8,264 million 3/31/2015 = $8,097 million
Slide 41: Noninterest Expense
$ in millions 1Operational expenses = total noninterest expense less merger/integration costs, efficiency program charges and litigation reserve – includes ongoing operating costs associated with prior acquisitions 1Q16 includes $2.0 million of higher seasonal costs FTE reduction of 368 (12%) from 1
Slide 42: 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 43: 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 44: 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 45: Appendix
Appendix Ml OLD NATIONAL BANCORP
Slide 46: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 47: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions Shares in thousands
Slide 48: GAAP Reconciliations
GAAP Reconciliations Es 1015 4Q15 1016 [Net Interest Income ($ in 000's) $90,993) $85,922] $85.64: Taxable Equivalent Adjustment 4,658) 5,163} 5,20 i $95,651] ,085} Assets $10,346,167] $10,414,823] $10,331,029) i 52% 3. 3.32% Fully Taxable Equivalent 3.70% 3.50% 3.52%| 1015 4Q15 1016 Net Interest In
Slide 49: 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 50: 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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