Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (February 2015)
55 slides from Old National Bancorp's investor presentation, Feb 17, 2015
Slide 1: Investment Thesis
Investment Thesis Financial Data as of 12-31-14 Dated: February 17, 2015 Exhibit 99.1
Slide 2: Investment Thesis: Executive Summary
Investment Thesis Executive Summary Slides 2 to 19 Financial Data as of 12-31-14 Dated: February 17, 2015 * * * *
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 4Q14 Revenue Breakdown Source: SNL Financial, Company filings, FactSet Estimates Note: Market data as of February 6, 2015; financial information as of December 31, 2014. Headquarters Evansville, IN Market C
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 2015 Certification
ETHISPHERE 20°15 INSIDE a CERTIFICATION BANKING INDUSTRY Corporate Engagement VolunteerMatch 3] WORLD'S Most AWARD OF = SETH ICAL o|COMPANIES WWW.ETHISPHERE.COM
Slide 8: Our Indiana Footprint
8 Our Indiana Footprint Indicator Outlook Latest Statistics (December 2014) Trend (YoY change from Dec. 2013) Economic Vital Signs Jobs Employment Unemployed 3,267,300 189,500 • Labor Force increased 83,100 • Unemployment rate decreased to 5.6% (December 2013 rate was 6.7%) Unemployment Insurance Cl
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 Ann Arbor, Michigan (MSA Population: 354,530) Kalamazoo, Michigan (MSA Population: 332,269) Grand Rapids, Michigan
Slide 10: Indiana's Economic Achievements
10 Indiana’s Economic Achievements “AAA” Credit Rating – Fitch, Moody’s and Standard and Poor’s rd Best U.S. State for Manufacturing Jobs th Best State for Business – CEO Magazine 280 new manufacturing jobs created – Berry Plastics, Evansville, Indiana new jobs created – GE Aviation, Lafayette, Indi
Slide 11: Executing the Plan – 4Q14 Highlights
11 Executing the Plan – 4Q14 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 • Organic loan growth of $51.9 million , or 3.4% annualized, over 3Q14 and organic growt
Slide 12: 4Q14 Financials
12 4Q14 Financials Net income of $29.3 million or $.25 per share – 19.1% increase over the $24.5 million in net income in 4Q13 Included in 4Q14 are the following pre-tax items – $3.1 million in merger and integration charges – $6.2 million amortization of the indemnification asset – $16.6 million in
Slide 13: 2014 Financials
13 2014 Financials Net income of $103.7 million or $.95 per share – 2.7% increase over the $100.9 million in net income in 2013 Included in 2014 are the following pre-tax items – $15.6 million in merger and integration charges – $43.2 million amortization of the indemnification asset – $86.5 million
Slide 14: Key Metrics: Adjusted Income, Expenses, Loan Growth, NIM
14 Basic Banking Adjusted Income 3 Operational Expenses 2 Organic Loan Growth 4 Core NIM 5 Consolidated NCOs Revenue 1 3.30% 3.32% 3.15% 4Q13 3Q14 4Q14 0.19% 0.03% 0.08% 4Q13 3Q14 4Q14 $43.2 $86.9 $51.9 4Q13 3Q14 4Q14 $28.6 $33.1 $36.5 4Q13 3Q14 4Q14 $85.1 $90.7 $91.1 4Q13 3Q14 4Q14 $111.9 $124.9 $1
Slide 15: Update on New Markets
Update on New Markets Ft Wayne, IN Ann Arbor, MI Columbus, IN MI / Northern IN 15 (Indiana Community — Closed 9/15/12) (BofA Branches — Closed 7/12/13) (Tower — Closed 4/25/14) (United — Closed 7/31/14)
Slide 16: Fee-Based Business Revenue
16 Fee-Based Business Revenue $ in millions ONB Less Tower & United Tower United
Slide 17: Net Charge-Offs / Provision
17 Net Charge-Offs / Provision $ in millions Excludes FDIC-covered loans 2013 2014 3Q14 4Q14 ($3.9) $4.4 $3.0 $0.7 ($2.3) $3.1 $2.6 $0.9 Provision for Loan Losses Consolidated Provision for Loan Losses
Slide 18: Credit Quality – Excluding Covered Loans
18 Credit Quality – Excluding Covered Loans $ in millions $135.4 $170.5 $194.8 $121.8 $116.5 4Q13 3Q14 4Q14 Special Mention Loans $63.2 $100.6 $107.8 $87.2 $93.8 4Q13 3Q14 4Q14 Substandard Accruing Loans $96.6 $125.4 $125.7 $81.1 $73.9 4Q13 3Q14 4Q14 Substandard Nonaccruing + Doubtful Loans Excludes
Slide 19: 2015 Initiatives – Execution is KEY
19 2015 Initiatives – Execution is KEY Grow organic revenue – Redesigned checking product lineup New checking account product has reduced attrition over 50% – Leverage fee income businesses Enhanced referral program Sales summit Leverage new markets Improve operating leverage Close/consolidate 19 ba
Slide 20: Investment Thesis
Investment Thesis Financial Data as of 12-31-14 Dated: February 17, 2015 * * * * *
Slide 21: Adjusted Income – Strong Growth
21 Adjusted Income 1 – Strong Growth $ in millions Adjusted income represents income before taxes less accretion income, change in indemnification assets, merger/integration expenses and costs associated with branch divestitures CAGR of 13.5% from 2011 to 2014 Growth of 10.3% 3Q14 vs 4Q14 13.5 % 10.
Slide 22: Loan Growth – Excluding Covered Loans
22 Loan Growth – Excluding Covered Loans End of Period Balance $6,097.0 $6,384.0 $235.1 $51.9 3Q14 Loans Obtained Through LSB Acquisition Organic Growth 4Q14 $ in millions Loan production net of principal pay-downs, prepayments and loan sales to the secondary market $4,872.8 $6,384.0 $1,171.6 $339.6
Slide 23: Loan Production Trends
23 Loan Production Trends Commercial Residential Mortgage Consumer Direct Consumer Indirect $ in millions Full-year total production increased 10.7% over 2013
Slide 24: Commercial Loans
24 Commercial Loans $ in millions 1% of line utilization = $13.5 million in outstandings 37.7% 2007-2008 Average = 39.9% 39.1% Commercial Line Utilization Commercial Loan Pipeline
Slide 25: Loan Concentrations – Excluding Covered Loans
25 Loan Concentrations – Excluding Covered Loans Diversified Commercial Loan Portfolio At 12-31-14 Commercial Commercial Real Estate
Slide 26: Credit Quality – Delinquent Loans
26 Credit Quality – Excluding Covered Loans 0.42% 0.43% 0.45% See Appendix for definition of Peer Group As a % of end of period total loans Peer Group data per SNL Financial 1.07% 0.81% 4Q13 3Q14 4Q14 30+ Day Delinquent Loans ONB Peer Group Average 0.00% 0.01% 0.01% 0.40% 4Q13 3Q14 4Q14 90+ Day Deli
Slide 27: Credit Quality – ALLL and Mark Summary
27 Credit Quality – ALLL and Mark Summary At December 31, 2014 ONB Legacy Monroe Integra Indiana Community Tower United Lafayette Total $ in millions Non-GAAP financial measure which Management believes useful to demonstrate that the remaining discount considers credit risk and should be included as
Slide 28: Conservative Lending Limits/Risk Grades
28 Conservative Lending Limits/Risk Grades Borrower 1 Asset Quality Rating (Risk Grades) In-House Lending Limit 1 ($ in millions) Borrower 1 Asset Quality Rating (Risk Grades) 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 29: Indemnification Asset Balance
29 Indemnification Asset Balance At December 31, 2014, $9.7 million of the remaining IA balance is expected to be amortized and reported in noninterest income over the next months $ in millions
Slide 30: Investment Portfolio Purchases 4Q14
30 Investment Portfolio Purchases 4Q14 1 Data as of December 31, 2014 Q4 2014 Purchases- Book Value Treasuries 8,043,738 Agencies 101,523,641 Pools 52,122,658 CMOs 6,704,359 Municipals 56,123,782 Corporates 26,817,592 ABS 28,311,522 Equity Total 279,647,292 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% Total
Slide 31: CD Maturity Schedule
31 CD Maturity Schedule Bucket Amount ($ in 000's) Rate Represents CD maturities at December 31, 2014 0-30 days 69,665 0.59% 31-60 days 57,873 0.70% 61-90 days 69,507 0.55% 91-120 days 58,398 0.92% 121-150 days 36,586 0.47% 151-180 days 53,533 0.43% 181-210 days 46,855 0.62% 211-240 days 40,688 0.49
Slide 32: Net Interest Margin
32 Net Interest Margin 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 ONB Core includes contractual interest income of Monroe, Integra, IN Community, Tower,
Slide 33: Core Net Interest Margin
33 Core Net Interest Margin 1 Refer to slide 32
Slide 34: Modeled Interest Rate Sensitivity
34 Modeled Interest Rate Sensitivity $ in thousands Change to Net Interest Income based on a one year time horizon Refer to slide 36 for rate curves Total non-maturity, interest- bearing accounts increase from 0.08% to 0.39% in the “Up 100 bps” scenario 21.6% of total non-interest bearing DDA are co
Slide 35: Modeled Interest Rate Sensitivity
35 Modeled Interest Rate Sensitivity $ in thousands Change to Net Interest Income based on a one year time horizon Refer to slide 36 for rate curves
Slide 36: Forward Curves: Up vs. Base
Up 100 vs. Base 1M 2M 3M 4M 5M 6M 9M 1Y 15Y 2¥ 25Y 3Y 4Y SY 7.SY 10Y 15Y 20Y 30¥ —Base ‘Up 100 Up 200 vs. Base 1M 2M 3M 4M 5M 6M 9M 1Y 15Y 2¥ 25Y 3Y 4Y SY 7.5Y 10Y 15Y 20Y 30¥ —Base Up 200 Forward Curves 3.0% 2.5% 2.0% 1.5% 1.0%, 0.5% 0.0% 1M 2M 3M 4M SM 6M 9M IY 15Y 2¥ 25Y 3Y 4Y SY 7.5Y 10Y 15Y 20Y
Slide 37: Tangible Common Book Value
37 Tangible Common Book Value 1 Non-GAAP financial measure management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliation
Slide 38: Capital Ratios
38 Capital Ratios Peer Group data per SNL Financial See Appendix for definition of Peer Group See Appendix for Non-GAAP reconciliation On October 23, 2014, ONB Board of Directors authorized repurchase of up to 6.0 million shares through January, 2016 As of January 21, 2015, 1.1 million shares of ONB
Slide 39: Total Revenue – Positive Trends
39 Total Revenue – Positive Trends $ in millions Revenue growth of 11.9% from 4Q13 11.9% Revenue less securities gains, accretion income and amortization of indemnification asset
Slide 40: Noninterest Income
40 Noninterest Income $19.8 $23.4 $25.1 $ in millions $(3.4) $(19.1) $(6.2) $12.8 $12.5 $12.0 $7.9 $8.1 $7.9 $7.0 $6.8 $6.8 $44.1 $31.7 $45.6 4Q13 3Q14 4Q14 Debit Card and ATM Fees Fee-based business: Wealth Management, Insurance, Mortgage and Investments Other Income Service Charges on Deposits Amo
Slide 41: Noninterest Expense – Well Controlled
41 $85.1 $90.7 $91.1 $0.6 Noninterest Expense – Well Controlled *Other Expenses include: In 4Q13, $.5 in BSA/AML penalties, $.4 million in pension adjustments and a $.3 million reversal of provision for unfunded commitments In 3Q14, $1.0 million reversal of hospitalization expense, a $0.7 million ad
Slide 42: Transforming Old National's Landscape
42 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 43: M&A Strategy Process and Emerging Trends
43 Strategy Process Emerging Trends M&A – Partnerships Focus on community banks with strong client relationships and deposit franchises Mid-sized markets within or near existing franchise with above average growth rates Must pass rigorous due diligence process Must align both strategically and cultu
Slide 44: Old National's Landscape
44 44 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 209 branches since 2004 – Sale or consolidations in lower-growth, non-core markets Consolidated 129 branches Sold 2
Slide 45: Completed Acquisitions
45 Completed 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 Branch Deal
Slide 46: Committed to Strong Corporate Governance
46 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 December 31, 2014, each named executive officer has met their stock ownership requirement Chief Executive Officer
Slide 47: Executive Compensation
47 Executive Compensation Short Term Incentive Plan (CEO, CFO, CBA, CCO, Chief Legal Counsel) Performance Measure Weight Long Term Incentive Plan (CFO,CBA, CCO, Chief Legal Counsel) Performance Measure Weight Long Term Incentive Plan (CEO) Performance Measure Weight Tied to long term shareholder val
Slide 48: Old National Bancorp
Ml OLD NATIONAL BANCORP” NASDAQ: ONB oldnational.com
Slide 49: Tangible Common Equity
49 Tangible Common Equity Tangible Common Equity – 9/30/2014 $876.7 4Q14 Earnings 29.3 4Q14 Dividend (12.9) 4Q14 Share Repurchase (10.6) Issuance of Shares from Acquisition 51.8 Changes in OCI – Securities 5.5 Changes in OCI – Other (4.6) Increase in Goodwill & Intangibles (39.0) Tangible Common Equ
Slide 50: Non-GAAP Reconciliations
50 2011 2012 2013 2014 4Q13 3Q14 4Q14 Non-GAAP Reconciliations Total Revenues $455.8 $498.6 $502.2 $531.5 $125.6 $142.8 $140.5 Less: Provision for Loan Losses ($7.5) ($5.0) $2.3 ($3.1) ($2.3) ($2.6) ($0.9) Less: Noninterest Expense ($348.5) ($365.8) ($362.0) ($386.4) ($88.2) ($100.0) ($100.1) Taxabl
Slide 51: Slide 51
Slide 52: Non-GAAP Reconciliations
52 Non-GAAP Reconciliations end of period balances 4Q13 3Q14 4Q14 end of period balances 3Q11 3Q12 3Q13 1Q14 2Q14 3Q14 4Q14 $ in millions Total Shareholders’ Equity $1,162.6 $1,407.2 $1,465.8 Deduct: Goodwill and Intangible Assets (378.7) (530.5) (569.5) Tangible Common Shareholders’ Equity $784.0 $
Slide 53: Non-GAAP Reconciliations
53 Non-GAAP Reconciliations 4Q13 3Q14 4Q14 Efficiency Ratio - As Reported 4Q14 Efficiency Ratio Excluding Acquisition Costs 4Q14 Net Interest Income ($ in 000's) $81,187 $108,367 $90,043 Taxable Equivalent Adjustment 4,359 4,488 4,324 Net Interest Income – Taxable Equivalent $85,546 $112,855 $94,367
Slide 54: Old National's Peer Group
54 Old National’s Peer Group Like-size, publicly-traded financial services companies, generally in the Midwest, serving comparable demographics with comparable services as ONB Associated Banc-Corporation ASB MB Financial Inc. MBFI BancFirst Corporation BANF National Penn Bancshares Inc. NPBC Bancorp
Slide 55: Investor Contact
55 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
OLD National Bancorp — Investor Presentation (February 2015) on 6ix