Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (November 2013)
62 slides from Old National Bancorp's investor presentation, Nov 4, 2013
Slide 1: Old National Bancorp Investment Thesis
Old National Bancorp Investment Thesis Financial Data as of 9-30-13 Dated: November 4, 2013
Slide 2: Executive Summary
Old National Bancorp Investment Thesis Executive Summary Slides 2 to 11 Financial Data as of 9-30-13 Dated: November 4, 2013
Slide 3: Additional Information for Shareholders
Additional Information for Shareholders In connection with the proposed merger, Old National Bancorp will file with the Securities and Exchange Commission (SEC) a Registration Statement on Form S-4 that will include a Proxy Statement of Tower Financial Corporation and a Prospectus of Old National Ba
Slide 4: Disclosures - Forward-Looking Statement
Disclosures Forward-Looking Statement This press release 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
Slide 5: Why Old National Bancorp?
Why Old National Bancorp? Focused on driving core net income Conservative and consistently applied credit stance since before current cycle has led to strong credit quality No subprime business Lending to clients we know in our footprint Transforming footprint to higher-growth markets Commitment to
Slide 6: Commitment to Excellence
Commitment to Excellence Commitment to Excellence BANKING INDUSTRY ETHISPHERE 2013
Slide 7: Corporate Summary
Corporate Summary Corporate Summary Corporate Summary Corporate Summary Investor Inquiries: Lynell J. Walton, CPA SVP - Director of Investor Relations 812-464-1366 lynell.walton@oldnational.com 1 Non-GAAP financial measure - refer to Appendix for reconciliation
Slide 8: The Old National Landscape
The Old National Landscape MSA Market Rank Deposit Market Share Bloomington, IN* 1 21.9% Central City, KY 1 38.3% Evansville, IN* 1 30.7% North Vernon, IN* 1 32.4% Columbus, IN* 2 18.3% Jasper, IN 2 23.9% Madisonville, KY 2 17.9% Terre Haute, IN 2 13.1% Vincennes, IN 2 25.7% Washington, IN 2 28.2% O
Slide 9: Deposit / Unemployment Distribution
Deposit / Unemployment Distribution Deposit / Unemployment Distribution 44.9% / 6.9% 0.5% / 7.2% 3.1% / 8.1% 0% / 8.8% 42.3% / 7.3% 9.2% / 6.9% % of ONB's Indiana deposits1 / Regional unemployment Unemployment data provided by Indiana Department of Workforce Development and Bureau of Labor Statistic
Slide 10: Our Indiana Footprint Economic Vital Signs
Our Indiana Footprint Economic Vital Signs Economic Vital Signs * Preliminary Strong Stable or Mixed Decline Sources: US Bureau of Labor Statistics, US Dept. of Labor, Stats Indiana, Indiana Association of Realtors, Yahoo Finance, IN Dept. of Revenue
Slide 11: Indiana's Economic Achievements
Indiana's Economic Achievements "AAA" Credit Rating - Fitch, Moody's and Standard and Poor 2nd Most Competitive State - Site Selection Magazine 3rd Best U.S. State for Manufacturing Jobs - CNBC 5th Best State for Business - CEO Magazine 8th Fastest Growing State Economy - USA Today 200 new manufactu
Slide 12: Third Quarter 2013 Highlights
Third Quarter 2013 Highlights Third Quarter 2013 Highlights 1 See slide 18 2 See slide 16 for non-gaap reconciliation
Slide 13: Old National Bancorp Investment Thesis
Old National Bancorp Investment Thesis Financial Data as of 9-30-13 Dated: November 4, 2013
Slide 14: Pre-Tax, Pre-Provision Income
Pre-Tax, Pre-Provision Income1 1 Non-GAAP financial measure management believes is useful in evaluating the financial results of the Company - see Appendix for Non-GAAP reconciliation $ in millions 10.6% increase 3Q12 to 3Q13
Slide 15: 21% increase in total assets with 5.5% decrease in FTE
21% increase in total assets with a corresponding 5.5% decrease in FTE FTE and Asset Change $ in millions
Slide 16: Net Interest Margin
Net Interest Margin1 1 Fully taxable equivalent basis 2 ONB Core includes contractual interest income of Monroe, Integra and IN Community loans 2 4.34% Earning assets reflect purchased assets, net of discount $188.2 million book of CD's set to re-price in 4Q13 at an average rate of .99% 4.04% 4.09%
Slide 17: Asset/Liability/Revenue Composition
Asset/Liability/Revenue Composition *Consumer Loans consist of 18% direct, 50% indirect and 32% HELOC. Period-End 9-30-13 Third Quarter 2013 Assets Liabilities Total Revenues, excluding Securities Gains *Other Income includes 0.8% for Mortgage Banking Revenue, 2.1% for Company-Owned Life Insurance,
Slide 18: Average Loan Trends
Average Loan Trends $ in millions - Quarterly averages - excludes residential loans and leases held for sale 1 1 Includes both covered and non-covered loans 1 3Q12 to 3Q13 increase of $332.3 million, or 7.9%, in average ONB Core loans ONB Core includes $8.6 million in loans from the newly acquired M
Slide 19: Commercial Loans
Commercial Loans1 $ in millions YTD 2013 production $98 million over YTD 2012 Sold $11.6 million in leases 3Q13 1 End of period - excludes covered loans
Slide 20: Loan Portfolio at September 30, 2013
Loan Portfolio at September 30, 2013 $ in millions - period-end balances $35.3 Comml, $103.5 CRE, $81.8 HELOC, $30.2 Resi Mortg Covered Loans (Integra) 5%
Slide 21: Conservative Lending Limits/Risk Grades
Conservative Lending Limits/Risk Grades Conservative Lending Limits/Risk Grades In-house lending limits conservative relative to ONB's legal lending limit at 9-30-13 of $113.7 million per borrower 1Includes entire relationship with borrower Borrower1 Asset Quality Rating (Risk Grades) 8 - Classified
Slide 22: Quick Home Refi (QHR) Product Statistics
Quick Home Refi (QHR) Product Statistics Based on September 30, 2013 portfolio data Portfolio balance as of September 30, 2013 = $697 million
Slide 23: Loan Concentrations - Excluding Covered Loans
Loan Concentrations - Excluding Covered Loans At 9-30-13 Commercial Commercial Real Estate Diversified Commercial Loan Portfolio Diversified Commercial Loan Portfolio (CHART)
Slide 24: Purchased Impaired Loans
Purchased Impaired Loans $ in millions Integra Bank Post acquisition data is cumulative Indiana Community Bancorp Monroe Bancorp
Slide 25: Credit Quality - Net Charge-Offs
Credit Quality - Net Charge-Offs $ in millions 1 Includes both covered and non-covered loans $.6 $.2 ($.2) ($.6) $.5 $.0 $1.0 $.6 $.7 $.7 $.6 ($.8) $.4 $1.0 $.4 ($.1) ($.1) $.3 ($.0) $.2
Slide 26: Credit Quality - Excluding Covered Loans
Credit Quality - Excluding Covered Loans
Slide 27: Credit Quality - ALLL and Mark Summary
Credit Quality - ALLL and Mark 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
Slide 28: Covered Assets
Covered Assets $ in millions - period-end balances Refer to Appendix for ONB Risk Grade Table *Covered loans shown net of $106.5 million discount Commercial Loans On this portfolio of covered loans*, the FDIC will reimburse Old National for 80% of the losses up to $275.0 million, 0% of losses from $
Slide 29: Credit Quality - Excluding Covered Loans
Credit Quality - Excluding Covered Loans Peer Group data per SNL Financial See Appendix for definition of Peer Group 1As a % of end of period total loans
Slide 30: Credit Quality - 30+ Day Delinquent Loans
Credit Quality - Excludes Covered Loans 30+ Day Delinquent Loans Specific Segment Overview (As a % of End of Period Total Loans)
Slide 31: Credit Quality - Excluding Covered Loans
$ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excluding Covered Loans
Slide 32: Shared National Credits - Excludes Covered Loans
Shared National Credits - Excludes Covered Loans *All but one in Indiana, Kentucky or Illinois **ONB's risk grade scale is 0 (investment grade) to 9 (nonaccrual)
Slide 33: Investment Portfolio
Investment Portfolio 1Includes market value for both available for sale and held to maturity securities
Slide 34: Investment Portfolio Purchases 3Q13
Investment Portfolio Purchases 3Q131 1 Data as of September 30, 2013, for purchases made throughout 3Q13
Slide 35: Other Classified Assets
Other Classified Assets Book Value Book Value | Market Value | Market Value [Sin millions Jun. 30, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Sept. 30, 2013 Corporate Bonds $8.0 $8.0 $7.5 $7.7 Pooled Trust Preferred ‘Securities $23.0 $22.9 $9.2 $9.4 Non-Agency Mortgage Backed Securities $17.3 $16.2 $18
Slide 36: Securities with OTTI
Securities with OTTI Lowest cei ating provided by any nanaly Lowest credit | pook Vatu a orritieto credtraing agenry. Sin thousands | Vinge | Rating’ | sep 29,2013 |wroorniaa13| pate Jenrc sere 200 oe $3989 2 cc [ona ser 7308 exuriysotaa%a) 208 a“ [ona ser73c8 ecurtysoiazar3) 206 oo [ors 208-0 eecut
Slide 37: Municipal Bond Portfolio by State
Municipal Bond Portfolio by State Based on book value at 9-30-13 Illinois exposure consists of 26 bonds representing 1.2% of entire municipal portfolio
Slide 38: CD Maturity Schedule
CD Maturity Schedule Represents CD maturities at September 30, 2013
Slide 39: Tangible Common Book Value
Tangible Common Book Value1 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 the financial results of the Company - see Appendix for Non-GAAP reconciliation Acquired IN Community Bancorp 9-15-12 Old Natio
Slide 40: Reduced interest rate risk in 3Q13
Reduced interest rate risk in 3Q13 Interest Rate Sensitivity $ in millions
Slide 41: Interest Rate Sensitivity
Interest Rate Sensitivity Actions taken to reduce risk to rising interest rates Sold $96.9 million in fixed rate (WAC 4.24%), agency eligible residential mortgages with a WAM of 281 months in 3Q13 Assumed reinvestment rate of 1.5%; impact of approximately $2.5 to $3.0 million of lower net interest i
Slide 42: Capital Ratios
Capital Ratios Peer Group data per SNL Financial See Appendix for definition of Peer Group $ in millions
Slide 43: Capital Ratios
Capital Ratios Peer Group data per SNL Financial See Appendix for definition of Peer Group
Slide 44: 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 45: 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 46: Transforming Old National's Landscape
Transforming Old National's Landscape1 Shifting to higher-growth markets from lower- growth markets Entry and fill-in of existing higher-growth markets through strategic acquisitions Acquired 175 branches Sale or consolidations in lower-growth, non-core markets Consolidated 121 branches +4 pending S
Slide 47: Transforming Old National's Landscape
Transforming Old National's Landscape 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 Acquired
Slide 48: Transforming Old National's Landscape
Transforming Old National's Landscape 2004 2013 2013 2013
Slide 49: ONB to Acquire TOFC
ONB to Acquire TOFC Compelling Strategic Rationale Strengthen ONB's objective of being Indiana's bank by continuing to develop the Northern Indiana region Adds 7 full service branches - $581.6 million in deposits and $438.6 million in loans Adds attractive fee businesses with $523.3 in trust assets
Slide 50: 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 51: 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 52: 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 53: ONB Acquired Bank of America Branches
ONB Acquired 24 Bank of America Branches 24 full-service branches 4 in Northern Indiana 20 in Southwest Michigan Total deposits of $575 million1 Total loans of $5 million1 2014 accretion of $.03 to $.05 per share One-time acquisition/conversion costs of $5.0 million Transaction closed July 12, 2013
Slide 54: Appendix
Old National Bancorp Appendix
Slide 55: 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, 2012, each named executive officer has met their stock ownership requirement ownership requirement ownership requirement ownership requirement ownersh
Slide 56: Executive Compensation
Executive Compensation Tied to long term shareholder value: Long Term Incentive Plan (CFO,CBA, CCO, Chief Legal Counsel) Long Term Incentive Plan (CFO,CBA, CCO, Chief Legal Counsel) Performance Measure Weight Performance-based 75% Service-based 25% Short Term Incentive Plan (CBA, CCO) Short Term Inc
Slide 57: Pre-Tax, Pre-Provision Income
Pre-Tax, Pre-Provision Income1 1Non-GAAP financial measure management believes is useful in evaluating the financial results of the Company (17.0%) 10.6% 9.3% .31%
Slide 58: Non-GAAP Reconciliations
Non-GAAP Reconciliations lend of period balances-§ in millions sor2_| 4ai2 | 1013 | 2013 | 3013 [Total Shareholders’ Equity $1,186.86 | $1,1946 | $1,199.7 | $4,167.0 | 1,150.3, Deduct: Goodvall and intangible Assets (371.2) | (368.0) | (365.5) | (364.4) | 79.3) [Tangible Common Ishareholders’ Equity
Slide 59: Non-GAAP Reconciliations
Non-GAAP Reconciliations lend of period balances-§ linmiltions. gare | 4a | sais | 2013 | 3013 |Total Shareholders’ Equity $1,186.8 | $1,194.6 | $1,1997 | $1,167.0 Deduct: Goodwill and lintangible Assets (371.2) |__ (68.0) |__ (365.5) |__ (364.4) [Tangible Common Shareholders’ Equity seis6 | e265} s
Slide 60: Non-GAAP Reconciliations
Non-GAAP Reconciliations $inthousands 3Q12 4Q12 1013 2013 3013 Net Interest Income $74,150| $84,361] $79,050 $79,191 Taxable Equivalent Adjustment $3340] $3545 sa,0t2| «$4,249 [Net Interest Income — Taxable Equivalent $77,490{ $67,906] $82,962] $83,434] [Average Eaming Assels $7,572,282] $6,093,204]
Slide 61: ONB's Peer Group
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
Slide 62: 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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