Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (May 2015)
53 slides from Old National Bancorp's investor presentation, May 6, 2015
Slide 1: Investment Thesis
Investment Thesis Financial Data as of 03-31-15 Dated: May 6, 2015 Exhibit 99.1
Slide 2: Investment Thesis: Executive Summary
Investment Thesis Executive Summary Slides 2 to 19 Financial Data as of 03-31-15 Dated: May 6, 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 Liability Breakdown Asset Mix 1Q15 Revenue Breakdown Headquarters Evansville, IN Market Cap (millions) $ 1,612 2015E P / E 14.5 x P / TBV 189% Dividend Yield 3.5 % LTM Average Daily Volume 656,429 Total Assets $ 11,951 Trust Assets Unde
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 actions taken to improve efficiency Diverse loan portfolio with growth accelerating while maintaini
Slide 7: Ethisphere World's Most Ethical Companies
== ETHISPHERE 201.5 scrascon 2 INSIDE & CERTIFICATION ro” BANKING INDUSTRY VolunteerMatch AWARD OF | WORLD’S MOST ™ SIETHICAL. «|COMPANIES WWW.ETHISPHERE.COM Corporate Engagement
Slide 8: We are proud to serve these communities
We are proud to verve these communities ILLINOIS
Slide 9: Our Indiana Footprint
9 Our Indiana Footprint Indicator Outlook Latest Statistics (March 2015) Trend (YoY change from Mar. 2014) Economic Vital Signs Jobs Employment Unemployed 3,255,000 188,900 • Labor Force increased 37,900 • Unemployment rate decreased to 5.5% (March 2014 rate was 6.6%) Unemployment Insurance Claims I
Slide 10: Our Michigan Footprint
10 Our Michigan Footprint Projected 2020 Median Household Income Projected 2015-2020 Median HHI Growth Ann Arbor, Michigan (MSA Population: 358,564) Kalamazoo, Michigan (MSA Population: 334,915) Grand Rapids, Michigan (MSA Population: 1,031,360) Source: SNL Financial and Bureau of Labor Statistics a
Slide 11: Indiana's Economic Achievements
11 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 230 new jobs created – GE Aviation, Lafayette,
Slide 12: 2015 Strategic Initiatives
12 2015 Strategic Initiatives Continue to Grow Organic Revenue Improve Operating Leverage Prudent Use of Capital • 3.4 million shares of stock repurchased during 1Q15 • Quarterly cash dividend recently increased to $.12 per share • Organic loan growth of $2.2 million over 4Q14 and $341.4 million ove
Slide 13: 1Q15 Earnings
13 1Q15 Earnings Net income of $20.9 million or $.18 per share Included in net income are the following pre-tax items – $4.4 million in early retirement & other severance charges – $4.0 million in merger and integration charges – $2.6 million in branch efficiency charges
Slide 14: Basic Banking
14 Basic Banking Adjusted Income 3 Operational Expenses 2 Revenue 1 Organic Loan Growth 4 Core NIM 5 Consolidated NCOs -0.06% $ in millions Refer to slide 40 Refer to slide 42 End of period balances See appendix for non-GAAP reconciliation Refer to slide 22 Refer to slide 32 $31.4 $32.2 1Q14 1Q15 $1
Slide 15: Fee-Based Business Revenue
15 Fee-Based Business Revenue $7.9 $9.6 $10.0 $2.2 $ in millions ONB Less Founders Contingency Revenues Founders $5.8 $0.6 $8.5 1Q14 1Q15 Wealth Management $2.4 $2.1 $12.0 $12.1 1Q14 1Q15 Insurance $3.9 $4.4 1Q14 1Q15 Investments $0.6 $0.8 $3.0 1Q14 1Q15 Mortgage Banking
Slide 16: Net Charge-Offs / Provision
16 Net Charge-Offs / Provision $ in millions -0.03% -0.06% 0.08% $0.0 $0.9 $0.0 $0.0 $0.5 $1.0 $1.5 $2.0 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 1Q14 4Q14 1Q15 Consolidated NCOs Consolidated Provision for Loan Losses
Slide 17: Credit Quality – Excluding Covered Loans
17 Credit Quality – Excluding Covered Loans $ in millions Excludes loans acquired through Tower, United, Lafayette & Founders transactions $112.3 $194.8 $183.9 $116.5 $106.8 1Q14 4Q14 1Q15 Special Mention Loans $85.7 $107.8 $95.6 $93.8 $74.3 1Q14 4Q14 1Q15 Substandard Accruing Loans $84.8 $125.7 $14
Slide 18: 2015 Initiatives – Execution is KEY
18 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 – to $27 million Close/
Slide 19: M&A Update
19 M&A Update Lafayette, IN – LSB Financial Corp acquisition fully converted Grand Rapids, MI – Founders Financial Corporation acquisition closed and successfully converted Lexington, KY strategy
Slide 20: Investment Thesis
Investment Thesis Financial Data as of 03-31-15 Dated: May 6, 2015
Slide 21: Adjusted Income
21 Adjusted Income 1 $ in millions Adjusted income represents income before taxes less accretion income, change in indemnification assets, merger/integration expenses, costs associated with branch divestitures and early retirement program/other severance $89.9 $100.4 $117.5 $131.3 $31.4 $32.2 2011 2
Slide 22: Loan Growth – Excluding Covered Loans
Loan Growth – Excluding Covered Loans End of Period Balances Average Balances 22 $ in millions
Slide 23: Commercial Loans
23 Commercial Loans $ in millions – End of Period Balances – includes held for sale and covered loans New Quarterly Production includes 50% credit for unfunded commitments $153.2 $239.4 $238.4 $277.9 $227.8 $89.1 $87.8 $106.1 $171.8 $176.5 3.57% 3.10% 3.11% 3.10% 3.23% 1Q14 2Q14 3Q14 4Q14 1Q15 New Q
Slide 24: Commercial Loans
24 Commercial Loans $ in millions 1% of line utilization = $13.5 million in outstandings Commercial Line Utilization Commercial Loan Pipeline New Market Commercial Loan Pipeline 1Q15 Ft Wayne, IN - $99.4 million Ann Arbor, MI - $51.9 million Lafayette, IN - $24.7 million Grand Rapids, MI - $24.8 mil
Slide 25: Loan Production & Yield Trends
25 Loan Production & Yield Trends Consumer Direct Consumer Indirect Residential Mortgage $ in millions New quarterly production includes unfunded commitments – Yield is based on funded balances only
Slide 26: Loan Concentrations – Excluding Covered Loans
26 Loan Concentrations – Excluding Covered Loans Diversified Commercial Loan Portfolio At 03-31-15 Commercial Commercial Real Estate
Slide 27: Credit Quality – Excluding Covered Loans
27 Credit Quality – Excluding Covered Loans 0.34% 0.45% 0.38% See Appendix for definition of Peer Group As a % of end of period total loans Peer Group data per SNL Financial 0.85% 0.75% 1Q14 4Q14 1Q15 30+ Day Delinquent Loans ONB Peer Group Average 0.00% 0.01% 0.00% 0.30% 0.25% 1Q14 4Q14 1Q15 90+ Da
Slide 28: Credit Quality – ALLL and Mark Summary
28 Credit Quality – ALLL and Mark Summary At March 31, 2015 ONB Legacy Monroe Integra Indiana Community Tower United Lafayette Founders Total $ in millions Non-GAAP financial measure which Management believes useful to demonstrate that the remaining discount considers credit risk and should be inclu
Slide 29: Conservative Lending Limits/Risk Grades
29 Conservative Lending Limits/Risk Grades Borrower Asset Quality Rating (Risk Grades) In-House Lending Limit ($ in millions) Borrower Asset Quality Rating (Risk Grades) 1 1 1 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 30: Investment Portfolio Purchases 1Q15
30 Investment Portfolio Purchases 1Q15 1 Data as of March 31, 2015 Q1 2015 Purchases- Book Value Treasuries 12,899,968 Agencies 35,941,750 Pools CMOs Municipals 42,613,177 Corporates 11,062,538 ABS Equity Total 102,517,433
Slide 31: Slide 31
Slide 32: Net Interest Margin
32 3.36% 3.15% Net Interest Margin 1 3.14% ONB Core includes contractual interest income of Monroe, Integra, IN Community, Tower, United, Lafayette and Founders loans 0.48% 0.29% 0.10% 0.38% 0.39% 0.46% 4.22% 3.83% 3.70% 1Q14 4Q14 1Q15 Integra Accretion Other Acquisition Accretion ONB Core Fully tax
Slide 33: Projected Purchase Accounting Impact
33 Projected Purchase Accounting Impact Actual Accretion Projected Accretion Actual Discount Projected Discount $ in millions Projections updated quarterly – subject to change IA = Indemnification Asset Manageable declines in purchase accounting impact expected in future periods Actual IA Amortizati
Slide 34: Indemnification Asset Balance
34 Indemnification Asset Balance At March 31, 2015, $8.5 million of the remaining IA balance is expected to be amortized and reported in noninterest income over the next 18 months $ in millions $167.9 $154.3 $109.9 $65.7 $20.0
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 37 for rate curves Total non-maturity, interest- bearing accounts increase from 0.08% to 0.44% in the “Up 100 bps” scenario 21.5% of total non-interest bearing DDA are co
Slide 36: Modeled Interest Rate Sensitivity
36 Modeled Interest Rate Sensitivity $ in thousands Change to Net Interest Income based on a two year time horizon Refer to slide 37 for rate curves $25,053 $31,594 $33,933 $12,541 $8,145 $9,149 3Q14 4Q14 1Q15 Two Year Projected Change to Net Interest Income (Historical) Up 200 Forward Curve
Slide 37: Interest Rate Curves
37 Interest Rate Curves 0% 1% 2% 3% 4% 1M 2M 3M 4M 5M 6M 9M 1Y 1.5Y 2Y 2.5Y 3Y 4Y 5Y 7.5Y 10Y 15Y 20Y 30Y Up 100 vs. Base Base Up 100 0% 1% 2% 3% 4% 5% 1M 2M 3M 4M 5M 6M 9M 1Y 1.5Y 2Y 2.5Y 3Y 4Y 5Y 7.5Y 10Y 15Y 20Y 30Y Up 200 vs. Base Base Up 200 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 1M 2M 3M 4M 5M 6M
Slide 38: Tangible Common Equity
38 Tangible Common Equity Tangible Common Equity – 12/31/2014 $896.2 1Q15 Earnings 20.9 1Q15 Dividend (14.2) 1Q15 Share Repurchase (48.2) Issuance of Shares from Acquisition 50.6 Changes in OCI – Securities 10.2 Changes in Equity - Other (1.8) Increase in Goodwill & Intangibles (62.1) Tangible Commo
Slide 39: Capital Ratios
39 Capital Ratios Peer Group data per SNL Financial See Appendix for definition of Peer Group See Appendix for Non-GAAP reconciliation 14.8% 12.9% 12.2% 13.5% 13.2% 1Q14 4Q14 1Q15 Tier 1 Risk-Based Capital Ratio ONB Peer Group Average 8.8% 8.1% 7.5% 8.7% 8.6% 1Q14 4Q14 1Q15 Tangible Common Equity to
Slide 40: Total Revenue
40 Total Revenue $0.4 $411.2 $430.9 $449.2 $478.5 $112.9 $130.0 $7.3 $13.6 $3.3 $9.7 $0.5 $2.7 $ in millions Revenue less securities gains, accretion income and amortization of indemnification asset ($3.4) ($9.3) ($43.2) ($7.3) ($1.0) $36.9 $57.5 $59.0 $86.5 $17.9 $14.6 $455.8 $498.6 $502.2 $531.5 $
Slide 41: Noninterest Income
41 Noninterest Income $22.3 $25.1 $28.0 $ in millions $(7.3) $(6.2) $(1.0) $11.1 $12.0 $11.0 $8.1 $7.9 $7.9 $5.7 $6.8 $6.7 $39.9 $45.6 $52.6 1Q14 4Q14 1Q15 Amortization of Idemnification Asset Service Charges on Deposits Other Income Fee-based business: Wealth Management, Insurance, Mortgage and Inv
Slide 42: Noninterest Expense
42 Noninterest Expense $85.8 $101.7 $331.6 $357.9 $356.1 $370.8 $7.9 $5.9 $ in millions Operational expenses = total noninterest expense less Founders operational costs, merger/integration costs and efficiency program charges Adjusted 1Q15 efficiency ratio of 68.9% Annualized savings expected of $23
Slide 43: Transforming Old National's Landscape
43 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 44: Completed Acquisitions
44 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 45: Committed to Strong Corporate Governance
45 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 March 31, 2015, each named executive officer has met their stock ownership requirement Chief Executive Officer 5X
Slide 46: Executive Compensation
46 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 47: Old National Bancorp
lM OLD NATIONAL BANCORP’ NASDAQ: ONB ‘oldnational.com
Slide 48: Non-GAAP Reconciliations
48 Non-GAAP Reconciliations 2011 2012 2013 2014 1Q14 1Q15 $ in millions Total Revenues $455.8 $498.6 $502.2 $531.5 $124.0 $146.3 Less: Provision for Loan Losses ($7.5) ($5.0) $2.3 ($3.1) $0.0 $0.0 Less: Noninterest Expense ($348.5) ($365.8) ($362.0) ($386.4) ($88.3) ($116.2) Taxable Equivalent Adjus
Slide 49: Slide 49
Slide 50: Non-GAAP Reconciliations
50 Non-GAAP Reconciliations end of period balances 1Q14 4Q14 1Q15 end of period balances 1Q14 2Q14 3Q14 4Q14 1Q15 Total Shareholders’ Equity $1,185.2 $1,465.8 $1,483.3 Deduct: Goodwill and Intangible Assets (376.8) (569.5) (631.6) Tangible Common Shareholders’ Equity $808.4 $896.2 $851.6 Risk Weight
Slide 51: Non-GAAP Reconciliations
51 Non-GAAP Reconciliations Efficiency Ratio - As Reported 1Q15 Efficiency Ratio Excluding Acquisition Costs 1Q15 1Q14 4Q14 1Q15 Net Interest Income (FTE) ($ in millions) $95.7 Noninterest Income Less Security Gains 52.6 Revenue Less Security Gains 148.2 Noninterest Expense 116.2 Intangible Amortiza
Slide 52: Old National's Peer Group
52 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 53: Investor Contact
53 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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