Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (August 2015)
47 slides from Old National Bancorp's investor presentation, Aug 4, 2015
Slide 1: Investment Thesis
Exhibit 99.1 Investment Thesis Financial Data as of 06-30-15 Dated: August 4, 2015
Slide 2: Investment Thesis: Executive Summary
* * * * * * Investment Thesis Executive Summary Slides 2 to 14 Financial Data as of 06-30-15 Dated: August 4, 2015
Slide 3: Forward-Looking Statement
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, results
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 Summary Overview Company Description Headquarters Evansville, IN Largest financial services bank holding company headquartered in Indiana with a presence throughout Indiana, Western Kentucky and Louisville, Southern Market Cap (millions) $ 1,659 Illinois and Central and West
Slide 6: Investment Thesis
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 maintaining
Slide 7: Commitment to Excellence
Commitment to Excellence Corporate Engagement AWARD OF Points of Light Institute VolunteerMatch ETHISPHERE 2.01.5 CERTIFICATION BANKING INDUSTRY tf)| WORLD'S MOST ™ o|ETHICAL ei|COMPANIES: WWW.ETHISPHERE.COM
Slide 8: Old National's Landscape
Old National’s Landscape 1 8 1 Assumes successful completion of pending branch sales in 3Q15
Slide 9: Our Indiana Footprint
Our Indiana Footprint Economic Vital Signs Strong Stable or Mixed Decline Indicator Outlook Latest Statistics (June 2015) Trend (YoY change from June 2014) • Labor Force increased 16,800 Employment 3,248,300 Jobs • Unemployment rate decreased to 5.3% Unemployed 157,900 (June 2014 rate was 6.1%) Unem
Slide 10: Our Michigan Footprint
Our Michigan Footprint Michigan named "most improved" in ranking of pro-business states in 2014 by the American Economic Institute(improved from39thto18th)1 Ann Arbor, Michigan (MSA Population: 358,564) Projected 2020 Median Household Income Highest median household income MSA in Michigan $62,312 Ma
Slide 11: Indiana's Economic Achievements
Indiana’s Economic Achievements “AAA” Credit Rating Fitch, – Moody’s and Standard and Poor’s1 3rd Best U.S. State for Manufacturing 2 Jobs 6th Best State for Business CEO 3 – Magazine 280 new manufacturing jobs created Berry–Plastics, 4 Evansville, Indiana 230 new jobs created 5 GE–Aviation, Lafayet
Slide 12: 2Q15 Highlights
2Q15 Highlights Reported net income of $26.2 million, or $.22 per share – 22% increase in EPS Y/Y and Q/Q Continue to grow organic revenue – 7% annualized loan growth – Stable net interest margin – Positive trends in all fee-based businesses Improve operating leverage – 1% decline in operational exp
Slide 13: 2Q15 Adjusted Net Income
2Q15 Adjusted Net Income Earnings Per Share $0.25 $0.22 2Q14 2Q15 2Q15 ROA of 1.0% 1 ROTCE of 15.7% 1 Adjusted Net Income excludes acquisition & divestiture charges 1 Non-GAAP financial measure which Management believes is useful in evaluating the financial results of the Company – see Appendix for
Slide 14: 2015 Initiatives – Execution is KEY
2015 Initiatives – Execution is KEY Grow organic revenue – Redesigned checking product lineup – Leverage fee income businesses Enhanced referral program Leverage new markets + Lexington, KY satellite operations Capital Markets hires Improve operating leverage – Expect operational expenses to be in t
Slide 15: Investment Thesis
* * * * * * Investment Thesis Financial Data as of 06-30-15 Dated: August 4, 2015
Slide 16: Total Loan Growth
Total Loan Growth 1 $6,983.7 $6,863.0 1 Loan growth $120.7 predominantly in footprint, not $6,863.0 syndicated deals, participations or acquired March 31, 2015 June 30, 2015 Loan Growth $ in millions – End of Period 1 16 Includes Loans Held for Sale and Covered Loans – Excluding covered loans, loan
Slide 17: Commercial & Commercial Real Estate Loans
Commercial & Commercial Real Estate Loans 1 New Quarterly Production Production Yield 2 Loan Pipeline $833 $378.0 $740 $190 3.37% $232 3.23% $530 $175 $227.8 $98 $83 $210 $468 $349 $299 1Q15 2Q15 1Q15 2Q15 2Q14 1Q15 2Q15 Discussed Proposed Accepted Average loan size of 2Q15 production is less than $
Slide 18: Loan Production & Yield Trends
Loan Production & Yield Trends Residential Mortgage 3.79% 3.74% $180.9 $126.4 1Q15 2Q15 New Quarterly Production Production Yield Consumer Direct Consumer Indirect 4.52% 4.44% 2.39% 2.21% $163.8 $157.7 $84.7 $65.2 1Q15 2Q15 1Q15 2Q15 New Quarterly Production New Quarterly Production Production Yield
Slide 19: Loan Concentrations – Excluding Covered Loans
Loan Concentrations – Excluding Covered Loans Finance & Professional Insurance, 4% Services, 3% Healthcare/Soci al Services, 9% Construction & Land Dev, 7% Public Admin, 8% Agriculture, 7% Manufacturing, Real Estate 13% Rental & Leasing, 6% Educational Services, 8% Other, 21% Wholesale Trade, 8% Ret
Slide 20: Credit Quality
Credit Quality Special Mention Loans $190.0 $173.9 $119.4 2Q14 1Q15 2Q15 Substandard Accruing Loans Substandard Nonaccruing + Doubtful Loans $110.7 $167.8 $155.9 $97.2 $88.7 $118.0 2Q14 1Q15 2Q15 2Q14 1Q15 2Q15 $ in millions 20
Slide 21: Credit Quality
Credit Quality Net Charge-Offs / Provision 0.5% $3.0 $2.3 0.4% $2.0 0.3% 0.2% $1.0 0.1% $0.0 0.07% 0.06% $0.0 0.0% -$0.4 -0.06% -0.1% -$1.0 2Q14 1Q15 2Q15 NCOs Provision for Loan Losses 30+ Day Delinquent Loans1 90+ Day Delinquent Loans1 0.84% 0.69% 0.30% 0.47% 0.22% 0.40% 0.31% 0.01% 0.00% 0.01% 2Q
Slide 22: Credit Quality – ALLL and Mark Summary
Credit Quality – ALLL and Mark Summary Indiana At June 30, 2015 ONB LegacyMonroe Integra Community Tower United LafayetteFounders Total Allowance for Loan Losses (ALLL) $47.3 $1.0 $1.8 $0.0 $0.0 $0.0 $0.0 $0.0 $50.2 Loan Mark N/A $5.5 $32.0 $20.1 $16.5 $28.9 $18.6 $16.0 $137.5 Total ALLL/Mark $47.3
Slide 23: Conservative Lending Limits/Risk Grades
Conservative Lending Limits/Risk Grades 1 1 BorrowerAsset Quality RatingIn-House Lending Limit (Risk Grades) ($ 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) $5 1 Borr
Slide 24: Investment Portfolio Purchases 2Q15
Investment Portfolio Purchases 2Q15 1 T/E Book Yield of Purchases Treasuries 0.00% Agencies 1.31% Pools 2.76% Q2 2015 Purchases- CMOs 2.17% Book Value Municipals 4.75% Treasuries - Corporates 2.77% Agencies 130,499,990 ABS 0.00% 2.36% Pools 3,650,486 Total CMOs 98,722,017 0.00% 1.00% 2.00% 3.00% 4.0
Slide 25: Investment Portfolio
Investment Portfolio Book Book Market Market 1 1 Value Value Value Value Market Mar 31, Jun 30, Mar 31, Jun 30, Value $ $ in millions 2015 2015 2015 2015 Change Federal National Mortgage Association $432.0 $412.6 $438.1 $414.5 Federal Home Loan Mortgage Corporation 217.7 242.6 218.1 241.5 Federal Fa
Slide 26: Net Interest Margin
Net Interest Margin 1 4.07% 3.70% 3.75% 0.81% 0.56% 0.60% 3.26% 3.14% 3.15% 2Q14 1Q15 2Q15 ONB Core 2 Acquisition Accretion 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
Slide 27: Acquired Loans
Acquired Loans Pre-Marked Acquired Loans Pre-Marked Integra Loans (excluding Integra loans) $60 $73 $1001 $1,440 Non-PCI PCI PCI = Purchased Credit Impaired Non-PCI PCI Remaining Discount Remaining Discount Non-PCI 5% ($77) Non-PCI 4% ($3) PCI 47% ($28) PCI 29% ($29) 1 $25 million is considered nona
Slide 28: Projected Purchase Accounting Impact
Projected Purchase Accounting Impact Manageable declines in purchase accounting impact expected in future periods Projected Accretion Income $86.6 $57.5 $59.0 $48.3 $43.2 $36.9 $34.5 $17.5 $9.3 $7.2 $3.4 $3.8 $0.3 $(0.4) 2011 2012 2013 2014 2015 2016 2017 Actual Accretion Projected Accretion 1 Actua
Slide 29: Modeled Interest Rate Sensitivity
Modeled Interest Rate Sensitivity Total non-maturity, interest- bearing accounts increase from 0.06% to 0.38% in the “Up 100 bps” scenario 18.9% of total non-interest bearing DDA are considered rate sensitive 41% of C&I and CRE loans reprice within one year 17% of loans have floors; less than 1% of
Slide 30: Modeled Interest Rate Sensitivity
Modeled Interest Rate Sensitivity $ in thousands Change to Net Interest Income based on a two year time horizon 30 Refer to slide 31 for rate curves
Slide 31: Interest Rate Curves
Interest Rate Curves Up 100 vs. Base 1M 2M 3M 4M SM 6M 9M 1Y 1.S5Y 2Y¥ 2.5Y 3Y 4Y SY 7.5Y 10Y¥ 15Y 20Y 30Y ——Base Up 100 Forward Curves 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% — 1M 2M 3M 4M SM 6M 9M 1Y 1.5Y 2Y¥ 2.5Y 3Y 4Y SY 7.SY 10Y 15Y 20Y 30Y ——6/30/2015 6/30/2016 6/30/2017 a) ray
Slide 32: Tangible Common Equity
Tangible Common Equity Tangible Common Equity – 03/31/2015 $851.6 2Q15 Earnings 26.2 2Q15 Dividend (13.8) 2Q15 Share Repurchase (26.4) Changes in OCI – Securities (16.7) Changes in Equity - Other 4.3 Changes in Goodwill & Intangibles 2.1 Tangible Common Equity – 06/30/2015 $827.3 1.9 million shares
Slide 33: Capital Ratios
Capital Ratios Tier 1 Risk-Based Capital Ratio Tangible Common Equity to Tangible Assets 1 14.0% 8.8% 13.5% 8.6% 8.4% 12.7% 12.2% 11.6% 7.5% 7.2% 2Q14 1Q15 2Q15 2Q14 1Q15 2Q15 ONB Peer Group Average ONB Peer Group Average Peer Group data per SNL Financial See Appendix for definition of Peer Group 1
Slide 34: Total Revenue
Total Revenue $146.3 $147.1 $124.2 $55.3 $55.0 $39.7 $84.5 $91.0 $92.1 2Q14 1Q15 2Q15 Fees, Service Charges, Security Gains & Other Rev. Net Interest Income 34 $ in millions
Slide 35: Fee-Based Business Revenue
Fee-Based Business Revenue Wealth Insurance Investments Mortgage Management $12.1 Banking $2.1 $10.2 $0.1 $9.4 $8.5 $10.1 $10.0 $4.4 $4.7 $4.3 $3.0 1Q15 2Q15 1Q15 2Q15 1Q15 2Q15 1Q15 2Q15 Contingency Revenues 35 $ in millions
Slide 36: Noninterest Expense
Noninterest Expense Adjusted 2Q15 efficiency ratio of 66.9% 2 2Q15 operational $116.2 expenses include $1.0 $7.0 $109.7 million in annual merit $4.0 $4.0 increases $98.1 $1.5 $6.3 Expect operational $105.2 $104.2 expenses to be in the mid $91.8 $90’s in 4Q15 upon completion of efficiency initiatives
Slide 37: Transforming Old National's Landscape
Transforming Old National’s Landscape Acquired United Bancorp — Acquired Monroe Entering Ann Bancorp – Acquired Indiana Arbor, MI July, Enhanced Community – 2014 Acquired St. Bloomington, IN Entry into Sold non- Joseph Capital – presence Columbus, IN January, 2011 Acquired LSB strategic Entry into S
Slide 38: Committed to Strong Corporate Governance
Committed to Strong Corporate Governance Stock ownership guidelines have been established for named executive officers as follows: 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
Slide 39: Executive Compensation
Executive Compensation Tied to long term shareholder value: 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% Long Term Incentive Plan Long Term Incentive Plan (CFO,CBA, CCO, Chief Legal Co
Slide 40: Appendix
Ml OLD NATIONAL BANCORP’ NASDAQ: ONB aldnational.com Appendix
Slide 41: Non-GAAP Reconciliations
Non-GAAP Reconciliations end of period balances 2Q14 1Q15 2Q15 Total Shareholders’ Equity $1,277.3 $1,483.3 $1,456.7 Deduct: Goodwill and Intangible Assets (439.3) (631.6) (629.5) Tangible Common Shareholders’ Equity $838.1 $851.6 $827.3 Total Assets $10,387.9 $11,951.3 $12,075.8 Add: Trust Overdraf
Slide 42: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2Q14 1Q15 2Q15 Reported Pre-Tax Income (FTE Basis) $30.7 $34.8 $39.9 Add Back - Acquisition & Divestiture Charges$6.3 $11.0 $5.5 Adjusted Pre-tax income $37.0 $45.8 $45.4 Taxes ($14.4) ($18.3) ($15.6) Adjusted Net Income $22.6 $27.5 $29.8 Average Diluted Shares 104.361 119.0
Slide 43: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2Q14 1Q15 2Q15 Net Interest Income ($ in 000's) $84,482 $90,993 $92,097 Taxable Equivalent Adjustment 4,256 4,658 4,757 Net Interest Income Taxable – Equivalent $88,738 $95,651 $96,854 Average Earning Assets $8,730,063$10,346,167$10,325,938 Net Interest Margin 3.87% 3.52% 3.
Slide 44: Non-GAAP Reconciliations
Non-GAAP Reconciliations Efficiency Ratio - As Reported 2Q15 Net Interest Income (FTE) ($ in millions) $96.9 Noninterest Income 55.0 Less Security Gains 0.5 Revenue Less Security Gains 151.3 Noninterest Expense 109.7 Intangible Amortization 3.0 Noninterest Expense Less Intangible Amortization 106.7
Slide 45: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2Q15 Net Income $26.2 Plus Acquisition Costs (after tax) $1.0 Plus Branch Divestitures (after tax) $2.6 Adjusted Net Income $29.8 Average Assets $11,911.6 Adjusted ROA 1.00% 2Q15 Net Income $26.2 Plus Acquisition Costs (after tax) $1.0 Plus Branch Divestitures (after tax) $2
Slide 46: 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 Associated Banc-Corporation ASB MB Financial Inc. MBFI BancFirst Corporation BANF National Penn Bancshares Inc. NPBC BancorpSo
Slide 47: 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 47
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