Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (August 2021)
46 slides from Old National Bancorp's investor presentation, Aug 4, 2021
Slide 1: Investment Thesis
Investment Thesis FINANCIAL DATA AS OF June 30, 2021 DATED: August 4, 2021 Exhibit 99.1
Slide 2: Executive Summary
Executive Summary Slides 6-18
Slide 3: Forward-Looking Statements
3 Forward-Looking Statements This communication includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to
Slide 4: Additional Statements
4 Additional Statements Additional Information and Where to Find It In connection with the proposed transaction, Old National filed with the SEC a registration statement on Form S-4 (SEC File No. 333- 257536). The registration statement includes a joint proxy statement of First Midwest and Old Natio
Slide 5: Non-GAAP Financial Measures
5 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 6: Snapshot of Old National
6 Snapshot of Old National Summary Company Description • Largest bank holding company headquartered in Indiana with financial centers located in Indiana, Kentucky, Michigan, Minnesota and Wisconsin • 162 financial centers and 193 ATMs Our strategic vision--The ONB Way • We are a leading commercially
Slide 7: Footprint map
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Slide 8: Attractive Midwest Markets
8 Attractive Midwest Markets Source: S&P Global Market Intelligence, based on MSAs Loans & Deposits in millions Excludes PPP $86.4 $69.2 $66.2 $66.6 $64.5 $68.8 $78.2 $63.9 $60.9 $78.8 $66.7 Median Household Income 2021 (000s) 10.0% 9.6% 8.8% 9.4% 9.8% 10.2% 11.3% 9.6% 9.5% 12.6% 9.4% Projected Hous
Slide 9: Why ONB? Our Investment Thesis
9 Why ONB? Our Investment Thesis The Old National Proposition Granular & Diversified Loan Portfolio Average Commercial & Industrial loan size ~$257,000 and average Commercial Real Estate loan size ~$890,000; diversified by product type with no significant industry concentrations; primarily to client
Slide 10: Franchise Evolution Built a Better Bank
10 Franchise Evolution Built a Better Bank Source: S&P Global Market Intelligence $ in millions unless noted otherwise $5,447 $7,279 $17,869 $47 $40 $110 2007 2012 2Q21 Core Deposits Core Deposits/Branch $7,846 $9,544 $23,676 $3.15 $3.56 $9.60 2007 2012 2Q21 Total Assets Assets/FTE 193 215 725 2007
Slide 11: Quality Low-Cost Deposit Franchise
11 $2.4 $2.5 $3.0 $3.7 $4.0 $4.1 $5.6 $6.1 $6.2 $6.1 $5.8 $7.6 $8.7 $10.2 $10.4 $11.3 $11.7 $11.7 $8.5 $8.3 $10.6 $12.4 $14.2 $14.5 $16.9 $17.8 $17.9 2014Y 2015Y 2016Y 2017Y 2018Y 2019Y 2020Y 1Q21 2Q21 Noninterest-bearing Interest-bearing Noninterest- bearing Demand 34.4% NOW 27.5% Savings 20.6% Mon
Slide 12: Granular & Diversified Loan Portfolio
12 CRE Non-Owner Occupied 34% CRE Owner Occupied 13% C&I 24% Residential Real Estate 17% Other Consumer 8% HELOC 4% Multifamily 36% Office 16% Retail 12% Warehouse/ Industrial 10% Single Family 6% Mixed Use 5% Senior Housing 4% Self Storage 3% Other 8% Granular & Diversified Loan Portfolio1,2 $ in b
Slide 13: Strong Credit Culture
13 Strong Credit Culture Peer Group data per S&P Global Market Intelligence as of 3/31/2021 - See Appendix for definition of Peer Group 1 Excludes loans held for sale ; 2 Full Years 2006-2020, includes banks with 15-years of NCO’s 3 and 15-Year Cumulative NCOs/ Avg. Loans1 0.08% 3.14% 0.65% 6.08% 0.
Slide 14: Conservative Lending Limit/Risk Grades
14 Conservative Lending Limit/Risk Grades In-house lending limits conservative relative to ONB’s legal lending limit of $305mm per borrower $ in millions 1 Includes entire relationship with borrower Borrower Asset Quality Rating (Risk Grades) In-House Lending Limit1 0 – Investment Grade $75.0 1 – Mi
Slide 15: Capital Trends
15 Capital Trends Board authorization of up to $100mm in stock to be repurchased, as conditions warrant, through January 31, 2022 1 Non-GAAP financial measure which Management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliation 8.45% 8.38%
Slide 16: Commitment to Corporate Social Responsibility
16 Commitment to Corporate Social Responsibility Old National’s newly issued Environment, Social and Governance (ESG) Report showcases our commitment to: • Strong corporate governance • Putting our clients at the center of all we do • Investing in our team members • Diversity, equity and inclusion •
Slide 17: ONB's ESG At A Glance — 2020
u ONB’s ESG At A Glance — 2020 ae Strengthening and Supporting Our Communities in Community Reinvestment Act (CRA)-eligible community development loans that supported affordable housing, economic development and community revitalization/stabilization $306I $1.4 million in Affordable Housing Program
Slide 18: Commitment to Excellence
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Slide 19: Financial Details
Financial Details FINANCIAL DATA AS OF June 30, 2021 DATED: August 4, 2021
Slide 20: 2nd Quarter Highlights
20 2nd Quarter Highlights Performance Drivers • End of period commercial loans (excluding PPP) increase +11.1% annualized; $1.1bn production • End of period core deposits increase $94.2mm • Allowance for credit losses recapture of $4.9mm; net recoveries of $336 thousand • Net interest income (exclud
Slide 21: Partnership Update
21 Partnership Update Strategically Connects Key Midwestern States… Minnesota Iowa Wisconsin Illinois Kentucky Indiana Minneapolis / St. Paul Milwaukee Chicago Madison Michigan Grand Rapids Indianapolis Louisv ille Ev ansv ille Missouri St. Louis Lexington Quad Cities Ann Arbor (162 Branches) (1 LPO
Slide 22: Partnership Update
22 Partnership Update Kendra Vanzo Chief Admin. Officer Evansville Q2 Momentum Jeff Newcom Chief Risk Officer Chicago Accomplishments and Next Steps Announced combined core executive leadership team Established joint Integration Office with experienced integration leaders across both companies; plan
Slide 23: Second-Quarter 2021 Results
23 Change vs. 2Q21 1Q21 2Q20 End of period total loans 13,835$ (141)$ 97$ annualized growth -4.0% End of period core deposits 17,869 94 1,700 annualized growth 2.1% Net interest income (FTE) 153.4 1.8 4.4 Provision for credit losses (4.9) 12.5 (27.4) Noninterest income 51.5 (5.2) (7.0) Noninterest e
Slide 24: Commercial Loans and Earning Assets
24 Commercial Loans1 and Earning Assets1 Total commercial loans • Increase of $1.0bn YoY +12% • Increase of $250mm from 1Q21 +11% annualized 2Q21 new production avg yields1 • Commercial and industrial: 2.63% • Commercial real estate: 2.72% • 75% of commercial production is floating rate $ in million
Slide 25: Deposits/Funding
25 Deposits/Funding Core deposit balances increased $94mm from 1Q21 Deposit costs continue to decline • 2Q21 total deposit costs of 6 bps • Total interest-bearing liabilities costs were 30 bps, down 2 bps from 1Q21 Low loan to deposit ratio of 77% $ in millions $9,336 $9,742 $9,971 $10,347 $10,678 $
Slide 26: Net Interest Income & Net Interest Margin
26 3.46% 3.16% 3.09% 3.14% 2.94% 2.91% 0.48% 0.32% 0.30% 2Q20 3Q20 4Q20 1Q21 2Q21 Net Interest Income & Net Interest Margin1 Key Performance Drivers • Net interest income (excluding PPP) increased $2.4mm • PPP 1% coupon + fees • $0.7mm decrease to NII • 1 bp decrease to NIM • NIM decreased 3 bps vs.
Slide 27: Noninterest Income
27 Noninterest Income Key Performance Drivers • 2Q21 adjusted noninterest income • $8.7mm decrease in mortgage income • $5.6mm decrease in pipeline valuation • $2.1mm decrease in gain on sales • 2Q21 Mortgage activity • Production was $497mm • 61% purchase / 39% refi • 64% sold in secondary market •
Slide 28: Noninterest Expense
28 Noninterest Expense Key Performance Drivers • 2Q21 adjusted noninterest expense • Increase in incentives and annual merit • 2Q21 adjusted efficiency ratio of 57.74% $ in millions 1Non-GAAP financial measure which management believes is useful in evaluating the financial results of the Company – s
Slide 29: Paycheck Protection Program (PPP)
29 Paycheck Protection Program (PPP) $ in millions 1 Net of unearned fees Remaining unamortized fees at 6/30/21 • $2.4mm from Round 1 • $23.2mm from Round 2 83% of Round 1 loans have been forgiven by the SBA 18% of Round 2 loans have been forgiven by the SBA $1,124 ($469) $66 $721 1Q21 Forgiveness/P
Slide 30: Credit
30 -1.05% 2.32% 1.71% 1.08% 3.86% 1.80% -0.01% -0.94% 13.67% 16.94% 16.43% 24.74% 28.41% 19.96% 20.84% 2015Y 2016Y 2017Y 2018Y 2019Y 2020Y 1Q21 2Q21 Net Charge-offs / NPL's ONB Peer Avg -0.02% 0.04% 0.03% 0.02% 0.05% 0.02% 0.00% -0.01% 0.16% 0.20% 0.17% 0.21% 0.22% 0.21% 0.19% 2015Y 2016Y 2017Y 2018
Slide 31: Allowance for Credit Losses
31 Allowance for Credit Losses 1 Excludes loans held for sale $ in millions $114.0 ($4.7) ($0.1) $0.2 $109.4 Allowance 3/31/2021 Economic Forecast Portfolio Changes Qualitative Factors Allowance 6/30/2021 Allowance for Credit Losses Key Economic Assumptions Other Key Model Inputs • Commercial Asset
Slide 32: Outlook
32 Outlook Category Outlook Commercial Loans Healthy pipeline heading into 3Q bodes well for future growth; PPP runoff expected to be concentrated in late 2021 Net Interest Income / Net Interest Margin Net interest income should remain stable given expected earning asset growth and reduced funding c
Slide 33: Appendix
Appendix = OLD NATIONAL BANCORP’
Slide 34: Projected Purchase Accounting Impact
34 Projected Purchase Accounting Impact $ in millions 1 Projections are updated quarterly, assumes no prepayments and are subject to change 2 Non-GAAP financial measure which management believes is useful in evaluating the financial results of the Company – see Appendix for Non- GAAP reconciliation
Slide 35: Scrutinized Industries
35 Scrutinized Industries 6.8% Other Loans 93.2% Credit Quality Scrutinized Industries 1 Includes loans held for sale $ in millions Data as of 6/30/2021 Excludes PPP Loans % of Industry Balance Total Loans Exposure CRE - Senior Housing $282 2.2% $297 Restaurants $207 1.6% $223 Arts/Entertainment $14
Slide 36: Net Interest Income Sensitivity
36 Fixed 54%Variable 40% Floating 6% Noninterest- bearing 34% CDs (Maturing/ Repricing ≤ 1-Year) 4% Other Interest- bearing 62% Year 1&2 NII Impact vs Rates Unchanged $29.5 2.8% $(31.2) -2.9% +50 bps Parallel Shock -50 bps Parallel Shock • 46% of loans are variable/floating-rate1 • $400mm of downrat
Slide 37: Commitment to Strong Corporate Governance
37 Commitment to Strong Corporate Governance • Stock ownership guidelines have been established for named executive officers as follows: • As part of Old National’s Proxy filed March 8, 2021, each named executive officer has met their stock ownership requirement Position or Salary Target Ownership G
Slide 38: 2021 Executive Compensation
38 2021 Executive Compensation • Tied to long term shareholder value Performance Measure Weight Corporate EPS 60% ROATCE 20% Efficiency Ratio 20% Short Term Incentive Plan Proxy 5 Performance Measure Weight Performance-based (50% TSR & 50% ROATCE) 75% Service-based 25% Long Term Incentive Plan Proxy
Slide 39: Board of Directors
39 Board of Directors Director Market Background Andrew E. Goebel Evansville, IN 34-year career in the energy industry, most recently serving as President and Chief Operating Officer of Vectren Corporation Jerome F. Henry Jr. Ft. Wayne, IN Owner and President of Midwest Pipe & Steel, Inc., a company
Slide 40: Non-GAAP Reconciliations
40 Non-GAAP Reconciliations $ in millions, except per share data 2Q20 1Q21 2Q21 As Reported: Net Interest Income (FTE) $149.0 $151.6 $153.4 Add: Fee Income 58.5 56.7 51.5 Total Revenue (FTE) $207.5 $208.3 $204.9 Less: Provision (22.5) 17.4 4.9 Less: Noninterest Expense (120.2) (117.7) (129.6) Pre-Ta
Slide 41: Non-GAAP Reconciliations
41 Non-GAAP Reconciliations $ in millions 2Q20 3Q20 4Q20 1Q21 2Q21 As Reported: Net Interest Income (FTE) $149.0 $149.0 $164.6 $151.6 $153.4 Add: Fee Income 58.5 64.7 58.5 56.7 51.5 Total Revenue (FTE) $207.5 $213.7 $223.1 $208.3 $204.9 Less: Noninterest Expense 120.2 120.2 142.3 117.7 129.6 Pre-Pro
Slide 42: Non-GAAP Reconciliations
42 Non-GAAP Reconciliations $ in millions 1 Year-over-year basis point change in noninterest expense plus change in total revenue 2 Year-over-year basis point change in adjusted noninterest expense plus change in adjusted total revenue 2Q20 1Q21 2Q21 Noninterest Expense As Reported $120.2 $117.7 $12
Slide 43: Non-GAAP Reconciliations
43 Non-GAAP Reconciliations $ in millions , except per share data 2Q20 1Q21 2Q21 Net Interest Income As Reported $145.6 $148.1 $149.9 FTE Adjustment 3.4 3.5 3.5 Net Interest Income (FTE) $149.0 $151.6 $153.4 Average Earning Assets $19,007.7 $20,601.7 $21,095.3 Net Interest Margin 3.06% 2.88% 2.84% N
Slide 44: Non-GAAP Reconciliations
44 Non-GAAP Reconciliations $ in millions 2Q21 Net Income As Reported $62.8 Less: Debt Securities Gains/Losses (net of tax) (0.5) Add: Diligence, Acquisition and Integration Charges (net of tax) 4.9 Add: ONB Way Charges (net of tax) 0.3 Adjusted Net Income $67.5 Average Total Assets $23,737.5 Return
Slide 45: Peer Group
45 Peer Group Like-size, publicly-traded financial services companies, generally in the Midwest, serving comparable demographics with comparable services as ONB Associated Banc-Corp ASB BancorpSouth Bank BXS Bank OZK OZK Cadence Bancorporation CADE Commerce Bancshares, Inc. CBSH F.N.B. Corporation F
Slide 46: Old National Investor Relations Contact
46 Old National Investor Relations 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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