Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (August 2013)
62 slides from Old National Bancorp's investor presentation, Aug 5, 2013
Slide 1: Old National Bancorp Investment Thesis
Old National Bancorp Investment Thesis Financial Data as of 6-30-13 Dated: August 5, 2013
Slide 2: Executive Summary
Old National Bancorp Investment Thesis Executive Summary Slides 2 to 10 Financial Data as of 6-30-13 Dated: August 5, 2013
Slide 3: Disclosures
Disclosures Forward-Looking Statement This Investment Thesis 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 operat
Slide 4: 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 5: Commitment to Excellence
Commitment to Excellence Commitment to Excellence ETHISPHERE 2013
Slide 6: Corporate Summary
Corporate Summary MARKET STATISTICS AND SUMMARY OVERVIEW ($ in millions) MARKET STATISTICS AND SUMMARY OVERVIEW ($ in millions) MARKET STATISTICS AND SUMMARY OVERVIEW ($ in millions) Headquarters Headquarters Evansville, Indiana Evansville, Indiana Evansville, Indiana Evansville, Indiana Stock Excha
Slide 7: The Old National Landscape
The Old National Landscape The Old National Landscape MSA Market Rank Deposit Market Share Bloomington, IN 1 22.2% Central City, KY 1 40.0% Danville, IL 1 16.1% Evansville, IN-KY 1 31.5% North Vernon, IN 1 37.7% Columbus, IN 2 26.4% Jasper, IN 2 25.2% Seymour, IN 2 26.3% Terre Haute, IN 2 14.5% Vinc
Slide 8: Deposit / Unemployment Distribution
Deposit / Unemployment Distribution Deposit / Unemployment Distribution 43.9% / 8.1% .6% / 8.5% 1.9% / 9.0% 0% / 9.9% 40.7% / 8.5% 12.9% / 8.1% % of ONB's Indiana deposits1 / Regional unemployment Unemployment data provided by Indiana Department of Workforce Development and Bureau of Labor Statistic
Slide 9: Our Indiana Footprint Economic Vital Signs
Our Indiana Footprint Economic Vital Signs Indicator Outlook Latest Statistics (June 2013) Latest Statistics (June 2013) Trend (YOY change from Jun. 2012) Jobs Nonfarm Employment* Unemployed* 2,946,000 264,700 Jobs increased 40,600 Unemployment rate remained 8.4 % (Jun. 2013 rate was 8.4%) Unemploym
Slide 10: 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 11: Second Quarter 2013 Highlights
Second Quarter 2013 Highlights Net income of $28.5 million, or $.28 per share 4.7% increase over $27.2 million, or $.29 per share1, in 2Q12 18.9% increase over $23.9 million, or $.24 per share, in 1Q13 Highlights of current quarter $94.4 million, or 7.2% growth in end of period commercial loans over
Slide 12: Old National Bancorp Investment Thesis
Old National Bancorp Investment Thesis Financial Data as of 6-30-13 Dated: August 5, 2013
Slide 13: 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 $34.3 $33.1 13.6% increase
Slide 14: FTE and Asset Change
FTE and Asset Change Acquired Monroe Bancorp 1-1-11 FDIC acquisition of Integra Bank 7-29-11 Acquired IN Community Bancorp 9-15-12 $ in millions 20% increase in total assets with a corresponding 8% decrease in FTE
Slide 15: Net Interest Margin
Net Interest Margin1 1 Fully taxable equivalent basis 3.67% 3.96% 4.20% 2 ONB Core includes contractual interest income of Monroe, Integra and IN Community loans 2 4.20% 4.26% 4.09% 4.34% Earning assets reflect purchased assets, net of discount
Slide 16: Asset/Liability/Revenue Composition
Asset/Liability/Revenue Composition *Consumer Loans consist of 20% direct, 48% indirect and 32% HELOC. Period-End 6-30-13 Second Quarter 2013 Assets Liabilities Total Revenues, excluding Securities Gains *Other Income includes 1.3% for Mortgage Banking Revenue, 1.3% for Company-Owned Life Insurance,
Slide 17: 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 2Q12 to 2Q13 increase of $375.1 million, or 9.1%, in average ONB Core loans
Slide 18: Commercial Loans
Commercial Loans $ in millions 20.8% increase in quarterly production 1Q13 to 2Q13 $94.4 million growth 1Q13 to 2Q13 Largest commercial loan growth since 4Q08 1 End of period - excludes covered loans
Slide 19: Loan Portfolio at June 30, 2013
Loan Portfolio at June 30, 2013 Commercial $1,409.5 Commercial Real Estate 1,198.0 Consumer 650.1 Residential Mortgage 1,413.2 HELOC 242.0 Covered Loans (Integra) 288.6 Total Loans $5,201.4 $39.3 Comml, $130.7 CRE, $86.6 HELOC, $32.0 Resi Mortg $ in millions - period-end balances vs. quarterly avera
Slide 20: Conservative Lending Limits/Risk Grades
Conservative Lending Limits/Risk Grades Borrower1 Asset Quality Rating (Risk Grades) In-House Lending Limit1 ($ in millions) 0 - Investment Grade $30 1 - Minimal Risk $25 2 - Modest Risk $25 3 - Average Risk $20 4 - Monitor $15 5 - Weak Monitor $10 6 - Watch $7.5 7 - Criticized (Special Mention) $5
Slide 21: Quick Home Refi (QHR) Product Statistics
Quick Home Refi (QHR) Product Statistics Term 10 years 26% 15 years 36% 20 years 15% 25 years 7% 30 years 16% Based on June 30, 2013 portfolio data Portfolio Statistics Average loan outstanding $77,333 Average yield of closed loans 3.88% Average Credit Score 779 Average FICO 303 Average debt to inco
Slide 22: Loan Concentrations - Excluding Covered Loans
Loan Concentrations - Excluding Covered Loans At 6-30-13 Commercial Commercial Real Estate Diversified Commercial Loan Portfolio
Slide 23: Purchased Impaired Loans
Purchased Impaired Loans $ in millions Monroe Bancorp Integra Bank Indiana Community Bancorp Post acquisition data is cumulative
Slide 24: Credit Quality - Net Charge-Offs
Credit Quality - Net Charge-Offs $5.2 $4.9 $5.0 $1.8 $ in millions $.8 $.2 $3.0 $1.1 ($.5) $.4 $1.2 $.9 $.7 1 Includes both covered and non-covered loans 1 ONB Consolidated 0.56% 0.40% 0.71% 0.36% 0.13% 0.03% 0.17% 0.17% 0.04% $.5 $.6 ($.8) $.0 $.4 Full-year 2012 = 0.17%
Slide 25: Credit Quality - Excluding Covered Loans
Credit Quality - Excluding Covered Loans 1 Does not reflect impact of $14.5 million remaining loan discount on Monroe's loan portfolio or the $49.6 million loan discount on Indiana Community's loan portfolio
Slide 26: Credit Quality - ALLL and Mark Summary
Credit Quality - ALLL and Mark Summary Allowance For Loan and Lease Loss/Loan Mark Summary Allowance For Loan and Lease Loss/Loan Mark Summary Allowance For Loan and Lease Loss/Loan Mark Summary Allowance For Loan and Lease Loss/Loan Mark Summary Allowance For Loan and Lease Loss/Loan Mark Summary A
Slide 27: Covered Assets
Covered Assets Grades 1 through 6 $179.5 $160.4 $147.0 $111.4 $108.1 $89.1 Criticized - Grade 7 20.2 16.2 14.3 9.3 14.2 14.0 Classified - Grade 8 27.5 23.3 24.7 17.6 15.7 6.6 Nonaccrual - Grade 9 158.5 137.7 120.6 100.1 62.0 60.3 Retail Loans 162.9 151.7 142.2 133.9 126.4 118.6 Total Covered Loans $
Slide 28: 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 29: Credit Quality - Excludes Covered Loans
Credit Quality - Excludes Covered Loans 30+ Day Delinquent Loans 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Commercial .35% .51% .29% .16% .24% .16% .27% .15% .07% Commercial Real Estate .19% .34% .78% .25% .19% .38% .35% .26% .16% First Mortgage Residential Real Estate 1.03% .82% .99% .71% .73% 1
Slide 30: Credit Quality - Excluding Covered Loans
$ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excluding Covered 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: Credit Quality - Excluding Covered Loans
$ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excluding Covered Loans
Slide 33: Shared National Credits - Excludes Covered Loans
Shared National Credits - Excludes Covered Loans ($ in millions) 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Count (#)* 7 7 7 7 7 7 7 7 Total exposure $70.5 $65.0 $64.5 $63.8 $63.3 $70.0 $70.0 $70.0 Dollar outstanding $22.9 $19.1 $18.0 $22.1 $23.1 $20.8 $20.0 $19.3 Largest exposure $15.0 $10.0 $10.0 $10
Slide 34: Investment Portfolio
Investment Portfolio ($ in millions) Book Value Mar. 31, 2013 Book Value Jun. 30, 2013 Market Value* Mar. 31, 2013 Market Value* Jun. 30, 2013 Market Value $ Change Federal National Mortgage Association $424.0 $388.9 Federal Home Loan Mortgage Corporation 138.8 133.0 Federal Farm Credit Bank 28.9 34
Slide 35: Investment Portfolio Purchases 2Q13
Investment Portfolio Purchases 2Q131 2Q13 Purchases- Book Value Treasuries $2,999,973 Agencies 13,013,959 Pools 5,352,126 CMOs 103,595,121 Municipals 41,111,554 Corporates 10,207,104 ABS 9,467,344 Total $185,747,181 1 Data as of June 30, 2013, for purchases made throughout 2Q13
Slide 36: Other Classified Assets
Other Classified Assets ($ in millions) Book Value Mar. 31, 2013 Book Value Jun. 30, 2013 Market Value Mar. 31, 2013 Market Value Jun. 30, 2013 Corporate Bonds $8.0 $8.0 $7.6 $7.5 Pooled Trust Preferred Securities $23.1 $23.0 $8.6 $9.2 Non-Agency Mortgage Backed Securities $24.6 $17.3 $25.2 $18.0 Ot
Slide 37: Securities with OTTI
Securities with OTTI *Lowest credit rating provided by any nationally recognized credit rating agency. ($ in thousands) Vintage Lowest Credit Rating* Book Value at Jun. 30, 2013 YTD OTTI 2Q13 OTTI Life to Date BAFC Ser 4 2007 CCC $10,753 $- $441 CWALT Ser 73CB (security sold 2Q13) 2005 - 441 CWALT S
Slide 38: Municipal Bond Portfolio by State
Municipal Bond Portfolio by State Based on book value at 6-30-13 Illinois exposure consists of 26 bonds representing 1.2% of entire municipal portfolio
Slide 39: CD Maturity Schedule
CD Maturity Schedule Bucket Amount ($ in 000's) Rate 0-30 days 96,449 2.10% 31-60 days 113,255 2.52% 61-90 days 83,701 1.82% 91-120 days 47,956 1.39% 121-150 days 55,138 1.42% 151-180 days 46,634 0.66% 181-210 days 46,185 1.39% 211-240 days 26,946 0.57% 241-270 days 35,974 0.65% 271-300 days 31,854
Slide 40: 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 41: Interest Rate Sensitivity
Interest Rate Sensitivity 2-year cumulative impact on Net Interest Income Comparison to Flat Rates at 6/30/13 1Bank of America values are estimates Forward Yield Curve Forward Yield Curve June 30, 2013 % Change Without Bank of America 1.67% With Bank of America1 1.82% Parallel 200 bps Shock Parallel
Slide 42: Interest Rate Sensitivity
Interest Rate Sensitivity Less asset sensitive than June 2012 (end of period) $286 million growth in residential real estate since 2Q12 $398.2 million growth in investments since 2Q12 Actions taken or pending Investment portfolio declined $177.8 million compared to end of period 1Q13 Since November
Slide 43: Capital Ratios
Capital Ratios Tangible Common Equity - 3/31/2013 $834.2 2Q Earnings 28.5 2Q Share Repurchase (6.5) 2Q Dividend (10.1) Changes in OCI - Securities (46.5) Changes in OCI - Other 1.9 Changes in Goodwill & Intangibles 1.1 Tangible Common Equity - 6/30/2013 $802.6 Peer Group data per SNL Financial See A
Slide 44: Capital Ratios
Capital Ratios Peer Group data per SNL Financial See Appendix for definition of Peer Group
Slide 45: 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 46: 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 47: 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 103 branches + 18 pending
Slide 48: 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 49: Transforming Old National's Landscape
Transforming Old National's Landscape 2004 2013 2013 2013
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 $5.0 million Transaction closed July 12, 2013
Slide 54: Old National Bancorp Appendix
Old National Bancorp Appendix
Slide 55: Committed to Strong Corporate Governance
Committed to Strong Corporate Governance Stock ownership guidelines have been established for named executive officers as follows: As of December 31, 2012, each named executive officer has met their stock ownership requirement Position or Salary Target Ownership Guidelines Chief Executive Officer 5X
Slide 56: Executive Compensation
Executive Compensation Tied to long term shareholder value: Short Term Incentive Plan (CEO, CFO, Chief Legal Counsel) Short Term Incentive Plan (CEO, CFO, Chief Legal Counsel) Performance Measure Weight Corporate Net Income 70% Net Charge-Offs 15% Efficiency Ratio 15% Long Term Incentive Plan (CFO,C
Slide 57: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ in millions) 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Total Revenues $105.9 $119.9 $125.7 $123.4 $124.5 $115.0 $135.6 $125.4 $125.4 Less: Provision for Loan Losses (3.2) .1 (1.0) (2.1) (.4) (.4) (2.2) (.8) 3.7 Less: Noninterest Expense (79.8) (95.2) (93.7) (91.3) (86.
Slide 58: Non-GAAP Reconciliations
Non-GAAP Reconciliations (end of period balances- $ in millions) 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Total Shareholders' Equity $895.7 $878.8 $984.0 $1,008.3 $1,027.7 $1,033.6 $1,050.4 $1,073.7 $1,186.8 $1,194.6 $1,199.7 $1,167.0 Deduct: Goodwill and Intangible Assets (195.6)
Slide 59: Non-GAAP Reconciliations
Non-GAAP Reconciliations (end of period balances- $ in millions) 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Total Shareholders' Equity $895.7 $878.8 $984.0 $1,008.3 $1,027.7 $1,033.6 $1,050.4 $1,073.7 $1,186.8 $1,194.6 $1,199.7 $1,167.0 Deduct: Goodwill and Intangible Assets (195.6)
Slide 60: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ in thousands) Three Months Ended June 30, 2011 Three Months Ended Sept. 31, 2011 Three Months Ended Dec. 31, 2011 Three Months Ended Mar. 31, 2012 Three Months Ended June 30, 2012 Three Months Ended Sept. 30, 2012 Three Months Ended Dec. 31, 2012 Three Months Ended Mar. 3
Slide 61: ONB's Peer Group
ONB's Peer Group 1st Source Corporation SRCE Heartland Financial USA, Inc. HTLF BancFirst Corporation BANF IBERIABANK Corporation IBKC BancorpSouth, Inc. BXS MB Financial, Inc. MBFI Bank of Hawaii Corporation BOH Park National Corporation PRK Chemical Financial Corporation CHFC Pinnacle Financial Pa
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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