Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (February 2012)
51 slides from Old National Bancorp's investor presentation, Feb 17, 2012
Slide 1: Old National Bancorp Investment Thesis
Old National Bancorp Investment ThesisFinancial Data as of 12-31-11 Dated: February 17, 2012
Slide 2: 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 a Registration Statement on Form S-4 that will include a Proxy Statement of Indiana Community Bancorp and a Prospectus of Old National Bancorp, a
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's financial condition, results of operations, asset and c
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: The Old National Distinction
The Old National Distinction Through execution of a sound strategy, ONB is well positioned for the futureStrengthen the risk profileConsistent application of conservative underwriting standards has led to strong loan quality relative to peers (excluding covered loans)4Q11 net charge-offs of .79% vs.
Slide 6: Strong 4Q11 Earnings Performance
Strong 4Q11 Earnings Performance Net income of $22.2 million, or $.23 per shareVs. $16.8 million, or $.18 per share, in 3Q11Vs. $5.7 million, or $.07 per share, in 4Q10Net interest margin expanded4.20% in 4Q11 vs. 3.96% in 3Q11Revenues, net of securities gains, increased 5.0% over 3Q11 and 32.9% ove
Slide 7: Strong Full-Year 2011 Earnings Performance
Strong Full-Year 2011 Earnings Performance Net income of $72.5 million, or $.76 per share$38.2 million, or $.44 per share, in 2010Earnings driven byReduced credit costsBenefits of Integra and Monroe acquisitionsContinued focus on reducing noninterest expenses
Slide 8: Adapting and Reshaping our Business For Growth
Adapting and Reshaping our Business For Growth Streamlining processes to make it simple, easy and fast for clients to do business with Old NationalCommercial Banking Unit 2nd review committee for new lending opportunitiesFocus on cross sell of insurance and wealth managementIntroduction of Quick Hom
Slide 9: Consistent Improvement: Pre-Tax, Pre-Provision Income
Consistent Improvement 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Pre-Tax, Pre-Provision Income, Net of Securities Gains and Merger and Integration Expenses 4 18 17 16.8 9.2 26.6 27.8 28.6 34.4 1Non-GAAP financial measures management believes is useful in evaluating the financial results of the Co
Slide 10: Consistent Improvement: Noninterest Expense and Revenues
Consistent Improvement 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Noninterest expense, less merger and integration costs 90.8 77.1 77.9 76.1 83.3 76.4 77.6 88.4 88.5 Total Revenues 91.6 98.1 98.1 96.1 96.2 104.2 105.9 119.9 125.7 1Non-GAAP financial measures management believes is useful in evalua
Slide 11: Net Interest Margin
Net Interest Margin 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 ONB Core 0.0333 0.034 0.0342 0.0346 0.0341 0.0329 0.0328 0.0351 Monroe Accretion 0.0021 0.0038 0.0029 0.0037 Integra Accretion 0.0039 0.0032 Net interest margin1 increased 24 bps2 to 4.20%Includes 37 bps and 32 bps, respectively, from accre
Slide 12: Corporate Summary
Corporate Summary Corporate Summary Corporate Summary 1See appendix for Non-GAAP reconciliation Investor Inquiries:Lynell J. Walton, CPASVP - Director of Investor Relations812-464-1366 lynell.walton@oldnational.com 812-464-1366 lynell.walton@oldnational.com 812-464-1366 lynell.walton@oldnational.com
Slide 13: New Old National Landscape
New Old National Landscape Old NationalIndiana Community Strategic fill-in of attractive I-65 corridor in South Eastern Indiana On January 25, 2012, Old National announced its intent to acquire Indiana Community Bancorp (INCB) headquartered in Columbus, Indiana
Slide 14: Unemployment / Deposit Distribution
Unemployment / Deposit Distribution Unemployment / Deposit Distribution 56.9% / 7.5% .5% / 8.9% 1.6% / 9.8% 0% / 9.2% 40.5% / 8.6% .5% / 8.2% % of ONB's Indiana deposits* / Regional unemployment Unemployment data provided by Indiana Department of Workforce Development and Bureau of Labor Statistics
Slide 15: Our Indiana Footprint Economic Vital Signs
Our Indiana Footprint Economic Vital Signs Economic Vital Signs * Preliminary **Avg. over Dec. 2011 Strong Stable or Mixed Decline Sources: US Bureau of Labor Statistics, US Dept. of Labor, Stats Indiana, Indiana Association of Realtors, Google Finance, IN Dept. of Revenue
Slide 16: Asset/Liability Composition
Asset/Liability Composition Investments Commercial Loans Commercial Real Estate Loans Consumer Loans* Residential Real Estate Other Asset 0.38197 0.16677 0.12974 0.12733 0.09203 0.10216 NOW & Savings Demand Deposits Money Markets Other Time Borrowings Brokered CDs Other Liability 0.4144 0.2282 0.039
Slide 17: Loan Concentrations - Excluding Covered Loans
Loan Concentrations - Excluding Covered Loans At 12-31-11 Commercial Commercial Real Estate Diversified Commercial Loan Portfolio
Slide 18: Conservative Lending Limits
Conservative Lending Limits Conservative Lending Limits In-house lending limits conservative relative to ONB's legal lending limit at 12-31-11 of $102.5 million per borrower 1Includes entire relationship with borrower
Slide 19: Proactive Risk Management
Proactive Risk Management No subprime business lineConservative stance on commercial real estateStarting mid-year 2006Reduction in higher-risk residential loansSold $405.6 million in 2004Sale of credit card portfolioJune 2000Minimal construction and land loan exposure3Q11 at 3.62% vs. 3Q11 peer aver
Slide 20: Credit Quality - Excluding Covered Loans
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Provision Expense 21.9 5.7 6.8 17 17.3 12 12.2 21.8 9.3 8 6.4 7.1 3.3 3.2 0 0.1 Quarterly Net Charge-Offs 6.1 15.9 5.5 13.4 12.6 13.6 12.7 21.8 6.7 8.2 6.1 6.9 2.9 5.8 4.9 8.2 2008 2009 2010 $40.8 $60.8 $28.0 $51.5 > $63
Slide 21: Credit Quality - 30+ Day Delinquent Loans
Credit Quality - Excluding Covered Loans 30+ Day Delinquent Loans Specific Segment Overview Specific Segment Overview Specific Segment Overview 1As a % of end of period loans Peer Group data per SNL Financial See Appendix for definition of Peer Group 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
Slide 22: Credit Quality - Excluding Covered Loans
4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 ONB Consolidated 124.855 86.587 101.019 94.607 103.5 104.861 100.652 75 84 115.8 105.6 98.5 80.1 ONB Excluding Monroe 94.6 85.8 77.6 62.2 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excluding Covered Loans
Slide 23: Credit Quality - Excluding Covered Loans
4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 ONB Consolidated 116.1 122.4 113.6 101 90.1 92.4 88.8 101 103.4 102 110.9 101.6 88.8 ONB Excluding Monroe 83 98.7 90.6 79.3 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excluding Covered Loans
Slide 24: Credit Quality - Excluding Covered Loans
4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 ONB Consolidated 64 77.4 77.7 73.7 67 68.1 68.86 69.8 70.9 121.4 118.4 124.8 115.3 ONB Excluding Monroe 82.4 79.7 84.2 78.4 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excluding Covered Loans
Slide 25: Credit Quality - Excluding Covered Loans
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 ONB Consolidated 0.9273 0.9477 0.9527 0.9448 0.5366 0.547 0.486 0.4615 ONB Excluding Monroe 0.84 0.83 0.68 0.65 Peer Group data per SNL Financial See Appendix for definition of Peer Group Credit Quality - Excluding Covered Loans 1 Does not reflect impact of $3
Slide 26: Credit Quality - ALLL and Mark Summary
Credit Quality - ALLL and Mark Summary Credit Quality - ALLL and Mark Summary $ in millions 1 Management believes this reconciliation to be useful to demonstrate that the day one fair value mark considers credit risk and should be included as part of total coverage
Slide 27: Loan Portfolio at December 31, 2011
Loan Portfolio at December 31, 2011 Commercial Commercial Real Estate Consumer Residential Mortgage HELOC Covered Loans 3Q11 1245.5 1072.3 645.2 1000.4 225.1 626.4 MSGraph.Chart.8 $124.8 Comml, $325.9 CRE, $128.7 HELOC, $47.0 Resi Mortg $ in millions
Slide 28: Covered Assets
Covered Assets Covered Assets Covered Assets $ in millions Refer to Appendix for ONB Risk Grade Table Refer to Appendix for ONB Risk Grade Table *Covered loans shown net of $220.7 million discount Commercial Loans *On this portfolio of covered loans, the FDIC will reimburse Old National for 80% of t
Slide 29: Credit Area Enhancements
Credit Area Enhancements Separate Loss Share Division createdCommercial credit underwriting officers and special assets associatesEngaged a third-party firm with FDIC Loss Share experience to provide guidance to includeActions necessary to preserve Loss Share coverageTypes of actions/decisions permi
Slide 30: Credit Area Enhancements
Credit Area Enhancements Separate staff allowsFocus on FDIC requirements in workout (and currently performing) to maximize Loss Share benefitsSeparation of Loss Share bank efforts from legacy portfolio credit administration to insure we don't diminish strong underwriting practices and management of
Slide 31: Capital Management - Recent Actions
Capital Management - Recent Actions Approved share repurchase program 1-26-12Up to 2.0 million shares of ONB common stockEnds 1-31-13Approved 28.6% increase in cash dividend to $.09 from $.07 per common shareRetirement of $150 million of 6.75% subordinated bank notes on 10-17-11Strong capital positi
Slide 32: Strong Capital Position
Strong Capital Position 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 ONB 0.1244 0.1304 0.1398 0.1458 0.145 0.1408 0.1482 0.1342 0.1446 Peer Group Average 0.0989 0.11 0.1133 0.1158 0.1144 0.1169 0.1179 0.1194 ONB Guideline 0.09 0.09 0.09 0.09 0.09 0.09 0.09 0.09 0.09 Capital levels remain strong foll
Slide 33: Investment Portfolio
Investment Portfolio Investment Portfolio *Includes market value for both available for sale and held to maturity securities
Slide 34: Municipal Bond Portfolio by State
Municipal Bond Portfolio by State IN TX PA KY MO All Other 0.426 0.062 0.061 0.052 0.054 0.345 Based on book value at 12-31-11 Illinois exposure consists of 2 bonds representing .24% of entire municipal portfolio
Slide 35: 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 36: M&A Strategy
M&A Strategy Focus on community banking, client relationships and consistent quality earningsTarget geographic marketsMid-sized markets within or near existing franchise with average to above average growth ratesIn market community banks where significant cost saves could be achieved
Slide 37: ONB Acquired Monroe Bancorp
ONB Acquired Monroe Bancorp Transaction closed 1-1-11Provides #1 market share in Monroe County (Bloomington, Indiana)Home to Indiana UniversityMarket has above-average growth rates and lower unemployment vs. state of IndianaSystems conversion occurred 5-14-11Balance sheet acquired1$419.4 million in
Slide 38: FDIC Acquisition of Integra Bank, NA
FDIC Acquisition of Integra Bank, NA Transaction Due DiligenceFinancial ImpactCapitalClosing / 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 loss s
Slide 39: ONB to Acquire INCB - Highlights
ONB to Acquire INCB - Highlights Transaction Due DiligenceFinancial ImpactCapitalTARP RepaymentAcceptable Risk ProfileClosing Consideration: 100% stock transaction at an exchange ratio of 1.90, resulting in 6.6 million shares issued Deal value = $79.2 million at ONB price of $12.00 Tangible premium/
Slide 40: Possible Credit-Related Adjustments to Exchange Ratio
Possible Credit-Related Adjustments to Exchange Ratio Deal value subject to change based on increase or decrease of credit mark and delinquencies1.9987 to 1.3396Loan mark based on changes in impairmentDelinquencies based on changes in "delinquent loans" from announcement date to closing dateDelinque
Slide 41: Appendix
Appendix Old National Bancorp
Slide 42: Pre-Tax, Pre-Provision Income
Pre-Tax, Pre-Provision Income1 Pre-Tax, Pre-Provision Income1 1Non-GAAP financial measures management believes is useful in evaluating the financial results of the Company 20.3% 273.9% 30.7% 4.8%
Slide 43: CD Maturity Schedule
CD Maturity Schedule CD Maturity Schedule Represents CD maturities at December 31, 2011
Slide 44: Shared National Credits - Excludes Covered Loans
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 45: ONB Loan Risk Grades
ONB Loan Risk Grades ONB Loan Risk Grades
Slide 46: Other Classified Assets
Other Classified Assets Other Classified Assets
Slide 47: Quick Home Refi (QHR) Product Statistics
Quick Home Refi (QHR) Product Statistics Quick Home Refi (QHR) Product Statistics Based on December 31, 2011 portfolio data Based on December 31, 2011 portfolio data
Slide 48: Securities with OTTI
Securities with OTTI Securities with OTTI $ in thousands
Slide 49: Non-GAAP Reconciliations
Non-GAAP Reconciliations Non-GAAP Reconciliations End of period balances - $ in millions
Slide 50: The Old National Peer Group
The Old National Peer Group The Old National Peer Group Like-size, publicly-traded financial services companies, generally in the Midwest, serving comparable demographics with comparable services as ONB
Slide 51: Investor Contact
Investor Contact Additional information can be found on theInvestor Relations web pages atwww.oldnational.comInvestor Inquiries:Lynell J. Walton, CPASVP - Director of Investor Relations812-464-1366lynell.walton@oldnational.com
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