Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (November 2011)
46 slides from Old National Bancorp's investor presentation, Nov 16, 2011
Slide 1: Old National Bancorp Investment Thesis
Old National Bancorp Investment Thesis Financial Data as of 9-30-11
Slide 2: 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, statements relating to Old National's financial condition, asset and credit quality tr
Slide 3: 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 4: The Old National Distinction
The Old National Distinction Through execution of a sound strategy, ONB is well positioned for the future Strengthen the risk profile Consistent application of conservative underwriting standards has led to strong loan quality relative to peers 3Q11 net charge-offs of .50% vs. 3Q11 peer average of .
Slide 5: Strong 3Q11 Performance
Strong 3Q11 Performance Net income of $16.8 million, or $.18 per share Vs. $17.0 million, or $.18 per share, in 2Q11 Vs. $11.9 million, or $.13 per share, in 3Q10 Net interest margin expanded 3.96% in 3Q11 vs. 3.67% in 2Q11 Revenues, net of securities gains, increased 11.0% over 2Q11 and 25.9% over
Slide 6: Adapting and Reshaping our Business For Growth
Adapting and Reshaping our Business For Growth Streamlining processes to make it simple, easy and fast for clients to do business with Old National Commercial Banking Unit 2nd review committee for new lending opportunities Focus on cross sell of insurance and wealth management Introduction of Quick
Slide 7: Pre-Tax, Pre-Provision Income
Pre-Tax, Pre-Provision Income1 ($ in millions) 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 Total Revenues $91.6 $98.1 $98.1 $96.1 $96.2 $104.2 $105.9 $119.9 Less: Provision for Loan Losses (21.8) (9.3) (8.0) (6.4) (7.1) (3.3) (3.2) .1 Less: Noninterest Expense (90.8) (77.1) (77.9) (76.1) (83.3) (79.9) (
Slide 8: Net Interest Margin
Net Interest Margin 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 ONB Core 0.0333 0.034 0.0342 0.0346 0.0341 0.0329 0.0328 Monroe Accretion 0.0021 0.0038 0.0029 Integra Accretion 0.0039 Net interest margin1 increased 29 bps2 to 3.96% Includes 29 bps and 39 bps, respectively, from accretion of balance sheet mar
Slide 9: Corporate Summary
Corporate Summary MARKET STATISTICS AND SUMMARY OVERVIEW ($ 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 10: New Old National Landscape
New Old National Landscape New Old National Landscape Old National Integra Old National acquired Integra Bank through an FDIC-assisted transaction on 7-29-11
Slide 11: Local Unemployment
Local Unemployment Local Unemployment 56.9% / 7.4% ..5% / 8.6% 1.6% / 9.8% 0% / 9.0% 40.5% / 8.4% ..5% / 8.0% % of ONB's Indiana deposits* / Regional unemployment Unemployment data provided by Indiana Department of Workforce Development and Bureau of Labor Statistics September 2011 Unemployment: Ind
Slide 12: Asset/Liability Composition
Asset/Liability Composition NOW & Savings Demand Deposits Money Markets Other Time Borrowings Brokered CDs Other Liability 0.39746 0.21866 0.03872 0.21078 0.09929 0.0031 0.03199 Investments Commercial Loans Commercial Real Estate Loans Consumer Loans* Residential Real Estate Covered Loans Other Asse
Slide 13: Loan Concentrations - Excluding Covered Loans
Loan Concentrations - Excluding Covered Loans At 9-30-11 Commercial Commercial Real Estate Diversified Commercial Loan Portfolio
Slide 14: Conservative Lending Limits
Conservative Lending Limits Borrower* Asset Quality Rating In-House Lending Limit1 ($ in millions) 0 $25 1, 2, or 3 $20 4 $15 5 $10 6 (Watch) $7.5 7 (Special Mention) $5 In-house lending limits conservative relative to ONB's legal lending limit at 9-30-11 of $98.8 million per borrower 1Includes enti
Slide 15: Proactive Risk Management
Proactive Risk Management No subprime business line Conservative stance on commercial real estate Starting mid-year 2006 Reduction in higher-risk residential loans Sold $405.6 million in 2004 Sale of credit card portfolio June 2000 Minimal construction and land loan exposure 2Q11 at 3.09% vs. 2Q11 p
Slide 16: Credit Quality - Provision Expense and Net Charge-Offs
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 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 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 2008 2009 2010 $40.8 $60.8 $28.0 $51.5 > $63.3 > $30.8 >
Slide 17: Credit Quality - 30+ Day Delinquent Loans
Credit Quality - Excluding Covered Loans 30+ Day Delinquent Loans Specific Segment Overview 30+ Day Delinquent Loans 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 Commercial .32% .36% .29% .26% .35% .35% .51% Commercial Real Estate .26% .52% .23% .12% .36% .19% .34% First Mortgage Residential Real Estate 1.31%
Slide 18: Credit Quality - Excluding Covered Loans
3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 ONB Consolidated 114.321 124.855 86.587 101.019 94.607 103.5 104.861 100.652 75 84 115.8 105.6 98.5 ONB Excluding Monroe 94.6 85.8 77.6 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excluding Covered Loans
Slide 19: Credit Quality - Excluding Covered Loans
3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 ONB Consolidated 105.4 116.1 122.4 113.6 101 90.1 92.4 88.8 101 103.4 102 110.9 101.6 ONB Excluding Monroe 83 98.7 90.6 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excluding Covered Loans
Slide 20: Credit Quality - Excluding Covered Loans
3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 ONB Consolidated 68.4 64 77.4 77.7 73.7 67 68.1 68.86 69.8 70.9 121.4 118.4 124.8 ONB Excluding Monroe 82.4 79.7 84.2 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excluding Covered Loans
Slide 21: Credit Quality - Excluding Covered Loans
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 ONB Consolidated 0.9273 0.9477 0.9527 0.9448 0.5366 0.547 0.486 ONB Excluding Monroe 0.84 0.83 0.71 Peer Group data per SNL Financial See Appendix for definition of Peer Group Credit Quality - Excluding Covered Loans 1Does not reflect impact of $38 million loan mar
Slide 22: Loan Portfolio at September 30, 2011
Loan Portfolio at September 30, 2011 Commercial Commercial Real Estate Consumer Residential Mortgage HELOC Covered Loans 3Q11 1246.2 1128.3 675.2 870.7 224.2 722.266 Commercial $1,246.2 Commercial Real Estate 1,128.3 Consumer 675.2 Residential Mortgage 870.7 HELOC 224.3 Covered Loans (Integra) $711.
Slide 23: Covered Assets at September 30, 2011
Covered Assets at September 30, 2011 Grades 1 through 6 $281.9 Criticized - Grade 7 26.9 Classified - Grade 8 16.5 Nonaccrual - Grade 9 196.4 Retail Loans 189.6 Total Covered Loans* $711.3 Other Real Estate Owned $31.9 $ in millions Refer to Appendix for ONB Risk Grade Table Loans 90+ Days & Over $.
Slide 24: Credit Area Enhancements
Credit Area Enhancements Separate Loss Share Division created Commercial credit underwriting officers and special assets associates Engaged a third-party firm with FDIC Loss Share experience to provide guidance to include Actions necessary to preserve Loss Share coverage Types of actions/decisions p
Slide 25: Credit Area Enhancements
Credit Area Enhancements Segregated staff allows Focus on FDIC requirements in workout (and currently performing) to maximize Loss Share benefits Separation of Loss Share bank efforts from legacy portfolio credit administration to insure we don't diminish strong underwriting practices and management
Slide 26: Noninterest Expense
Noninterest Expense 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 FTE's 2875 2828 2812 2708 2646 2585 2491 2618 2543 2454 2441 2415 2352 Noninterest expense was $95.2 million in 3Q11 and includes: Acquisition expenses of $6.8 million and litigation costs of $2.0 million Decrease of 18.2% or 523
Slide 27: Noninterest Expense - Reduction of Expenses in Legacy Operations
2Q11 3Q11 Legacy Operations 77.5843 76.0417 Acquisition Costs 2.1728 6.77 Integra Operations 6.3 Incentive Accrual 3.174 Litigation Costs 1.954 Severance Accrual 0.878 ($1.6) Noninterest Expense $ in millions $79.8 $95.2 Reduction of Expenses in Legacy Operations
Slide 28: Capital Management - Recent Actions
Capital Management - Recent Actions Approved share repurchase program 1-27-11 Up to 2.25 million shares of ONB common stock Ends 1-31-12 Redemption of ONB Capital Trust II $100 million at 8.00% called 12-15-10 Termination of $50 million of FHLB advances at an average rate of 1.90% and restructure of
Slide 29: Capital
Capital 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 ONB 0.1225 0.1244 0.1304 0.1398 0.1458 0.145 0.1408 0.1482 0.1342 Peer Group Average 0.0974 0.0989 0.11 0.1133 0.1157 0.1144 0.1169 0.1179 ONB Guideline 0.09 0.09 0.09 0.09 0.09 0.09 0.09 0.09 0.09 Capital levels remain strong following the acquis
Slide 30: Investment Portfolio
Investment Portfolio ($ in millions) Book Value Jun. 30, 2011 Book Value Sept. 30, 2011 Market Value* Jun. 30, 2011 Market Value* Sept. 30, 2011 Market Value $ Change Federal National Mortgage Association $540.9 $367.5 Federal Home Loan Mortgage Corporation 53.0 -0- Federal Home Loan Bank 33.6 3.1 F
Slide 31: Municipal Bond Portfolio by State
Municipal Bond Portfolio by State IN TX PA KY MO All Other 0.415 0.064 0.063 0.051 0.056 0.351 Based on book value at 9-30-11 Illinois exposure consists of 2 bonds representing .28% of entire municipal portfolio
Slide 32: 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 33: 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 34: 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 35: Integra Trust Acquisition
Integra Trust Acquisition Transaction closed 6-1-11 Assets under management = $386.8 million1 Purchase price of $1.25 million Anticipated accretion less than $.01 per share 1Based on 12-31-10 Call Report
Slide 36: 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 $.7 billion in loans covered by FDIC los
Slide 37: Appendix
Appendix Old National Bancorp
Slide 38: CD Maturity Schedule
CD Maturity Schedule Bucket Amount ($ in 000's) Rate 0-30 days $97,789 1.33% 31-60 days 80,625 1.12% 61-90 days 86,795 .76% 91-120 days 63,412 .76% 121-150 days 55,825 .83% 151-180 days 105,212 1.17% 181-210 days 85,627 1.36% 211-240 days 89,805 1.73% 241-270 days 84,022 1.63% 271-300 days 80,927 1.
Slide 39: Minimal Shared National Credits
Minimal Shared National Credits 1All but one in ONB footprint of Indiana, Kentucky or Illinois 2Refer to Appendix for ONB Loan Risk Grade Table ($ in millions) 3Q10 4Q10 1Q11 2Q11 3Q11 Count (#)1 10 8 7 7 7 Total exposure $118.2 $83.4 $68.2 $70.6 $70.5 Dollar outstanding $38.7 $23.0 $24.4 $21.4 $22.
Slide 40: ONB Loan Risk Grades
ONB Loan Risk Grades Grade Name 0 Investment Grade 1 Minimal Risk 2 Modest Risk 3 Average Risk 4 Monitor 5 Weak Monitor 6 Watch 7 Criticized (Special Mention) 8 Classified (Problem) 9 Nonaccrual
Slide 41: Other Classified Assets
Other Classified Assets ($ in millions) Book Value June 30, 2011 Book Value Sept 30, 2011 Market Value June 30, 2011 Market Value Sept. 30, 2011 Corporate Bonds $3.4 $3.4 $2.9 $2.3 Pooled Trust Preferred Securities $27.3 $27.3 $9.7 $7.5 Non-Agency Mortgage Backed Securities $86.6 $82.5 $84.1 $78.5 T
Slide 42: Quick Home Refi (QHR) Product Statistics
Quick Home Refi (QHR) Product Statistics Term 10 years 32% 15 years 37% 20 years 11% 25 years 6% 30 years 14% Based on September 30, 2011 portfolio data. Average loan amount $80,120 Average yield of closed loans 4.35% Average Credit Score 776 Average FICO 290 Average debt to income 23% Average loan
Slide 43: Securities with OTTI
Securities with OTTI *Lowest credit rating provided by any nationally recognized credit rating agency. Vintage Lowest Credit Rating* Book Value at Sept. 30, 2011 OTTI 1Q11 OTTI 2Q11 OTTI 3Q11 OTTI Life to Date BAFC Ser 4 2007 CCC $14,026 $- $- $142 CWALT Ser 73CB 2005 CC 3,842 - - 290 CWALT Ser 73CB
Slide 44: Non-GAAP Reconciliations
Non-GAAP Reconciliations (End of period balances - $ in millions) 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 Total Shareholders' Equity $634.6 $865.4 $843.8 $855.5 $874.7 $895.7 $878.8 $984.0 $1,008.3 $1,027.7 Deduct: Goodwill and Intangible Assets (204.0) (202.4) (200.2) (198.6) (197.1) (195
Slide 45: The Old National Peer Group
The Old National Peer Group Name Ticker Name Ticker 1st Source Corporation SRCE Hancock Holding Company HBHC BancFirst Corporation BANF Heartland Financial USA, Inc. HTLF BancorpSouth, Inc. BXS IBERIABANK Corporation IBKC Bank of Hawaii Corporation BOH MB Financial, Inc. MBFI Chemical Financial Corp
Slide 46: 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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