Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (May 2012)
52 slides from Old National Bancorp's investor presentation, May 11, 2012
Slide 1: Old National Bancorp Investment Thesis
Old National Bancorp Investment Thesis Financial Data as of 3-31-12 Dated: May 11, 2012
Slide 2: Commitment to Excellence
Commitment to Excellence es ETHISPHERE 2.01 2 “| WORLD’S MOST SIETHICAL neice «|COMPANIES Ne” WWW.ETHISPHERE.COM peda. ey Corporate Engagement AWARD OF
Slide 3: 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 4: 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 5: 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 6: 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 (excluding covered loans) 1Q12 net charge-offs of .33%
Slide 7: Strong 1Q12 Earnings Performance
Strong 1Q12 Earnings Performance Net income of $21.7 million, or $.23 per share Vs. $22.2 million, or $.23 per share, in 4Q11 Vs. $16.4 million, or $.17 per share, in 1Q11 Net interest margin remained stable at 4.20% Core deposits grew $56.7 million Noninterest-bearing demand deposits increased $39.
Slide 8: Adapting and Reshaping our Business For Growth
Adapting and Reshaping our Business For Growth Streamlining processes to make it simple, easy and fast for clients to do business with Old National Commercial Banking Unit 2nd review committee for new lending opportunities Focus on cross sell of insurance and wealth management Introduction of Quick
Slide 9: Pre-Tax, Pre-Provision Income
Pre-Tax, Pre-Provision Income1 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Pre-Tax, Pre-Provision Income, Net of Securities Gains and Merger and Integration Expenses 4 18 17 16.8 9.2 26.6 27.8 28.6 34.4 32.4 1 Non-GAAP financial measures management believes is useful in evaluating the financia
Slide 10: Positive Momentum
Positive Momentum 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Noninterest expense, less merger and integration costs and Integra-related OREO expenses 90.8 77.1 77.9 76.1 83.3 76.4 77.6 88.4 88.5 80.8 Total revenues less securities gains (losses) 94.8 95.1 94.9 92.9 92.5 103 105.4 117 122.9 12
Slide 11: Net Interest Margin
Net Interest Margin 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 ONB Core 0.0333 0.034 0.0342 0.0346 0.0341 0.0329 0.0328 0.0351 0.0352 Monroe Accretion 0.0021 0.0038 0.0029 0.0037 0.0016 Integra Accretion 0.0039 0.0032 0.0052 Net interest margin1 remained stable at 4.20% Includes 16 bps and 52 bps,
Slide 12: Corporate Summary
Corporate Summary MARKET STATISTICS AND SUMMARY OVERVIEW ($ 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 13: New Old National Landscape
New Old National Landscape Old National Indiana 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: Deposit / Unemployment Distribution
Deposit / Unemployment Distribution Deposit / Unemployment Distribution 56.9% / 7.8% .5% / 8.6% 1.6% / 9.4% 0% / 9.4% 40.5% / 8.6% .5% / 8.5% % 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 Indicator Outlook Latest Statistics (March 2012) Latest Statistics (March 2012) Trend (YOY change from March 2011) Jobs Nonfarm Employment* Unemployed* 2,849,700 274,700 Jobs increased 42,600 Unemployment rate decreased to 8.2 % (Lowest level since December
Slide 16: Asset/Liability Composition
Asset/Liability Composition NOW & Savings Demand Deposits Money Markets Other Time Borrowings Brokered CDs Other Liability 0.42894 0.23478 0.03921 0.17967 0.08528 0.00283 0.02929 Investments Commercial Loans Commercial Real Estate Loans Consumer Loans* Residential Real Estate Covered Loans Other Ass
Slide 17: Loan Concentrations - Excluding Covered Loans
Loan Concentrations - Excluding Covered Loans At 3-31-12 Commercial Commercial Real Estate Diversified Commercial Loan Portfolio
Slide 18: Conservative Lending Limits
Conservative Lending Limits Borrower1 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 3-31-12 of $107.0 million per borrower 1Includes ent
Slide 19: 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 4Q11 at 3.14% vs. 4Q11 p
Slide 20: Credit Quality - Excluding Covered Loans
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 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 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 3.4 2008 2009 2010 $40.8 $60.8 $28.0
Slide 21: Credit Quality - Net Charge-Offs
Credit Quality - Net Charge-Offs 1Q11 2Q11 3Q11 4Q11 1Q12 ONB Core 0.0031 0.0053 0.0053 0.0055 0.002 Monroe -0.0009 0.0075 0.0018 0.0322 0.0127 Integra Covered - - -0.0025 0.0017 0.0058 Integra Noncovered - - -0.0214 0.0061 0.0352 $5.2 $4.9 $5.0 $3.0 $1.8 $ in millions ($.1) $.8 $.2 $3.0 $1.1 ($.3)
Slide 22: 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 4Q11 1Q12 Commercial ..32% .36% .29% .26% .35% .35% .51% .29% .16% Commercial Real Estate .26% .52% .23% .12% .36% .19% .34% .78% .25% First Mortgag
Slide 23: Credit Quality - Excluding Covered Loans
4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 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 77.1 ONB Excluding Monroe 94.6 85.8 77.6 62.2 59.88 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excludi
Slide 24: Credit Quality - Excluding Covered Loans
4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 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 71 ONB Excluding Monroe 83 98.7 90.6 79.3 64.448 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excluding Covered Loan
Slide 25: Credit Quality - Excluding Covered Loans
4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 ONB Consolidated 64 77.4 77.7 73.7 67 68.1 68.86 69.8 70.9 121.4 118.4 124.8 115.3 113 ONB Excluding Monroe 82.4 79.7 84.2 78.4 79.885 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excluding Covered Loa
Slide 26: Credit Quality - Excluding Covered Loans
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 ONB Consolidated 0.9273 0.9477 0.9527 0.9448 0.5366 0.547 0.486 0.4615 0.454 ONB Excluding Monroe 0.84 0.83 0.68 0.65 0.67 Peer Group data per SNL Financial See Appendix for definition of Peer Group Credit Quality - Excluding Covered Loans 1 Does not refl
Slide 27: 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 28: Loan Portfolio at March 31, 2012
Loan Portfolio at March 31, 2012 Commercial Commercial Real Estate Consumer Residential Mortgage HELOC Covered Loans 3Q11 1180.5 1026.9 639.7 1063.9 207.6 548.6 Commercial $1,180.5 Commercial Real Estate 1,026.9 Consumer 639.7 Residential Mortgage 1,063.9 HELOC 207.6 Covered Loans (Integra) 548.6 To
Slide 29: Covered Assets
Covered Assets Grades 1 through 6 $281.9 $230.5 $179.5 Criticized - Grade 7 26.9 23.0 20.2 Classified - Grade 8 16.5 16.7 27.5 Nonaccrual - Grade 9 196.4 179.7 158.5 Retail Loans 189.6 176.5 162.9 Total Covered Loans $711.3 $626.4 $548.6* Other Real Estate Owned $31.9 $30.4 $24.7 $ in millions - per
Slide 30: 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 31: Credit Area Enhancements
Credit Area Enhancements Separate 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 o
Slide 32: Capital Management - Recent Actions
Capital Management - Recent Actions Approved share repurchase program 1-26-12 Up to 2.0 million shares of ONB common stock Ends 1-31-13 Approved 28.6% increase in cash dividend to $.09 from $.07 per common share Retirement of $150 million of 6.75% subordinated bank notes on 10-17-11 Strong capital p
Slide 33: Capital
Capital 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 ONB 0.1244 0.1304 0.1398 0.1458 0.145 0.1408 0.1482 0.1342 0.1446 0.1488 Peer Group Average 0.0966 0.1071 0.1113 0.1139 0.1125 0.1145 0.1175 0.1186 0.1183 Capital levels remain strong Among the best capitalized in our peer group Strong capita
Slide 34: Investment Portfolio
Investment Portfolio ($ in millions) Book Value Dec. 31, 2011 Book Value Mar. 31, 2012 Market Value* Dec. 31, 2011 Market Value* Mar. 31, 2012 Market Value $ Change Federal National Mortgage Association $358.8 $405.4 Federal Home Loan Mortgage Corporation -0- 53.8 Federal Home Loan Bank 3.0 3.0 Fede
Slide 35: Municipal Bond Portfolio by State
Municipal Bond Portfolio by State IN TX PA KY MO All Other 0.412 0.073 0.057 0.067 0.051 0.34 Based on book value at 3-31-12 Illinois exposure consists of 2 bonds representing .24% of entire municipal portfolio
Slide 36: 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 37: 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 38: 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 39: 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 40: ONB to Acquire INCB - Highlights
ONB to Acquire INCB - Highlights Transaction Due Diligence Financial Impact Capital TARP Repayment Acceptable Risk Profile Closing 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 $12.00 Tangible pre
Slide 41: Possible Credit-Related Adjustments to Exchange Ratio
Possible Credit-Related Adjustments to Exchange Ratio Deal value subject to change based on increase or decrease of credit mark and delinquencies 1.9987 to 1.3396 Loan mark based on changes in impairment Delinquencies based on changes in "delinquent loans" from announcement date to closing date Deli
Slide 42: Appendix
Appendix Old National Bancorp
Slide 43: Pre-Tax, Pre-Provision Income
Pre-Tax, Pre-Provision Income1 ($ in millions) 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Total Revenues $91.6 $98.1 $98.1 $96.1 $96.2 $104.2 $105.9 $119.9 $125.7 $123.4 Less: Provision for Loan Losses (21.8) (9.3) (8.0) (6.4) (7.1) (3.3) (3.2) .1 (1.0) (2.1) Less: Noninterest Expense (90.8)
Slide 44: CD Maturity Schedule
CD Maturity Schedule Bucket Amount ($ in 000's) Rate 0-30 days $90,429 1.20% 31-60 days 85,569 1.69% 61-90 days 90,035 1.45% 91-120 days 77,970 1.14% 121-150 days 114,005 1.82% 151-180 days 56,916 .84% 181-210 days 23,807 .72% 211-240 days 32,979 1.11% 241-270 days 43,921 .88% 271-300 days 36,071 .8
Slide 45: Shared National Credits - Excludes Covered Loans
Shared National Credits - Excludes Covered Loans ($ in millions) 1Q11 2Q11 3Q11 4Q11 1Q12 Count (#)* 7 7 7 7 7 Total exposure $68.2 $70.6 $70.5 $65.0 $64.5 Dollar outstanding $24.4 $21.4 $22.9 $19.1 $18.0 Largest exposure $15.0 $15.0 $15.0 $10.0 $10.0 Weighted average risk grade** 1.8 1.8 1.9 1.8 1.
Slide 46: ONB Loan Risk Grades
ONB Loan Risk Grades Grade Name 0 Investment Grade 1 Minimal Risk 2 Modest Risk 3 Average Risk 4 Monitor 5 Weak Monitor 6 Watch 7 Criticized (Special Mention) 8 Classified (Problem) 9 Nonaccrual
Slide 47: Other Classified Assets
Other Classified Assets ($ in millions) Book Value Dec. 31, 2011 Book Value Mar. 31, 2012 Market Value Dec. 31, 2011 Market Value Mar. 31, 2012 Corporate Bonds $3.4 $7.2 $2.6 $6.5 Pooled Trust Preferred Securities $25.5 $25.5 $7.3 $7.8 Non-Agency Mortgage Backed Securities $78.0 $73.7 $73.2 $71.8 To
Slide 48: Quick Home Refi (QHR) Product Statistics
Quick Home Refi (QHR) Product Statistics Term 10 years 29% 15 years 39% 20 years 13% 25 years 5% 30 years 15% Based on March 31, 2012 portfolio data Average loan outstanding $79,012 Average yield of closed loans 4.22% Average Credit Score 779 Average FICO 297 Average debt to income 20% Average loan
Slide 49: Securities with OTTI
Securities with OTTI *Lowest credit rating provided by any nationally recognized credit rating agency. Vintage Lowest Credit Rating* Book Value at Mar. 31, 2012 OTTI 1Q12 OTTI Life to Date BAFC Ser 4 2007 CCC $13,754 $76- $218 CWALT Ser 73CB 2005 CC 2,963 - 290 CWALT Ser 73CB 2005 CC 4,087 - 609 CWH
Slide 50: Non-GAAP Reconciliations
Non-GAAP Reconciliations (End of period balances - $ in millions) 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Total Shareholders' Equity $843.8 $855.5 $874.7 $895.7 $878.8 $984.0 $1,008.3 $1,027.7 $1,033.6 $1,050.4 Deduct: Goodwill and Intangible Assets (200.2) (198.6) (197.1) (195.6) (194.1)
Slide 51: ONB's Peer Group
ONB's Peer Group Like-size, publicly-traded financial services companies, generally in the Midwest, serving comparable demographics with comparable services as ONB 1st Source Corporation SRCE Heartland Financial USA, Inc. HTLF BancFirst Corporation BANF IBERIABANK Corporation IBKC BancorpSouth, Inc.
Slide 52: 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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