Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Day (November 2013)
68 slides from Old National Bancorp's investor day presentation, Nov 20, 2013
Slide 1: Analyst / Investor Conference
November 20, 2013 Analyst / Investor Conference Exhibit 99.1
Slide 2: Additional Information for Shareholders
2 Additional Information for Shareholders In connection with the proposed merger, Old National Bancorp will file with the Securities and Exchange Commission (SEC) a Registration Statement on Form S-4 that will include a Proxy Statement of Tower Financial Corporation and a Prospectus of Old National
Slide 3: Disclosures
3 Disclosures 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 operation
Slide 4: Rules of the Day
4 Rules of the Day There are no dumb questions but no guarantees on the answers. We will follow Reg FD, so try and stump us. We guarantee an answer to you in hours! You’ll get a chance to meet a lot of Old National Management, besides Bob Jones! Rudely interrupt anytime, no need to raise your hand.
Slide 5: Agenda
5 Agenda What you heard in 2010/What you will hear today – Bob Jones Value of the ONB Franchise – Bob Jones Organic Growth Opportunities Panel – Carrie Ellspermann, Ken Ellspermann, Tom Flynn & Barbara Murphy Enterprise Risk Management Panel – Dennis Heishman, Daryl Moore, Candice Rickard & Chris Wo
Slide 6: What You Heard in 2010
6 What You Heard in 2010 Our strategy: Basic, Community Banking Know who we are and who we are not Conservative credit Transparency Our focus: Reduce cost Focus on sales Improve net interest margin Maintain liquidity Prepare for rising rates Capital is king Execute M&A plan
Slide 7: What You Will Hear Today
7 What You Will Hear Today Our strategy remains the same: Basic, Community Banking Know who we are and who we are not Conservative credit Transparency Consistency Our focus continues on: Growing revenue Reducing cost Improving the net interest margin Maintaining liquidity Benefiting from rising rate
Slide 8: Value of the Old National Franchise
Value of the Old National Franchise —— IIE A Achieve Consistent Quality Earnings Enhance Management Discipline 4 Strengthen the Risk Profile OLD NATIONAL STRATEGIC IMPERATIVES
Slide 9: QuickScore
QuickScore { Corporate Engagement AWARD OF Points of Light institute VolunteerMatch CERTIFICATION C9] WORLD'S MOST SIETHICAL Ca|COMPANIES WWW.ETHISPHERE.COM
Slide 10: Dominant Market Share
10 Dominant Market Share MSA Market Rank Deposit Market Share Bloomington, IN 21.9% Central City, KY 38.3% Evansville, IN 30.7% North Vernon, IN 32.4% Columbus, IN 18.3% Jasper, IN 23.9% Madisonville, KY 17.9% Terre Haute, IN 13.1% Vincennes, IN 25.7% Washington, IN 28.2% Old National has banking ce
Slide 11: Transforming Old National's Landscape
11 11 Transforming Old National’s Landscape 2004 2013
Slide 12: Adding Markets with Greater Populations
12 Adding Markets with Greater Populations 12 2004 2013 Bloomington, IN 195,386 Kalamazoo, MI 328,709 South Bend, IN 319,575 >50k <50k Indianapolis, IN 1,782,614 Counties with Populations Columbus, IN 77,943 Ft. Wayne, IN 421,029 Lafayette, IN 205,437 Louisville, KY 1,295,890 Market MSA Population
Slide 13: Change in Deposits: ONB's Top Most Populated MSAs
13 Change in Deposits: ONB’s Top 20 Most Populated MSAs Population Rank MSA 2012 Population Actual 2004 Deposits ($000's) 2013 Deposits ($000's) Change in Deposits ($000's) Indianapolis-Carmel, IN 1,782,614 303,873 $ 820,521 $ 516,648 $ Louisville-Jefferson County, KY-IN 1,295,890 - 161,852 161,852
Slide 14: ONB Transformation to Higher Population Markets
14 ONB Transformation to Higher Population Markets 40% increase in deposit-weighted population due to new markets since 2004 St. Joseph Capital, February 2007 – South Bend 65 Charter One branches throughout Indiana, March 2009 - Indianapolis Monroe & Integra Bank, 2011 - Bloomington IN Community Ban
Slide 15: Community Brand
15 Community Brand We are committed to the communities we serve In 2012 – • Our associates donated more than 93,000 volunteer hours • We gave more than $3 million in grants and sponsorships
Slide 16: Strong Corporate Governance
16 Strong Corporate Governance Old National received an Institutional Shareholder Services QuickScore ranking of “1” Only of our peer banks received a “1” ranking The average score of Old National peers was “5.4” and the median score of our peer group was “6.0” Scores are based on a scale of 1 (lowe
Slide 17: Strong Ethics
17 Strong Ethics We are devoted to ethics and corporate governance Old National was the only US bank in 2012 and 2013 to be named to the list of World’s Most Ethical Companies Every associate participates in our certified ethics program and training On behalf of all Old National associates, Chief Et
Slide 18: Investment in our Associates
18 Investment in our Associates Old National has a strong associate culture Associates report high level of commitment in annual survey We are dedicated to talent development We are committed to work-life balance
Slide 19: Diversified Revenue
19 Diversified Revenue 19 ATM Fees, 5% $16 $21 $22 $16 $18 Net Interest Income, 63% Wealth Management, 5% Service Charges, 10% Insurance, 8% Change in IA, - (2%) Company- owned Life Insurance, 2% Investment Product Fees, 3% Mortgage Banking, 1% Other Income, 5% Revenue Mix 2013 YTD $9 $11 $13 $10 $1
Slide 20: Low Risk Profile
20 Low Risk Profile A culture of transparency and accountability Strong ethics and corporate governance Disciplined credit process Low risk balance sheet Board of Directors support, provide oversight and appropriately challenge Constructive regulatory relationships Demonstrated ability to close and
Slide 21: Indiana's Economic Achievements – 2013
21 Indiana’s Economic Achievements – 2013 “AAA” credit rating – Fitch, Moody’s and Standard and Poor nd most competitive state – Site Selection magazine rd best U.S. state for manufacturing jobs – CNBC th best state for business – CEO Magazine th fastest-growing state economy – USA Today 200 new man
Slide 22: Organic Growth Opportunities
22 Organic Growth Opportunities
Slide 23: Banking Markets at Old National
23 Banking Markets at Old National Northeast region includes Muncie, Anderson, Winchester and Richmond Northwest region includes Terre Haute and Danville North Central region includes Bloomington, Columbus and Seymour Evansville, 36% Jasper, 6% Southern Illinois, 6% Vincennes, 6% North Central, 7% N
Slide 24: Banking Markets at Old National: Loans
Banking Markets at Old National Indianapolis, 12% 24 Northeast region includes Muncie, Anderson, Winchester and Richmond Northwest region includes Terre Haute and Danville North Central region includes Bloomington, Columbus and Seymour 2004 loans are YTD average balances through September, 2013 loan
Slide 25: Banking Markets at Old National: Deposits
25 Banking Markets at Old National Northeast region includes Muncie, Anderson, Winchester and Richmond Northwest region includes Terre Haute and Danville North Central region includes Bloomington, Columbus and Seymour 2004 deposits are YTD average balances through September, 2013 deposits are averag
Slide 26: Reduction in Funding Costs
26 Reduction in Funding Costs Excludes brokered CDs 1.99% 2.36% 3.12% 3.38% 2.04% 1.39% 1.07% 0.73% 0.54% 0.33% 2004 2005 2006 2007 2008 2009 2010 2011 2012 3Q2013 Cost of Interest-bearing Deposits
Slide 27: Loan Production
27 Loan Production $238 $387 $253 $559 $millions $201 $331 $280 $461 Indirect Consumer Direct Consumer Residential Mortgage Commercial YTD 9-30-12 YTD 9-30-13 +18.4% +16.9% (9.6%) +21.2%
Slide 28: Loan Spreads
Loan Spreads 28 Loan spreads relative to internal funds transfer pricing Total Commercial Real Estate Loans Total Commercial Loans
Slide 29: Investments Overview
29 Investments Overview Growth from differentiation Our advisors Tenure and low advisor turnover Attractive, consistent payout grids Focus on sales and service Approach to business Quality consultation provided to all clients Flexible investment solutions for clients Relationship with banking partne
Slide 30: Investments Overview/Opportunities
30 Investments Overview/Opportunities Growth & Opportunities 27.4% growth from 3QYTD 2012 Household penetration of 5.47% (3.5% LPL average) Wallet share capture rate of 47% (42% LPL average) Fifth largest investment program in the LPL network $9.2 $11.1 $12.7 $9.5 $12.1 '10 '11 '12 3Q12 YTD 3Q13 YTD
Slide 31: Insurance Overview
31 Employee Benefits, 18% Insurance Overview P&C, 56% Third Part Administration Fees, 21% Other, 5% ONI Revenue Old National Insurance is Indiana’s largest independent retail insurance agency Top 100 U.S. insurance broker (70th largest)* 10th largest bank-affiliated insurance brokerage in U.S.* 300
Slide 32: Insurance Footprint
Insurance Footprint 32 Lafayette 1 producer Mishawaka 4 producers Danville, IL 4 producers Terre Haute 15 producers Bloomington 2 producers Princeton 1 producer Evansville 15 producers Owensboro, KY 1 producer Jasper 1 producer Indianapolis 17 producers Muncie 1 producer Ft. Wayne 17 producers
Slide 33: Insurance Opportunities
33 Insurance Opportunities Growth & Opportunities Producer recruitment and development Build out ONI footprint Continue to build on success of retail Insurance production in bank channel Targeted M&A and producer lift outs ACA strategies Strong Active Corporate Parent $36.5 $37.0 $37.1 $27.6 $29.1 '
Slide 34: Wealth Management Footprint
34 ONI Footprint Wealth Management Footprint Danville, IL WM Office – 1 associate Evansville WM Hub – 65 associates Indianapolis WM Hub – 6 associates Jasper WM Office – 3 associates Vincennes WM Office – 1 associate Muncie WM Hub – 13 associates Greencastle WM Office – 1 associate Terre Haute WM Hu
Slide 35: Wealth Management Overview
35 Wealth Management Overview Partnerships Pre- Conversion No. of Associates Post - Conversion No. of Associates Pre- Conversion AUM (Million) Post- Conversion AUM* (Million) Overall Client Retention* Successful new partnerships * Data as of June 30, 2013 Monroe $336 $400 89% Indiana Bank & Trust 6.
Slide 36: Wealth Management Opportunities
36 Wealth Management Opportunities Growth & Opportunities Key existing relationships Experienced advisors with strong tenure New business with new partners Metro markets and Northern Region Leverage hub structure to reach new markets Relationships with Commercial Banking Partners $16.1 $20.5 $21.5 $
Slide 37: Enterprise Risk Management
37 Enterprise Risk Management
Slide 38: Enterprise Risk Objectives
Enterprise Risk Objectives 38 Appropriate governance and risk organizational structures Independence and stature of the risk function within the organization Expertise and talent of key risk management and independent review Clarity and effectiveness of risk appetite statements, tolerances and limit
Slide 39: Governance, Framework, Staff, Regulatory
GOVERNANCE + Risk appetite statement + ERM policy and program + Independence and stature of risk function + Strengthen risk culture FRAMEWORK + Aggregate view ofrisk + “Top Risks” identification + Risk tolerances and limits defined and monitored + LOB accountability + Model risk management STAFF + E
Slide 40: Low Risk Balance Sheet: Allowance and Loan Mark
40 Low Risk Balance Sheet Allowance For Loan and Lease Loss/Loan Mark Summary At September 30, 2013 ONB Legacy Monroe Integra IN Community Total Credit Risk Management Credit culture established at the top of the organization Well-defined, centralized credit polices Relationship manager and credit p
Slide 41: Low Risk Balance Sheet
Low Risk Balance Sheet 41 Including covered assets Acquired Monroe Acquired Monroe Acquired Integra Acquired IBT Acquired IN / MI Branches Acquired Integra Acquired IBT Acquired IN / MI Branches 1.01% 1.69% 4.11% 3.62% 1.98% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13
Slide 42: Executing within the Basic Bank Strategy
Executing within the Basic Bank Strategy 42 ONB’s Credit Culture Conservative, consistent, and common sense based Understanding of risk appetite Shared responsibility and accountability Identify, mitigate, ongoing Collaborative partnership Skin in the game Relationship-based business model Culture,
Slide 43: Low Risk Balance Sheet: Liquidity
Low Risk Balance Sheet 43 Liquidity 69.41% 68.71% 69.38% 72.17% 68.71% 3Q12 4Q12 1Q13 2Q13 3Q13 Loans/Deposits Unencumbered high quality investment securities portfolio and residential loan portfolio Predictable regular significant cash flows of approximately $50MM - $65MM per month from the securit
Slide 44: Interest Rate Risk Management
____ __ ____ _____ ____ ______ _____ _____ ____ _____ _____ _____ ____ _____ Click to edit Master text styles Second level Third level Fourth level Fifth level Low Risk Balance Sheet 44 Interest Rate Risk Management 0.46% 0.08% 3.36% 5.18% 2.55% 6.00% 4.00% 2.00% 0.00% 3Q12 4Q12 1Q13 2Q13 3Q13 Year
Slide 45: Capital Management
Low Risk Balance Sheet 45 Organic Growth Acquisitions Dividends Buybacks Capital Management 12.4% 13.1% 13.6% 13.9% 13.7% 11.8% 11.6% 11.7% 11.6% 11.7% 10% 11% 12% 13% 14% 15% 3Q12 4Q12 1Q13 2Q13 3Q13 ONB Peer Group Average 9.1% 9.0% 9.0% 8.7% 8.4% 8.4% 8.2% 8.3% 8.1% 8.2% 7.5% 8.0% 8.5% 9.0% 9.5% 1
Slide 46: Ongoing Efficiency Efforts
46 Ongoing Efficiency Efforts
Slide 47: Old National IT
Old National IT 47 The IT focus areas of the past two years have been: Regulations (BSA/AML) Acquisitions Strengthen the Foundation (Infrastructure) Today, the focus is transforming: Regulations – more of the same (CFPB) Acquisitions – continued appetite Shift the focus towards value added applicati
Slide 48: Old National IT: Core Strategies
Old National IT 48 Core IT Strategies Reduce complexity – consolidate systems by expanding relationships with fewer vendors (reduces the “knifing” required) Outsourcing (systems and processes) – focus on what will drive competitive advantage Remove paper and “wait states” Move towards an expense ori
Slide 49: Procurement Initiatives
Procurement Initiatives 49 Initiative Strategic sourcing Vendor management Contract management Purchasing and logistics Mission Aggregated buying power Vendor competition Vendor consolidation Mutually beneficial partnerships Expansion of purchasing department to an enterprise wide procurement servic
Slide 50: Procurement Initiatives: Results
Procurement Initiatives 50 Objective Reduce expenses and facilitate ongoing expense controls, prudent spend decisions, vendor selection and risk management activities that are sustainable quantifiable and repeatable for the long term Results/Status Expense reduction through vendor consolidation Expe
Slide 51: Branch Optimization
Branch Optimization Acquired St. Joseph Capital – entry into Northern IN market February, 2007 Acquired 65 Charter One branches throughout Indiana March, 2009 Acquired IN Community – Entry into Columbus, IN September, 2012 FDIC-assisted acquisition of Integra Bank July, 2011 Acquired 24 MI / NI bran
Slide 52: FTE and Asset Change
FTE and Asset Change 52 Assets In Millions 21% increase in total assets and a 5.5% decrease in staff since 2009 Michigan market expansion in 2013 added 158 FTE Staff additions in Michigan, Insurance Producers, Wealth Management, Risk/Compliance and IT functions Total branches increased from 172 in Q
Slide 53: Efficiency Ratio
Efficiency Ratio 53 Leveraged support functions with acquisitions Consolidated and sold branches Focused procurement efforts have generated additional savings Process improvements in client contact and support areas Staff additions in Michigan, Insurance producers, Wealth Management, risk/compliance
Slide 54: M&A Process Panel
M&A Process Panel — ac cheve — = Consistent = Quality Earnings Enhance Management Discipline 4 Strengthen the Risk Profile OLD NATIONAL STRATEGIC IMPERATIVES
Slide 55: Disciplined M&A Process
Disciplined M&A Process 55 “Dating” Strategic & Cultural Alignment Credit Due Diligence Due Diligence Board Approval Negotiate & Close Integration Review & Assess Significant time commitment from CEO Oversight from board Finance and Corporate Development Committee Must be accretive in the first 12 t
Slide 56: Collaborative and Disciplined Integration Process
Collaborative and Disciplined Integration Process 56 Special attention is given to cultural integration and client retention Teams include: Full-time Project Management Office leads integration Experienced Old National “ambassadors” work closely with the integrating banking centers before, during an
Slide 57: Recent Successful Partnerships
Recent Successful Partnerships 57 St. Joseph Capital – February 2007 2 branches Charter One – March 2009 65 branches Monroe Bancorp – January 2011 15 branches Integra Bank Trust – June 2011 Integra Bank – July 2011 52 branches (FDIC assisted) Indiana Community Bancorp – September 2012 17 branches Ba
Slide 58: North Central Region (Bloomington and Columbus, IN)
North Central Region (Bloomington and Columbus, IN) 58 Old National Bank was recently recognized as the 2013 Large Business of the Year at the annual meeting of the Greater Bloomington Chamber of Commerce Results for the nine-months ended September 30, 2013 are well in excess of expectations and com
Slide 59: Our Associates: Our Most Important Asset
Our Associates: Our Most Important Asset A Achieve Consistent Quality Earnings Enhance Management Discipline A Strengthen the Risk Profile HOLD NATIONAL STRATEGIC IMPERATIVES
Slide 60: Employee Engagement
Employee Engagement 60 We annually survey all associates to determine the extent that the value, enjoy and believe in what they do
Slide 61: Talent Management Strategy
Talent Management Strategy 61 Our people are our greatest asset. Our talent management strategy enables us to: Attract the best people to our company and culture. Retain associates and their valuable knowledge and client relationships. Develop associates through robust training and leadership progra
Slide 62: Stage-based Associate Education and Training
62 Stage-based Associate Education and Training “I believe that the right way to change a culture and improve performance is through associates.” Bob Jones, CEO, Old National Bancorp Career Track A nine-month professional development program for entry level associates. Fast Track A 12-month manageri
Slide 63: Commitment to Leadership Development
Commitment to Leadership Development 63 “Strong, effective leadership demands personal integrity and the selfless desire to motivate and make a difference in the lives of others.” Larry Dunigan, Chair, Old National Bancorp Board Emerging Leaders Development program for associates to enhance leadersh
Slide 64: Commitment to a Diverse Workforce
Commitment to a Diverse Workforce 64 DRIVE This program focuses on the development, retention, motivation and promotion of a multicultural group of associates “An inclusive culture is a environment that embraces the strengths of our differences, supports involvement and provides everyone with equal
Slide 65: Wrap-Up
Wrap-Up A Achieve Consistent Quality Earnings 4 Enhance Management Discipline + Strengthen the Risk Profile i OLD NATIONAL STRATEGIC IMPERATIVES
Slide 66: Our Commitment to You
Our Commitment to You 66 Transparency – we tell it like it is Consistency – no surprises/overnight changes to our strategy Long-term view – make strategic decisions that not only benefit our shareholders now, but into the future Availability – we’ll always be available for your questions
Slide 67: Thank you for your participation
67 Thank you for your participation and interest in Old National Bancorp.
Slide 68: Old National Investor Relations Contact
Old National Investor Relations Contact 68 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