Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (May 2020)
58 slides from Old National Bancorp's investor presentation, May 8, 2020
Slide 1: Investment Thesis
Investment Thesis FINANCIAL DATA AS OF March 31, 2020 DATED: May 8, 2020 Exhibit 99.1
Slide 2: Executive Summary
Executive Summary SLIDES 2 TO 22
Slide 3: Forward-Looking Statements; Non-GAAP; New Accounting Standards
Forward-Looking Statements; Non-GAAP; New Accounting Standards Forward-Looking Statements: 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 N
Slide 4: Snapshot of Old National
Snapshot of Old National Largest bank holding company headquartered in Indiana with financial centers located in Indiana, Kentucky, Michigan, Wisconsin and Minnesota 161 financial centers and 204 ATMs (as of 5-6-2020) Summary Overview Company Description Headquarters Evansville, IN Market Cap (milli
Slide 5: Old National's Footprint
Old National’s Footprint 75 69 74 70 64 57 39 75 64 65 90 94 43 65 74 35 94 Indiana1 $7.6 billion deposits 52% of total franchise Michigan $1.4 billion deposits 10% of total franchise Wisconsin $1.4 billion deposits 10% of total franchise Kentucky $0.9 billion deposits 6% of total franchise Minnesot
Slide 6: Our Response to COVID-19
Our Response to COVID-19 Team Members Enabled many team members to work remotely Clients All branches with drive-thru remain open with lobbies appointment only $1.2 million commitment to relief efforts Granted additional sick time and PTO Expanded paid family and medical leave benefits to those who
Slide 7: Credit Quality – COVID-19
Credit Quality – COVID-19 $ in millions Data as of March 31, 2020 1 Include loans held for sale 2 Subprime is FICO < 660 Vulnerable Industries Consumer Portfolio1 Total loans of $12.4bn1 Commercial Line Utilization 2.2% of total consumer loans are subprime2 757 Average FICO 784 768 753
Slide 8: COVID-19 Client Relief Programs
COVID-19 Client Relief Programs as of 5-7-20 $ in millions Commercial Booked Deferrals by Industry Deferrals Paycheck Protection Program (PPP) 8,655 applications have been processed and approved, representing $1.53bn in client funding PPP by State
Slide 9: Our New Strategic Vision – The ONB Way
Our New Strategic Vision – The ONB Way We are a leading commercially-oriented regional bank with a distinctive client-centric value proposition based on strong relationships, streamlined operating model, and an exceptional work environment that empowers our team members to deliver their best
Slide 10: Six Key Pillars Of Our ONB Way Strategy
Six Key Pillars Of Our ONB Way Strategy Old National is a commercially-oriented regional bank that consistently delivers top quartile performance to clients, team members, shareholders and communities Commercial salesforce aligned to client’s size or loan type Relationship Manager (RM) aligned to se
Slide 11: The ONB Way – Projected Financial Impact
The ONB Way – Projected Financial Impact1 Recurring Expense Benefit Implementation Costs Expense Opportunities Net Impact -$1 -$2 $-8 -$30 -$1 $5 $9 $40 $ in millions and are pre-tax 1 Based on estimates as of April 20, 2020 1Q20 Implementation Costs by Type $20.8 related to branch facilities (other
Slide 12: Strategy to Drive Long-Term Shareholder Value
Strategy to Drive Long-Term Shareholder Value Larger balance sheet capabilities with a strong product offering, delivered in-market with unequalled client care – “Out-product Community Banks, Out-service Large Regionals” Basic Bank…Broader Reach M&A Repositioned Franchise with Better Growth Dynamics
Slide 13: Franchise Evolution Built a Better Bank
Franchise Evolution Built a Better Bank… Source: S&P Global Market Intelligence 1 Branch count as of April 24, 2020 1
Slide 14: With Improved Scale
… With Improved Scale Source: S&P Global Market Intelligence using FDIC Summary of Deposits as of June 30, 2019 33% increase 78% increase
Slide 15: Old National's Top MSAs
Old National’s Top 10 MSAs Demographics in Top 5 (56% of deposits) and Top 10 (69% of deposits) markets are better than national averages Expansion markets tend to be much better than national average demographics Source: S&P Global Market Intelligence using FDIC Summary of Deposits as of June 30, 2
Slide 16: Deposit Composition and Growth
Deposit Composition Deposit Growth 2012 – 1Q20 CAGR: 9.6% Cost of Total Deposits Peer Group data per S&P Global Market Intelligence - See Appendix for definition of Peer Group $ in millions 1 As of March 31, 2020, 2 Peers with no financial disclosure Quality Low-Cost Deposit Franchise
Slide 17: Improved Balance Sheet Mix
Improved Balance Sheet Mix Increase of 11.3% 1 Includes loans held for sale
Slide 18: Credit
Credit Peer Group data per S&P Global Market Intelligence - See Appendix for definition of Peer Group
Slide 19: Allowance for Credit Losses
Allowance for Credit Losses Released March 20th New infections peak in April 2% mortality rate Infections abate by July-August V-shaped recovery with GDP contracting in 1Q through 3Q and returning to growth in 4Q Unemployment stays elevated through 2023 Economic Inputs Unemployment GDP BBB Spread ov
Slide 20: Strong Credit Culture
Strong Credit Culture Peer Group data per S&P Global Market Intelligence as of 12/31/2019 - See Appendix for definition of Peer Group 1 Excludes loans held for sale; 2 Source: Regulatory Call Report 3 Full Years 2005-2019, includes banks with 15-years of NCO’s Legal lending limit at March 31, 2020 o
Slide 21: Low-Risk Balance Sheet
Low-Risk Balance Sheet Implies $2.0bn increase in RWA to meet peer average Peer Group data as of 4Q19 and per S&P Global Market Intelligence - See Appendix for definition of Peer Group Risk Weighted Assets / Total Assets
Slide 22: Commitment to Excellence
Commitment to Excellence AMERICAN BANKER. sicascow & Hecate Bloomberg Gander-Squsiy inde beend | BEST PLACE TO WORK FOR Fis ETHISPHERE jammy | DISABILITY INCLUSION Fq [ETHICS INSIDE 100% DISABILITY EQUALITY INDEX _ . pl eo ©)|WORLD’S MOST = AWARD OF SIETHICAL f wit) “@|COMPANIES’ WWW.ETHISPHERE.COM
Slide 23: Financial Details
Financial Details FINANCIAL DATA AS OF March 31, 2020 DATED: May 8, 2020
Slide 24: First-Quarter 2020 Key Performance Indicators
First-Quarter 2020 Key Performance Indicators Earnings: Net income of $22.6mm, or $0.13 per diluted share Adjusted net income1 of $42.1mm, or $0.25 per diluted share, Excludes $31.2mm in ONB Way charges and $5.2mm in debt securities gains Loans and Deposits2: Total loans3 grew 9.0% annualized over p
Slide 25: First-Quarter 2020 Results
First-Quarter 2020 Results Performance Drivers Total loans increased $274.4mm Net interest margin, less accretion, down 9 bps Provision for credit losses driven higher by implementation of the CECL accounting standard which uses an economic forecast including the impact of the novel coronavirus pand
Slide 26: Pre-Provision Net Revenue
Pre-Provision Net Revenue Adjusted pre-provision net revenue1 increased 2.9% Y/Y Improvement driven by successful execution of our stated strategy Improved fee income Low cost core deposit funding Strong expense management Positive operating leverage continues 102 bps Y/Y improvement 1 Up 2.9% YoY $
Slide 27: Average Balance Sheet Mix
Average Balance Sheet Mix $ in millions Loans Total commercial loans: 66.4% of total loans, down 0.4% Y/Y Indirect auto: 7.8% of earning assets, down 0.2% Y/Y Securities Duration of 3.10 vs. 3.86 in 4Q19 1Q20 yield was 2.71% 1Q20 new money yield was 2.42% Estimated NTM cash flows of $1,335mm Net unr
Slide 28: Loans
Loans1 $ in millions 1 Includes loans held for sale Average Balances Period-End Balances Quarterly total loan growth of 9.0% annualized Commercial production of $647mm Average new production size < $1mm Commercial pipeline at quarter end of $2.8bn Line utilization was 35.2% at quarter end Loan yield
Slide 29: Commercial Loan Portfolio Concentrations
Commercial Loan Portfolio Concentrations As of March 31, 2020 $ in millions 1 Includes held for sale Total C&I and CRE - $8,330 (Classed by Product Type)
Slide 30: C&I Loan Portfolio Concentrations
C&I Loan Portfolio Concentrations As of March 31, 2020 $ in millions C&I by State - $3,047 (State Determined by Primary Address of Borrower)
Slide 31: Commercial Real Estate Loan Concentrations
Commercial Real Estate Loan Concentrations CRE - $5,283 (Classed by Property Type) Multifamily by Product Type - $1,210 Multifamily by State - $1,210 (State Determined by Primary Address of Pledged Collateral) *Owner Occupied CRE is 31% As of March 31, 2020 $ in millions
Slide 32: Auto Loan Portfolio
Auto Loan Portfolio Total portfolio average original loan term of 70 months and weighted average FICO score of 767 Total portfolio LTV of 85% Total Portfolio yield of 3.81% 30+ Days Delinquency at 3/31/2020 = 0.73% Loans are originated within the ONB footprint As of March 31, 2020 $ in millions
Slide 33: Investment Portfolio Purchases 1Q20
Investment Portfolio Purchases 1Q201 1 Data as of March 31, 2020
Slide 34: Investment Portfolio
Investment Portfolio $ in millions Investment Portfolio yield of 2.71% in 1Q20 vs. 2.74% in 4Q19
Slide 35: Deposits
Deposits Average Balances Period-End Balances Expected seasonal decline in balances Deposit costs continue to decline 1Q20 total deposit costs of 34 bps Improved to 21 bps by the end of March Total interest-bearing deposit costs were 48 bps, down 11 bps from 4Q19 Low loan to deposit ratio of 87% $ i
Slide 36: Key Performance Drivers: Net Interest Income and Margin
Key Performance Drivers Rate cuts in March NIM decreased 15 bps vs. 4Q19 - 6 bps accretion - 10 bps asset yields + 8 bps funding costs - 4 bps interest collected on nonaccruals - 3 bps # of days Net Interest Income & Net Interest Margin1 $ in millions 1Tax Equivalent Basis; Non-GAAP financial measur
Slide 37: Projected Purchase Accounting Impact
Projected Purchase Accounting Impact Actual Accretion Projected Accretion1 Actual Discount Projected Discount1 Manageable declines in purchase accounting impact expected in future periods Actual IA Amortization Net Income Statement Contribution $ in millions 1 Projections are updated quarterly, assu
Slide 38: Asset Liability Management Position
Asset Liability Management Position 42% of loans are variable-rate $400mm of downrate asset hedges with a weighted average 1-month LIBOR strike of 1.84% 11% of loans have floors Deposit pricing success 1Q20 total cost of deposits was 34 bps, improving 9 bps from 4Q19 Improved to 21 bps by the end of
Slide 39: Noninterest Income
Noninterest Income $ in millions 1Non-GAAP financial measure which management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliation Residential mortgage production includes quick home refinance product Key Performance Drivers 1Q20 adjusted n
Slide 40: Noninterest Expense
Noninterest Expense $ in millions 1Non-GAAP financial measure which management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliation Key Performance Drivers 1Q20 adjusted noninterest expense1 ONB Way cost savings beginning to materialize Con
Slide 41: Conservative Lending Limits/Risk Grades
Conservative Lending Limits/Risk Grades Borrower Asset Quality Rating (Risk Grades) In-House Lending Limit1 ($ in millions) 0 – Investment Grade $67.5 1 – Minimal Risk $57.5 2 – Modest Risk $52.5 3 – Average Risk $45.0 4 – Monitor $35.0 5 – Weak Monitor $25.0 6 – Watch $10.0 7 – Criticized (Special
Slide 42: Capital Trends
Capital Trends 1 Non-GAAP financial measure which Management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliation 2 Excludes commissions Shares in millions Total board authorization of up to 7.0mm shares to be repurchased, as conditions war
Slide 43: Branch Actions
Branch Actions Driving efficiencies through increased branch size and investment in mobile and online banking Consolidated 103 branches since January 2014 Increased core deposits per branch by 119% since 2009 Launched new online and mobile solution January 2016 Increased mobile users by over 530% As
Slide 44: Outlook
Outlook Category Outlook Commercial Loan Production Strong pipeline heading into the 2nd quarter but pull through rates likely to be impacted; PPP loans of $1.35bn will increase outstandings in 2Q20 Net Interest Margin FTE NIM, excluding accretion income, under pressure given historically low intere
Slide 45: The Old National Footprint
The Old National Footprint Sources: United States Census Bureau, Bureau of Labor Statistics, Stats America, Federal Reserve Bank of St. Louis (FRED) INDIANA Population: 6.7 million Total Resident Labor Force:3.3 million Unemployment Rate:3.2% (Mar. ‘20, Seasonally Adjusted) GDP (2019): $377.1B Expor
Slide 46: Attractive Midwest Markets
Attractive Midwest Markets Source: S&P Global Market Intelligence, based on MSAs $ in thousands Average of ONB Footprint Average of ONB Footprint
Slide 47: Attractive Midwest Markets
Attractive Midwest Markets Minneapolis, MN Indianapolis, IN Milwaukee, WI Louisville, KY Grand Rapids, MI MSA Population: 3.7mm MSA Population: 2.1mm MSA Population: 1.6mm MSA Population: 1.3mm MSA Population: 1.1mm Major industries include: Manufacturing, applied research and technology Major indus
Slide 48: Commitment to Strong Corporate Governance
Position or Salary Target Ownership Guidelines Chief Executive Officer 5X salary in stock or 200,000 shares Chief Operating Officer 4X salary in stock or 100,000 shares Salary equal to or greater than $250,000 3X salary in stock or 50,000 shares Salary below $250,000 2X salary in stock or 25,000 sha
Slide 49: 2020 Executive Compensation
2020 Executive Compensation Short Term Incentive Plan Proxy 5 Performance Measure Weight Corporate EPS 60% ROATCE 20% Efficiency Ratio 20% Tied to long term shareholder value Long Term Incentive Plan Proxy 5 Performance Measure Weight Performance-based 75% (50% TSR & 50% ROATCE) Service-based 25%
Slide 50: Commitment to Diversity & Inclusion
Commitment to Diversity & Inclusion Old National is fully committed to supporting a rich culture of diversity as a cornerstone to our success 29% of Old National’s Executive Operating Group are women 68% of all Old National associates are women
Slide 51: Board of Directors
Board of Directors Director Market Background Andrew E. Goebel Evansville, IN 34-year career in the energy industry, most recently serving as President and Chief Operating Officer of Vectren Corporation Jerome F. Henry Jr. Ft. Wayne, IN Owner and President of Midwest Pipe & Steel, Inc., a company he
Slide 52: Appendix
Appendix Hi OLD NATIONAL BANCORP’
Slide 53: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions, except per share data
Slide 54: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 55: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions 1 Year-over-year basis point change in noninterest expense plus change in total revenue 2 Year-over-year basis point change in adjusted noninterest expense plus change in adjusted total revenue
Slide 56: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions, except per-share data
Slide 57: Peer Group
Peer Group Like-size, publicly-traded financial services companies, generally in the Midwest, serving comparable demographics with comparable services as ONB
Slide 58: Old National Investor Relations Contact
Old National Investor Relations 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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