Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (November 2016)
46 slides from Old National Bancorp's investor presentation, Nov 14, 2016
Slide 1: Investment Thesis
Investment Thesis Financial Data as of 9-30-16 Dated: November 14, 2016 Exhibit 99.1
Slide 2: Investment Thesis Executive Summary
Investment Thesis Executive Summary Slides 2 to 12 Financial Data as of 9-30-16 Dated: November 14, 2016
Slide 3: Forward-Looking Statements
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 National Bancorp’s (“Old National’s”) financial condition, result
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: Snapshot of Old National
Snapshot of Old National Largest financial services bank holding company headquartered in Indiana with financial centers located in Indiana, Kentucky, Michigan and Wisconsin 201 financial centers, including newly acquired in Wisconsin 224 ATMs, including newly acquired in Wisconsin Focused on commun
Slide 6: A Strategic Framework for Creating Long-Term Shareholder Value
A Strategic Framework for Creating Long-Term Shareholder Value Attractive footprint that offers room to expand in higher-growth markets and leading share in mature markets Consistent financial performance with focus on building tangible book value and providing adequate return for our shareholders D
Slide 7: Commitment to Excellence
Commitment to Excellence ja) ae ETHISPHERE QuickScore “ 2016 Brus tition Had 4 & WORLD’S MOST ™ COMPANIES’ COM Corporate Engagement AWARD OF = Points of Light Institute =|2016] m
Slide 8: Old National's Landscape
Old National’s Landscape “ciate INDIANA tie MOLD NATIONAL pee
Slide 9: Unemployment Rates in Top Growth Markets
Unemployment Rates in Top Growth Markets Unemployment rates have consistently been below the national average
Slide 10: 3Q16 Highlights
3Q16 Highlights Net income of $34.7 million, or $0.25 per share Results include $5.5 million of pre-tax merger and integration charges 4.1% annualized organic loan growth Stable Core Net Interest Margin1 Decline in Noninterest Expenses Increase in Tangible Book Value Per Share1 of 2.4% from 2Q16 Ret
Slide 11: 3Q16 vs. 2Q16 Highlights
3Q16 vs. 2Q16 Highlights Solid fundamentals driven by disciplined execution Loan Growth +4.1%(annualized) Q/Q TBV +2.4% Q/Q 1 Non-GAAP financial measure which Management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliations $ in millions, e
Slide 12: 2016 Strategic Actions
2016 Strategic Actions Continue investment in higher growth markets Investing in higher growth markets as demonstrated by the closing of the Anchor partnership on May 1 Improve operating leverage Expect an approximately 150 basis point improvement in 2017’s efficiency ratio from the sale of Old Nati
Slide 13: Investment Thesis
Investment Thesis Financial Data as of 9-30-16 Dated: November 14, 2016
Slide 14: Loan Growth – End of Period Balances
Loan Growth $ in millions – End of Period Balances 1 Includes Loans Held for Sale 1 1 Annualized Organic Growth of 4.1% Annualized Organic Growth of 7.6%
Slide 15: Commercial & Commercial Real Estate Loans
Commercial & Commercial Real Estate Loans $ in millions 1New Quarterly Production includes 50% credit for line of credit unfunded commitments 2Yield is based on funded balances only New Quarterly Production1 Production Yield 2 Average loan size of 3Q16 production is less than $520,000 Loan Pipeline
Slide 16: Consumer Loan Production & Yield Trends
Consumer Loan Production & Yield Trends $ in millions New quarterly production includes unfunded commitments – Yield is based on funded balances only Quick Home Refinance (residential mortgage product) is included in the Residential Mortgage graph Direct Consumer includes Home Equity Lines of Credit
Slide 17: Auto Loan Portfolio
Auto Loan Portfolio $ in millions Total portfolio average original loan term of 70 months and weighted average FICO score of 767 Total Portfolio yield of 2.66% 30+ Days Delinquency at 9/30/2016 is 0.44% Loans are originated within the ONB footprint
Slide 18: Loan Concentrations
Loan Concentrations As of September 30, 2016 Commercial Commercial Real Estate Diversified Commercial Loan Portfolio Healthcare/Social Services, 8% Public Admin, 9% Manufacturing, 13% Educational Services, 8% Wholesale Trade, 7% Retail, 6% Other, 23% Real Estate Rental & Leasing, 6% Agriculture, 6%
Slide 19: Credit Quality Trends
$ in millions Credit Quality Trends
Slide 20: Net Charge-Offs / Provision
Net Charge-Offs / Provision $ in millions
Slide 21: ALLL and Remaining Purchase Discount Summary
ALLL and Remaining Purchase Discount Summary $ in millions 1 Includes discount on loans acquired through previous partnerships 2 Non-GAAP financial measure which Management believes useful to demonstrate that the remaining discount considers credit risk and should be included as part of total covera
Slide 22: 2016 DFAST Disclosure
2016 DFAST Disclosure 1 Loss % is calculated by adding the nine quarters of losses and dividing by the nine-quarter average loan balance for each portfolio 2 Commercial real estate includes multifamily, construction loans, and non-farm non-residential loans $ in millions
Slide 23: 2016 DFAST Disclosure
2016 DFAST Disclosure 1 Calculated by dividing the nine-quarter cumulative totals for each line by average total assets over the same time period 2 Pre-Provision Net Revenue includes estimates for operational losses resulting from the hypothetical severely adverse scenario 3 Each Ratio, excluding th
Slide 24: 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 $45 1 – Minimal Risk $40 2 – Modest Risk $35 3 – Average Risk $30 4 – Monitor $25 5 – Weak Monitor $17.5 6 – Watch $7.5 7 – Criticized (Special Mention) $5
Slide 25: Investment Portfolio Purchases 3Q16
Investment Portfolio Purchases 3Q161 1 Data as of September 30, 2016 Security Purchases by Month July August September Total Book Value $ ,165,146,907.28999999 $ ,126,462,083 $ ,189,855,741.52999994 $ ,481,464,731.81999993 Market Value $ ,165,146,907.28999999 $ ,126,462,083 $ ,189,855,741.52999994 $
Slide 26: Investment Portfolio
Investment Portfolio 1Includes market value for both available-for-sale and held-to-maturity securities
Slide 27: Net Interest Margin
Net Interest Margin1 1 Fully taxable equivalent basis, non-GAAP financial measure which Management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliation 2 ONB Core includes contractual interest income of prior acquisitions 2
Slide 28: Acquired Loans
Acquired Loans $ in millions – as of September 30, 2016 PCI = Purchased Credit Impaired
Slide 29: Projected Purchase Accounting Impact
Projected Purchase Accounting Impact Actual Accretion Projected Accretion1 Actual Discount Projected Discount1 $ in millions 1 Updated quarterly – subject to change IA = Indemnification Asset Manageable declines in purchase accounting impact expected in future periods Actual IA Amortization Net Inco
Slide 30: Modeled Interest Rate Sensitivity
$ in millions Change to Net Interest Income based on a two year time horizon Refer to slide 31 for rate curves Total non-maturity, interest-bearing accounts increase from 0.09% to 0.37% in the “Up 100 bps” scenario 18.7% of total non-interest bearing DDA are considered rate sensitive Investment port
Slide 31: Up vs. Base Rate Curves
Up 100 vs. Base 1% i 1M 2M 3M 4M 5M 6M 9M IY 15Y 2Y 25Y 3Y 4Y SY 7.SY 10Y 15Y 20Y 30Y —sase ——up100 Forward Curves 3.0% 25% 2.0% —— 1M 2M 3M 4M 5M 6M 9M 1Y 15Y 2¥ 25Y 3Y 4Y SY 7.5Y 10Y 15Y 20Y 30Y — 9/30/2016 9/30/2017 9/30/2018
Slide 32: 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
Slide 33: Total Revenue
$ in millions Total Revenue $141.4 9.6% increase excluding branch sale gains
Slide 34: Fee-Based Business Revenue
Fee-Based Business Revenue $ in millions
Slide 35: Noninterest Expense
$ in millions 1Operational expenses = total noninterest expense less merger/integration costs , Foundation/Community Support, Branch Consolidations and severance Noninterest Expense 5.1% reduction in Operational Expenses1
Slide 36: Improving Efficiency Trends
Improving Efficiency Trends Core Deposits per Branch Branches $ in millions
Slide 37: Rationalizing Distribution Channels
Rationalizing Distribution Channels Driving efficiencies through increased branch size and investment in mobile and online banking Consolidated 32 branches since Jan 1, 2014 Increased average deposits per branch by almost 22% Announced an additional 15 branch consolidations to occur January, 2016 La
Slide 38: Returned to Community Bank Model
Returned to community bank model 2004 2005 Sold non-strategic market – Clarksville, TN – 5 branches 2006 Sold non-strategic market – O’Fallon, IL – 1 branch 2007 2008 2009 2010 2011 2012 2013 Acquired St. Joseph Capital – Entry into Northern IN market February, 2007 Acquired 65 Charter One branches
Slide 39: 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 40: Executive Compensation
Executive Compensation Short Term Incentive Plan (CEO, CFO, CBA, CCO, Chief Legal Counsel) Performance Measure Weight Corporate Net Income 60% Net Charge-Offs 15% Efficiency Ratio 25% Tied to long term shareholder value: Long Term Incentive Plan (CFO,CBO, CCO, Chief Legal Counsel) Performance Measur
Slide 41: Appendix
Appendix Ml OLD NATIONAL BANCORP
Slide 42: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 43: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions Shares in thousands
Slide 44: GAAP Reconciliations
GAAP Reconciliations 3Q15 2016 3Q16 Net Interest Income ($ in 000's) $97,104) $99,340] $107,80: Taxable Equivalent Adjustment 4,965} 5,267| 5,321 $102,069] $104,607| $113,125 Assets $10,364,691] $11,726,383] $12,575,454) 3.75%| 3.39% 3.43" Fully Taxable Equivalent 3.94%] 357%| 36 3015 2016 3016 Net
Slide 45: Old National's 2016 Peer Group
Old National’s 2016 Peer Group Like-size, publicly-traded financial services companies, generally in the Midwest, serving comparable demographics with comparable services as ONB
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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