Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (February 2011)
34 slides from Old National Bancorp's investor presentation, Feb 14, 2011
Slide 1: Old National Bancorp Investment Thesis
Old National Bancorp Investment Thesis Financial Data as of 12-31-2010
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, descriptions of Old National's financial condition, results of operations, asset and c
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 4Q10 NPL's/loans of 1.90% vs. 3Q10 peer average of 3.00
Slide 5: 2010 Year in Review
2010 Year in Review Net income of $38.2 million, or $.44 per share Vs $9.8 million, or $.14 per share, in 2009 Earnings driven by Reduction in credit costs 2010: Net charge-offs of $28.0 million and provision expense of $30.8 million 2009: Net charge-offs of 60.8 million and provision expense of $63
Slide 6: Adapting and Reshaping our Business For Growth
Adapting and Reshaping our Business For Growth Streamlining processes to make it simple, easy and fast for clients to do business with Old National Commercial Banking Unit 2nd review committee for new lending opportunities Focus on cross sell of insurance and wealth management Introduction of Quick
Slide 7: Corporate Summary
Corporate Summary MARKET STATISTICS AND SUMMARY OVERVIEW ($ 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 8: The Old National Footprint
The Old National Footprint The Old National Footprint ONB Headquarters
Slide 9: Local Unemployment
Local Unemployment Local Unemployment 50.9% / 7.8% 2.2% / 9.6% 3.2% / 10.8% 0% / 9.6% 43.6% / 8.8% ..1% / 9.3% % of ONB's Indiana deposits* / Regional unemployment Unemployment data provided by Indiana Department of Workforce Development and Bureau of Labor Statistics December 2010 Unemployment: Ind
Slide 10: Asset/Liability Composition
Asset/Liability Composition Investments Commercial Loans Commercial Real Estate Loans Consumer Loans* Residential Real Estate Other Asset 0.369 0.168 0.133 0.135 0.052 0.143 NOW & Savings Demand Deposits Money Markets Other Time Borrowings Brokered CDs Other Liability 0.37224 0.19984 0.05243 0.22787
Slide 11: Loan Concentrations
Loan Concentrations At December 31, 2010 Commercial Commercial Real Estate Diversified Commercial Loan Portfolio
Slide 12: Conservative Lending Limits
Conservative Lending Limits Borrower* Asset Quality Rating In-House Lending Limit* ($ 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 12-31-2010 of $89 million per borrower *Includes ent
Slide 13: 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 4Q10 at 2.77% vs. 3Q10 p
Slide 14: Credit Metrics
Credit Metrics 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Provision Expense 21.9 5.7 6.8 17 17.3 12 12.2 21.8 9.3 8 6.4 7.1 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 2008 2009 2010 $40.8 $60.8 $28.0 $51.5 > $63.3 > $30.8 > $ in millions Positive
Slide 15: Credit Metrics
Credit Metrics 1As a % of end of period loans 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Criticized Loans 103.815 97.542 114.321 124.855 86.587 101.019 94.607 103.5 104.861 100.652 75 84 Classified Loans 83.5 81.7 105.4 116.1 122.4 113.6 101 90.1 92.4 88.8 101 103.4 Nonaccrual Loans
Slide 16: Credit Metrics: 30+ Day Delinquent Loans
Credit Metrics 30+ Day Delinquent Loans Specific Segment Overview 30+ Day Delinquent Loans 4Q09 1Q10 2Q10 3Q10 4Q10 Commercial .51% .32% .36% .29% .26% Commercial Real Estate .44% .26% .52% .23% .12% First Mortgage Residential Real Estate 1.97% 1.31% 1.85% 1.73% 1.59% Home Equity Lines Of Credit .82
Slide 17: Reduction of Noninterest Expenses
Reduction of Noninterest Expenses 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 FTE's 2875 2828 2812 2708 2646 2585 2491 Decrease of 13.4% or 384 FTE Full-year 2010 noninterest expenses are down $24.7 million, or 7.3%, compared to 2009 levels
Slide 18: Capital Management
Capital Management Approved share repurchase program 1-27-2011 Up to 2.25 million shares of ONB common stock Ends 1-31-2012 Redemption of ONB Capital Trust II $100 million at 8.00% called 12-15-2010 Termination of $50 million of FHLB advances at an average rate of 1.90% and restructure of $25 millio
Slide 19: Capital Ratios
Capital Ratios 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 ONB 0.0883 0.085 0.0831 0.0804 0.075 0.0779 0.1225 0.1244 0.1304 0.1398 0.1458 0.145 Peer Group Average 0.0879 0.0849 0.0848 0.0848 0.0866 0.0892 0.0963 0.0987 0.1097 0.113 0.1153 ONB Minimum Guideline 0.09 0.09 0.09 0.09 0.0
Slide 20: Investment Portfolio
Investment Portfolio ($ in millions) Book Value Sept. 30, 2010 Book Value Dec. 31, 2010 Market Value* Sept. 30, 2010 Market Value* Dec. 31, 2010 Market Value $ Change Federal National Mortgage Association $676.4 $558.2 Federal Home Loan Mortgage Corporation 195.5 49.0 Federal Home Loan Bank 81.2 9.7
Slide 21: Municipal Bond Portfolio by State
Municipal Bond Portfolio by State IN TX PA KY MO All Other 0.383 0.069 0.071 0.052 0.061 0.364 Based on book value at 12-31-2010 Illinois exposure consists of 1 bond representing < .5% of entire municipal portfolio
Slide 22: Monthly Net Interest Margin
Monthly Net Interest Margin* 1/1/2010 2/1/2010 3/1/2010 4/1/2010 5/1/2010 6/1/2010 7/1/2010 8/1/2010 9/1/2010 10/1/2010 11/1/2010 12/1/2010 ONB 0.0339 0.0327 0.0333 0.0341 0.0343 0.0336 0.0344 0.0342 0.0341 0.0346 0.0337 0.0356 *Fully taxable-equivalent basis 1Q10 = 3.33% 2Q10 = 3.40% 3Q10 = 3.42% 4
Slide 23: 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 24: 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 25: ONB Acquired Monroe Bancorp
ONB Acquired Monroe Bancorp Transaction closed 1-1-2011 Provides #1 market share in Monroe County (Bloomington, Indiana) Systems conversion to occur 5-14-2011 Balance sheet acquired Approximately $800 million in total assets Approximately $500 million in total loans Approximately $700 million in tot
Slide 26: Appendix
Appendix Old National Bancorp
Slide 27: Minimal Shared National Credits
Minimal Shared National Credits *All but one in ONB footprint of Indiana, Kentucky or Illinois **Refer to Appendix for ONB Loan Risk Grade Table ($ in millions) 1Q10 2Q10 3Q10 4Q10 Count (#)* 12 12 10 8 Total exposure $134.6 $133.2 $118.2 $83.4 Dollar outstanding $54.4 $50.8 $38.7 $23.0 Largest expo
Slide 28: ONB Loan Risk Grades
ONB Loan Risk Grades Grade Name 0 Investment Grade 1 Minimal Risk 2 Modest Risk 3 Average Risk 4 Monitor 5 Weak Monitor 6 Watch 7 Criticized (Special Mention) 8 Classified (Problem) 9 Nonaccrual
Slide 29: Other Classified Assets
($ in millions) Book Value Sept. 30, 2010 Market Value Sept. 30, 2010 Book Value Dec. 31, 2010 Market Value Dec. 31, 2010 Corporate Bonds $3.4 $2.5 $3.3 $2.5 Pooled Trust Preferred Securities $28.1 $8.4 $27.4 $8.4 Non-Agency Mortgage Backed Securities $116.5 $97.8 $74.9 $70.3 Totals $148.0 $108.7 $1
Slide 30: Securities with OTTI
Securities with OTTI *Lowest credit rating provided by any nationally recognized credit rating agency. Vintage Lowest Credit Rating* Book Value at Dec. 31, 2010 OTTI 4Q10 OTTI YTD 2010 OTTI Life to Date BAFC Ser 4 2007 CCC $14,026 $- $79 $142 CWALT Ser 73CB 2005 CCC 5,481 - 207 290 CWALT Ser 73CB 20
Slide 31: Loan Yields and Deposit Costs
Loan Yields and Deposit Costs Peer Group data per SNL Financial See Appendix for definition of Peer Group 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 ONB Loan Yields 0.0681 0.0629 0.0611 0.0597 0.0521 0.0514 0.0514 0.0508 0.0507 0.0508 0.0502 0.0495 Peer Group Average 0.0685 0.0632 0
Slide 32: The Old National Peer Group
The Old National Peer Group Name Ticker Name Ticker 1st Source Corporation SRCE Heartland Financial USA, Inc. HTLF BancFirst Corporation BANF IBERIABANK Corporation IBKC BancorpSouth, Inc. BXS MB Financial, Inc. MBFI Bank of Hawaii Corporation BOH Park National Corporation PRK Chemical Financial Cor
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Total Shareholders' Equity $675.4 $649.0 $635.4 $730.9 $631.8 $634.6 $865.4 $843.8 $855.5 $874.7 $895.7 $878.8 Deduct: Goodwill and Intangible Assets (190.3) (188.7) (187.8) (186.8) (205.6) (204.0) (202.4) (200.2) (
Slide 34: 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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