Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (November 2020)
53 slides from Old National Bancorp's investor presentation, Nov 2, 2020
Slide 1: Investment Thesis
Exhibit 99.1 Investment Thesis FINANCIAL DATA AS OF September 30, 2020 DATED: November 2, 2020
Slide 2: Executive Summary
Executive Summary Slides 3-18
Slide 3: Forward-Looking Statements; Non-GAAP
Forward-Looking Statements; Non-GAAP 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 Na
Slide 4: Snapshot of Old National
Snapshot of Old National Summary Company Description Headquarters Evansville, IN • Largest bank holding company headquartered in Indiana with financial centers located in Indiana, Kentucky, Michigan, Market Cap $2,311 Minnesota and Wisconsin P/ TBV 126% • 162 financial centers and 204 ATMs Dividend
Slide 5: Old National's Footprint
Old National’s Footprint Wisconsin $1.4 billion deposits Minnesota 8% of total franchise Wisconsin St.St. PaulPaul MinneapolisMinneapolis == ====== ========= == == ======== ====== == ==== Michigan EauEau ClaireClaire == == == ===== $1.6 billion deposits == == == == == AppletonAppleton Michigan 10% o
Slide 6: Credit Quality
Credit Quality Vulnerable Industries % of Industry Balance Total Loans Exposure Other CRE - Senior Housing $285 2.3% $325 Loans Vulnerable Restaurants $211 1.7% $230 92.9% Industries 7.1% Arts/Entertainment $142 1.1% $176 C&I - Retail $109 0.9% $253 Hotels $83 0.7% $85 Oil/Gas $54 0.4% $128 Total $8
Slide 7: Client Relief Programs
Client Relief Programs Deferrals Deferrals by Industry/CRE Collateral Ever Ever Active Active Educational Retail Trade 3% Services 3% Other 3% Deferred % of Portfolio1 Deferrals % of Portfolio1 Healthcare & Social $1,304 10% $138 1% Assistance 5% Arts, CRE - Office 22% Entertainment & Recreation 7%
Slide 8: Strategy to Drive Long-Term Shareholder Value
Strategy to Drive Long-Term Shareholder Value Basic Bank… Larger balance sheet capabilities with a strong product offering, delivered in-market with Broader Reach unequalled client care- “Out-product Community Banks, Out-service Large Regionals” M&A Repositioned Positioned in faster-growth Midwester
Slide 9: Franchise Evolution
Franchise Evolution Built a Better Bank… Key market expansions in Minnesota (2017/2018), Wisconsin (2016), Michigan (2014/2015) Deposits per Branch Assets per FTE $16,450 $22,460 $7,279 $9,544 $102 $7,846 $5,447 $9.04 $47 $40 $3.15 $3.56 2007 2012 3Q20 2007 2012 3Q20 Core Deposits Core Deposits/Bran
Slide 10: …With Improved Scale
…With Improved Scale Number of MSAs with Top 5 Rank Number of MSAs with Top 10 Rank 16 32 12 12 23 18 2007 2012 2020 2007 2012 2020 Number of MSAs with Top 5 Rank Number of MSAs with Top 10 Rank 44 23 18 32 16 14 14 27 26 25 FNB ASB ONB FFBC GWB FNB ONB GWB ASB FFBC 10 Source: S&P Global Market Inte
Slide 11: Old National Top MSAs
Old National Top 10 MSAs Percent of 2021-2026 2021 2021-2026 ONB Market Deposits 2021 Total 2020-2021 Projected Median Projected Franchise Share Per Branch Population Population Population Household HH Income (%) Rank ($M) (Actual) Change (%) Change (%) Income ($) Change (%) Minneapolis-St. Paul-Blo
Slide 12: Quality Low-Cost Deposit Franchise
Quality Low-Cost Deposit Franchise Deposit Composition Deposit Growth $16.2 $16.4 Time $14.2 $14.5 $14.2 Money 7.3% $12.4 Market Noninterest- $10.6 11.6% $11.0 $11.0 bearing $8.5 $8.3 $10.2 $10.4 $10.1 Demand $7.3 Savings $7.2 $8.7 33.2% $7.6 20.0% $6.1 $5.8 $5.3 $5.2 NOW $5.2 $5.4 $4.0 $4.1 $4.1 27
Slide 13: Improved Balance Sheet Mix
Improved Balance Sheet Mix Average Commercial Loans/Average Average Indirect Loans/Average Assets Assets 41.9% 40.3% 39.8% 40.3% 40.1% 7.8% 36.0% 7.5% 7.3% 32.9% 30.3% 28.5% 28.8% 6.2% 5.8% 5.0% 4.7% 4.7% 4.5% 4.5% 2013 2014 2015 2016 2017 2018 2019 1Q20 2Q20 3Q20 2013 2014 2015 2016 2017 2018 2019
Slide 14: Credit
Credit 30+ Day Delinquency Net Charge-offs 0.56% 0.53% 0.52% 0.48% 0.50% 0.48% 0.45% 0.43% 0.26% 1 0.23% 0.23% 0.38% 0.40% 0.20% 0.17% 0.18% 0.15% 0.31% 0.27% 0.05% 0.25% 0.21% 0.04% 0.20% 0.03% 0.02% 0.02% 0.17% -0.02% -0.09% 2015Y 2016Y 2017Y 2018Y 2019Y 1Q20 2Q20 3Q20 2015Y 2016Y 2017Y 2018Y 2019
Slide 15: Allowance for Credit Losses
Allowance for Credit Losses Allowance for Credit Losses $11.0 $131.4 $128.4 ($7.8) Key Economic Assumptions ($0.2) 3Q20 4Q20 2021 2022 2023 2024 GDP Change 26.6% 2.9% 3.5% 5.0% 3.8% 2.4% Unemployment Rate 8.9% 9.1% 8.4% 6.4% 4.8% 4.5% BBB Spread/10Y Treasury 2.7% 2.7% 2.7% 2.5% 2.5% 2.5% Other Key M
Slide 16: Strong Credit Culture and CRE Concentration
Strong Credit Culture 3 and 15-Year Cumulative NCOs/ Avg. Loans1 CRE Concentration (% of Loans)1,2 CRE/ Total 220% 204% 220% RBC 34.1% 7.55% 30.9% 6.08% 28.8% 3.84% 0.60% 0.63% 0.10% 3-Year 15-Year³ ONB Peer Average Banks $10B - $50B ONB Peer Average Banks $10B-$50B 15-Year Peak NCOs Average Loan Si
Slide 17: Low-Risk Balance Sheet
Low-Risk Balance Sheet Implies $2.0B increase in RWA to meet peer average 101% 83% 75% 67% 66% 60% Peer Min Lower Quartile Average Upper Quartile Peer Max ONB Risk Weighted Assets/ Total Assets Includes PPP Loans 17 Peer Group data as of 2Q20 and per S&P Global Market Intelligence - See Appendix for
Slide 18: Commitment to Excellence
u Commitment to Excellence Bloomberg Gender-Equality Index ©)|WORLD’S MOST ~ siETHICAL «1|COMPANIES® WWW.ETHISPHERE.COM ABA Foundation Sey Haveds Corporate Engagement AWARD OF Points of Light Institute = lo - D =| BEST PLACE TO WORK FOR [x4 = DISABILITY INCLUSION F4 100% DISABILITY EQUALITY INDEX ET
Slide 19: Financial Details
Financial Details FINANCIAL DATA AS OF September 30, 2020 DATED: November 2, 2020
Slide 20: Third-Quarter 2020 Results
Third-Quarter 2020 Results Change vs. 3Q20 2Q20 3Q19 Linked-Quarter Performance Drivers • Strong total commercial production of $978mm End of period total loans$ 13,978 $ 240 $ 1,902 End of period total deposits 16,507 188 2,059 • Noninterest-bearing demand deposit growth Net interest income (FTE) 1
Slide 21: Pre-Provision Net Revenue
Pre-Provision Net Revenue Adjusted Pre-Provision Net Revenue $94.6 $91.5 $92.1 • Adjusted pre-provision net revenue $77.4 increased 3.4% Y/Y $73.9 • Improvement driven by successful execution of our stated strategy • Strong commercial loan production • Improved fee income • Low cost core deposit fun
Slide 22: Earning Assets
Earning Assets1 Total Loans $13,978 $13,849 $13,738 $13,450 $1,479 $1,125 $1,477 $1,463 $12,091 $12,069 $12,192 Commercial loans, excl. PPP $2,785 $2,924 $2,798 $2,845 $3,064 $2,892 $2,907 • Commercial production of $978mm • Average new production size ~$1mm $5,020 $5,130 $5,189 $5,341 $5,546 $5,403
Slide 23: Total Loan Portfolio Concentrations
Total Loan Portfolio Concentrations1,2 By Product Type - $12,498 Repricing Type HELOC 4% Floating Other 6% Consumer 9% CRE Non-Owner Residential Real Occupied 33% Estate Variable 37% 19% Fixed 57% C&I 22% CRE Owner Occupied 13% 23 $ in millions As of 9/30/2020 1 Includes loans held for sale 2 Exclud
Slide 24: C&I Loan Portfolio
C&I Loan Portfolio1 C&I - $2,785 Repricing Type Manufacturing 15% Floating Other 19% 24% Public Admin 9% Ag, Forestry, Fishing, Fixed Construction 54% and Hunting 9% 5% Other Services Variable (Except Public 27% Admin) 6% Educational Services Finance & 7% Insurance Wholesale Trade 6% 7% Health Care
Slide 25: Commercial Real Estate Loan Concentrations
Commercial Real Estate Loan Concentrations Construction & Land Development - $574 CRE - $5,702 (Classed by Property Type) Other CRE 22% Multifamily Construction & Single Family 34% Religion 2% Land Dev 10% 3% Mixed Use 3% Mixed Use 2% Senior Housing Other CRE 15% 3% Retail 8% Office Single Family 14
Slide 26: Auto Loan Portfolio
Auto Loan Portfolio Direct $68 • Total portfolio average original loan term of 70 months and weighted average FICO score of 766 Indirect (Dealer) • Total portfolio LTV of 86% $933 • Total portfolio yield of 3.79% • 30+ Days Delinquency at 9/30/2020 = 0.49% New $424 Used $577 Loans are originated wit
Slide 27: Investment Portfolio Purchases 3Q20
Investment Portfolio Purchases 3Q20 Duration of Purchases Treasuries 0.00 Agencies 7.21 Pools 4.64 Q3 2020 CMOs 5.58 Purchases- Book Municipals 11.02 Value Corporates 6.40 Treasuries - ABS 0.00 Agencies $99,000,000 Total 6.69 Pools 39,988,184 0.00 2.00 4.00 6.00 8.00 10.00 12.00 CMO 444,602,460 Muni
Slide 28: Investment Portfolio
Investment Portfolio Market Book Value Book Value Market Value Market Value Value $ Jun 30, 2020 Sep 30, 2020 Jun 30, 2020 Sep 30, 2020 Change Federal National Mortgage Association $0.0 $70.0 $0.0 $70.0 Federal Farm Credit Bank 251.2 220.2 253.4 223.3 Federal Home Loan Bank and Other 198.6 198.6 200
Slide 29: Deposits
Deposits Total Deposits $16,437 $16,319 $16,506 $15,653 $1,404 $1,263 $14,603 $1,472 Growth in noninterest-bearing and $14,331 $14,328 $1,446 $1,752 savings lead to higher deposit $1,915 $1,646 $5,291 $5,218 $5,463 $4,871 balances $4,047 $3,842 $3,965 0.52% Deposit costs continue to decline 0.43% •
Slide 30: Net Interest Income & Net Interest Margin
Net Interest Income & Net Interest Margin1 Net Interest Income Key Performance Drivers $156 $152 • Lower new business yields $147 $149 $149 $13 $10 • PPP 1% coupon + fees $7 $7 $9 $6 $5 • Increases NII, neutral to NIM • NIM decreased 11 bps vs. 2Q20 • - 17 bps asset yields • +5 bps funding costs • -
Slide 31: Projected Purchase Accounting Impact
Projected Purchase Accounting Impact Manageable declines in purchase accounting impact expected in future periods Projected Accretion Income Projected Remaining Discount $57.2 $40.7 $42.9 $40.7 $136.5 $129.7 $121.3 $21.5 $77.8 $52.4 $42.4 $10.0 $7.5 $34.9 2016 2017 2018 2019 2020 2021 2022 2016 2017
Slide 32: Asset Liability Management Position
Asset Liability Management Position Disciplined balance sheet management and well-positioned to both defend margin against lower rates and benefit from higher rates Interest Rate Risk Position Loan and Deposit Mix 1 • 42% of loans are variable/floating-rate1 Loans Deposits Floating • $400mm of downr
Slide 33: Noninterest Income
Noninterest Income Adjusted Noninterest Income1 $58 $60 $53 Key Performance Drivers $52 $9 $8 • 3Q20 adjusted noninterest income $8 $47 $5 $7 $6 • $1.1mm increase in service charges on $5 $7 $4 deposits $3 $9 $18 • $0.8mm increase in mortgage banking $6 $11 $17 revenue • Mortgage activity $14 $15 $1
Slide 34: Noninterest Expense
Noninterest Expense Adjusted Noninterest Expense1 $126 $122 $118 $115 $114 Key Performance Drivers $25 $24 • 3Q20 adjusted noninterest expense $24 $22 $22 • Additional ONB Way cost savings $12 $12 $11 $13 $9 • 3Q20 adjusted efficiency ratio of 53.1% $14 $12 $14 • 73 bps improvement from 2Q20 $13 $14
Slide 35: Conservative Lending Limit/Risk Grades
Conservative Lending Limit/Risk Grades Borrower Asset Quality Rating In-House Lending Limit1 (Risk Grades) 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 Mention) $5.0 Borrowe
Slide 36: Capital Trends
Capital Trends Tangible Common Equity to Tangible Tangible Common Book Value1 Assets1 $11.10 $10.75 8.95% 8.58% $10.18 8.45% 3Q19 2Q20 3Q20 3Q19 2Q20 3Q20 Share Repurchase Activity2 Shares Weighted Avg Price 1Q20 4.9 $16.05 2Q20 0 N/A 3Q20 0 N/A Total board authorization of up to 7.0mm shares to be
Slide 37: 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 199% since 2009 • Launched new online and mobile solution January 2016 • Increased mobile user by ove
Slide 38: Outlook
Outlook COVID-19 will impact performance going forward Category Outlook Commercial Loans Strong pipeline heading into the 4th quarter; PPP runoff expected to begin in 4Q but majority in 2021 Net Interest Margin FTE NIM, excluding accretion income, under pressure given the low interest rate environme
Slide 39: Old National's Footprint
Old National’s Footprint Wisconsin Population: 5.82 million Total Resident Labor Force: 3.88 million Unemployment Rate: 5.4% Minnesota (Sept. ‘20, Seasonally adjusted) Minnesota GDP (2019): $347.3B Population: 5.64 million Exports (2019): $21.7B Total Resident Labor Force: 3.93 million Wisconsin St.
Slide 40: Attractive Midwest Markets
Attractive Midwest Markets Median Household Income 2021 Projected Household Income Change $86.4 2021-2026 $78.2 $78.8 12.6%12.4% $66.2 $66.6 $68.8 $66.7 11.3% $64.5 $63.9 $60.9 $59.7 Average 10.0% 10.2% of ONB 9.8% 9.6% 9.5% 8.8% 9.4% 9.4% Footprint Projected Population Change 2021-2026 4.0% 3.7% 3.
Slide 41: Attractive Midwest Markets
Attractive Midwest Markets Minneapolis, MN Indianapolis, IN Milwaukee, WI Louisville, KY Grand Rapids, MI MSA Population: 3.7mm MSA Population: 2.1 mm MSA Population: 1.6mm MSA Population: 1.3mm MSA Population: 1.1mm Major industries include: Major industries include: Major industries include: Major
Slide 42: Commitment to Strong Corporate Governance
Commitment to Strong Corporate Governance • Stock ownership guidelines have been established for named executive officers as follows: 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 shar
Slide 43: 2020 Executive Compensation
2020 Executive Compensation • Tied to long term shareholder value Short Term Incentive Plan Proxy 5 Performance Measure Weight Corporate EPS 60% ROATCE 20% Efficiency Ratio 20% Long Term Incentive Plan Proxy 5 Performance Measure Weight Performance-based (50% 75% TSR & 50% ROATCE) Service-based 25%
Slide 44: 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 • 27% of Old National’s Executive Operating Group are women • 68% of all Old National associates are women 44
Slide 45: Board of Directors
Board of Directors Director Market Background 34-year career in the energy industry, most recently serving as President and Chief Operating Officer of Vectren Andrew E. Goebel Evansville, IN Corporation Jerome F. Henry Jr. Ft. Wayne, IN Owner and President of Midwest Pipe & Steel, Inc., a company he
Slide 46: Appendix
Appendix Ml OLD NATIONAL BANCORP”
Slide 47: Non-GAAP Reconciliations
Non-GAAP Reconciliations 3Q19 2Q20 3Q20 As Reported: Net Interest Income (FTE) $156.3 $149.0 $149.0 Add: Fee Income 53.9 58.5 64.7 Total Revenue (FTE) $210.2 $207.5 $213.7 Less: Provision (1.4) (22.5) - Less: Noninterest Expense (122.6) (120.2) (120.2) Pre-Tax Income $86.2 $64.8 $93.5 Less: Income T
Slide 48: Non-GAAP Reconciliations
Non-GAAP Reconciliations 3Q19 4Q19 1Q20 2Q20 3Q20 As Reported: Net Interest Income (FTE) $156.3 $152.2 $147.1 $149.0 $149.0 Add: Fee Income 53.9 47.7 57.5 58.5 64.7 Total Revenue (FTE) $210.2 $199.9 $204.6 $207.5 $213.7 Less: Noninterest Expense 122.6 134.7 158.7 120.2 120.2 Pre-Provision Net Revenu
Slide 49: Non-GAAP Reconciliations
Non-GAAP Reconciliations 3Q19 2Q20 3Q20 Noninterest Expense As Reported $122.6 $120.2 $120.2 Less: ONB Way Charges (1.8) (4.9) (2.9) Less: Merger and Integration Charges (1.3) - - Noninterest Expense Less Charges $119.5 $115.3 $117.3 Less: Amortization of Tax Credit Investments (1.2) (0.3) (3.1) Adj
Slide 50: Non-GAAP Reconciliations
Non-GAAP Reconciliations 1Q20 2Q20 3Q20 Net Interest Income As Reported $143.8 $145.6 $145.6 FTE Adjustment 3.3 3.4 3.4 Net Interest Income (FTE) $147.1 $149.0 $149.0 Average Earning Assets $17,774.0 $19,007.7 $19,654.3 Net Interest Margin 3.24% 3.06% 2.96% Net Interest Margin (FTE) 3.31% 3.14% 3.03
Slide 51: Non-GAAP Reconciliations
Non-GAAP Reconciliations 3Q20 Net Income As Reported $77.9 Less: Securities Gains/Losses (net of tax) (3.7) Add: ONB Way Charges (net of tax) 2.2 Adjusted Net Income $76.4 Average Total Assets $22,273.7 Return on Average Assets 1.40% Adjusted Return on Average Assets 1.37% 3Q20 Net Income As Reporte
Slide 52: Peer Group
Peer Group Like-size, publicly-traded financial services companies, generally in the Midwest, serving comparable demographics with comparable services as ONB Associated Banc-Corp ASB BancorpSouth Bank BXS Bank OZK OZK Commerce Bancshares, Inc. CBSH Cullen/Frost Bankers, Inc. CFR F.N.B. Corporation F
Slide 53: Old National Investor Relations Contact
Old National Investor Relations Contract 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 53
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