Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (May 2013)
54 slides from Old National Bancorp's investor presentation, May 13, 2013
Slide 1: Old National Bancorp Investment Thesis
Old National Bancorp Investment Thesis Financial Data as of 3-31-13 Dated: May 13, 2013
Slide 2: Executive Summary
Old National Bancorp Investment Thesis Executive Summary Slides 2 to 10 Financial Data as of 3-31-13 Dated: May 13, 2013
Slide 3: Disclosures
Disclosures Forward-Looking Statement This Investment Thesis 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 operat
Slide 4: Why Old National Bancorp?
Why Old National Bancorp? Focused on driving core net income Conservative and consistently applied credit stance since before current cycle has led to strong credit quality No subprime business Lending to clients we know in our footprint Transforming footprint to higher-growth markets Commitment to
Slide 5: Commitment to Excellence
Commitment to Excellence Commitment to Excellence ETHISPHERE 2013
Slide 6: 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 7: The Old National Landscape
The Old National Landscape MSA Market Rank Deposit Market Share Bloomington, IN 1 22.2% Central City, KY 1 40.0% Danville, IL 1 16.1% Evansville, IN-KY 1 31.5% North Vernon, IN 1 37.7% Columbus, IN 2 26.4% Jasper, IN 2 25.2% Seymour, IN 2 26.3% Terre Haute, IN 2 14.5% Vincennes, IN 2 26.6% Washingto
Slide 8: Deposit / Unemployment Distribution
Deposit / Unemployment Distribution Deposit / Unemployment Distribution 43.9% / 8.2% .6% / 9.0% 1.9% / 9.6% 0% / 10.4% 40.7% / 8.9% 12.9% / 8.9% % of ONB's Indiana deposits1 / Regional unemployment Unemployment data provided by Indiana Department of Workforce Development and Bureau of Labor Statisti
Slide 9: Our Indiana Footprint Economic Vital Signs
Our Indiana Footprint Economic Vital Signs Indicator Outlook Latest Statistics (March 2013) Latest Statistics (March 2013) Trend (YOY change from Mar. 2012) Jobs Nonfarm Employment* Unemployed* 2,924,000 275,400 Jobs increased 29,000 Unemployment rate increased to 8.7 % (Mar. 2012 rate was 8.2%) Une
Slide 10: First Quarter 2013 Highlights
First Quarter 2013 Highlights Net income of $23.9 million, or $.24 per share 10.2% increase over $21.7 million, or $.23 per share, in 1Q12 $23.0 million, or $.23 per share, in 4Q12 Highlights of current quarter 8.3% growth in average core loans over 1Q12 Excluding covered and acquired loans Improvem
Slide 11: Old National Bancorp Investment Thesis
Old National Bancorp Investment Thesis Financial Data as of 3-31-13 Dated: May 13, 2013
Slide 12: Pre-Tax, Pre-Provision Income
Pre-Tax, Pre-Provision Income1 1 Non-GAAP financial measure management believes is useful in evaluating the financial results of the Company - see Appendix for Non-GAAP reconciliation $ in millions $34.0 $32.4
Slide 13: FTE and Asset Change
FTE and Asset Change Acquired Monroe Bancorp 1-1-11 FDIC acquisition of Integra Bank 7-29-11 Acquired IN Community Bancorp 9-15-12 $ in millions 21% increase in total assets with a corresponding 8% decrease in FTE
Slide 14: Net Interest Margin
Net Interest Margin1 1 Fully taxable equivalent basis 3.67% 3.96% 4.20% 2 ONB Core includes contractual interest income of Monroe, Integra and IN Community loans 2 4.20% 4.26% 4.09% 4.34% Earning assets reflect purchased assets, net of discount
Slide 15: Asset/Liability/Revenue Composition
Asset/Liability/Revenue Composition *Consumer Loans consist of 21% direct, 46% indirect and 34% HELOC. Period-End 3-31-13 Period-End 3-31-13 Assets Liabilities Total Revenues, excluding Securities Gains *Other Income includes 1.0% for Mortgage Banking Revenue, 1.3% for Company-Owned Life Insurance,
Slide 16: Average Loan Trends
Average Loan Trends $ in millions - Quarterly averages - excludes residential loans and leases held for sale 1 1 Includes both covered and non-covered loans 1Q12 to 1Q13 increase of $308.4 million, or 8.3%, in average ONB Core loans
Slide 17: Loan Portfolio at March 31, 2013
Loan Portfolio at March 31, 2013 Commercial $1,315.1 Commercial Real Estate 1,230.3 Consumer 643.1 Residential Mortgage 1,367.3 HELOC 244.4 Covered Loans (Integra) 326.4 Total Loans $5,126.6 $46.1 Comml, $153.9 CRE, $92.3 HELOC, $34.1 Resi Mortg $ in millions - period-end balances vs. quarterly aver
Slide 18: Conservative Lending Limits/Risk Grades
Conservative Lending Limits/Risk Grades Borrower1 Asset Quality Rating (Risk Grades) In-House Lending Limit1 ($ in millions) 0 - Investment Grade $30 1 - Minimal Risk $25 2 - Modest Risk $25 3 - Average Risk $20 4 - Monitor $15 5 - Weak Monitor $10 6 - Watch $7.5 7 - Criticized (Special Mention) $5
Slide 19: Quick Home Refi (QHR) Product Statistics
Quick Home Refi (QHR) Product Statistics Term 10 years 27% 15 years 36% 20 years 14% 25 years 7% 30 years 17% Based on March 31, 2013 portfolio data Portfolio Statistics Average loan outstanding $77,536 Average yield of closed loans 3.96% Average Credit Score 779 Average FICO 303 Average debt to inc
Slide 20: Loan Concentrations - Excluding Covered Loans
Loan Concentrations - Excluding Covered Loans At 3-31-13 Commercial Commercial Real Estate Diversified Commercial Loan Portfolio
Slide 21: Purchased Impaired Loans
Purchased Impaired Loans $ in millions Monroe Bancorp Integra Bank Indiana Community Bancorp Post acquisition data is cumulative
Slide 22: Credit Quality - Net Charge-Offs
Credit Quality - Net Charge-Offs $5.2 $4.9 $5.0 $1.8 $ in millions $.8 $.2 $3.0 $1.1 ($.5) $.4 $1.2 $.9 $.7 1 Includes both covered and non-covered loans 1 ONB Consolidated 0.56% 0.40% 0.71% 0.36% 0.13% 0.03% 0.17% 0.17% $.5 $.6 ($.8) $.0 $.4 Full-year 2012 = 0.17%
Slide 23: Credit Quality - Excluding Covered Loans
Credit Quality - Excluding Covered Loans 1 Does not reflect impact of $15.8 million remaining loan discount on Monroe's loan portfolio or the $55.8 million loan discount on Indiana Community's loan portfolio 1
Slide 24: Credit Quality - ALLL and Mark Summary
Credit Quality - ALLL and Mark Summary Allowance For Loan and Lease Loss/Loan Mark Summary Allowance For Loan and Lease Loss/Loan Mark Summary Allowance For Loan and Lease Loss/Loan Mark Summary Allowance For Loan and Lease Loss/Loan Mark Summary Allowance For Loan and Lease Loss/Loan Mark Summary A
Slide 25: Covered Assets
Covered Assets Grades 1 through 6 $230.5 $179.5 $160.4 $147.0 $111.4 $108.1 Criticized - Grade 7 23.0 20.2 16.2 14.3 9.3 14.2 Classified - Grade 8 16.7 27.5 23.3 24.7 17.6 15.7 Nonaccrual - Grade 9 179.7 158.5 137.7 120.6 100.1 62.0 Retail Loans 176.5 162.9 151.7 142.2 133.9 126.4 Total Covered Loan
Slide 26: Credit Quality - Excluding Covered Loans
Credit Quality - Excluding Covered Loans Peer Group data per SNL Financial See Appendix for definition of Peer Group 1As a % of end of period total loans
Slide 27: Credit Quality - Excludes Covered Loans
Credit Quality - Excludes Covered Loans 30+ Day Delinquent Loans 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 Commercial .35% .51% .29% .16% .24% .16% .27% .15% Commercial Real Estate .19% .34% .78% .25% .19% .38% .35% .26% First Mortgage Residential Real Estate 1.03% .82% .99% .71% .73% 1.27% 1.24% .86%
Slide 28: Credit Quality - Excluding Covered Loans
$ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excluding Covered Loans 1Q13 increase is primarily due to 1 large credit in the equipment manufacturing and repair business
Slide 29: Credit Quality - Excluding Covered Loans
$ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excluding Covered Loans
Slide 30: Credit Quality - Excluding Covered Loans
$ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality - Excluding Covered Loans
Slide 31: Shared National Credits - Excludes Covered Loans
Shared National Credits - Excludes Covered Loans ($ in millions) 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 Count (#)* 7 7 7 7 7 7 7 7 Total exposure $70.6 $70.5 $65.0 $64.5 $63.8 $63.3 $70.0 $70.0 Dollar outstanding $21.4 $22.9 $19.1 $18.0 $22.1 $23.1 $20.8 $20.0 Largest exposure $15.0 $15.0 $10.0 $10
Slide 32: Investment Portfolio
Investment Portfolio ($ in millions) Book Value Dec. 31, 2012 Book Value Mar. 31, 2013 Market Value* Dec. 31, 2012 Market Value* Mar. 31, 2013 Market Value $ Change Federal National Mortgage Association $496.4 $424.0 Federal Home Loan Mortgage Corporation 174.3 138.8 Federal Farm Credit Bank 28.9 28
Slide 33: Other Classified Assets
Other Classified Assets ($ in millions) Book Value Dec. 31, 2012 Book Value Mar. 31, 2013 Market Value Dec. 31, 2012 Market Value Mar. 31, 2013 Corporate Bonds $7.9 $8.0 $7.4 $7.6 Pooled Trust Preferred Securities $24.9 $23.1 $9.4 $8.6 Non-Agency Mortgage Backed Securities $26.4 $24.6 $27.1 $25.2 Ot
Slide 34: Securities with OTTI
Securities with OTTI *Lowest credit rating provided by any nationally recognized credit rating agency. ($ in thousands) Vintage Lowest Credit Rating* Book Value at Mar. 31, 2013 OTTI 1Q13 OTTI Life to Date BAFC Ser 4 2007 CCC $11,275 $- $441 CWALT Ser 73CB 2005 D 2,406 441 CWALT Ser 73CB 2005 D 3,46
Slide 35: Municipal Bond Portfolio by State
Municipal Bond Portfolio by State Based on book value at 3-31-13 Illinois exposure consists of 27 bonds representing 1.3% of entire municipal portfolio
Slide 36: CD Maturity Schedule
CD Maturity Schedule Bucket Amount ($ in 000's) Rate 0-30 days 72,735 0.90% 31-60 days 47,968 0.56% 61-90 days 45,268 0.51% 91-120 days 88,149 2.30% 121-150 days 112,020 2.55% 151-180 days 84,624 1.82% 181-210 days 44,800 1.50% 211-240 days 51,888 1.51% 241-270 days 36,142 0.84% 271-300 days 42,001
Slide 37: Tangible Common Book Value
Tangible Common Book Value1 1 Non-GAAP financial measure management believes is useful in evaluating the financial results of the Company - see Appendix for Non-GAAP reconciliation January 24, 2013 actions Board approved 11.1% increase in quarterly cash dividend to $.10 per share Board approved auth
Slide 38: Capital Ratios
Capital Ratios Peer Group data per SNL Financial - See Appendix for definition of Peer Group and Non-GAAP reconciliation
Slide 39: 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 40: 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 41: Transforming Old National's Landscape
Transforming Old National's Landscape1 Shifting to higher-growth markets from lower- growth markets Entry and fill-in of existing higher-growth markets through strategic acquisitions Acquired 151 branches Sale or consolidations in lower-growth, non-core markets Consolidated 103 branches Sold 19 bran
Slide 42: Transforming Old National's Landscape
Transforming Old National's Landscape 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 Acquired
Slide 43: ONB Acquired Monroe Bancorp
ONB Acquired Monroe Bancorp Transaction closed 1-1-11 Provides #1 market share in Monroe County (Bloomington, Indiana) Home to Indiana University Market has above-average growth rates and lower unemployment vs. state of Indiana Systems conversion occurred 5-14-11 Balance sheet acquired1 $419.4 milli
Slide 44: FDIC Acquisition of Integra Bank, NA
FDIC Acquisition of Integra Bank, NA Transaction Due Diligence Financial Impact Capital Closing / Conversion Purchased $1.8 billion in assets1 and assumed $1.8 billion of liabilities2 from the FDIC as receiver of Integra Bank, NA, Evansville, IN Approximately $.7 billion in loans covered by FDIC los
Slide 45: ONB Acquired Indiana Community
ONB Acquired Indiana Community Transaction Due Diligence Financial Impact Capital TARP Repayment Acceptable Risk Profile Closing Consideration: 100% stock transaction at an exchange ratio of 1.9455, resulting in 6.6 million shares issued Deal value = $88.5 million based on average ONB closing price
Slide 46: ONB to Acquire Bank of America Branches
ONB to Acquire 24 Bank of America Branches 24 full-service branches 4 in Northern Indiana 20 in Southwest Michigan Total deposits of $745.2 million1 Deposit premium of 2.94% Total loans of $8.1 million1 2014 accretion of $.03 to $.05 per share One-time acquisition/conversion costs of $5.0 million Tr
Slide 47: Appendix
Old National Bancorp Appendix
Slide 48: Committed to Strong Corporate Governance
Committed to Strong Corporate Governance Stock ownership guidelines have been established for named executive officers as follows: As of December 31, 2012, each named executive officer has met their stock ownership requirement Position or Salary Target Ownership Guidelines Chief Executive Officer 5X
Slide 49: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ in millions) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 Total Revenues $104.2 $105.9 $119.9 $125.7 $123.4 $124.5 $115.0 $135.6 $125.4 Less: Provision for Loan Losses (3.3) (3.2) .1 (1.0) (2.1) (.4) (.4) (2.2) (.8) Less: Noninterest Expense (79.9) (79.8) (95.2) (93.7) (9
Slide 50: Non-GAAP Reconciliations
Non-GAAP Reconciliations (end of period balances- $ in millions) 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 Total Shareholders' Equity $874.7 $895.7 $878.8 $984.0 $1,008.3 $1,027.7 $1,033.6 $1,050.4 $1,073.7 $1,186.8 $1,194.6 $1,199.7 Deduct: Goodwill and Intangible Assets (197.1) (
Slide 51: Non-GAAP Reconciliations
Non-GAAP Reconciliations (end of period balances- $ in millions) 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 Total Shareholders' Equity $874.7 $895.7 $878.8 $984.0 $1,008.3 $1,027.7 $1,033.6 $1,050.4 $1,073.7 $1,186.8 $1,194.6 $1,199.7 Deduct: Goodwill and Intangible Assets (197.1) (
Slide 52: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ in thousands) Three Months Ended Mar. 31, 2011 Three Months Ended June 30, 2011 Three Months Ended Sept. 31, 2011 Three Months Ended Dec. 31, 2011 Three Months Ended Mar. 31, 2012 Three Months Ended June 30, 2012 Three Months Ended Sept. 30, 2012 Three Months Ended Dec. 3
Slide 53: ONB's Peer Group
ONB's Peer Group 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 Corporation CHFC Pinnacle Financial Pa
Slide 54: 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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