Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (August 2011)
41 slides from Old National Bancorp's investor presentation, Aug 15, 2011
Slide 1: Old National Bancorp Investment Thesis
Old National Bancorp Investment Thesis Financial Data as of 6-30-11
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, statements relating to Old National's financial condition, asset and credit quality tr
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 2Q11 net charge-offs of .56% vs. peer average of 1.09%
Slide 5: Strong 2Q11 Performance
Strong 2Q11 Performance Net income of $17.0 million, or $.18 per share Vs. $16.4 million, or $.17 per share, in 1Q11 Vs. $10.5 million, or $.12 per share, in 2Q10 Net interest margin expanded 3.67% in 2Q11 vs. 3.62% in 1Q11 Revenues, net of securities gains, increased 2.3% over 1Q11 and 11.1% over 2
Slide 6: Adapting and Reshaping our Business For Growth
Adapting and Reshaping our Business For Growth Streamlining processes to make it simple, easy and fast for clients to do business with Old National Commercial Banking Unit 2nd review committee for new lending opportunities Focus on cross sell of insurance and wealth management Introduction of Quick
Slide 7: Monthly Net Interest Margin
Monthly Net Interest Margin1 1 Fully taxable-equivalent basis Steady improvement in NIM despite decline in average earning assets. 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 ONB 0.0333 0.034 0.0342 0.0346 0.0362 0.0367 Net interest margin1 increased 5 bps2 to 3.67% Includes 38 bps from accretion of Monroe balanc
Slide 8: Improvement in Pre-Tax, Pre-Provision Income
Improvement in Pre-Tax, Pre-Provision Income1 ($ in millions) 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Total Revenues $91.6 $98.1 $98.1 $96.1 $96.2 $104.2 $105.9 Less: Provision for Loan Losses (21.8) (9.3) (8.0) (6.4) (7.1) (3.3) (3.2) Less: Noninterest Expense (90.8) (77.1) (77.9) (76.1) (83.3) (79.9) (
Slide 9: Corporate Summary
Corporate Summary MARKET STATISTICS AND SUMMARY OVERVIEW ($ 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 10: New Old National Landscape
New Old National Landscape New Old National Landscape Old National Integra Old National acquired Integra Bank through an FDIC-assisted transaction on 7-29-11
Slide 11: Local Unemployment
Local Unemployment Local Unemployment 44.6% / 7.3% ..7% / 8.6% 2.8% / 9.6% 0% / 9.0% 50.9% / 8.5% 1.0% / 7.8% % of ONB's Indiana deposits* / Regional unemployment Unemployment data provided by Indiana Department of Workforce Development and Bureau of Labor Statistics June 2011 Unemployment: Indiana
Slide 12: Asset/Liability Composition
Asset/Liability Composition Investments Commercial Loans Commercial Real Estate Loans Consumer Loans* Residential Real Estate Other Asset 0.414 0.168 0.13 0.131 0.056 0.101 NOW & Savings Demand Deposits Money Markets Other Time Borrowings Brokered CDs Other Liability 0.37617 0.21462 0.04497 0.2133 0
Slide 13: Loan Concentrations
Loan Concentrations At 6-30-11 Commercial Commercial Real Estate Diversified Commercial Loan Portfolio
Slide 14: Conservative Lending Limits
Conservative Lending Limits Borrower* Asset Quality Rating In-House Lending Limit1 ($ 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 6-30-11 of $93.5 million per borrower 1Includes enti
Slide 15: 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 2Q11 at 3.09% vs. 1Q11 p
Slide 16: Credit Quality: Provision Expense and Net Charge-Offs
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Provision Expense 21.9 5.7 6.8 17 17.3 12 12.2 21.8 9.3 8 6.4 7.1 3.3 3.2 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 2.9 5.8 2008 2009 2010 $40.8 $60.8 $28.0 $51.5 > $63.3 > $30.8 > $ in millio
Slide 17: Credit Quality: 30+ Day Delinquent Loans
Credit Quality 30+ Day Delinquent Loans Specific Segment Overview 30+ Day Delinquent Loans 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Commercial .32% .36% .29% .26% .35% .35% Commercial Real Estate .26% .52% .23% .12% .36% .19% First Mortgage Residential Real Estate 1.31% 1.85% 1.73% 1.59% .98% 1.03% Home Equity
Slide 18: Credit Quality
2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 ONB Consolidated 97.542 114.321 124.855 86.587 101.019 94.607 103.5 104.861 100.652 75 84 115.8 105.6 ONB Excluding Monroe 94.6 85.8 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality
Slide 19: Credit Quality
2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 ONB Consolidated 81.7 105.4 116.1 122.4 113.6 101 90.1 92.4 88.8 101 103.4 102 110.9 ONB Excluding Monroe 83 98.7 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality
Slide 20: Credit Quality
2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 ONB Consolidated 68.1 68.4 64 77.4 77.7 73.7 67 68.1 68.86 69.8 70.9 121.4 118.4 ONB Excluding Monroe 82.4 79.7 $ in millions Refer to Appendix for ONB Risk Grade Table Credit Quality
Slide 21: Reduction of Noninterest Expenses
Reduction of Noninterest Expenses 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 FTE's 2875 2828 2812 2708 2646 2585 2491 2618 2543 2441 2415 Decrease of 16% or 460 FTE2 1 Includes 177 FTE acquired with the Monroe transaction 2 Excludes impact of FTE acquired with the Monroe transaction Noninterest ex
Slide 22: Capital Management - Recent Actions
Capital Management - Recent Actions Approved share repurchase program 1-27-11 Up to 2.25 million shares of ONB common stock Ends 1-31-12 Redemption of ONB Capital Trust II $100 million at 8.00% called 12-15-10 Termination of $50 million of FHLB advances at an average rate of 1.90% and restructure of
Slide 23: Capital Ratios
Capital Ratios 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 ONB 0.075 0.0779 0.1225 0.1244 0.1304 0.1398 0.1458 0.145 0.1408 0.1482 Peer Group Average 0.0866 0.0892 0.0963 0.0988 0.1097 0.113 0.1153 0.1135 0.1163 ONB Minimum Guideline 0.09 0.09 0.09 0.09 0.09 0.09 0.09 0.09 0.09 0.09 1Q09 2Q09
Slide 24: Investment Portfolio
Investment Portfolio ($ in millions) Book Value Mar. 31, 2011 Book Value Jun. 30, 2011 Market Value1 Mar. 31, 2011 Market Value1 Jun. 30, 2011 Market Value $ Change Federal National Mortgage Association $580.9 $540.9 Federal Home Loan Mortgage Corporation 54.4 53.0 Federal Home Loan Bank 15.2 33.6 F
Slide 25: Municipal Bond Portfolio by State
Municipal Bond Portfolio by State IN TX PA KY MO All Other 0.415 0.064 0.063 0.051 0.057 0.35 Based on book value at 6-30-11 Illinois exposure consists of 1 bond representing .22% of entire municipal portfolio
Slide 26: 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 27: 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 28: 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 29: Integra Trust Acquisition
Integra Trust Acquisition Transaction closed 6-1-11 Assets under management = $386.8 million1 Purchase price of $1.25 million Anticipated accretion less than $.01 per share 1Based on 12-31-10 Call Report
Slide 30: FDIC Acquisition of Integra Bank, NA
FDIC Acquisition of Integra Bank, NA Transaction Due Diligence Financial Impact Capital Closing / Conversion Purchased approximately $1.9 billion in assets1 and assumed approximately $1.6 billion of liabilities2 from the FDIC as receiver of Integra Bank, NA, Evansville, IN Approximately $1.2 billion
Slide 31: Appendix
Appendix Old National Bancorp
Slide 32: CD Maturity Schedule
CD Maturity Schedule Bucket Amount ($ in 000's) Rate 0-30 days $134,013 2.12% 31-60 days 109,834 2.38% 61-90 days 101,259 1.74% 91-120 days 60,592 1.91% 121-150 days 63,516 1.26% 151-180 days 70,201 .80% 181-210 days 40,299 .88% 211-240 days 35,431 1.01% 241-270 days 76,663 1.49% 271-300 days 67,790
Slide 33: Minimal Shared National Credits
Minimal Shared National Credits 1All but one in ONB footprint of Indiana, Kentucky or Illinois 2Refer to Appendix for ONB Loan Risk Grade Table ($ in millions) 2Q10 3Q10 4Q10 1Q11 2Q11 Count (#)1 12 10 8 7 7 Total exposure $133.2 $118.2 $83.4 $68.2 $70.6 Dollar outstanding $50.8 $38.7 $23.0 $24.4 $2
Slide 34: ONB Loan Risk Grades
ONB Loan Risk Grades Grade Name 0 Investment Grade 1 Minimal Risk 2 Modest Risk 3 Average Risk 4 Monitor 5 Weak Monitor 6 Watch 7 Criticized (Special Mention) 8 Classified (Problem) 9 Nonaccrual
Slide 35: Other Classified Assets
Other Classified Assets ($ in millions) Book Value Mar. 31, 2011 Book Value Jun. 30, 2011 Market Value Mar. 31, 2011 Market Value Jun. 30, 2011 Corporate Bonds $3.3 $3.4 $2.7 $2.9 Pooled Trust Preferred Securities $27.4 $27.3 $9.3 $9.7 Non-Agency Mortgage Backed Securities $61.8 $86.6 $61.2 $84.1 To
Slide 36: Quick Home Refi Product Statistics
Quick Home Refi Product Statistics Term 10 years 33% 15 years 34% 20 years 10% 25 years 7% 30 years 16% Based on June 30, 2011 portfolio data. Average loan amount $79,270 Average yield of closed loans 4.42% Average Credit Score 773 Average FICO 283 Average debt to income 24% Average loan to value 59
Slide 37: Securities with OTTI
Securities with OTTI *Lowest credit rating provided by any nationally recognized credit rating agency. Vintage Lowest Credit Rating* Book Value at June 30, 2011 OTTI 1Q11 OTTI 2Q11 OTTI Life to Date BAFC Ser 4 2007 CCC $14,026 $- $- $142 CWALT Ser 73CB 2005 CCC 4,428 - - 290 CWALT Ser 73CB 2005 CCC
Slide 38: Loan Yields and Deposit Costs
Loan Yields and Deposit Costs Peer Group data per SNL Financial See Appendix for definition of Peer Group 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 ONB Loan Yields 0.0629 0.0611 0.0597 0.0521 0.0514 0.0514 0.0508 0.0507 0.0508 0.0502 0.0495 0.0513 0.0531 Peer Group Average 0.0
Slide 39: Non-GAAP Reconciliations
Non-GAAP Reconciliations (End of period balances - $ in millions) 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Total Shareholders' Equity $631.8 $634.6 $865.4 $843.8 $855.5 $874.7 $895.7 $878.8 $984.0 $1,008.3 Deduct: Goodwill and Intangible Assets (205.6) (204.0) (202.4) (200.2) (198.6) (197.1
Slide 40: 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 41: 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
OLD National Bancorp — Investor Presentation (August 2011) on 6ix