Attached files
| file | filename |
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| 8-K - 8-K - OLD NATIONAL BANCORP /IN/ | d920227d8k.htm |
 Investment Thesis
Financial Data as of 03-31-15
Dated: May 6, 2015
Exhibit 99.1 |
 Investment Thesis
Executive Summary
Slides 2 to 19
Financial Data as of 03-31-15
Dated: May 6, 2015 |
 3
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 Bancorp’s (“Old
National’s”) financial condition, results of operations, asset and credit
quality trends and profitability. Forward- looking statements can be
identified by the use of the words “anticipate,” “believe,” “expect,” “intend,” “could” and
“should,” and other words of similar meaning. These forward-looking
statements express management’s current expectations or forecasts of future
events and, by their nature, are subject to risks and uncertainties and there are a
number of factors that could cause actual results to differ materially from those in such
statements. Factors that might cause such a difference include, but are not
limited to: expected cost savings, synergies and other financial benefits from the
recently completed mergers might not be realized within the expected timeframes and costs or
difficulties relating to integration matters might be greater than expected; market,
economic, operational, liquidity, credit and interest rate risks associated with
Old National’s business; competition; government legislation and policies
(including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and its related
regulations); ability of Old National to execute its business plan; changes in the
economy which could materially impact credit quality trends and the ability to
generate loans and gather deposits; failure or circumvention of our internal
controls; failure or disruption of our information systems; significant changes in accounting, tax or regulatory
practices or requirements; new legal obligations or liabilities or unfavorable
resolutions of litigations; other matters discussed in this presentation and other
factors identified in our Annual Report on Form 10-K and other periodic
filings with the SEC. These forward-looking statements are made only as of the
date of this presentation, and Old National does not undertake an obligation to
release revisions to these forward-looking statements to reflect events or
conditions after the date of this presentation.
|
 4
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 adjustments that have the
effect of excluding amounts, that are included in the most
directly comparable measure calculated and presented in
accordance with GAAP in the statement of income, balance
sheet or statement of cash flows (or equivalent statements) of
the registrant; or includes amounts, or is subject to adjustments
that have the effect of including amounts, that are excluded
from the most directly comparable measure so calculated and
presented. In this regard, GAAP refers to generally accepted
accounting principles in the United States. Pursuant to the
requirements of Regulation G, Old National Bancorp has
provided reconciliations within the slides, as necessary, of the
non-GAAP financial measure to the most directly comparable
GAAP financial measure. |
 5
Snapshot of Old National
Summary Overview
Company Description
Headquarters
Evansville, IN
Market Cap (millions)
$ 1,612
2015E P / E
14.5 x
P / TBV
189%
Dividend Yield
3.5 %
LTM Average Daily Volume
656,429
Total Assets
$ 11,951
Trust Assets Under Management
$ 8,097
Total Core Deposits
$ 8,866
1Q15 ROAA
.70 %
$ in millions, except noted
Largest
financial
services
bank
holding
company
headquartered
in
Indiana
with
a presence throughout Indiana, Western Kentucky and Louisville, Southern
Illinois and Central and Western Michigan
–
196 financial centers
–
216 ATMs
Focused on community banking with a full suite of product offerings:
–
Retail and small business
–
Wealth management
–
Mortgage
Guided by three strategic imperatives
–
Strengthen the risk profile
–
Enhance management discipline
–
Achieve consistent quality earnings
–
Investment services
–
Capital markets
–
Insurance
Source: SNL Financial, Company filings, FactSet Estimates
Note: Market data as of April 29, 2015; financial information as of March 31, 2015.
Liability Breakdown
Asset Mix
1Q15 Revenue Breakdown |
 6
Attractive footprint that offers both leading share in mature markets
and room to expand in higher growth markets
Consistent financial performance with distinct revenue streams and
actions taken to improve efficiency
Diverse loan portfolio with growth accelerating while maintaining
strong credit metrics
Disciplined acquisitions that are exceeding expectations with robust
future opportunities
Steward of capital –
organic growth, dividend / share repurchases,
and acquisitions
Achieving strategic imperatives
Investment Thesis |
 7
Commitment to Excellence |
 8
Old National’s Landscape |
 9
Our Indiana Footprint
Economic Vital Signs
Indicator
Outlook
Latest Statistics (March 2015)
Trend (YoY change from Mar. 2014)
Jobs
Employment
Unemployed
3,255,000
188,900
•
Labor Force increased 37,900
•
Unemployment rate decreased to 5.5%
(March 2014 rate was 6.6%)
Unemployment
Insurance Claims
Initial Claims
Weeks Claimed
15,281
182,503
•
Initial claims decreased 9.4%
•
Weeks claimed decreased 24.3%
Home Sales
Units Sold
Median Home Price
5,953
$147,135
•
The number of home sales increased 9.5%
•
The median sale price increased 6.0%
Regional Spending
Net Sales Tax Collected
$531.5 MM
•
Sales tax collections increased .3%
Local Indiana HQ
Stock Performance
Price Change during 1Q15
CMI: (3.8)%
LLY: 5.3%
NI: 4.1%
SPG: 7.4%
STLD: 1.8%
ANTM: 22.9%
ZMH: 3.6%
•
Stock prices have generally increased as
overall economy improves
Strong
Stable or Mixed
Decline
Sources: US Bureau of Labor Statistics, US Dept. of Labor, Indiana Association of
Realtors, IN Dept. of Revenue and Bloomberg |
 10
Our Michigan Footprint
Projected 2020 Median Household Income
Ann Arbor, Michigan (MSA Population: 358,564)
Kalamazoo, Michigan (MSA Population: 334,915)
Projected 2015-2020 Median HHI Growth
Grand Rapids, Michigan (MSA Population: 1,031,360)
Source: SNL Financial and Bureau of Labor Statistics as of April, 2015
(1)
Crain’s Detroit Business, article published July 16, 2014
Michigan named "most improved" in ranking of pro-business states in 2014 by
the American Economic Highest median household income MSA in Michigan
March 2015 unemployment rate of 3.5%, compared to the
national rate of 5.5%
Listed in Forbes’
2013 “Best Places for Business and Careers”
and was Livability.com’s 13th “Best Place to Live”
Popular area for healthcare and pharmaceutical
organizations, with major companies such as Pfizer, Perrigo
and Stryker housing large operations
March 2015 unemployment rate of 4.9% compared to the
national rate of 5.5%
Home to five of the world’s leading office furniture
companies.
March 2015 unemployment rate of 3.9%, compared to the
national rate of 5.5%
6.7%
7.3%
4.7%
5.2%
3.2%
5.8%
USA
Indiana
Michigan
Ann Arbor
MSA
Kalamazoo
MSA
Grand
Rapids
MSA
$57,294
$52,614
$50,421
$62,312
$46,609
$55,836
USA
Indiana
Michigan
Ann Arbor
MSA
Kalamazoo
MSA
Grand
Rapids
MSA
Institute (improved from 39th to 18th) 1
|
 11
Indiana’s Economic Achievements
“AAA”
Credit Rating –
Fitch, Moody’s and Standard and
Poor’s
1
3
rd
Best U.S. State for Manufacturing Jobs
2
6
th
Best State for Business –
CEO Magazine
3
280 new manufacturing jobs created –
Berry Plastics,
Evansville, Indiana
4
230 new jobs created –
GE Aviation, Lafayette, Indiana
5
Sources:
(1)
December 2013
(2)
June 2013; National Association of Manufacturers (3)
May 2014
(4)
January 2014 press release of Berry Plastics (5)
January 2015 press release of GE Aviation |
 12
2015 Strategic Initiatives
•
3.4 million shares of stock repurchased during 1Q15
•
Quarterly cash dividend recently increased to $.12 per share
Continue to
Grow Organic
Revenue
•
Organic loan growth of $2.2 million
1
over 4Q14 and $341.4 million
1
over 1Q14,
based on period-end balances
•
Organic loan growth of $57.6 million
1
over 4Q14 and $344.8 million
1
over 1Q14,
based on average balances
•
Revenue growth
2
of 15.1% from 1Q14
•
Enhanced referral program has already resulted in over 7,300 referrals
•
Stable core net interest margin from 4Q14
Improve
Operating
Leverage
Prudent Use
of Capital
•
Anticipated expense reductions resulting from branch sales and consolidations,
early retirement and other workforce reductions tracking as planned
•
Anticipated annualized noninterest expense savings of $23 million to $27 million
1
Excluding change in FDIC covered loans and loans acquired in acquisitions
2
Excluding changes in securities gains, accretion income and amortization of the
indemnification asset |
 13
1Q15 Earnings
Net income of $20.9 million or $.18 per share
Included in net income are the following pre-tax
items
–
$4.4 million in early retirement & other severance
charges
–
$4.0 million in merger and integration charges
–
$2.6 million in branch efficiency charges |
 14
Basic Banking
Adjusted Income
3
Operational Expenses
2
Revenue
1
Organic Loan Growth
4
Core NIM
5
Consolidated NCOs
$ in millions
1
Refer to slide 40
2
Refer to slide 42
End of period balances
3
See appendix for non-GAAP reconciliation
4
Refer to slide 22
5
Refer to slide 32
$31.4
$32.2
1Q14
1Q15
$112.9
$130.0
1Q14
1Q15
$11.5
$51.9
$2.2
1Q14
4Q14
1Q15
3.36%
3.15%
3.14%
1Q14
4Q14
1Q15
-0.03%
0.08%
-0.06%
1Q14
4Q14
1Q15
$85.8
$101.7
1Q14
1Q15 |
 15
Fee-Based Business Revenue
$ in millions
ONB Less Founders
Contingency Revenues
Founders
$5.8
$7.9
$0.6
$8.5
1Q14
1Q15
Wealth
Management
$9.6
$10.0
$2.4
$2.1
$12.0
$12.1
1Q14
1Q15
Insurance
$3.9
$4.4
1Q14
1Q15
Investments
$0.6
$2.2
$0.8
$3.0
1Q14
1Q15
Mortgage
Banking |
 16
Net Charge-Offs / Provision
$ in millions
-0.03%
-0.06%
0.08%
$0.0
$0.9
$0.0
$0.0
$0.5
$1.0
$1.5
$2.0
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
1Q14
4Q14
1Q15
Consolidated NCOs
Consolidated Provision for Loan Losses |
 17
$ in millions
Credit Quality –
Excluding Covered Loans
Excludes loans acquired through Tower, United, Lafayette & Founders
transactions $112.3
$194.8
$183.9
$116.5
$106.8
1Q14
4Q14
1Q15
Special Mention Loans
$85.7
$107.8
$95.6
$93.8
$74.3
1Q14
4Q14
1Q15
Substandard Accruing Loans
$84.8
$125.7
$143.3
$73.9
$81.0
1Q14
4Q14
1Q15
Substandard Nonaccruing + Doubtful
Loans |
 18
Grow organic revenue
–
Redesigned checking product lineup
New checking account product has reduced attrition over 50%
–
Leverage fee income businesses
Enhanced referral program
Sales summit
Leverage new markets
Improve operating leverage
–
to $27 million
Close/consolidate 19 banking centers
Sale of Southern Illinois market (12 locations)
Sale of 5 banking centers (4 in Eastern Indiana + 1 in Ohio)
Early retirement program
–
Gains on sales should offset costs associated with these actions
–
New
efficiency
ratio
target
is
63.0%
in
4Q15
–
represents
25%
of
2015
short-term
incentive
performance goals
Prudent use of capital
–
Recently announced 9% increase in cash dividend
–
Share buyback program
–
Pause means pause
2015 Initiatives –
Execution is KEY
Approx. $620 million in deposits
and $200 million in loans combined
Anticipated timing of branch actions: 3 consolidations in March, 3 consolidations in April, 13
consolidations in May, sales should be completed by mid 3Q15
Recently announced actions should provide annualized noninterest expense savings of $23
million |
 19
M&A Update
Lafayette, IN –
LSB Financial Corp
acquisition fully converted
Grand Rapids, MI –
Founders Financial
Corporation acquisition closed and
successfully converted
Lexington, KY strategy |
 Investment Thesis
Financial Data as of 03-31-15
Dated: May 6, 2015 |
 21
Adjusted
Income
$ in millions
1
Adjusted income represents income before taxes less accretion income, change in
indemnification assets, merger/integration expenses, costs associated with
branch divestitures and early retirement program/other severance
$89.9
$100.4
$117.5
$131.3
$31.4
$32.2
2011
2012
2013
2014
1Q14
1Q15
1
Non-GAAP financial measure which Management believes is useful in evaluating the financial results
of the Company – see Appendix for Non-GAAP reconciliation |
 Loan
Growth – Excluding Covered Loans
$ in millions
End of Period Balances
Average Balances
22 |
 23
Commercial Loans
$ in millions –
End of Period Balances –
includes held for sale and covered loans
1
New Quarterly Production includes 50% credit for unfunded commitments
$153.2
$239.4
$238.4
$277.9
$227.8
$89.1
$87.8
$106.1
$171.8
$176.5
3.57%
3.10%
3.11%
3.10%
3.23%
1Q14
2Q14
3Q14
4Q14
1Q15
New Quarterly Production
Quarterly Payoffs
Commerial Production Yield |
 24
Commercial Loans
$ in millions
1% of line utilization = $13.5
million in outstandings
Commercial Line Utilization
Commercial Loan Pipeline
New Market Commercial Loan Pipeline 1Q15
Ft Wayne, IN -
$99.4 million
Ann Arbor, MI -
$51.9 million
Lafayette, IN -
$24.7 million
Grand Rapids, MI -
$24.8 million (all Accepted) |
 25
Loan Production & Yield Trends
$ in millions
New quarterly production includes unfunded commitments –
Yield is based on funded balances only
Consumer Direct
Consumer Indirect
Residential Mortgage |
 26
Loan Concentrations –
Excluding Covered Loans
At 03-31-15
Commercial
Commercial Real Estate
Diversified Commercial Loan Portfolio |
 27
Credit Quality –
Excluding Covered Loans
See Appendix for definition of Peer Group
1
As a % of end of period total loans
Peer Group data per SNL Financial
0.34%
0.45%
0.38%
0.85%
0.75%
1Q14
4Q14
1Q15
30+ Day Delinquent Loans
1
ONB
Peer Group Average
0.00%
0.01%
0.00%
0.30%
0.25%
1Q14
4Q14
1Q15
90+ Day Delinquent Loans
1
ONB
Peer Group Average |
 28
Credit Quality –
ALLL and Mark Summary
$ in millions
1
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 coverage N/A = not
applicable At March 31, 2015
ONB
Legacy
Monroe
Integra
Indiana
Community
Tower
United
Lafayette
Founders
Total
Allowance for Loan Losses
(ALLL)
$44.7
$1.3
$2.3
$0.3
$0.0
$0.3
$0.0
$0.0
$48.9
Loan Mark
N/A
$6.5
$35.8
$23.0
$19.0
$31.9
$19.5
$17.5
$153.2
Total ALLL/Mark
$44.7
$7.7
$38.0
$23.3
$19.0
$32.3
$19.5
$17.5
$202.0
Pre-Mark Loan Balance
$4,984.1
$109.0
$180.8
$169.4
$278.6
$521.5
$219.8
$351.1
$6,814.3
ALLL/Pre-Mark Loan Balance
0.90%
1.18%
1.25%
0.16%
0.00%
0.06%
0.00%
0.00%
0.72%
Mark/Pre-Mark Loan Balance
N/A
5.92%
19.78%
13.58%
6.83%
6.13%
8.88%
4.97%
2.25%
Combined ALLL & Mark/Pre-
Mark Loan Balance
0.90%
7.11%
21.04%
13.74%
6.83%
6.19%
8.88%
4.97%
2.97%
1 |
 29
Conservative Lending Limits/Risk Grades
Borrower Asset Quality Rating
(Risk Grades)
In-House Lending Limit
($ in millions)
0 –
Investment Grade
$30
1 –
Minimal Risk
$25
2 –
Modest Risk
$25
3 –
Average Risk
$22.5
4 –
Monitor
$15
5 –
Weak Monitor
$10
6 –
Watch
$7.5
7 –
Criticized (Special Mention)
$5
In-house lending limits conservative relative to ONB’s legal lending limit
at 03-31-15 of $150.6 million per borrower
1
Includes entire relationship with borrower
Borrower Asset Quality Rating
(Risk Grades)
8 –
Classified (Problem)
9 –
Nonaccrual
1
1
1 |
 30
Investment Portfolio Purchases 1Q15
1
1
Data as of March 31, 2015
Q1 2015 Purchases-
Book Value
Treasuries
12,899,968
Agencies
35,941,750
Pools
0
CMOs
0
Municipals
42,613,177
Corporates
11,062,538
ABS
0
Equity
0
Total
102,517,433 |
  31
CD Maturity Schedule
Represents CD maturities at March 31, 2015
Bucket
Amount
($ in 000's)
Rate
0-30 days
79,985
0.72%
31-60 days
46,486
0.45%
61-90 days
52,267
0.48%
91-120 days
58,686
0.54%
121-150 days
51,306
0.46%
151-180 days
66,560
0.65%
181-210 days
58,246
1.48%
211-240 days
34,292
0.92%
241-270 days
47,021
0.88%
271-300 days
37,822
0.40%
301-330 days
37,270
0.61%
331-365 days
42,335
0.57%
1-2 years
263,724
1.97%
2-3 years
107,445
0.96%
3-4 years
68,507
1.17%
4-5 years
56,418
1.74%
Over 5 years
25,671
1.38% |
 32
1
2
ONB Core includes contractual interest income of Monroe, Integra, IN Community,
Tower, United, Lafayette and Founders loans 2
3.36%
3.15%
0.48%
0.29%
0.10%
0.38%
0.39%
0.46%
4.22%
3.83%
3.70%
1Q14
4Q14
1Q15
Integra Accretion
Other Acquisition Accretion
Net Interest Margin
1
3.14%
ONB Core
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
|
 33
Projected Purchase Accounting Impact
Actual Accretion
Projected
Accretion
1
Actual Discount
Projected
Discount
1
$ in millions
1
Projections updated quarterly –
subject to change
IA = Indemnification Asset
Manageable declines in purchase accounting impact expected in future periods
Actual IA Amortization
Projected
IA
Amortization
1
Net Income Statement Contribution
$36.9
$57.5
$59.0
$86.6
$45.6
$37.9
$17.1
$(0.4)
$3.4
$9.3
$43.2
$6.7
$4.0
$0.1
2011
2012
2013
2014
2015
2016
2017
Projected Accretion Income
$252.9
$224.1
$146.1
$148.5
$121.9
$84.0
$66.9
2011
2012
2013
2014
2015
2016
2017
Projected Remaining Discount |
 34
Indemnification Asset Balance
At March 31, 2015, $8.5 million of the remaining IA balance is expected to be
amortized and reported in noninterest income over the next 18 months
$ in millions
$167.9
$154.3
$109.9
$65.7
$20.0 |
 35
Modeled Interest Rate Sensitivity
$ in thousands
Change to Net Interest Income based on a one year time horizon
Refer to slide 37 for rate curves
Total non-maturity, interest-
bearing accounts increase from
0.08% to 0.44% in the “Up 100
bps”
scenario
21.5% of total non-interest
bearing DDA are considered rate
sensitive
43% of C&I and CRE loans
reprice within one year
17% of loans have floors; less
than 1% of these loans are
currently below their floor rates
Investment portfolio duration of
3.74 at 03/31/15, down from 3.76
at 12/31/14.
$463
$1,962
$2,469
$1,792
$988
$1,843
3Q14
4Q14
1Q15
One Year Projected Change to
Net Interest Income
(Historical)
Up 100
Forward Curve |
 36
Modeled Interest Rate Sensitivity
$ in thousands
Change to Net Interest Income based on a two year time horizon
Refer to slide 37 for rate curves
$25,053
$31,594
$33,933
$12,541
$8,145
$9,149
3Q14
4Q14
1Q15
Two Year Projected Change to
Net Interest Income
(Historical)
Up 200
Forward Curve |
 37
Interest Rate Curves
0%
1%
2%
3%
4%
1M
2M
3M
4M
5M
6M
9M
1Y
1.5Y
2Y
2.5Y
3Y
4Y
5Y
7.5Y
10Y
15Y
20Y
30Y
Up 100 vs. Base
Base
Up 100
0%
1%
2%
3%
4%
5%
1M
2M
3M
4M
5M
6M
9M
1Y
1.5Y
2Y
2.5Y
3Y
4Y
5Y
7.5Y
10Y
15Y
20Y
30Y
Up 200 vs. Base
Base
Up 200
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
1M
2M
3M
4M
5M
6M
9M
1Y
1.5Y
2Y
2.5Y
3Y
4Y
5Y
7.5Y
10Y
15Y
20Y
30Y
Forward Curves
3/31/2015
3/31/2016
3/31/2017 |
 38
Tangible Common Equity
Tangible Common Equity – 12/31/2014
$896.2
1Q15 Earnings
20.9
1Q15 Dividend
(14.2)
1Q15 Share Repurchase
(48.2)
Issuance of Shares from Acquisition
50.6
Changes in OCI – Securities
10.2
Changes in Equity - Other
(1.8)
Increase in Goodwill & Intangibles
(62.1)
Tangible Common Equity – 03/31/2015
$851.6
$ in millions
On October 23, 2014, ONB Board of Directors authorized repurchase of
up to 6.0 million shares through January, 2016
3.4 million shares of stock repurchased during 1Q15 |
 39
Capital Ratios
Peer Group data per SNL Financial
See Appendix for definition of Peer Group
1
See Appendix for Non-GAAP reconciliation
14.8%
12.9%
12.2%
13.5%
13.2%
1Q14
4Q14
1Q15
Tier 1 Risk-Based Capital Ratio
ONB
Peer Group Average
8.8%
8.1%
7.5%
8.7%
8.6%
1Q14
4Q14
1Q15
Tangible Common Equity to Tangible
Assets
1
ONB
Peer Group Average |
 40
Total Revenue
$ in millions
1
Revenue less securities gains, accretion income and amortization
of indemnification asset
$0.4
($3.4)
($9.3)
($43.2)
($7.3)
($1.0)
$411.2
$430.9
$449.2
$478.5
$112.9
$130.0
$7.3
$13.6
$3.3
$9.7
$0.5
$2.7
$36.9
$57.5
$59.0
$86.5
$17.9
$14.6
$455.8
$498.6
$502.2
$531.5
$124.0
$146.3
2011
2012
2013
2014
1Q14
1Q15
Amortization of Indemnification Asset
Revenue Less Securities Gains, Accretion Income and Amortization
of Indemnification Asset
Securities Gains
Accretion Income |
 41
Noninterest Income
$ in millions
$(7.3)
$(6.2)
$(1.0)
$11.1
$12.0
$11.0
$8.1
$7.9
$7.9
$22.3
$25.1
$28.0
$5.7
$6.8
$6.7
$39.9
$45.6
$52.6
1Q14
4Q14
1Q15
Amortization of Idemnification Asset
Service Charges on Deposits
Other Income
Fee-based business: Wealth Management, Insurance, Mortgage and Investments
Debit Card and ATM Fees |
 42
$ in millions
1
Operational expenses = total noninterest expense less Founders operational costs,
merger/integration costs and efficiency program charges Noninterest
Expense Adjusted 1Q15 efficiency
ratio of 68.9%
2
Annualized savings
expected of $23 million
to $27 million beginning
in 4Q15 resulting from
300 estimated FTE
reductions and 36 branch
sales/consolidations
Beginning in 4Q15,
estimated cost savings
of $4 million to $5 million
(annualized) associated
with fully integrated
acquisitions
2
$85.8
$101.7
$3.5
$2.5
$4.0
$7.0
$88.3
$116.2
1Q14
1Q15
$331.6
$357.9
$356.1
$370.8
$16.9
$7.9
$5.9
$15.6
$348.5
$365.8
$362.0
$386.4
2011
2012
2013
2014
Operational Expenses
Founders Operational Costs
Merger/Integration Costs
Efficiency Program Charges
Non-GAAP financial measure which Management believes is useful in evaluating the financial results
of the Company – see Appendix for Non-GAAP reconciliation |
 43
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
throughout
Indiana
March, 2009
Acquired Monroe
Bancorp –
Enhanced
Bloomington, IN
presence
January, 2011
Acquired Indiana
Community –
Entry into
Columbus, IN
September, 2012
FDIC-assisted
acquisition of
Integra Bank
July, 2011
Sold non-
strategic
market –
Chicago-area -
4 branches
Consolidation
of 21 branches
Acquired 24
MI / IN branches
July, 2013
Consolidation
of 2 branches
Consolidation
of 8 branches
Consolidation
of 1 branch
Consolidation
of 10 branches
Consolidation
of 12 branches
Consolidation
of 44 branches
Consolidation
of 5 branches
Sold 12
branches
Consolidation
of 22 branches
Acquired 209
Sold 22
Consolidated 132
Acquired Tower
Financial –
Enhancing Ft.
Wayne, IN
presence April,
2014
Transforming Old National’s Landscape
Acquired
United
Bancorp —
Entering Ann
Arbor, MI July,
2014
2014
Consolidation
of 4 branches
Acquired LSB
Financial Corp.–
Enhancing
Lafayette, IN
presence
November 1,
2014
Acquired
Founders
Financial
Corporation–
Entry into Grand
Rapids , MI
January 1, 2015
2015
Consolidation
of 3 branches |
 44
$ in millions
N/A equals not applicable
(1) Based on end of quarter assets immediately preceding announcement date
Completed Acquisitions
Acquisition
RBS
Citizens-65
Branches
Monroe
Integra Bank
Indiana
community
BofA -
24
Branches
Tower
Financial
United
Bancorp
LSB
Founders
Deal Type
Branch Deal
Traditional
FDIC-Assisted
Traditional
Branch Deal
Traditional
Traditional
Traditional
Traditional
Principal Geography
Indianapolis, IN
Bloomington, IN
Evansville, IN
Columbus, IN /
I-65 Corridor
Southwest MI /
Northern IN
Fort Wayne, IN
Ann Arbor, MI
Lafayette, IN
Grand Rapids, MI
Purchase Price at Announcement
$16
$84
N/A
$79
$23
$108
$173
$67
$88
Total Assets at Announcement
NA
$838
$1,900
$985
N/A
$681
$919
$366
$466
% Stock Consideration at Announcement
0%
100%
N/A
100%
0%
71%
80%
75%
54%
Announce Date
11/24/2008
10/6/2010
7/29/2011
1/25/2012
1/9/2013
9/10/2013
1/8/2014
6/4/2014
7/28/2014
Close Date
3/20/2009
1/1/2011
7/29/2011
9/15/2012
7/12/2013
4/25/2014
7/31/2014
11/1/2014
1/1/2015
1 |
 45
Committed to Strong Corporate Governance
Stock ownership guidelines have been
established for named executive officers as
follows:
As of March 31, 2015, each named executive
officer has met their stock ownership
requirement
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 shares
Salary equal to or less than $150,000
1X salary in stock or 15,000 shares |
 46
Executive Compensation
Tied to long term shareholder value:
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%
Long Term Incentive Plan
(CFO,CBA, CCO, Chief Legal Counsel)
Performance Measure
Weight
Performance-based
75%
(67% TSR & 33% EPS Growth)
Service-based
25%
Long Term Incentive Plan
(CEO)
Performance Measure
Weight
Performance-based
100%
(75% TSR & 25% EPS Growth) |
 Appendix |
 48
Non-GAAP Reconciliations
$ in millions
2011
2012
2013
2014
1Q14
1Q15
Total Revenues
$455.8
$498.6
$502.2
$531.5
$124.0
$146.3
Less: Provision for Loan Losses
($7.5)
($5.0)
$2.3
($3.1)
$0.0
$0.0
Less: Noninterest Expense
($348.5)
($365.8)
($362.0)
($386.4)
($88.3)
($116.2)
Taxable Equivalent Adjustment
$11.8
$13.2
$16.9
$17.0
$3.9
$4.7
Pre-tax Income (FTE)
$111.6
$141.0
$159.4
$159.0
$39.6
$34.8
Less: Total Accretion
$36.9
$57.5
$59.0
$86.5
$17.9
$14.6
Change in IA
($0.4)
$3.4
$9.3
$43.2
$7.3
$1.0
Mergers/Integration Expenses
$16.9
$7.9
$5.9
$15.6
$2.5
$4.0
Branch Divestitures
($1.2)
$5.7
$1.9
$0.0
$0.0
$2.6
Early Retirement/Other Severance
$0.0
$0.0
$0.0
$0.0
$0.0
$4.4
Adjusted Income
$89.9
$100.4
$117.5
$131.3
$31.4
$32.2 |
  49
Non-GAAP Reconciliations
$ in millions
end of period balances
1Q14
4Q14
1Q15
Total Shareholders’ Equity
$1,185.2
$1,465.8
$1,483.3
Deduct: Goodwill and Intangible Assets
(376.8)
(569.5)
(631.6)
Tangible Common Shareholders’ Equity
$808.4
$896.2
$851.6
Total Assets
$9,544.8
$11,647.6
$11,951.3
Add: Trust Overdrafts
0.0
0.2
0.1
Deduct: Goodwill and Intangible Assets
(376.8)
(569.5)
(631.6)
Tangible Assets
$9,168.0
$11,078.2
$11,319.7
Tangible Equity to Tangible Assets
8.82%
8.09%
7.52%
Tangible Common Equity to Tangible
Assets
8.82%
8.09%
7.52%
Net Income
$26.5
$29.3
$20.9
After-Tax Intangible Amortization
1.5
2.5
2.8
Tangible Net Income
$28.0
$31.7
$23.7
ROTCE
13.84%
14.15%
11.12% |
 50
Non-GAAP Reconciliations
end of period balances
1Q14
4Q14
1Q15
Total Shareholders’
Equity
$1,185.2
$1,465.8
$1,483.3
Deduct: Goodwill and Intangible Assets
(376.8)
(569.5)
(631.6)
Tangible Common Shareholders’
Equity
$808.4
$896.2
$851.6
Risk Weighted Assets
$5,729.5
$7,333.4
$7,694.0
Tangible Common Equity to Risk Weighted Assets
14.11%
12.22%
11.07%
end of period balances
1Q14
2Q14
3Q14
4Q14
1Q15
Total Shareholders’
Equity
$1,185.2
$1,277.3
$1,407.2
$1,465.8
$1,483.3
Deduct: Goodwill and Intangible Assets
(376.8)
(439.3)
(530.5)
(569.5)
(631.6)
Tangible Common Shareholders’
Equity
$808.4
$838.1
$876.7
$896.2
$851.6
Common Shares Issued and Outstanding at Period End
100,084
105,851
113,984
116,847
116,983
Tangible Common Book Value
$8.08
$7.92
$7.69
$7.67
$7.28 |
 51
Non-GAAP Reconciliations
Efficiency Ratio -
As Reported
1Q15
Net Interest Income (FTE) ($ in millions)
$95.7
Noninterest Income Less Security Gains
52.6
Revenue Less Security Gains
148.2
Noninterest Expense
116.2
Intangible Amortization
3.1
Noninterest Expense Less Intangible Amortization
113.0
Efficiency Ratio
76.27%
Efficiency Ratio Excluding Acquisition Costs
1Q15
Net Interest Income (FTE) ($ in millions)
$95.7
Noninterest Income Less Security Gains
52.6
Revenue Less Security Gains
148.2
Noninterest Expense
116.2
Intangible Amortization
3.1
Acquisition Costs
4.0
Early Retirement/Other Severance
4.4
Branch Divestitures
2.6
Noninterest Expense Less Intangible Amortization and Acquisition
Costs
102.1
Efficiency Ratio
68.88%
1Q14
4Q14
1Q15
Net Interest Income ($ in 000's)
$83,478
$90,043
$90,993
Taxable Equivalent Adjustment
$3,931
4,324
4,658
Net Interest Income –
Taxable Equivalent
$87,409
$94,367
$95,651
Average Earning Assets
$8,276,267
$9,858,522
$10,346,167
Net Interest Margin
4.03%
3.65%
3.52%
Net Interest Margin –
Fully Taxable Equivalent
4.22%
3.83%
3.70% |
 52
Old National’s Peer Group
Like-size,
publicly-traded
financial
services
companies,
generally
in
the
Midwest,
serving
comparable demographics with comparable services as ONB
Associated Banc-Corporation
ASB
MB Financial Inc.
MBFI
BancFirst Corporation
BANF
National Penn Bancshares Inc.
NPBC
BancorpSouth, Inc.
BXS
Park National Corporation
PRK
Bank of Hawaii Corporation
BOH
PrivateBancorp, Inc.
PVTB
Chemical Financial Corporation
CHFC
Prosperity Bancshares Inc.
PB
Commerce Bancshares, Inc.
CBSH
Renasant Corporation
RNST
Cullen/Frost Bankers, Inc.
CFR
South State Corporation
SSB
F.N.B. Corporation
FNB
Susquehanna Bancshares, Inc.
SUSQ
First Commonwealth Financial Corporation
FCF
TCF Financial Corporation
TCB
First Finanacial Bancorp.
FFBC
TFS Financial Corporation
TFSL
First Merchants Corporation
FRME
Trustmark Corporation
TRMK
First Midwest Bancorp Inc.
FMBI
UMB Financial Corporation
UMBF
FirstMerit Corporation
FMER
United Bankshares Inc.
UBSI
Flagstar Bancorp Inc.
FBC
Valley National Bancorp
VLY
Fulton Financial Corporation
FULT
WesBanco Inc.
WSBC
Home Bancshares, Inc.
HOMB
Wintrust Financial Corporation
WTFC
IberiaBank Corporation
IBKC |
 53
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 |