Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (February 2017)
49 slides from Old National Bancorp's investor presentation, Feb 6, 2017
Slide 1: Investment Thesis
Investment Thesis Financial Data as of December 31, 2016 Dated: February 6, 2017 Exhibit 99.1
Slide 2: Investment Thesis Executive Summary
Investment Thesis Executive Summary Slides 2 to 15 Financial Data as of December 31, 2016 Dated: February 6, 2017
Slide 3: Forward-Looking Statements
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 National’s”) financial condition, result
Slide 4: 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 5: Snapshot of Old National
Snapshot of Old National Largest financial services bank holding company headquartered in Indiana with financial centers located in Indiana, Kentucky, Michigan and Wisconsin 188 financial centers as of 1-31-2017 225 ATMs as of 1-31-2017 Focused on community banking with a full suite of product offer
Slide 6: A Strategic Framework for Creating Long-Term Shareholder Value
A Strategic Framework for Creating Long-Term Shareholder Value Attractive footprint that offers room to expand in higher-growth markets and leading share in mature markets Consistent financial performance with focus on building tangible book value and providing adequate return for our shareholders D
Slide 7: Commitment to Excellence
Commitment to Excellence ja) ETHISPHERE Quicl A ETHICS © QuickScoré 2017 INSIDE (onl DISTINCTION CERTIFIED ( Bloomberg \ = =) = SS na VolunteerMatch erate AMERICAN BANKER, o| ETHIC Most ™ AWARD OF BEST BANKS TO WORK &| COMPANIES" 'W.ETHISF COM . . FOR 2016 Points of Light Institute
Slide 8: ONB's Transformational Journey
ONB’s Transformational Journey Since 2011, Old National has transformed its franchise by reducing low-return businesses and low-growth markets and investing in higher-growth markets Acquisitions 7 whole-bank, 1 FDIC and 1 branch purchase Divestitures Insurance agency business Exited Southern Illinoi
Slide 9: Our Transformational Journey
Our Transformational Journey 2011 Monroe Bancorp $846M 19 Branches 2012 Indiana Community $985M 19 Branches 2014 Tower Financial $681M 7 Branches 2014 United Bancorp $919M 18 Branches 2013 24 Branches (Bank of America) 2011 Integra Bank (FDIC) $1.9B 55 Branches 2014 LSB Financial $366M 5 Branches 20
Slide 10: Attractive Midwest Markets
Attractive Midwest Markets Source: SNL Financial, based on MSAs $ in thousands Average of ONB Footprint Average of ONB Footprint
Slide 11: Attractive Midwest Markets
Attractive Midwest Markets Indianapolis, IN Milwaukee, WI Louisville, KY Grand Rapids, MI Madison, WI MSA Population: 2.0 million MSA Population: 1.6 million MSA Population: 1.3 million MSA Population: 1.1 million MSA Population: 652K Major industries include: Scientific and technical services, phar
Slide 12: 4Q16 Highlights
4Q16 Highlights Net income of $33.5 million, or $0.25 per share Results include the following pre-tax items Recognition of a $12.8 million deferred gain on property repurchases $9.8 million pension termination charges $5.1 million in branch consolidation charges $1.8 million of merger and integratio
Slide 13: 2016 Financial Highlights
2016 Financial Highlights Reported net income of $134.3 million, or $1.05 per share 15.0% increase over the $116.7 reported for 2015 7.1% organic loan growth1 10.7% organic growth1 in commercial and commercial real estate loans 5.7% organic core deposit growth2 8.9% increase in tangible book value3
Slide 14: 4Q16 vs. 3Q16 Highlights
4Q16 vs. 3Q16 Highlights Solid fundamentals driven by disciplined execution Loan Growth +6.1%(annualized) Q/Q 1 Non-GAAP financial measure which Management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliations $ in millions, except per shar
Slide 15: 2016 Strategic Actions
2016 Strategic Actions Continue investment in higher growth markets Investing in higher growth markets as demonstrated by the closing of the Anchor partnership on May 1 Improve operating leverage Expect an approximately 150 basis point improvement in 2017’s efficiency ratio from the sale of Old Nati
Slide 16: Investment Thesis
Investment Thesis Financial Data as of December 31, 2016 Dated: February 6, 2017
Slide 17: Loan Growth
Loan Growth $ in millions – End of Period Balances 1 Includes Loans Held for Sale 1 1 Annualized Organic Growth of 6.1% Annualized Organic Growth of 9.7% 1 1 Organic Growth of 7.1% Organic Growth of 10.7%
Slide 18: Commercial & Commercial Real Estate Loans
Commercial & Commercial Real Estate Loans $ in millions 1New Production includes 50% credit for line of credit unfunded commitments 2Yield is based on funded balances only New Production1 Production Yield 2 Average loan size of 4Q16 production is less than $580,000 Loan Pipeline Production Growth of
Slide 19: Consumer Loan Production & Yield Trends
Consumer Loan Production & Yield Trends $ in millions New quarterly production includes unfunded commitments – Yield is based on funded balances only Quick Home Refinance (residential mortgage product) is included in the Residential Mortgage graph Direct Consumer includes Home Equity Lines of Credit
Slide 20: Auto Loan Portfolio
Auto Loan Portfolio $ in millions Total portfolio average original loan term of 70 months and weighted average FICO score of 767 Total Portfolio yield of 2.74% 30+ Days Delinquency at 12/31/2016 is 0.61% Loans are originated within the ONB footprint
Slide 21: Loan Concentrations
Loan Concentrations As of December 31, 2016 Commercial Commercial Real Estate Diversified Commercial Loan Portfolio
Slide 22: Credit Quality Trends
$ in millions Credit Quality Trends
Slide 23: Net Charge-Offs / Provision
Net Charge-Offs / Provision $ in millions Full-year 2016 net charge-offs of $3.4 million & provision expense of $1.0 million Strong Credit Quality
Slide 24: ALLL and Remaining Purchase Discount Summary
ALLL and Remaining Purchase Discount Summary $ in millions 1 Includes discount on loans acquired through previous partnerships 2 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 covera
Slide 25: DFAST Disclosure
DFAST Disclosure 1 Loss % is calculated by adding the nine quarters of losses and dividing by the nine-quarter average loan balance for each portfolio 2 Commercial real estate includes multifamily, construction loans, and non-farm non-residential loans $ in millions
Slide 26: DFAST Disclosure
DFAST Disclosure 1 Calculated by dividing the nine-quarter cumulative totals for each line by average total assets over the same time period 2 Pre-Provision Net Revenue includes estimates for operational losses resulting from the hypothetical severely adverse scenario 3 Each Ratio, excluding the lev
Slide 27: Conservative Lending Limits/Risk Grades
Conservative Lending Limits/Risk Grades Borrower Asset Quality Rating (Risk Grades) In-House Lending Limit1 ($ in millions) 0 – Investment Grade $45 1 – Minimal Risk $40 2 – Modest Risk $35 3 – Average Risk $30 4 – Monitor $25 5 – Weak Monitor $17.5 6 – Watch $7.5 7 – Criticized (Special Mention) $5
Slide 28: Investment Portfolio Purchases 4Q16
Investment Portfolio Purchases 4Q161 1 Data as of December 31, 2016 Security Purchases by Month October November December Total Book Value $ ,126,710,032.31 $ 69,037,937.75 $ ,148,915,319.50999999 $ ,344,663,289.56999999 Market Value $ ,126,710,032.31 $ 69,037,937.75 $ ,148,915,319.50999999 $ ,344,6
Slide 29: Investment Portfolio
Investment Portfolio 1Includes market value for both available-for-sale and held-to-maturity securities
Slide 30: Net Interest Margin
Net Interest Margin1 1 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 2 ONB Core includes contractual interest income of prior acquisitions 2 Stable Core Net
Slide 31: Acquired Loans
Acquired Loans $ in millions – as of December 31, 2016 PCI = Purchased Credit Impaired
Slide 32: Projected Purchase Accounting Impact
Projected Purchase Accounting Impact Actual Accretion Projected Accretion1 Actual Discount Projected Discount1 $ in millions 1 Updated quarterly – subject to change IA = Indemnification Asset Manageable declines in purchase accounting impact expected in future periods Actual IA Amortization Net Inco
Slide 33: Modeled Interest Rate Sensitivity
$ in millions Change to Net Interest Income based on a two year time horizon Refer to slide 34 for rate curves Total non-maturity, interest-bearing accounts increase from 0.09% to 0.38% in the “Up 100 bps” scenario 18.97% of total non-interest bearing DDA are considered rate sensitive Investment por
Slide 34: Up vs. Base / Forward Curves
Up 100 vs. Base 2% 1% 1M 2M 3M 4M 5M 6M 9M IY 15Y 2¥ 25Y 3Y 4Y SY 75Y 1oY 15Y 207 30Y —Base —up 100 Forward Curves 3.0% 25% ern 2.0% 15% 1.0% 0.5% 0.0% 1M 2M 3M 4M 5M 6M 9M lY 15Y 2Y 25Y 3Y 4Y SY 7.5Y 10Y 15Y 20Y 30Y 12/31/2016 12/31/2017, 12/31/2018
Slide 35: Capital Trends
Capital Trends 1 Non-GAAP financial measure which Management believes is useful in evaluating the financial results of the Company – see Appendix for Non-GAAP reconciliation Growth of 8.9% 4Q16 tangible common book value declined $40.5 million primarily as a result of fluctuations in the fair value
Slide 36: Total Revenue
$ in millions 1 Operating Revenue = Interest income and non-interest income less gain on the sale of insurance and branch rationalization activity Total Revenue $135.4 18.1% increase in operating revenue1 $159.9 $568.3 $601.6 5.9% increase in operating revenue1
Slide 37: Fee-Based Business Revenue
Fee-Based Business Revenue $ in millions
Slide 38: Mortgage Banking
Mortgage Banking $ in millions
Slide 39: Noninterest Expense
$ in millions 1Operational expenses = total noninterest expense less pension termination expense, merger/integration costs , branch consolidations, severance and litigation reserve Noninterest Expense 4Q16 Operational Expenses1 include higher than normal levels in various line items totaling $5.5 mi
Slide 40: Improving Efficiency Trends
Improving Efficiency Trends Core Deposits per Branch Branches $ in millions
Slide 41: Rationalizing Distribution Channels
Rationalizing Distribution Channels Driving efficiencies through increased branch size and investment in mobile and online banking Consolidated 47 branches since January 1, 2014 Increased average deposits per branch by 23% Launched new online and mobile solution January 16, 2016 Increased online use
Slide 42: Transforming Old National's Landscape
2011 2012 2013 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 Acquir
Slide 43: Commitment to Strong Corporate Governance
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 sha
Slide 44: 2016 Executive Compensation
2016 Executive Compensation 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% Tied to long term shareholder value: Long Term Incentive Plan (CFO,CBO, CCO, Chief Legal Counsel) Performance M
Slide 45: Appendix
Appendix Ml OLD NATIONAL BANCORP
Slide 46: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 47: GAAP Reconciliations
GAAP Reconciliations Es 4Q15 3Q16 4016 [Net Interest Income ($ in 000's) $85,922] $107,803} $109,917 Taxable Equivalent Adjustment 5,163} 5,320] 5,50 i $91,085} $113,123] $115.42. Assets $10,414,823) $12,575,454) $12,713,341 i 3.43%| 3.46% Fully Taxable Equivalent 3.50%| 3.60%| 3.63 4015 3016 4Q16 N
Slide 48: Old National's 2016 Peer Group
Old National’s 2016 Peer Group Like-size, publicly-traded financial services companies, generally in the Midwest, serving comparable demographics with comparable services as ONB
Slide 49: Old National Investor Relations Contact
Old National Investor Relations 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 [email protected]
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