Old National Bancorp · NASDAQ:ONB
Old National Bancorp — Investor Presentation (May 2017)
47 slides from Old National Bancorp's investor presentation, May 8, 2017
Slide 1: Investment Thesis
Investment Thesis Financial Data as of March 31, 2017 Dated: May 8, 2017 Exhibit 99.1
Slide 2: Investment Thesis Executive Summary
Investment Thesis Executive Summary Slides 2 to 13 Financial Data as of March 31, 2017 Dated: May 8, 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 225 ATMs Focused on community banking with a full suite of product offerings: Retail and small business
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) sirascon Y 2017 WT & DISTINCTION ( (==) engagement AMERICAN BANKER, AWARD OF BEST BANKS TO WORK . . FOR 2016 Points of Light Institute ETHISPHERE ETHICS. CERTIFIED Ea VolunteerMatch | WORLD'S MosT ™ ° ETHICAL. a CO MPANIES*
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 $771M 15 Branches 2012 Indiana Community $818M 17 Branches 2014 Tower Financial $618M 7 Branches 2014 United Bancorp $851M 18 Branches 2013 24 Branches (Bank of America) 2011 Integra Bank (FDIC) $1.8B 52 Branches 2014 LSB Financial $337M 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: 1Q17 Highlights
1Q17 Highlights Net income of $36.0 million, or $0.27 per share Results include $1.4 million in pre-tax branch consolidation charges 6.8% annualized growth in commercial and commercial real estate loans 6.9% decline in operational expenses1 from 4Q16 Return on Average Tangible Common Equity2 of 13.3
Slide 13: Pre-Tax, Pre-Provision Income
Pre-Tax, Pre-Provision Income1 1Q16 1Q17 Net Interest Income (FTE Basis) $90,843 $111,489 Noninterest Income 49,451 42,920 Total Revenue (FTE Basis) $140,294 $154,409 Noninterest Expense 98,355 101,891 Pre-Tax, Pre-Provision Income1 $41,939 $52,518 Branch Rationalization - 1,360 Merger and Integrati
Slide 14: Investment Thesis
Investment Thesis Financial Data as of March 31, 2017 Dated: May 8, 2017
Slide 15: Loan Growth
Loan Growth $ in millions – End of Period Balances 1 Includes Loans Held for Sale 1 1 Annualized Growth of 2.1% Annualized Growth of 6.8% Total loan growth includes a $73.3 million reduction in residential mortgage loans held for sale
Slide 16: 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 Loan Pipeline Production Growth of 44.7%
Slide 17: 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 18: Auto Loan Portfolio
Auto Loan Portfolio $ in millions Total portfolio average original loan term of 70 months and weighted average FICO score of 761 Total Portfolio yield of 2.81% 30+ Days Delinquency at 3/31/2017 is 0.35% Loans are originated within the ONB footprint
Slide 19: Loan Concentrations
Loan Concentrations As of March 31, 2017 Commercial Commercial Real Estate Diversified Commercial Loan Portfolio
Slide 20: Credit Quality Trends
$ in millions Credit Quality Trends
Slide 21: Net Charge-Offs / Provision
Net Charge-Offs / Provision $ in millions Strong Credit Quality
Slide 22: 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 23: 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 24: 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 25: 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 26: Investment Portfolio Purchases 1Q17
Investment Portfolio Purchases 1Q171 1 Data as of March 31, 2017 Q1 2017 Purchases- Book Value Treasuries 4,999,646 Agencies 65,497,500 Pools - CMO 28,024,219 Municipals 17,188,471 Corporates 17,579,029 ABS - Equity - Total 133,288,865
Slide 27: Investment Portfolio
Investment Portfolio 1Includes market value for both available-for-sale and held-to-maturity securities
Slide 28: 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 29: Acquired Loans
Acquired Loans $ in millions – as of March 31, 2017 PCI = Purchased Credit Impaired
Slide 30: 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 31: Modeled Interest Rate Sensitivity
$ in millions Change to Net Interest Income based on a two year time horizon Refer to slide 32 for rate curves Total non-maturity, interest-bearing accounts increase from 0.10% to 0.39% in the “Up 100 bps” scenario 19.04% of total non-interest bearing DDA are considered rate sensitive Investment por
Slide 32: Interest Rate Curves
Interest Rate Curves Up 100 vs. Base 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% erm" 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 —— 3/31/2017 3/31/2018 3/31/2019
Slide 33: 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 9.5% Growth of 3.6%
Slide 34: Fee-Based Business Revenue
Fee-Based Business Revenue $ in millions
Slide 35: Noninterest Expense
$ in millions 1Operational expenses = total noninterest expense less pension termination expense, merger/integration costs, branch consolidations and severance. Operational expenses is a non-GAAP financial measure which Management believes is useful in evaluating the financial results of the Company
Slide 36: Historic Tax Credit Business
Historic Tax Credit Business We anticipate our full-year 2017 effective tax rate on an FTE basis to be 31% and on a GAAP basis to be 23% The improvement in our tax rates is the result of historic tax credit projects that are expected to be placed in service in 2017 We anticipate investment impairmen
Slide 37: Improving Efficiency Trends
Improving Efficiency Trends Core Deposits per Branch Branches $ in millions
Slide 38: 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 33% Launched new online and mobile solution January 16, 2016 Increased online use
Slide 39: 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 40: 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 41: 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 42: 2017 Executive Compensation
2017 Executive Compensation Short Term Incentive Plan (CEO, CFO, COO, CCE, Chief Legal Counsel) Performance Measure Weight Corporate EPS 60% ROATCE 20% Efficiency Ratio 20% Tied to long term shareholder value: Long Term Incentive Plan (CFO, COO, CCE, Chief Legal Counsel) Performance Measure Weight P
Slide 43: Appendix
Appendix Ml OLD NATIONAL BANCORP
Slide 44: Non-GAAP Reconciliations
Non-GAAP Reconciliations $ in millions
Slide 45: Non-GAAP Reconciliations
Non-GAAP Reconciliations 1Q17 4Q16 Net Interest Income ($ in 000's) axable it 5,200 5; let Interest Income - Taxable Equivalent $90,843] $115,423] $111,489] Avera ing Asset $10,331,029] $12,713,345] ie Net Interest Margin 3: ry 332%) Net interest Margin - Fully ‘352% 3.63% 3.50%) 1016 4016 1017 Net
Slide 46: Old National's 2017 Peer Group
Old National’s 2017 Peer Group Like-size, publicly-traded financial services companies, generally in the Midwest, serving comparable demographics with comparable services as ONB
Slide 47: 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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