-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VASsUL/S/pPQTXwGKsfbwb5eaEv580Aoa2eSVoJeys2Ljrp5Gf51dkAKdzukOXOL 5y0bya1hohYwI7s8EhOX2w== 0000707179-96-000008.txt : 19961118 0000707179-96-000008.hdr.sgml : 19961118 ACCESSION NUMBER: 0000707179-96-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OLD NATIONAL BANCORP /IN/ CENTRAL INDEX KEY: 0000707179 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 351539838 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10888 FILM NUMBER: 96663898 BUSINESS ADDRESS: STREET 1: 420 MAIN ST CITY: EVANSVILLE STATE: IN ZIP: 47708 BUSINESS PHONE: 8124641434 MAIL ADDRESS: STREET 1: 420 MAIN STREET CITY: EVANSVILLE STATE: IN ZIP: 47708 FORMER COMPANY: FORMER CONFORMED NAME: OLD NATIONAL BANCORP DATE OF NAME CHANGE: 19920703 10-Q 1 SECURITIES & EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number 0-10888 OLD NATIONAL BANCORP (Exact name of Registrant as specified in its charter) INDIANA 35-1539838 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 420 Main Street Evansville, Indiana 47708 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code, (812)464-1200 NOT APPLICABLE Former name, former address and former fiscal year, if changed since last reports. Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to the filing requirements for at least the past 90 days. Yes x No Indicate the number of shares outstanding of each of the issuer's classes of common stock. The Registrant has one class of common stock (no par value) with approximately 24.8 million shares outstanding at September 30, 1996. OLD NATIONAL BANCORP FORM 10-Q INDEX PART I. FINANCIAL INFORMATION Item 1.Financial Statements Page No. Consolidated Balance Sheet September 30, 1996 and 1995, and December 31, 1995 . . . . . .3 Consolidated Statement of Income Three and nine months ended September 30, 1996 and 1995. . . 4 Consolidated Statement of Cash Flows Nine months ended September 30, 1996 and 1995. . . . . . . . 5 Notes to the Consolidated Financial Statements. . . . . . . . 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . 8 PART II. OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . 12 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 INDEX OF EXHIBITS. . . . . . . . . . . . . . . . . . . . . . . . . . 14 2
OLD NATIONAL BANCORP CONSOLIDATED BALANCE SHEET September 30, September 30, December 31, ($ in thousands) (unaudited) 1996 1995 1995 Assets Cash and due from banks. . . . . . . . . . $165,066 $172,547 $176,737 Money market investments . . . . . . . . . 19,275 10,697 88,162 Investment Securities: U.S. Treasury . . . . . . . . . . . . . . 163,016 209,787 191,464 U.S. Government agencies and corporations. . . . . . . . . . . . 767,488 736,441 751,205 Obligations of states and political subdivisions. . . . . . . . . . . . . . 453,524 431,440 442,300 Other . . . . . . . . . . . . . . . . . . 37,828 29,299 30,489 --------- --------- --------- Total Investment Securities . . . . . . 1,421,856 1,406,967 1,415,458 Loans: --------- --------- --------- Commercial. . . . . . . . . . . . . . . . 791,124 735,635 780,755 Commercial Mortgage. . . . . . . . . . . . . . 644,225 555,025 514,602 Residential Mortgage. . . . . . . . . . . 1,108,904 1,080,486 1,077,167 Consumer credit, net of unearned income . . . . . 739,326 683,758 694,070 Financial . . . . . . . . . . . . . . . . 15,000 1,500 5,167 --------- --------- --------- Total Loans . . . . . . . . . . . . . . 3,298,579 3,056,404 3,071,761 Allowance for loan losses . . . . . . . (43,290) (42,206) (40,581) --------- --------- --------- Net Loans . . . . . . . . . . . . . . . 3,255,289 3,014,198 3,031,180 Other assets . . . . . . . . . . . . . . . 186,123 173,618 176,984 --------- --------- --------- Total Assets. . . . . . . . . . . . . . $5,047,609 $4,778,027 $4,888,521 ========= ========= ========= Liabilities Deposits: Noninterest bearing demand. . . . . . . . $471,616 $454,355 $474,297 Interest bearing: Savings, daily interest checking and money market accounts . . . . . . . 1,530,381 1,458,961 1,581,656 Certificates of deposit of $100,000 and over . . . . . . . . . . . 279,917 285,393 276,010 Other time. . . . . . . . . . . . . . . 1,700,472 1,709,073 1,697,697 --------- --------- --------- Total Deposits. . . . . . . . . . . . . 3,982,386 3,907,782 4,029,660 --------- --------- --------- Short-term borrowings. . . . . . . . . . . 501,814 309,509 280,981 Subordinated debentures. . . . . . . . . . 30,564 31,545 31,515 Medium term notes. . . . . . . . . . . . . 44,000 50,000 50,000 Other liabilities. . . . . . . . . . . . . 58,316 52,746 60,257 --------- --------- --------- Total Liabilities . . . . . . . . . . . . 4,617,080 4,351,582 4,452,413 --------- --------- --------- Shareholders' Equity Preferred stock . . . . . . . . . . . . . --- --- --- Common stock. . . . . . . . . . . . . . . 24,760 24,315 25,343 Capital surplus . . . . . . . . . . . . . 223,939 212,234 247,173 Retained earnings . . . . . . . . . . . . 181,562 188,855 153,380 Net unrealized gain (loss) on investment securities. . . . . . . . . . . . . . . 268 1,041 10,212 --------- --------- --------- Total Shareholders' Equity. . . . . . . . 430,529 426,445 436,108 --------- --------- --------- Total Liabilities and Shareholders' Equity. . . . . . . . . . . . . . . . . $5,047,609 $4,778,027 $4,888,521 ========= ========= =========
The accompanying notes are an integral part of this statement. 3
OLD NATIONAL BANCORP CONSOLIDATED STATEMENT OF INCOME Three Months Ended Nine Months Ended ($ in thousands except share September 30, September 30, and per share data) (unaudited) 1996 1995 1996 1995 Interest Income Loans including fees: Taxable . . . . . . . . . $72,900 $68,441 $210,977 $197,479 Non-taxable . . . . . . . 1,013 901 2,835 2,691 Investment securities: Taxable . . . . . . . . . 15,972 15,604 46,750 46,939 Non-taxable . . . . . . . 6,014 5,847 17,708 17,639 Federal funds sold and securities purchased under agreement to resell 121 701 2,258 1,956 Deposits with banks. . . . 41 69 287 211 ------- ------- ------- ------- Total Interest Income . . 96,061 91,563 280,815 266,915 ------- ------- ------- ------- Interest Expense Savings, daily interest checking and money market accounts . . 11,061 11,772 34,322 33,994 Certificates of deposit of $100,000 and over. . . . . . . . . 3,074 3,524 10,844 9,687 Other time deposits. . . . 24,241 24,090 71,229 67,870 Federal funds purchased. . 1,009 263 1,537 1,948 Securities sold under agreements to repurchase. . . . . . . . 2,424 2,533 7,023 7,495 Other borrowings . . . . . 3,545 3,191 8,929 9,062 ------- ------- ------- ------- Total Interest Expense. . 45,354 45,373 133,884 130,056 ------- ------- ------- ------- Net Interest Income . . . 50,707 46,190 146,931 136,859 Provision for loan losses. 3,205 1,981 7,268 4,383 ------- ------- ------- ------- Net Interest Income After Provision For Loan Losses . . . . . 47,502 44,209 139,663 132,476 ------- ------- ------- ------- Noninterest Income Trust fees . . . . . . . . 2,496 2,201 7,461 6,978 Service charges on deposit accounts 3,983 3,623 11,509 10,374 Loan servicing fees. . . . 1,404 1,484 4,056 4,264 Securities gains (losses), net. . 2 10 49 45 Other income . . . . . . . 3,177 2,521 9,300 7,541 ------- ------- ------- ------- Total Noninterest Income. 11,062 9,839 32,375 29,202 ------- ------- ------- ------- Noninterest Expense Salaries and employee benefits. . 21,027 19,046 61,172 57,101 Occupancy expense. . . . . 2,345 2,236 6,844 6,532 Equipment expense. . . . . 2,786 2,654 8,386 8,033 Marketing expense. . . . . . . . . 1,364 1,290 3,887 3,808 FDIC insurance expense . . 1,341 (271) 1,730 4,064 Data processing expense. . 1,273 1,505 3,625 4,283 Supplies expense . . . . . . . . . . 1,044 1,076 3,233 3,258 Communication and transportation exp 1,751 1,442 4,998 4,271 Other expenses . . . . . . 4,112 5,350 14,938 15,396 ------- ------- ------- ------- Total Noninterest Expense. . . 37,043 34,328 108,813 106,746 ------- ------- ------- ------- Income before income taxes 21,521 19,720 63,225 54,932 Provision for income taxes 6,297 5,723 18,914 14,831 ------- ------- ------- ------- Net Income. . . . . . . . $ 15,224 $ 13,997 $ 44,311 $ 40,101 ======= ======= ======= ======= Net Income Per Common Share Primary . . . . . . . . . $ 0.61 $ 0.54 $ 1.76 $ 1.55 ======= ======= ======= ======= Fully Diluted . . . . . . $ 0.59 $ 0.53 $ 1.71 $ 1.51 ======= ======= ======= ======= Weighted average common shares outstanding: Primary . . . . . . . . . 24,918,324 25,719,023 25,137,528 25,899,224 ========== ========== ========== ========== Fully Diluted . . . . . . 26,284,453 27,127,286 26,503,657 27,307,487 ========== ========== ========== ==========
The accompanying notes are an integral part of this statement 4
OLD NATIONAL BANCORP CONSOLIDATED STATEMENT OF CASH FLOWS Nine Months Ended September 30, ($ in thousands) (unaudited) 1996 1995 Cash flows from operating activities: Net income . . . . . . . . . . . . . . . $ 44,311 $ 40,101 ------- ------- Adjustments to reconcile net income to cash provided from operating activities: Depreciation. . . . . . . . . . . . . . 6,258 5,760 Amortization of intangible assets . . . 834 1,391 Net premium amortization (discount accretion) on investment securities . . . . . . . . (1,672) 1,206 Provision for loan losses . . . . . . . 7,268 4,383 Gain on sale of investment securities . (49) (45) Gain on sale of assets. . . . . . . . . (120) (309) Increase in interest receivable . . . . (1,713) (4,861) (Increase) decrease in other assets. . . . . . . . (5,461) 2,824 Increase (decrease)in accrued expenses and other liabilities. . . . . . . . . . 5,581 6,061 ------- ------- Total adjustments . . . . . . . . . . 10,926 16,410 ------- ------- Net cash flows provided by operating activities. . 55,237 56,511 ------- ------- Cash flows from investing activities: Purchase of investment securities held to maturity. --- (58,111) Purchase of investment securities available for sale . . . (272,353) (192,957) Proceeds from maturities and paydowns of investment securities held to maturity . . . . . . --- 94,035 Proceeds from maturities and paydowns of investment securities available for sale . . . . . 231,214 133,588 Proceeds from sales of investment securities available for sale. . . . . . . . . . . . . . . . 18,996 22,114 Net principal collected from (loans made to) customers: Commercial . . . . . . . . . . . . . . (21,266) 61,763 Mortgage . . . . . . . . . . . . . . . (191,111) (175,814) Consumer . . . . . . . . . . . . . . . (48,466) (53,650) Proceeds from sale of mortgage loans . . 29,684 29,921 Proceeds from sale of premises and equipment. . . . 527 339 Purchase of premises and equipment . . . (9,682) (7,314) ------- ------- Net cash flows used in investing activities. . . . (262,457) (146,086) ------- ------- Cash flows from financing activities: Net increase (decrease) in deposits and short-term borrowings: Noninterest bearing demand. . . . . . . (2,681) 6,481 Savings, daily interest checking and money market deposits. (51,275) (22,814) Certificates of deposit of $100,000 and over . . . 3,907 72,095 Other time deposits . . . . . . . . . . . 2,775 126,585 Short-term borrowings . . . . . . . . . . 220,833 (146,662) Issuance (Payment) of medium-term notes .. . . . . . . . . (6,000) 18,000 Cash dividends paid. . . . . . . . . . . . (15,629) (15,325) Common stock repurchased . . . . . . . . . (27,823) (35,908) Common stock reissued, net of shares used to convert subordinated debentures. . . . . . . . . 2,555 4,628 ------- ------- Net cash flows provided by financing activities . . 126,662 7,080 ------- ------- Net decrease in cash and cash equivalents. (80,558) (82,495) Cash and cash equivalents at beginning of period. . 264,899 265,739 ------- ------- Cash and cash equivalents at end of period $184,341 $183,244 ======= ======= Total interest paid . . . . . . . . . . . $135,683 $125,313 ======= ======= Total taxes paid. . . . . . . . . . . . . $ 19,650 $ 11,416 ====== ======
The accompanying notes are an integral part of this statement. 5 Old National Bancorp Notes To Consolidated Financial Statements 1. Basis of Presentation The accompanying consolidated financial statements include the accounts of the Old National Bancorp and its affiliate entities (ONB). All significant intercompany transactions and balances have been eliminated. In the opinion of management, the consolidated financial statements contain all the normal and recurring adjustments necessary to present fairly the financial position of ONB as of September 30, 1996 and 1995 and December 31, 1995, and the results of its operations for the three and nine months ended September 30, 1996 and 1995 and its cash flows for the nine months ended September 30, 1996 and 1995. All prior period information has been restated for the effects of business combinations accounted for as pooling-of-interests. 2. Net Income Per Common Share Net income per common share computations are based on the weighted average number of common shares outstanding during the periods presented. A 5% stock dividend was paid February 20, 1996 to shareholders of record on February 5, 1996. All share and per share data presented herein have been restated for the effects of this stock dividend. 3. Merger Activities Pending Mergers On April 8, 1996, ONB and Workingmens Capital Holdings (Workingmens) of Bloomington, Indiana announced the execution of a definitive merger agreement. ONB will issue common shares in exchange for all of the outstanding common shares of Workingmens. The transaction will be accounted for as a pooling-of- interests. The merger received the approvals of Workingmen's shareholders and requlatory authorities. As of September 30, 1996 Workingmens consolidated financial statements reflected $208 million in total assets, net loans of $181 million, total deposits of $150 million and net income for the nine months then ended of $851 thousand. This merger was consummated October 19, 1996. 4. Investments The market value and amortized cost of investment securities as of September 30, 1996 are set forth below ($ in thousands): Market Value Amortized Cost Held-to-maturity, at amortized cost $ -- $ -- Available-for-sale, at market value 1,421,856 1,421,399 ----------- ----------- $ 1,421,856 $ 1,421,399 =========== =========== 5. Borrowings ONB has outstanding $30.6 million of 8% convertible subordinated debentures which are due September 15, 2012, unless previously converted or redeemed. The debentures are convertible at any time prior to maturity into shares of common stock of ONB at a conversion rate of 44.643 shares for each one thousand dollars principal amount of debentures. Interest on the debentures is payable on March 15 and September 15 of each year. The debentures are redeemable in whole or in part at the option of ONB at a premium to par value. 6 Beginning September 15, 1998, debenture holders are entitled to an annual sinking fund of $2.5 million principal amount of debentures annually less conversions and redemptions. The debentures are subordinated in right of payment to all senior indebtedness of ONB. As of September 30, 1996, 1.4 million authorized and unissued common shares were reserved for conversion of the debentures. ONB has registered Series A Medium Term Notes in the principal amount of $50 million. The notes may be issued with maturities ranging from nine months to thirty years and rates may be either fixed or variable. As of September 30, 1996, a total of $44 million of the notes were outstanding, with maturities ranging from two to seven years and fixed interest rates ranging from 6.0% to 7.1%. As of September 30, 1996, ONB has $55 million in unsecured lines of credit with unaffiliated banks. These lines of credit include various informal arrangements to maintain compensating balances. The compensating balances are maintained for the benefit of the parent company by affiliate banks which normally maintain correspondent balances with unaffiliated banks. As of September 30, 1996, $40.5 million was outstanding under these lines bearing interest rates that averaged 5.89%. 6. Impact of Accounting Changes Effective January 1, 1996, ONB adopted the provisions of Statement of Financial Accounting Standards (SFAS) No 122, "Accounting for Mortgage Servicing Rights". This statement modifies the accounting for mortgage servicing rights to allow the recognition of a servicing asset whether they are purchased or originated. Effective January 1, 1996, ONB adopted the provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". The adoption of both above statements did not have a material impact on ONB's financial condition and its results of operations. 7 PART I. FINANCIAL INFORMATION ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations The following management's discussion and analysis is presented to provide information concerning the financial condition of ONB as of September 30, 1996, as compared to September 30, 1995 and December 31, 1995, and the results of operations for the three and nine month periods ended September 30, 1996 and 1995. Financial Condition ONB's total assets at September 30, 1996 were $5.05 billion, a 5.6% increase over the prior year and a 3.3% increase from December 31, 1995. Earning assets, which consist primarily of money market investments, investment securities and loans, rose 5.9% over the prior year and a 3.6% increase since year-end. During the past year, the mix of earning assets has changed slightly with loans growing 7.9% while investment securities and money market investments combined increased only 1.7%. Since year-end, loans increased 7.4% compared to a 4.2% decrease in investment securities and money market investments. The continued loan growth reflects the generally healthy economies in our tri-state market areas. Redemptions and maturities in money market investments and investment securities were used to partially fund our loan growth. At September 30, 1996, under-performing assets (defined as loans 90 days or more past due, nonaccrual and restructured loans and other real estate) increased to $18.4 million from $13.5 million as of December 31, 1995. As of these respective dates, under-performing assets in total were 0.56% and 0.44% of total loans and other real estate. Past Due Total as % 90 Other of Total Loans Days Nonaccrual Restructured Real and Other Or More Loans Loans Estate Total Real Estate September 30, 1996 $4,221 $12,482 $ 948 $781 $18,432 0.56% December 31, 1995 5,160 6,724 1,120 541 13,545 0.44 As of September 30, 1996, the recorded investment in loans for which impairment has been recognized in accordance with SFAS No. 114 and 118 was $4.9 million with no related allowance and $49.6 million with $12.2 million of related allowance. ONB's policy for recognizing income on impaired loans is to accrue earnings unless a loan becomes nonaccrual. When loans are classified as nonaccrual, interest accrued during the current year is reversed against earnings; interest accrued in the prior year, if any, is charged to the allowance for loan losses. Cash received while a loan is classified nonaccrual is recorded to principal. For the nine months ended September 30, 1996, the average balance of impaired loans was $54.7 million and $2.8 million of interest was recorded. ONB's consolidated loan portfolio is well diversified and contains no concentrations of credit in any particular industry. A concentration generally exists when more than 10% of total loans outstanding are to borrowers of the same industry. The portfolio is primarily composed of loans 8 to our customers in our tri-state markets. ONB has minimal exposure to construction lending or leveraged buyouts and no exposure in credits to foreign or lesser-developed countries. Total deposits at September 30, 1996, grew $74.6 million or 1.9% from September 30, 1995 and decreased $47.3 million or 1.2% since year-end. Over the past year the mix of deposits has remained relatively unchanged with a slight shift to savings, daily interest checking and money market accounts. This deposit growth has enabled ONB to fund asset growth. Capital Total shareholders' equity increased by $4.1 million since September 1995 and decreased $5.6 million since December 1995. During the first nine months of 1996, net unrealized gain on investment securities decreased $9.9 million as interest rates increased and the market value of ONB's available-for-sale investment portfolio declined. ONB's consolidated capital position remains strong as evidenced by the following comparisons of key industry ratios:
Minimum Regulatory Well- September 30, September 30, December 31, Ratios Capitalized 1996 1995 1995 Risk Based Capital: Tier 1 Capital to Total Assets 3.00% 5.0% 8.23% 8.59% 8.40% (Leverage Ratio) Tier 1 Capital to Risk Adjusted 4.00% 6.0% 12.88% 13.52% 13.44% Total Assets Total Capital to Risk Adjusted 8.00% 10.0% 14.99% 15.77% 15.63% Total Assets Shareholders' Equity to N/A N/A 8.53% 8.93% 8.92% Total Assets
Each of ONB's affiliate banks have capital ratios which exceed regulatory minimums. Liquidity and Asset/Liability Management ONB continually monitors its liquidity and actively manages its asset/liability position. The purpose of liquidity management is to match the sources of funds with anticipated customer borrowings and withdrawals and other obligations. The primary purpose of asset/liability management is to minimize the effect on net income of changes in interest rates and to maintain a prudent match within specified time periods of rate-sensitive assets and rate-sensitive liabilities. As of September 30, 1996, ONB's rate-sensitive assets were 75% of rate-sensitive liabilities in the 1-180 day maturity category and 91% in the 181-365 day category. These figures compared to 80% and 96% on December 31, 1995 and 79% and 94% on September 30, 1995. These positions are within acceptable ranges as determined from time-to-time by management. ONB's funds management committee meets monthly to closely monitor and effect changes as needed in the consolidated rate-sensitivity position. In addition, simulation is used to estimate the possible net interest income impact of interest rate changes and to improve earnings. 9 Results of Operations Net Income Net income for the nine months ended September 30, 1996 was $44.3 million, an 10.5% increase from the same period 1995. Net income for the third quarter of 1996 was up 8.8% over 1995. Primary net income per common share for the third quarter of 1996 and for the nine months ended September 30, 1996 were $0.61 and $1.76, respectively. Earnings per common share for both periods in 1996 exceeded the results for the similar periods in 1995 by 13.0% or more. The company's return on average assets (ROA) for the third quarter of 1996 was 1.23%. This compared to 1.17% for the same period in 1995. Year-to-date ROA percentages were 1.21% in 1996 compared to 1.13% for 1995. Return on average equity (ROE) for the quarter and the first nine months of 1996 were 14.20% and 13.85%, respectively, excluding unrealized security gains(losses). These compare favorably to 1995 ROE results of 13.24% and 12.65% for similar periods. Growth in net interest income and noninterest income generated the net income improvements. Net Interest Income/Net Interest Margin (taxable equivalent basis) Year-to-date net interest income for 1996 was $157,128, a 7.0% increase over 1995. Net interest income for the third quarter of 1996 was $54,171 compared to $49,606 in 1995, a 9.2% increase over the prior year. The net interest margin for the third quarter was 4.63% and 4.42% for 1996 and 1995, respectively. The year-to-date net interest margin percentage in 1996 was 4.53% compared to 4.41% in 1995. Reduced deposit costs and increased lending contributed to the improved net interest income. Provision and Allowance for Loan Losses The provision for loan losses was $3.2 million in the third quarter of 1996 compared to $2.0 million in the third quarter of 1995. Year-to-date, the provision for loan losses of $7.3 million compares to $4.4 million in 1995. ONB's net charge-offs were 0.31% of average loans for the current quarter, compared to 0.37% to the third quarter of 1995. For the first nine months, net charge-offs were 0.19% in 1996 compared to 0.17% in 1995. The provision and net charge-off levels in the first half of 1995 were historically low. Levels in 1996 are more comparable with the second half of 1995. Similar to the increases in consumer loan delinquencies and charge-offs within the national banking industry in 1996, ONB has experienced some increased charge- offs in this area. The allowance for loan losses is continually monitored and evaluated both within each affiliate bank and at the holding company level to provide adequate coverage for potential losses. ONB maintains a comprehensive loan review program to provide independent evaluations of loan administration, credit quality, loan documentation, and adequacy of the allowance for loan losses. The allowance for loan losses to end-of-period loans was 1.31% at September 30, 1996 compared to 1.38% in 1995. The loan portfolio's strength enabled ONB to add loan growth with minimal increase in the allowance. As a result, the this ratio declined. The allowance for loan losses covered all under-performing assets by 2.3 times at September 30, 1996 compared to 3.0 times at December 31, 1995. 10 Noninterest Income Excluding securities gains (losses), noninterest income increased 12.5% in the three months ended September 30, 1996 as compared to the same period in 1995. For the first nine months, this increase was 10.9%. Both increases were fueled by an increase in service charges which were up 9.9% in the third quarter versus last year and 10.9% for the first nine months and other income increased 26.0% and 23.3% for the quarter and nine months ended. The growth in other income was mainly from stronger brokerage and annuity sales. Most other categories of noninterest income were comparable to last year's results. Noninterest Expense Noninterest expense increased 7.9% in the third quarter of 1996 compared to 1995. For the first nine months noninterest expense increased 1.9% from 1995. Salaries and benefits, together the largest individual component of noninterest expense, increased 10.4% in the third quarter of 1996 compared to 1995. For the first nine months, this percentage increased 7.1%. Part of this increase relates to the recognition of incentive expenses given ONB's strong performance in the first nine-months of 1996. Equipment expense was up 5.0% quarter-to-quarter and 4.4% year-to-year. Data Processing expense continues to decline as more banks are processed at our internal data operations center. Communications expenses exceeded prior year due to the installation of a wide-area network. Other expense decreased 23.1% over the third quarter of 1995 and 3.0% over 1995 year-to-date. Most other categories of noninterest expense experienced relatively small changes between the years. On September 30, 1996 President Clinton signed into law the recapitalization of the FDIC's Savings Association Insurance fund ("SAIF") pertaining to thrift deposits. This law required a one-time assessment on thrift deposits and deposits acquired from thrifts of 65.7 basis points or 52.6 basis points per $100 deposits, respectively. This charge was accrued as of September 30, 1996 and amounted to $1.2 million. Effective January 1, 1997, deposits insured by the FDIC's BIF fund will be 1.29 basis points per $100 deposits, an increase over the $2,000 annual charge per bank in 1996. SAIF insured deposits will decrease from approximately 23 basis points per $100 deposits to 6.44 basis points per $100 deposits for thrift deposits and 2.43 basis points per $100 deposits for deposits acquired from thrifts. Provision for Income Taxes The provision for income taxes, as a percentage of pre-tax income, increased in the third quarter to 29.3% compared to 29.0% in 1995. For the first nine months, this percentage was 29.9% for 1996 and 27.0% in 1995. The earning assets growth has been primarily in taxable loans with tax-exempt securities remaining fairly level. The resulting increase in taxable sources of revenue has increased our effective tax rates. 11 PART II OTHER INFORMATION ITEM 1. Legal Proceedings NONE ITEM 2. Changes in Securities NONE ITEM 3. Defaults Upon Senior Securities NONE ITEM 4. Submission of Matters to a Vote of Security Holders None ITEM 5. Other Information See Note 3 to the consolidated financial statements for discussion of pending mergers. ITEM 6. Exhibits and Reports on Form 8-K (a) NONE (b) ONB did not file a current report on Form 8-K during the quarter ended September 30, 1996. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OLD NATIONAL BANCORP (Registrant) By: s/s Steve H. Parker Steve H. Parker Senior Vice President Chief Financial Officer Date: November 14, 1996 13 INDEX OF EXHIBITS Regulation S-K Reference (Item 601) 11 Statement re Computation of Per Share Earnings 27 Financial Data Schedule 14 EX-11 2
EXHIBIT 11 PAGE 1 OF 2 OLD NATIONAL BANCORP STATEMENT RE COMPUTATION OF PER SHARE EARNINGS ($ IN THOUSANDS EXCEPT PER SHARE) Three Months Ended Nine Months Ended September 30, 1996 September 30, 1996 Primary Fully Diluted Primary Fully Diluted Net Income. . . . . . . . . . . . . . . $15,224 $15,224 $44,311 $44,311 Interest expense foregone on assumed conversion of 8% convertible subordinated debentures, net of tax . . . . . . . . . -- 369 -- 1,108 ------- ------- ------- ------- Adjusted net income. . . . . . . . . . . $15,224 $15,593 $44,311 $45,419 Weighted average common shares outstanding. . . . . . . . . . . . . . 24,851,840 24,851,840 25,071,044 25,071,044 Additional shares outstanding upon assumed conversion of 8% convertible subordinated debentures. . . . . . . . . . . . . . -- 1,364,469 -- 1,364,469 Additional shares outstanding upon assumed exercise of stock options. . . . . . . 66,484 68,144 66,484 68,144 ----------- ---------- ---------- ---------- Adjusted weighted average shares outstanding. . . . . . . . . . . . . . 24,918,324 26,284,453 25,137,528 26,503,657 ========== ========== ========== ========== Earnings per share . . . . . . . . . . $ .61 $ .59 $ 1.76 $ 1.71 ========== ========== ========== ==========
EXHIBIT 11 PAGE 2 OF 2 OLD NATIONAL BANCORP STATEMENT RE COMPUTATION OF PER SHARE EARNINGS ($ IN THOUSANDS EXCEPT PER SHARE) Three Months Ended Nine Months Ended September 30, 1995 September 30, 1995 Primary Fully Diluted Primary Fully Diluted Net Income. . . . . . . . . . . . . . . $13,997 $13,997 $40,101 $40,101 Interest expense foregone on assumed conversion of 8% convertible subordinated debentures, net of tax . . . . . . . . . -- 381 -- 1,143 ------- ------- ------- ------- Adjusted net income. . . . . . . . . . . $13,997 $14,378 $40,101 $41,244 Weighted average common shares outstanding. . . . . . . . . . . . . . . 25,653,953 25,653,953 25,834,154 25,834,154 Additional shares outstanding upon assumed conversion of 8% convertible subordinated debentures . . . . . . . . . . . . . . . -- 1,408,263 -- 1,408,263 Additional shares outstanding upon assumed exercise of stock options. . . . . . . . 65,070 65,070 65,070 65,070 ---------- ---------- ---------- ---------- Adjusted weighted average shares outstanding. . . . . . . . . . . . . . . 25,719,023 27,127,286 25,899,224 27,307,487 ========== ========== ========== ========== Earnings per share . . . . . . . . . . . $ .54 $ .53 $ 1.55 $ 1.51 ========== ========== ========== ==========
EX-27 3
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM OLD NATIONAL BANCORP'S SEPTEMBER 30, 1996 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1996 SEP-30-1996 165,066 749 18,526 0 1,421,856 0 0 3,298,579 43,290 5,047,609 3,982,386 501,814 58,316 74,564 0 0 24,760 405,769 5,047,609 213,812 64,458 2,545 280,815 116,395 133,884 146,931 7,268 49 14,938 63,225 44,311 0 0 44,311 1.76 1.71 4.53 12,482 4,221 948 112,210 40,581 9,541 4,982 43,290 43,290 0 0
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