Segment Information

9 Months Ended

Sep. 30, 2011

Segment Information

Segment Information

NOTE 20 - SEGMENT INFORMATION

Old National operates in two operating segments: community banking and treasury. The community banking segment serves customers in both urban and rural markets providing a wide range of financial services including commercial, real estate and consumer loans; lease financing; checking, savings, time deposits and other depository accounts; cash management services; and debit cards and other electronically accessed banking services and Internet banking. Treasury manages investments, wholesale funding, interest rate risk, liquidity and leverage for Old National. Additionally, treasury provides other miscellaneous capital markets products for its corporate banking clients. Other is comprised of the parent company and several smaller business units including insurance, wealth management and brokerage. It includes unallocated corporate overhead and intersegment revenue and expense eliminations.

In order to measure performance for each segment, Old National allocates capital and corporate overhead to each segment. Capital and corporate overhead are allocated to each segment using various methodologies, which are subject to periodic changes by management. Intersegment sales and transfers are not significant.

Old National uses a funds transfer pricing ("FTP") system to eliminate the effect of interest rate risk from net interest income in the community banking segment and from companies included in the "other" column. The FTP system is used to credit or charge each segment for the funds the segments create or use. The net FTP credit or charge is reflected in segment net interest income.

The financial information for each operating segment is reported on the basis used internally by Old National's management to evaluate performance and is not necessarily comparable with similar information for any other financial institution.

Summarized financial information concerning segments is shown in the following table for the three and nine months ended September 30:

		Community
(dollars in thousands)		Banking			Treasury			Other			Total
Three months ended September 30, 2011
Net interest income	$	75,292		$	(11,803	)	$	9,103		$	72,592
Provision for loan losses		(1,258	)		0			1,176			(82	)
Noninterest income		28,800			4,756			13,770			47,326
Noninterest expense		60,828			8,840			25,490			95,158
Income (loss) before income taxes		44,522			(15,887	)		(3,793	)		24,842
Total assets		5,156,030			3,569,790			206,880			8,932,700
Three months ended September 30, 2010
Net interest income	$	63,402		$	(8,305	)	$	(929	)	$	54,168
Provision for loan losses		6,400			0			0			6,400
Noninterest income		22,119			4,506			15,354			41,979
Noninterest expense		57,298			3,358			15,446			76,102
Income (loss) before income taxes		21,823			(7,157	)		(1,021	)		13,645
Total assets		3,828,941			3,567,870			109,303			7,506,114
Nine months ended September 30, 2011
Net interest income	$	218,356		$	(30,009	)	$	7,931		$	196,278
Provision for loan losses		5,261			0			1,176			6,437
Noninterest income		80,989			8,816			43,931			133,736
Noninterest expense		192,071			10,617			52,153			254,841
Income (loss) before income taxes		102,013			(31,810	)		(1,467	)		68,736
Total assets		5,156,030			3,569,790			206,880			8,932,700
Nine months ended September 30, 2010
Net interest income	$	187,215		$	(19,984	)	$	(2,792	)	$	164,439
Provision for loan losses		23,706			0			(25	)		23,681
Noninterest income		66,345			13,139			48,461			127,945
Noninterest expense		176,081			7,603			47,349			231,033
Income (loss) before income taxes		53,773			(14,448	)		(1,655	)		37,670
Total assets		3,828,941			3,567,870			109,303			7,506,114

Included in net interest income for the three and nine months ended September 30, 2011 in the Community Banking segment is approximately $21.0 million and $38.7 million, respectively, associated with the acquisition of Monroe Bancorp and Integra Bank. The decrease in provision for loan losses is primarily attributable to the changing portfolio mix and improved risk profile. Noninterest expense for the three and nine months ended September 30, 2011 includes $16.0 million and $31.0 million, respectively, of costs associated with the addition of Monroe Bancorp and Integra Bank. Included in income before income taxes for the three and nine months ended September 30, 2011 is $10.6 million and $15.0 million, respectively, associated with the addition of Monroe Bancorp and Integra Bank.