Segment Information

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Segment Information

NOTE 21 – SEGMENT INFORMATION

Our business segments are defined as Banking, Insurance, and Other and are described below:

Banking

The banking segment provides a wide range of financial products and services to consumers and businesses. Loan products include commercial, commercial real estate, mortgage and other consumer loans. Deposit products include checking, savings, and time deposit accounts. This segment also provides cash management, private banking, brokerage, trust and investment advisory services. Products and services are delivered to customers in the states of Indiana, Kentucky, Illinois and Michigan through our branch locations, ATMs, on-line banking services, 24-hour telephone banking, client care call center, and a mobile banking service.

Insurance

The insurance segment offers full-service insurance brokerage services including commercial property and casualty, surety, loss control services, employee benefits consulting and administration, and personal insurance. Our agencies offer products that are issued and underwritten by various insurance companies not affiliated with us. In addition, we have two affiliated third party claims management companies that handle service claims for self-insured clients.

Other

Other Corporate Administrative units such as Human Resources or Finance, provide a wide-range of support to our other income earning segments. Expenses incurred by these support units are charged to the business segments through an internal cost allocation process, which may not be comparable to that of other companies. The other segment includes the unallocated portion of other corporate support functions, the elimination of intercompany transactions and our Corporate Treasury unit. Corporate Treasury activities consist of corporate asset and liability management. This unit’s assets and liabilities (and related interest income and expense) consist of investment securities, corporate-owned life insurance, and certain borrowings.

During the third quarter of 2014, Old National merged American National Trust & Investment Management Corp. into Old National Bank. As part of the merger, Old National re-evaluated its business segments and, as of September 30, 2014, Old National changed the composition of its reportable segments to those described above and restated all prior period information. The Wealth Management segment has been aggregated into the banking segment as this business has never been quantitatively significant. In addition, wealth management and banking have the same customers and distribution channels, similar products and services as well as similar economic performance.

Selected business segment financial information is shown in the following table for the three and six months ended June 30:

(dollars in thousands)	Banking			Insurance		Other			Total
Three months ended June 30, 2015
Net interest income	$	94,214		$	3	$	(2,120	)	$	92,097
Noninterest income		44,300			10,197		482			54,979
Noncash items:
Depreciation and software amortization		4,126			34		158			4,318
Provision for loan losses		2,271			—		—			2,271
Amortization of intangibles		2,491			486		—			2,977
Income tax expense (benefit)		10,406			213		(1,660	)		8,959
Segment profit		28,849			318		(3,011	)		26,156
Segment assets		11,927,618			60,773		87,429			12,075,820
Three months ended June 30, 2014
Net interest income	$	84,737		$	3	$	(258	)	$	84,482
Noninterest income		29,428			9,788		437			39,653
Noncash items:
Depreciation and software amortization		3,351			35		135			3,521
Provision for loan losses		(400	)		—		—			(400	)
Amortization of intangibles		1,590			413		—			2,003
Income tax expense (benefit)		6,962			165		531			7,658
Segment profit		22,322			240		(3,789	)		18,773
Segment assets		10,253,413			62,800		71,720			10,387,933
Six months ended June 30, 2015
Net interest income	$	187,292		$	5	$	(4,207	)	$	183,090
Noninterest income		87,139			22,184		951			110,274
Noncash items:
Depreciation and software amortization		8,782			68		316			9,166
Provision for loan losses		2,272			—		—			2,272
Amortization of intangibles		5,096			962		—			6,058
Income tax expense (benefit)		19,703			828		(2,347	)		18,184
Segment profit		53,632			1,282		(7,852	)		47,062
Segment assets		11,927,618			60,773		87,429			12,075,820
Six months ended June 30, 2014
Net interest income	$	168,291		$	6	$	(337	)	$	167,960
Noninterest income		57,688			21,764		764			80,216
Noncash items:
Depreciation and software amortization		6,587			70		256			6,913
Provision for loan losses		(363	)		—		—			(363	)
Amortization of intangibles		3,020			820		—			3,840
Income tax expense (benefit)		18,186			968		(2,254	)		16,900
Segment profit		45,823			2,113		(2,653	)		45,283
Segment assets		10,253,413			62,800		71,720			10,387,933

The banking segment noninterest income increased for the three and six months ended June 30, 2015 when compared to the same periods in 2014 primarily due to fee income associated with the acquisitions of Tower in April 2014, United in July 2014, LSB in November 2014, and Founders in January 2015. Also contributing to the increase in noninterest income in the banking segment was a favorable variance in adjustments to the FDIC indemnification asset. Banking segment assets increased at June 30, 2015 when compared to June 30, 2014 primarily due to the acquisitions of United, LSB, and Founders.