NOTE 23 - REGULATORY RESTRICTIONS

RESTRICTIONS ON CASH AND DUE FROM BANKS

Old National’s affiliate bank is required to maintain reserve balances on hand and with the Federal Reserve Bank which are interest bearing and unavailable for investment purposes. The reserve balances were $68.4 million at December 31, 2015 and $67.9 million at December 31, 2014. In addition, Old National had cash and due from banks which was held as collateral for collateralized swap positions of $0.2 million at December 31, 2015 and $0.2 million at December 31, 2014.

RESTRICTIONS ON TRANSFERS FROM AFFILIATE BANK

Regulations limit the amount of dividends an affiliate bank can declare in any year without obtaining prior regulatory approval. Prior regulatory approval is required if dividends to be declared in any year would exceed net earnings of the current year plus retained net profits for the preceding two years. Prior regulatory approval to pay dividends was not required in 2013, 2014, or 2015 and is not currently required.

RESTRICTIONS ON THE PAYMENT OF DIVIDENDS

Old National has traditionally paid a quarterly dividend to common stockholders. The payment of dividends is subject to legal and regulatory restrictions. Any payment of dividends in the future will depend, in large part, on Old National’s earnings, capital requirements, financial condition, and other factors considered relevant by our Board of Directors.

CAPITAL ADEQUACY

Old National and Old National Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can elicit certain mandatory actions by regulators that, if undertaken, could have a direct material effect on Old National’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Old National and Old National Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies. Quantitative measures established by regulation to ensure capital adequacy require Old National and Old National Bank to maintain minimum amounts and ratios as set forth in the following tables.

At December 31, 2015, Old National and Old National Bank exceeded the regulatory minimums and Old National Bank met the regulatory definition of well-capitalized based on the most recent regulatory notification.

We are reflecting the new Basel III requirements for Old National and Old National Bank in the table below as of December 31, 2015:

Fully Phased-In

Regulatory

Well Capitalized

Actual

Guidelines Minimum

Guidelines

(dollars in thousands)

Amount

Ratio

Amount

Ratio

Amount

Ratio

2015

Total capital to risk-weighted assets

Old National Bancorp

1,024,586

13.28

810,397

10.50

N/A

Old National Bank

1,079,652

14.11

803,490

10.50

765,229

10.00

Common equity Tier 1 capital to risk-weighted assets

Old National Bancorp

934,497

12.11

540,265

7.00

N/A

Old National Bank

1,023,839

13.38

535,660

7.00

497,399

6.50

Tier 1 capital to risk-weighted assets

Old National Bancorp

968,772

12.55

656,036

8.50

N/A

Old National Bank

1,023,839

13.38

650,445

8.50

612,183

8.00

Tier 1 capital to average assets

Old National Bancorp

968,772

8.54

454,005

4.00

N/A

Old National Bank

1,023,839

9.11

449,791

4.00

562,239

5.00

N/A = not applicable

The following table summarizes capital ratios for Old National and Old National Bank as of December 31, 2014:


						Regulatory					Well Capitalized
	Actual					Guidelines Minimum					Guidelines
(dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
2014
Total capital to risk- weighted assets
Old National Bancorp	$	996,929		13.59	%	$	586,722		8.00	%	$	N/A		N/A	%
Old National Bank		949,596		13.02			583,266		8.00			729,082		10.00
Tier 1 capital to risk- weighted assets
Old National Bancorp		944,649		12.88			293,361		4.00			N/A		N/A
Old National Bank		897,316		12.31			291,633		4.00			437,449		6.00
Tier 1 capital to average assets
Old National Bancorp		944,649		8.79			429,935		4.00			N/A		N/A
Old National Bank		897,316		8.41			426,873		4.00			533,591		5.00

N/A = not applicable