10-Q

UNITED STATES

SECURITIES AND 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 June 30, 2016

¨ 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 1-15817

OLD NATIONAL BANCORP

(Exact name of Registrant as specified in its charter)

INDIANA	35-1539838
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One Main Street Evansville, Indiana	47708
(Address of principal executive offices)	(Zip Code)

(812) 464-1294

(Registrant’s telephone number, including area code)

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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (s232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

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 135,005,000 shares outstanding at June 30, 2016.

OLD NATIONAL BANCORP

FORM 10-Q

INDEX

		Page No.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets June 30, 2016 (unaudited), December 31, 2015, and June 30, 2015 (unaudited)		3
	Consolidated Statements of Income (unaudited) Three and six months ended June 30, 2016 and 2015		4
	Consolidated Statements of Comprehensive Income (unaudited) Three and six months ended June 30, 2016 and 2015		5
	Consolidated Statements of Changes in Shareholders’ Equity (unaudited) Three and six months ended June 30, 2016 and 2015		6
	Consolidated Statements of Cash Flows (unaudited) Three and six months ended June 30, 2016 and 2015		7
	Notes to Consolidated Financial Statements (unaudited)		8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		64
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		88
Item 4.	Controls and Procedures		88
PART II	OTHER INFORMATION		89
SIGNATURE			91

2

OLD NATIONAL BANCORP

CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,			June 30,
(dollars and shares in thousands, except per share data)	2016			2015			2015
	(unaudited)						(unaudited)
Assets
Cash and due from banks	$	205,973		$	91,311		$	178,985
Money market and other interest-earning investments		61,947			128,507			16,228
Total cash and cash equivalents		267,920			219,818			195,213
Trading securities - at fair value		4,838			3,941			3,995
Investment securities - available-for-sale, at fair value:
U.S. Treasury		12,269			12,150			12,171
U.S. government-sponsored entities and agencies		540,775			613,550			695,074
Mortgage-backed securities		1,336,605			1,066,361			1,104,145
States and political subdivisions		417,163			387,296			388,039
Other securities		342,089			338,864			373,092
Total investment securities - available-for-sale		2,648,901			2,418,221			2,572,521
Investment securities - held-to-maturity, at amortized cost (fair value $939,855; $929,417; and $867,345, respectively)		865,957			872,111			823,255
Federal Home Loan Bank/Federal Reserve Bank stock, at cost		90,742			86,146			71,669
Loans held for sale ($44,422; $13,810; and $20,287, respectively at fair value)		44,422			13,810			217,667
Loans:
Commercial		1,893,700			1,804,615			1,775,954
Commercial real estate		2,943,525			1,847,821			1,767,341
Residential real estate		2,099,770			1,644,614			1,622,819
Consumer credit, net of unearned income		1,893,163			1,543,768			1,464,541
Covered loans, net of discount		—			107,587			135,407
Total loans		8,830,158			6,948,405			6,766,062
Allowance for loan losses		(51,804	)		(51,296	)		(48,479	)
Allowance for loan losses - covered loans		—			(937	)		(1,712	)
Net loans		8,778,354			6,896,172			6,715,871
FDIC indemnification asset		—			9,030			16,475
Premises and equipment, net		231,656			196,676			131,336
Accrued interest receivable		79,536			69,098			66,605
Goodwill		655,523			584,634			588,464
Other intangible assets		44,237			35,308			40,996
Company-owned life insurance		350,193			341,294			337,802
Net deferred tax assets		179,448			109,984			127,622
Loan servicing rights		25,756			10,468			10,027
Assets held for sale		4,867			5,679			9,886
Other real estate owned and repossessed personal property		24,254			7,594			9,388
Other real estate owned - covered		—			4,904			4,753
Other assets		123,658			106,639			130,859
Total assets	$	14,420,262		$	11,991,527		$	12,074,404
Liabilities
Deposits:
Noninterest-bearing demand	$	2,883,917		$	2,488,855		$	2,557,665
Interest-bearing:
NOW		2,456,963			2,133,536			2,213,862
Savings		2,616,365			2,201,352			2,352,916
Money market		1,015,336			577,050			602,287
Time		1,479,021			1,000,067			1,082,840
Total deposits		10,451,602			8,400,860			8,809,570
Short-term borrowings		567,659			628,499			530,377
Other borrowings		1,367,896			1,291,747			1,067,993
Accrued expenses and other liabilities		221,988			179,251			209,741
Total liabilities		12,609,145			10,500,357			10,617,681
Shareholders’ Equity
Preferred stock, 2,000 shares authorized, no shares issued or outstanding		—			—			—
Common stock, $1.00 per share stated value, 300,000 shares authorized, 135,005; 114,297; and 115,205 shares issued and outstanding, respectively		135,005			114,297			115,205
Capital surplus		1,342,393			1,087,911			1,098,384
Retained earnings		357,336			323,759			281,196
Accumulated other comprehensive income (loss), net of tax		(23,617	)		(34,797	)		(38,062	)
Total shareholders’ equity		1,811,117			1,491,170			1,456,723
Total liabilities and shareholders’ equity	$	14,420,262		$	11,991,527		$	12,074,404

The accompanying notes to consolidated financial statements are an integral part of these statements.

3

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(dollars and shares in thousands, except per share data)	2016		2015			2016		2015
Interest Income
Loans including fees:
Taxable	$	86,527	$	76,579		$	158,099	$	151,538
Nontaxable		2,991		2,818			5,995		5,761
Investment securities:
Taxable		13,585		14,292			27,307		29,018
Nontaxable		7,119		6,267			14,101		12,227
Money market and other interest-earning investments		21		8			70		14
Total interest income		110,243		99,964			205,572		198,558
Interest Expense
Deposits		4,254		3,531			7,747		7,094
Short-term borrowings		410		112			592		208
Other borrowings		6,239		4,224			12,250		8,166
Total interest expense		10,903		7,867			20,589		15,468
Net interest income		99,340		92,097			184,983		183,090
Provision for loan losses		1,319		2,271			1,410		2,272
Net interest income after provision for loan losses		98,021		89,826			183,573		180,818
Noninterest Income
Wealth management fees		9,355		9,443			17,476		17,963
Service charges on deposit accounts		10,437		11,278			20,076		22,323
Debit card and ATM fees		4,471		7,075			8,256		13,807
Mortgage banking revenue		5,203		4,262			8,123		7,225
Insurance premiums and commissions		7,122		10,172			20,243		22,285
Investment product fees		4,724		4,719			8,629		9,122
Company-owned life insurance		2,080		2,193			4,118		4,345
Net securities gains		1,856		512			2,962		3,195
Recognition of deferred gain on sale leaseback transactions		1,038		1,468			2,090		2,992
Gain on sale of ONB Insurance Group, Inc.		41,864		—			41,864		—
Change in FDIC indemnification asset		888		(1,541	)		233		(2,509	)
Other income		4,347		5,398			8,766		9,526
Total noninterest income		93,385		54,979			142,836		110,274
Noninterest Expense
Salaries and employee benefits		62,715		59,248			119,687		128,942
Occupancy		13,568		14,141			26,412		28,434
Equipment		3,316		3,446			6,209		7,350
Marketing		5,111		3,678			7,597		5,914
Data processing		8,676		8,077			15,799		14,667
Communication		2,535		2,435			4,399		5,179
Professional fees		5,181		3,381			8,549		6,513
Loan expense		2,123		1,816			3,456		3,142
Supplies		598		581			1,181		1,265
FDIC assessment		2,030		1,972			3,949		3,857
Other real estate owned expense		2,099		476			2,523		1,637
Amortization of intangibles		3,365		2,977			6,012		6,058
Other expense		10,155		7,462			14,054		12,888
Total noninterest expense		121,472		109,690			219,827		225,846
Income before income taxes		69,934		35,115			106,582		65,246
Income tax expense		30,812		8,959			40,483		18,184
Net income	$	39,122	$	26,156		$	66,099	$	47,062
Net income per common share - basic	$	0.31	$	0.22		$	0.55	$	0.40
Net income per common share - diluted		0.31		0.22			0.55		0.40
Weighted average number of common shares outstanding - basic		127,508		115,732			120,753		117,128
Weighted average number of common shares outstanding - diluted		127,973		116,223			121,273		117,634
Dividends per common share	$	0.13	$	0.12		$	0.26	$	0.24

The accompanying notes to consolidated financial statements are an integral part of these statements.

4

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2016			2015			2016			2015
Net income	$	39,122		$	26,156		$	66,099		$	47,062
Other comprehensive income (loss):
Change in securities available-for-sale:
Unrealized holding gains (losses) for the period		12,671			(26,234	)		30,528			(7,928	)
Reclassification adjustment for securities gains realized in income		(1,856	)		(512	)		(2,962	)		(3,195	)
Income tax effect		(3,809	)		9,716			(9,977	)		3,920
Unrealized gains (losses) on available-for-sale securities		7,006			(17,030	)		17,589			(7,203	)
Change in securities held-to-maturity:
Amortization of fair value for securities held-to-maturity previously recognized into accumulated other comprehensive income		466			430			931			767
Income tax effect		(159	)		(147	)		(318	)		(81	)
Changes from securities held-to-maturity		307			283			613			686
Cash flow hedges:
Net unrealized derivative gains (losses) on cash flow hedges		(4,483	)		3,557			(15,613	)		(2,071	)
Reclassification adjustment for losses realized in net income		1,585			439			2,858			625
Income tax effect		1,101			(1,519	)		4,847			549
Changes from cash flow hedges		(1,797	)		2,477			(7,908	)		(897	)
Defined benefit pension plans:
Amortization of net loss recognized in income		730			725			1,430			1,463
Income tax effect		(278	)		(275	)		(544	)		(556	)
Changes from defined benefit pension plans		452			450			886			907
Other comprehensive income (loss), net of tax		5,968			(13,820	)		11,180			(6,507	)
Comprehensive income	$	45,090		$	12,336		$	77,279		$	40,555

The accompanying notes to consolidated financial statements are an integral part of these statements.

5

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)

(dollars in thousands)	Common Stock			Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance at December 31, 2014	$	116,847		$	1,118,292		$	262,180		$	(31,555	)	$	1,465,764
Net income		—			—			47,062			—			47,062
Other comprehensive loss		—			—			—			(6,507	)		(6,507	)
Acquisition - Founders Financial Corporation		3,402			47,224			—			—			50,626
Dividends - common stock		—			—			(28,065	)		—			(28,065	)
Common stock issued		14			178			—			—			192
Common stock repurchased		(5,385	)		(69,209	)		—			—			(74,594	)
Stock based compensation expense		—			2,236			—			—			2,236
Stock activity under incentive compensation plans		327			(337	)		19			—			9
Balance at June 30, 2015	$	115,205		$	1,098,384		$	281,196		$	(38,062	)	$	1,456,723
Balance at December 31, 2015	$	114,297		$	1,087,911		$	323,759		$	(34,797	)	$	1,491,170
Net income		—			—			66,099			—			66,099
Other comprehensive income		—			—			—			11,180			11,180
Acquisition - Anchor BanCorp Wisconsin, Inc.		20,415			253,150			—			—			273,565
Dividends - common stock		—			—			(32,391	)		—			(32,391	)
Common stock issued		17			185			—			—			202
Common stock repurchased		(120	)		(1,426	)		—			—			(1,546	)
Stock based compensation expense		—			3,391			—			—			3,391
Stock activity under incentive compensation plans		396			(818	)		(131	)		—			(553	)
Balance at June 30, 2016	$	135,005		$	1,342,393		$	357,336		$	(23,617	)	$	1,811,117

The accompanying notes to consolidated financial statements are an integral part of these statements.

6

OLD NATIONAL BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Six Months Ended June 30,
(dollars in thousands)	2016			2015
Cash Flows From Operating Activities
Net income	$	66,099		$	47,062
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation		7,462			7,790
Amortization of other intangible assets		6,012			6,058
Net premium amortization on investment securities		9,198			9,481
Amortization of and net gains on termination of FDIC indemnification asset		(458	)		2,509
Stock compensation expense		3,391			2,236
Provision for loan losses		1,410			2,272
Net securities gains		(2,962	)		(3,195	)
Recognition of deferred gain on sale leaseback transactions		(2,090	)		(2,992	)
Gain on sale of ONB Insurance Group, Inc.		(41,864	)		—
Net gains on sales of other assets		(2,689	)		(4,009	)
Increase in cash surrender value of company-owned life insurance		(1,621	)		(3,888	)
Residential real estate loans originated for sale		(238,184	)		(178,612	)
Proceeds from sale of residential real estate loans		219,854			180,336
Increase in interest receivable		(3,130	)		(4,379	)
Decrease in other real estate owned		6,487			2,895
(Increase) decrease in other assets		22,266			(17,320	)
Increase (decrease) in accrued expenses and other liabilities		6,345			(9,408	)
Total adjustments		(10,573	)		(10,226	)
Net cash flows provided by operating activities		55,526			36,836
Cash Flows From Investing Activities
Cash portion of bank purchase price, net of cash acquired		(62,532	)		(37,098	)
Proceeds from sale of ONB Insurance Group, Inc.		91,771			—
Purchases of investment securities available-for-sale		(799,597	)		(481,038	)
Purchases of investment securities held-to-maturity		—			(13,406	)
Purchases of Federal Home Loan Bank/Federal Reserve Bank stock		—			(7,394	)
Proceeds from maturities, prepayments, and calls of investment securities available-for-sale		721,414			401,579
Proceeds from sales of investment securities available-for-sale		107,451			196,584
Proceeds from maturities, prepayments, and calls of investment securities held-to-maturity		2,842			30,285
Proceeds from sales of investment securities held-to-maturity		—			855
Proceeds from sales of Federal Home Loan Bank/Federal Reserve Bank stock		—			8,710
Reimbursements under FDIC loss share agreements		10,000			2,231
Net principal collected from (loans made to) loan customers		(246,987	)		(108,498	)
Proceeds from sale of premises and equipment and other assets		5,707			7,093
Purchases of premises and equipment and other assets		(12,317	)		(10,713	)
Net cash flows used in investing activities		(182,248	)		(10,810	)
Cash Flows From Financing Activities
Net increase (decrease) in deposits and short-term borrowings:
Deposits		198,029			(57,750	)
Short-term borrowings		(63,972	)		(33,424	)
Payments for maturities on other borrowings		(575,588	)		(227,433	)
Proceeds from issuance of other borrowings		650,000			350,000
Cash dividends paid on common stock		(32,391	)		(28,065	)
Common stock repurchased		(1,546	)		(74,594	)
Proceeds from exercise of stock options, including tax benefit		90			298
Common stock issued		202			192
Net cash flows provided by (used in) financing activities		174,824			(70,776	)
Net increase (decrease) in cash and cash equivalents		48,102			(44,750	)
Cash and cash equivalents at beginning of period		219,818			239,963
Cash and cash equivalents at end of period	$	267,920		$	195,213
Supplemental cash flow information:
Total interest paid	$	19,824		$	15,384
Total taxes paid (net of refunds)	$	8,800		$	3,784

The accompanying notes to consolidated financial statements are an integral part of these statements.

7

OLD NATIONAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of Old National Bancorp and its wholly-owned affiliates (hereinafter collectively referred to as “Old National”) and have been prepared in conformity with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry. Such principles require management to make estimates and assumptions that affect the reported amounts of assets, liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements and amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, the consolidated financial statements contain all the normal and recurring adjustments necessary for a fair statement of the financial position of Old National as of June 30, 2016 and 2015, and December 31, 2015, and the results of its operations for the three and six months ended June 30, 2016 and 2015. Interim results do not necessarily represent annual results. These financial statements should be read in conjunction with Old National’s Annual Report for the year ended December 31, 2015.

All significant intercompany transactions and balances have been eliminated. Certain prior year amounts have been reclassified to conform to the 2016 presentation. Such reclassifications had no effect on net income or shareholders’ equity and were insignificant amounts.

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

FASB ASC 606 – In May 2014, the FASB issued an update (ASU No. 2014-09, Revenue from Contracts with Customers) creating FASB Topic 606, Revenue from Contracts with Customers. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides steps to follow to achieve the core principle. An entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 718 – In June 2014, the FASB issued an update (ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period). Generally, an award with a performance target also requires an employee to render service until the performance target is achieved. In some cases, however, the terms of an award may provide that the performance target could be achieved after an employee completes the requisite service period. The amendments in this update require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. An entity should apply guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period for which the service has already been rendered. The amendments in this update became effective for interim and annual periods beginning after December 15, 2015 and did not have a material impact on the consolidated financial statements.

FASB ASC 350 – In April 2015, the FASB issued an update (ASU No. 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement) impacting FASB ASC 350-40, Intangibles: Goodwill and Other: Internal- Use Software. This update is part of the FASB’s Simplification Initiative. The amendments in this update provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service

8

contract. The guidance will not change generally accepted accounting principles for a customer’s accounting for service contracts. The amendments in this update became effective for interim and annual periods beginning after December 15, 2015 and did not have a material impact on the consolidated financial statements.

FASB ASC 944 – In May 2015, the FASB issued an update (ASU No. 2015-09, Disclosures about Short-Duration Contracts). This update applies to all insurance entities that issue short-duration contracts as defined in Topic 944, Financial Services – Insurance. The amendment requires insurance entities to disclose for annual reporting periods information about the liability for unpaid claims and claim adjustment expenses, and information about significant changes in methodologies and assumptions used to calculate the liability for unpaid claims and claim adjustment expenses, including reasons for the change and the effects on the financial statements. Additionally, the amendments require insurance entities to disclose for annual and interim reporting periods a roll-forward of the liability for unpaid claims and claim adjustment expenses. The amendments in this update become effective for annual periods beginning after December 15, 2015, and interim periods within annual periods beginning after December 15, 2016. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 805 – In September 2015, the FASB issued an update (ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments). This update applies to all entities that have reported provisional amounts for items in a business combination for which the accounting is incomplete by the end of the reporting period in which the combination occurs and during the measurement period have an adjustment to provisional amounts recognized. The amendments in this update require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this update require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this update require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The amendments in this update became effective for interim and annual periods beginning after December 15, 2015 and did not have a material impact on the consolidated financial statements.

FASB ASC 825 – In January 2016, the FASB issued an update (ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities). The amendments in this update impact public business entities as follows: 1) Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. 2) Simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. 3) Eliminate the requirement to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. 4) Require entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. 5) Require an entity to present separately in other comprehensive income the portion of the total change in fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. 6) Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. 7) Clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 842 – In February 2016, the FASB issued its new lease accounting guidance in ASU No. 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases, with the exception of short-term leases, at the commencement date: a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new

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guidance, lessor accounting is largely unchanged. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2018. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, which is expected to have a material impact.

FASB ASC 405 – In March 2016, the FASB issued ASU No. 2016-04, Liabilities – Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products. The amendments of this ASU narrowly address breakage, which is the monetary amount of the card that ultimately is not redeemed by the cardholder for prepaid stored-value products that are redeemable for monetary values of goods or services but may also be redeemable for cash. Examples of prepaid stored-value products included in this amendment are prepaid gift cards issued by specific payment networks and redeemable at network-accepting merchant locations, prepaid telecommunication cards, and traveler’s checks. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 815 – In March 2016, the FASB issued ASU No. 2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. The amendments apply to all reporting entities for which there is a change in the counterparty to a derivative instrument that has been designated as a hedging instrument. The amendments clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require de-designation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

In March 2016, the FASB issued ASU No. 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments. The amendments apply to all entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options. Topic 815, Derivatives and Hedging, requires that embedded derivatives be separated from the host contract and accounted for separately as derivatives if certain criteria are met. One of those criteria is that the economic characteristics and risks of the embedded derivatives are not clearly and closely related to the economic characteristics and risks of the host contract. The amendments clarify what steps are required when assessing “clearly and closely related”. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 323 – In March 2016, the FASB issued ASU No. 2016-07, Investments - Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. The amendments affect all entities that have an investment that becomes qualified for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence. The amendments eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The amendments also require that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 606 – In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments relate

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to when another party, along with the entity, is involved in providing a good or service to a customer. Topic 606, Revenue from Contracts with Customers, requires an entity to determine whether the nature of its promise is to provide that good or service to the customer (that is, the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (that is, the entity is an agent). This determination is based upon whether the entity controls the good or the service before it is transferred to the customer. Topic 606 includes indicators to assist in this evaluation. The amendments in this update affect the guidance in ASU No. 2014-09 above, which is not yet effective. The effective date will be the same as the effective date of ASU No. 2014-09. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: identifying performance obligations, and the licensing implementation guidance. Before an entity can identify its performance obligations in a contract with a customer, the entity first identifies the promised goods or services in the contract. The amendments in this update are expected to reduce the cost and complexity of applying the guidance on identifying promised goods or services. To identify performance obligations in a contract, an entity evaluates whether promised goods and services are distinct. Topic 606 includes two criteria for assessing whether promises to transfer goods or services are distinct. One of those criteria is that the promises are separately identifiable. This update will improve the guidance on assessing that criterion. Topic 606 also includes implementation guidance on determining whether as entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property, which is satisfied at a point in time, or a right to access the entity’s intellectual property, which is satisfied over time. The amendments in this update are intended to improve the operability and understandability of the licensing implementation guidance. The amendments in this update affect the guidance in ASU No. 2014-09 above, which is not yet effective. The effective date will be the same as the effective date of ASU No. 2014-09. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The amendments do not change the core revenue recognition principle in Topic 606. The amendments provide clarifying guidance in certain narrow areas and add some practical expedients.

FASB ASC 718 – In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Shared-Based Payment Accounting. The amendments are intended to improve the accounting for employee shared-based payments and affects all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including the income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 326 – In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The main objective of this amendment is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendment requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to enhance their credit loss estimates. The amendment requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2019. Early adoption will be permitted beginning after December 15, 2018. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements.

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NOTE 3 – ACQUISITION AND DIVESTITURE ACTIVITY

Acquisitions

Founders Financial Corporation

On July 28, 2014, Old National announced that it had entered into an agreement to acquire Grand Rapids, Michigan-based Founders Financial Corporation (“Founders”) through a stock and cash merger. The acquisition was completed effective January 1, 2015 (the “Closing Date”). Founders was a bank holding company with Founders Bank & Trust as its wholly-owned subsidiary and operated four full-service banking centers in Kent County. Old National believes that it will be able to achieve cost savings by integrating the two companies and combining accounting, data processing, retail and lending support, and other administrative functions after the merger, which will enable Old National to achieve economies of scale in these areas.

The total purchase price for Founders was $91.7 million, consisting of $41.0 million of cash and the issuance of 3.4 million shares of Old National Common Stock valued at $50.6 million. This acquisition was accounted for under the acquisition method of accounting. Accordingly, the Company recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values. Through December 31, 2015, transaction and integration costs of $4.9 million associated with the acquisition had been expensed.

As of December 31, 2015, the Company finalized its valuation of all assets and liabilities acquired, resulting in no material change to purchase accounting adjustments. A summary of the final purchase price allocation is as follows (in thousands):

Cash and cash equivalents	$	3,978
Investment securities		75,383
Federal Home Loan Bank stock		1,810
Loans held for sale		3,473
Loans		339,569
Premises and equipment		3,604
Accrued interest receivable		1,260
Other real estate owned		674
Company-owned life insurance		8,297
Other assets		8,804
Deposits		(376,656	)
Other borrowings		(39,380	)
Accrued expenses and other liabilities		(1,307	)
Net tangible assets acquired		29,509
Definite-lived intangible assets acquired		5,515
Loan servicing rights		664
Goodwill		56,014
Purchase price	$	91,702

The portion of the purchase price allocated to goodwill will not be deductible for tax purposes.

The components of the estimated fair value of the acquired identifiable intangible assets are in the table below. These intangible assets will be amortized on an accelerated basis over their estimated lives.

	Estimated Fair Value (in millions)		Estimated Useful Lives (Years)
Core deposit intangible	$	2.9		7
Trust customer relationship intangible	$	2.6		12

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Acquired loan data for Founders can be found in the table below:

(in thousands)	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
Acquired receivables subject to ASC 310-30	$	6,607	$	11,103	$	2,684
Acquired receivables not subject to ASC 310-30	$	332,962	$	439,031	$	61,113

Anchor BanCorp Wisconsin Inc.

On January 12, 2016, Old National announced that it had entered into an agreement to acquire Madison, Wisconsin-based Anchor BanCorp Wisconsin Inc. (“Anchor”) through a stock and cash merger. The acquisition was completed effective May 1, 2016 (the “Closing Date”). Anchor was a savings and loan holding company with AnchorBank, fsb (“AnchorBank”) as its wholly-owned subsidiary. AnchorBank operated 46 banking centers, including 32 banking centers in the Madison, Milwaukee and Fox Valley triangle. Old National believes that it will be able to achieve cost savings by integrating the two companies and combining accounting, data processing, retail and lending support, and other administrative functions after the merger, which will enable Old National to achieve economies of scale in these areas.

Pursuant to the merger agreement, shareholders of Anchor could elect to receive either 3.5505 shares of Old National common stock or $48.50 in cash for each share of Anchor they held, subject to a maximum of 40% of the purchase price in cash. The total purchase price for Anchor was $459.8 million, consisting of $186.2 million of cash and the issuance of 20.4 million shares of Old National Common Stock valued at $273.6 million. This acquisition was accounted for under the acquisition method of accounting. Accordingly, the Company recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values. Through June 30, 2016, transaction and integration costs of $8.6 million associated with the acquisition have been expensed and remaining integration costs will be expensed in future periods as incurred.

Under the acquisition method of accounting, the total estimated purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of acquisition. Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on assumptions that are subject to change, the purchase price for the Anchor acquisition is allocated as follows (in thousands):

Cash and cash equivalents	$	123,657
Investment securities		235,240
Federal Home Loan Bank stock		4,596
Loans held for sale		9,334
Loans		1,636,605
Premises and equipment		35,721
Accrued interest receivable		7,308
Other real estate owned		18,243
Company-owned life insurance		7,278
Other assets		126,013
Deposits		(1,852,713	)
Other borrowings		(3,255	)
Accrued expenses and other liabilities		(36,958	)
Net tangible assets acquired		311,069
Definite-lived intangible assets acquired		21,559
Loan servicing rights		15,274
Goodwill		111,852
Purchase price	$	459,754

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Prior to the end of the one year measurement period for finalizing the purchase price allocation, if information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation in the reporting period in which the adjustment amounts are determined.

The portion of the purchase price allocated to goodwill will not be deductible for tax purposes.

The estimated fair value of the core deposit intangible is $21.6 million and will be amortized over an estimated useful life of 7 years.

Acquired loan data for Anchor can be found in the table below:

(in thousands)	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
Acquired receivables subject to ASC 310-30	$	20,174	$	29,544	$	6,153
Acquired receivables not subject to ASC 310-30	$	1,616,431	$	2,143,532	$	274,155

Summary of Unaudited Pro-forma Information

The unaudited pro-forma information below for the periods ended June 30, 2016 and 2015 gives effect to the Anchor acquisition as if it had occurred on January 1, 2015. The pro-forma financial information is not necessarily indicative of the results of operations if the acquisition had been effective as of this date.

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2016		2015		2016		2015
Revenue (1)	$	203,355	$	174,238	$	370,352	$	346,322
Income before income taxes	$	82,343	$	32,437	$	135,958	$	67,354

(1) Net interest income plus noninterest income.

2016 supplemental pro-forma earnings were adjusted to exclude $7.2 million and $8.6 million of acquisition-related costs incurred during the three and six months ended June 30, 2016, respectively. 2015 supplemental pro-forma earnings were adjusted to include these charges.

Insurance Acquisitions

Effective February 1, 2015, Old National acquired certain assets from Mutual Underwriters Insurance (“Mutual Underwriters”). The total purchase price of the assets was $3.7 million, consisting of $2.6 million of customer business relationship intangibles and $1.1 million of goodwill. The customer business relationship intangibles were originally scheduled to be amortized using an accelerated method over an estimated useful life of 10 years.

On May 8, 2015, the Company issued cash consideration of $0.1 million to purchase a book of business. The acquisition terms call for further cash consideration of approximately $0.1 million if certain operating targets are met. The fair value of these payments was booked at acquisition and added $0.2 million of customer business relationships intangibles. The customer business relationship intangibles were originally scheduled to be amortized using an accelerated method over an estimated useful life of 10 years.

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Divestitures

On August 14, 2015, the Company completed its previously announced branch sales. The Company divested its southern Illinois region (twelve branches) along with four branches in eastern Indiana and one in Ohio. At closing, the purchasers assumed loans of $193.6 million and deposits of $555.8 million. The Company recorded a net pre-tax gain of $15.6 million in connection with the divestitures, which included a deposit premium of $19.3 million, goodwill allocation of $3.8 million, and $0.9 million of other transaction expenses.

In addition, the Company consolidated 23 branches throughout the Old National franchise during 2015 based on an ongoing assessment of our service and delivery network and on our goal to continue to move our franchise into stronger growth markets.

On May 31, 2016 the Company completed its previously announced sale of its insurance operations, ONB Insurance Group, Inc. (“ONI”). The Company received approximately $91.8 million in cash resulting in a pre-tax gain of $41.9 million and an after-tax gain of $17.6 million. See Note 17 to the consolidated financial statements for further details on the income tax impact of this sale. Goodwill and intangible assets of approximately $47.5 million were eliminated as part of this transaction. ONI was an ancillary business and did not meet the criteria to be treated as a discontinued operation as defined in Accounting Standards Update 2014-08 “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”.

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NOTE 4 - NET INCOME PER SHARE

The following table reconciles basic and diluted net income per share for the three and six months ended June 30, 2016 and 2015:

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars and shares in thousands, except per share data)	2016		2015		2016		2015
Basic Earnings Per Share
Net income	$	39,122	$	26,156	$	66,099	$	47,062
Weighted average common shares outstanding		127,508		115,732		120,753		117,128
Basic Earnings Per Share	$	0.31	$	0.22	$	0.55	$	0.40
Diluted Earnings Per Share
Net income	$	39,122	$	26,156	$	66,099	$	47,062
Weighted average common shares outstanding		127,508		115,732		120,753		117,128
Effect of dilutive securities:
Restricted stock (1)		425		397		480		409
Stock options (2)		40		94		40		97
Weighted average shares outstanding		127,973		116,223		121,273		117,634
Diluted Earnings Per Share	$	0.31	$	0.22	$	0.55	$	0.40

(1) 0.1 million shares of restricted stock and restricted stock units at June 30, 2016 were not included in the computation of net income per diluted share for the three months ended June 30, 2016 because the effect would be antidilutive. 0.2 million shares of restricted stock and restricted stock units at June 30, 2016 were not included in the computation of net income per diluted share for the six months ended June 30, 2016 because the effect would be antidilutive. There were no antidilutive shares excluded from the computation of net income for the three or six months ended June 30, 2015.

(2) Options to purchase 0.8 million shares and 0.9 million shares outstanding at June 30, 2016 and 2015, respectively, were not included in the computation of net income per diluted share for the three months ended June 30, 2016 and 2015, respectively, because the exercise price of these options was greater than the average market price of the common shares and, therefore, the effect would be antidilutive. Options to purchase 0.8 million shares and 0.9 million shares outstanding at June 30, 2016 and 2015, respectively, were not included in the computation of net income per diluted share for the six months ended June 30, 2016 and 2015, respectively, because the exercise price of these options was greater than the average market price of the common shares and, therefore, the effect would be antidilutive.

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NOTE 5 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes within each classification of accumulated other comprehensive income (loss) (“AOCI”) net of tax for the three and six months ended June 30, 2016 and 2015:

(dollars in thousands)	Unrealized Gains and Losses on Available-for-Sale Securities			Unrealized Gains and Losses  on Held-to-Maturity Securities			Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Plans			Total
Three Months Ended June 30, 2016
Balance at April 1, 2016	$	6,777		$	(14,174	)	$	(15,387	)	$	(6,801	)	$	(29,585	)
Other comprehensive income (loss) before reclassifications		8,208			—			(2,780	)		—			5,428
Amounts reclassified from accumulated other comprehensive income (loss) (a)		(1,202	)		307			983			452			540
Net other comprehensive income (loss)		7,006			307			(1,797	)		452			5,968
Balance at June 30, 2016	$	13,783		$	(13,867	)	$	(17,184	)	$	(6,349	)	$	(23,617	)
Three Months Ended June 30, 2015
Balance at April 1, 2015	$	9,079		$	(15,373	)	$	(9,309	)	$	(8,639	)	$	(24,242	)
Other comprehensive income (loss) before reclassifications		(16,704	)		—			2,205			—			(14,499	)
Amounts reclassified from accumulated other comprehensive income (loss) (a)		(326	)		283			272			450			679
Net other comprehensive income (loss)		(17,030	)		283			2,477			450			(13,820	)
Balance at June 30, 2015	$	(7,951	)	$	(15,090	)	$	(6,832	)	$	(8,189	)	$	(38,062	)
Six Months Ended June 30, 2016
Balance at January 1, 2016	$	(3,806	)	$	(14,480	)	$	(9,276	)	$	(7,235	)	$	(34,797	)
Other comprehensive income (loss) before reclassifications		19,490			—			(9,680	)		—			9,810
Amounts reclassified from accumulated other comprehensive income (loss) (a)		(1,901	)		613			1,772			886			1,370
Net other comprehensive income (loss)		17,589			613			(7,908	)		886			11,180
Balance at June 30, 2016	$	13,783		$	(13,867	)	$	(17,184	)	$	(6,349	)	$	(23,617	)
Six Months Ended June 30, 2015
Balance at January 1, 2015	$	(748	)	$	(15,776	)	$	(5,935	)	$	(9,096	)	$	(31,555	)
Other comprehensive income (loss) before reclassifications		(5,189	)		—			(1,284	)		—			(6,473	)
Amounts reclassified from accumulated other comprehensive income (loss) (a)		(2,014	)		686			387			907			(34	)
Net other comprehensive income (loss)		(7,203	)		686			(897	)		907			(6,507	)
Balance at June 30, 2015	$	(7,951	)	$	(15,090	)	$	(6,832	)	$	(8,189	)	$	(38,062	)

(a) See table below for details about reclassifications.

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The following table summarize the significant amounts reclassified out of each component of AOCI for the three months ended June 30, 2016 and 2015:

Details about AOCI Components	Amount Reclassified from AOCI						Affected Line Item in the Statement of Income
	Three Months Ended June 30,
(dollars in thousands)	2016			2015
Unrealized gains and losses on available-for-sale securities	$	1,856		$	512		Net securities gains
		(654	)		(186	)	Income tax (expense) benefit
	$	1,202		$	326		Net income
Unrealized gains and losses on held-to-maturity securities	$	(466	)	$	(430	)	Interest income/(expense)
		159			147		Income tax (expense) benefit
	$	(307	)	$	(283	)	Net income
Gains and losses on cash flow hedges Interest rate contracts	$	(1,585	)	$	(439	)	Interest income/(expense)
		602			167		Income tax (expense) benefit
	$	(983	)	$	(272	)	Net income
Amortization of defined benefit pension items
Actuarial gains/(losses)	$	(730	)	$	(725	)	Salaries and employee benefits
		278			275		Income tax (expense) benefit
	$	(452	)	$	(450	)	Net income
Total reclassifications for the period	$	(540	)	$	(679	)	Net income

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The following table summarize the significant amounts reclassified out of each component of AOCI for the six months ended June 30, 2016 and 2015:

Details about AOCI Components	Amount Reclassified from AOCI						Affected Line Item in the Statement of Income
	Six Months Ended June 30,
(dollars in thousands)	2016			2015
Unrealized gains and losses on available-for-sale securities	$	2,962		$	3,195		Net securities gains
		(1,061	)		(1,181	)	Income tax (expense) benefit
	$	1,901		$	2,014		Net income
Unrealized gains and losses on held-to-maturity securities	$	(931	)	$	(767	)	Interest income/(expense)
		318			81		Income tax (expense) benefit
	$	(613	)	$	(686	)	Net income
Gains and losses on cash flow hedges Interest rate contracts	$	(2,858	)	$	(625	)	Interest income/(expense)
		1,086			238		Income tax (expense) benefit
	$	(1,772	)	$	(387	)	Net income
Amortization of defined benefit pension items
Actuarial gains/(losses)	$	(1,430	)	$	(1,463	)	Salaries and employee benefits
		544			556		Income tax (expense) benefit
	$	(886	)	$	(907	)	Net income
Total reclassifications for the period	$	(1,370	)	$	34		Net income

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NOTE 6 - INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair value of the available-for-sale and held-to-maturity investment securities portfolio at June 30, 2016 and December 31, 2015 and the corresponding amounts of unrealized gains and losses therein:

	Amortized		Unrealized		Unrealized			Fair
(dollars in thousands)	Cost		Gains		Losses			Value
June 30, 2016
Available-for-Sale
U.S. Treasury	$	11,963	$	306	$	—		$	12,269
U.S. government-sponsored entities and agencies		537,728		3,264		(217	)		540,775
Mortgage-backed securities - Agency		1,323,606		15,180		(2,181	)		1,336,605
States and political subdivisions		398,727		18,579		(143	)		417,163
Pooled trust preferred securities		17,059		—		(10,339	)		6,720
Other securities		338,094		3,559		(6,284	)		335,369
Total available-for-sale securities	$	2,627,177	$	40,888	$	(19,164	)	$	2,648,901
Held-to-Maturity
U.S. government-sponsored entities and agencies	$	141,220	$	1,928	$	—		$	143,148
Mortgage-backed securities - Agency		13,200		523		—			13,723
States and political subdivisions		711,537		71,447		—			782,984
Total held-to-maturity securities	$	865,957	$	73,898	$	—		$	939,855
December 31, 2015
Available-for-Sale
U.S. Treasury	$	11,968	$	190	$	(8	)	$	12,150
U.S. government-sponsored entities and agencies		615,578		1,495		(3,523	)		613,550
Mortgage-backed securities - Agency		1,065,936		10,970		(10,545	)		1,066,361
States and political subdivisions		375,671		11,960		(335	)		387,296
Pooled trust preferred securities		17,320		—		(9,420	)		7,900
Other securities		337,590		1,151		(7,777	)		330,964
Total available-for-sale securities	$	2,424,063	$	25,766	$	(31,608	)	$	2,418,221
Held-to-Maturity
U.S. government-sponsored entities and agencies	$	142,864	$	2,899	$	—		$	145,763
Mortgage-backed securities - Agency		16,042		562		—			16,604
States and political subdivisions		713,205		53,848		(3	)		767,050
Total held-to-maturity securities	$	872,111	$	57,309	$	(3	)	$	929,417

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Proceeds from sales or calls of available-for-sale investment securities, the resulting realized gains and realized losses, and other securities gains or losses were as follows for the three and six months ended June 30, 2016 and 2015:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(dollars in thousands)	2016			2015			2016			2015
Proceeds from sales of available-for-sale securities	$	30,801		$	26,319		$	107,451		$	196,584
Proceeds from calls of available-for-sale securities		239,998			161,408			364,309			213,002
Total	$	270,799		$	187,727		$	471,760		$	409,586
Realized gains on sales of available-for-sale securities	$	1,491		$	316		$	3,151		$	2,797
Realized gains on calls of available-for-sale securities		126			212			370			380
Realized losses on sales of available-for-sale securities		(1	)		(22	)		(447	)		(47	)
Realized losses on calls of available-for-sale securities		(1	)		(12	)		(88	)		(15	)
Other securities gains (losses) (1)		241			18			(24	)		80
Net securities gains	$	1,856		$	512		$	2,962		$	3,195

(1) Other securities gains (losses) includes net realized gains or losses associated with trading securities and mutual funds.

During the six months ended June 30, 2015, the Company sold a municipal bond that was classified as held-to-maturity due to credit deterioration. Proceeds from the sale were $0.8 million and resulted in a gain of $52 thousand.

Trading securities, which consist of mutual funds held in trusts associated with deferred compensation plans for former directors and executives, are recorded at fair value and totaled $4.8 million at June 30, 2016 and $3.9 million at December 31, 2015.

All of the mortgage-backed securities in the investment portfolio are residential mortgage-backed securities. The amortized cost and fair value of the investment securities portfolio are shown by expected maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Weighted average yield is based on amortized cost.

	At June 30, 2016
(dollars in thousands)					Weighted
	Amortized		Fair		Average
Maturity	Cost		Value		Yield
Available-for-Sale
Within one year	$	36,566	$	36,649		1.54	%
One to five years		400,424		405,665		2.00
Five to ten years		339,108		344,653		2.68
Beyond ten years		1,851,079		1,861,934		2.34
Total	$	2,627,177	$	2,648,901		2.32	%
Held-to-Maturity
Within one year	$	15,011	$	15,075		5.57	%
One to five years		49,934		52,935		4.53
Five to ten years		220,589		231,585		3.79
Beyond ten years		580,423		640,260		5.49
Total	$	865,957	$	939,855		5.00	%

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The following table summarizes the investment securities with unrealized losses at June 30, 2016 and December 31, 2015 by aggregated major security type and length of time in a continuous unrealized loss position:

	Less than 12 months					12 months or longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
June 30, 2016
Available-for-Sale
U.S. government-sponsored entities and agencies	$	91,640	$	(217	)	$	—	$	—		$	91,640	$	(217	)
Mortgage-backed securities - Agency		156,600		(281	)		104,843		(1,900	)		261,443		(2,181	)
States and political subdivisions		1,064		(3	)		5,692		(140	)		6,756		(143	)
Pooled trust preferred securities		—		—			6,720		(10,339	)		6,720		(10,339	)
Other securities		54,406		(877	)		118,291		(5,407	)		172,697		(6,284	)
Total available-for-sale	$	303,710	$	(1,378	)	$	235,546	$	(17,786	)	$	539,256	$	(19,164	)
December 31, 2015
Available-for-Sale
U.S. Treasury	$	6,505	$	(8	)	$	—	$	—		$	6,505	$	(8	)
U.S. government-sponsored entities and agencies		160,751		(1,492	)		122,581		(2,031	)		283,332		(3,523	)
Mortgage-backed securities - Agency		256,359		(3,444	)		239,047		(7,101	)		495,406		(10,545	)
States and political subdivisions		38,373		(161	)		5,137		(174	)		43,510		(335	)
Pooled trust preferred securities		—		—			7,900		(9,420	)		7,900		(9,420	)
Other securities		156,604		(2,717	)		126,661		(5,060	)		283,265		(7,777	)
Total available-for-sale	$	618,592	$	(7,822	)	$	501,326	$	(23,786	)	$	1,119,918	$	(31,608	)
Held-to-Maturity
States and political subdivisions	$	2,026	$	(3	)	$	—	$	—		$	2,026	$	(3	)
Total held-to-maturity	$	2,026	$	(3	)	$	—	$	—		$	2,026	$	(3	)

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities classified as available-for-sale or held-to-maturity are generally evaluated for OTTI under FASB ASC 320 (SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities). However, certain purchased beneficial interests, including non-agency mortgage-backed securities, asset-backed securities, and collateralized debt obligations, that had credit ratings at the time of purchase of below AA are evaluated using the model outlined in FASB ASC 325-10 (EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests that Continue to be Held by a Transfer in Securitized Financial Assets).

In determining OTTI under the FASB ASC 320 (SFAS No. 115) model, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time. The second segment of the portfolio uses the OTTI guidance provided by FASB ASC 325-10 (EITF 99-20) that is specific to purchased beneficial interests that, on the purchase date, were rated below AA. Under the FASB ASC 325-10 model, we compare the present value of the remaining cash flows as estimated at the preceding evaluation date to the current expected remaining cash flows. An OTTI is deemed to have occurred if there has been an adverse change in the remaining expected future cash flows.

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When other-than-temporary impairment occurs under either model, the amount of the other-than-temporary impairment recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary impairment shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. Otherwise, the other-than-temporary impairment shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total other-than-temporary impairment related to other factors shall be recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the other-than-temporary impairment recognized in earnings shall become the new amortized cost basis of the investment.

We did not record other-than-temporary-impairments during the six months ended June 30, 2016 or 2015.

As of June 30, 2016, Old National’s securities portfolio consisted of 1,758 securities, 94 of which were in an unrealized loss position. The unrealized losses attributable to our U.S. government-sponsored entities and agencies, our agency mortgage-backed securities, and our other securities are the result of fluctuations in interest rates. Our pooled trust preferred securities are discussed below.

Pooled Trust Preferred Securities

At June 30, 2016, our securities portfolio contained three pooled trust preferred securities with a fair value of $6.7 million and unrealized losses of $10.3 million. One of the pooled trust preferred securities in our portfolio falls within the scope of FASB ASC 325-10 (EITF 99-20) and has a fair value of $0.2 million with an unrealized loss of $3.0 million at June 30, 2016. This security was rated A3 at inception, but is rated D at June 30, 2016. The issuers in this security are banks. We use the OTTI evaluation model to compare the present value of expected cash flows to the previous estimate to determine whether an adverse change in cash flows has occurred during the quarter. The OTTI model considers the structure and term of the collateralized debt obligation (“CDO”) and the financial condition of the underlying issuers. Specifically, the model details interest rates, principal balances of note classes and underlying issuers, the timing and amount of interest and principal payments of the underlying issuers, and the allocation of the payments to the note classes. The current estimate of expected cash flows is based on the most recent trustee reports and any other relevant market information including announcements of interest payment deferrals or defaults of underlying trust preferred securities. Assumptions used in the model include expected future default rates and prepayments. We assume no recoveries on defaults and a limited number of recoveries on current or projected interest payment deferrals. In addition, we use the model to “stress” this CDO, or make assumptions more severe than expected activity, to determine the degree to which assumptions could deteriorate before the CDO could no longer fully support repayment of Old National’s note class. For the six months ended June 30, 2016 and 2015, our model indicated no other-than-temporary-impairment losses on this security. At June 30, 2016, we had no intent to sell any securities that were in an unrealized loss position nor is it expected that we would be required to sell any securities.

Two of our pooled trust preferred securities with a fair value of $6.5 million and unrealized losses of $7.4 million at June 30, 2016 are not subject to FASB ASC 325-10. These securities are evaluated using collateral-specific assumptions to estimate the expected future interest and principal cash flows. For the six months ended June 30, 2016 and 2015, our analysis indicated no OTTI on these securities.

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The table below summarizes the relevant characteristics of our pooled trust preferred securities as well as our single issuer trust preferred securities that are included in the “other securities” category in this footnote. Each of the pooled trust preferred securities support a more senior tranche of security holders. All three pooled trust preferred securities have experienced credit defaults. However, two of these securities have excess subordination and are not other-than-temporarily-impaired as a result of their class hierarchy, which provides more loss protection.

																Actual			Expected			Excess
																Deferrals			Defaults as			Subordination
														# of Issuers		and Defaults			a % of			as a % of
Trust preferred securities			Lowest						Unrealized			Realized		Currently		as a % of			Remaining			Current
June 30, 2016			Credit		Amortized		Fair		Gain/			Losses		Performing/		Original			Performing			Performing
(dollars in thousands)	Class		Rating (1)		Cost		Value		(Loss)			2016		Remaining		Collateral			Collateral			Collateral
Pooled trust preferred securities:
Reg Div Funding 2004		B-2		D	$	3,168	$	204	$	(2,964	)	$	—		23/39		33.3	%		7.4	%		0.0	%
Pretsl XXVII LTD		B		B		4,422		2,017		(2,405	)		—		33/43		18.9	%		4.2	%		49.4	%
Trapeza Ser 13A		A2A		BBB		9,469		4,499		(4,970	)		—		50/57		8.9	%		4.9	%		43.1	%
						17,059		6,720		(10,339	)		—
Single Issuer trust preferred securities:
Fleet Cap Tr V (BOA)				BB+		3,393		2,835		(558	)		—
JP Morgan Chase Cap XIII				BBB-		4,762		4,000		(762	)		—
NB-Global				BB+		777		810		33			—
Chase Cap II				BBB-		815		840		25			—
						9,747		8,485		(1,262	)		—
Total					$	26,806	$	15,205	$	(11,601	)	$	—

(1) Lowest rating for the security provided by any nationally recognized credit rating agency.

NOTE 7 - LOANS HELD FOR SALE

Mortgage loans held for immediate sale in the secondary market were $44.4 million at June 30, 2016, compared to $13.8 million at December 31, 2015. Residential loans that Old National has originated with the intent to sell are recorded at fair value in accordance with FASB ASC 825-10 (SFAS No. 159 – The Fair Value Option for Financial Assets and Financial Liabilities). Beginning with the inception of an in-house servicing unit in the third quarter of 2014, conventional mortgage production is sold on a servicing retained basis. Certain loans, such as government guaranteed mortgage loans are sold on servicing released basis.

During the fourth quarter of 2014, $197.9 million of loans were reclassified to loans held for sale at the lower of cost or fair value. When the branch divestitures closed during the third quarter of 2015, these loans were valued at $193.6 million, resulting in a gain of $0.1 million. At June 30, 2016, there were no loans held for sale under this arrangement.

NOTE 8 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

Old National’s finance receivables consist primarily of loans made to consumers and commercial clients in various industries including manufacturing, agribusiness, transportation, mining, wholesaling, and retailing. Most of Old National’s lending activity occurs within our principal geographic markets of Indiana, Kentucky, Michigan, and Wisconsin. Old National has no concentration of commercial or commercial real estate loans in any single industry exceeding 10% of its portfolio.

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The composition of loans by lending classification was as follows:

	June 30,			December 31,
(dollars in thousands)	2016			2015
Commercial (1)	$	1,893,700		$	1,804,615
Commercial real estate:
Construction		263,496			185,449
Other		2,680,029			1,662,372
Residential real estate		2,099,770			1,644,614
Consumer credit:
Heloc		473,550			359,954
Auto		1,145,198			1,050,336
Other		274,415			133,478
Covered loans		—			107,587
Total loans		8,830,158			6,948,405
Allowance for loan losses		(51,804	)		(51,296	)
Allowance for loan losses - covered loans		—			(937	)
Net loans	$	8,778,354		$	6,896,172

(1) Includes direct finance leases of $12.7 million at June 30, 2016 and $14.4 million at December 31, 2015.

The risk characteristics of each loan portfolio segment are as follows:

Commercial

Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate

These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The properties securing Old National’s commercial real estate portfolio are diverse in terms of type and geographic location. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

Included with commercial real estate are construction loans, which are underwritten utilizing independent appraisal reviews, sensitivity analysis of absorption and lease rates, financial analysis of the developers and property owners, and feasibility studies, if available. Construction loans are generally based on estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from Old National until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions, and the availability of long-term financing.

25

Residential

With respect to residential loans that are secured by 1-4 family residences and are generally owner occupied, Old National typically establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in residential property values. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Consumer

Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. We assumed student loans in the acquisition of Anchor in May 2016. As of June 30, 2016, student loans totaled $83.3 million and are guaranteed by the government on average from 97% to 100%. Some consumer loans are unsecured such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in residential property or other collateral values. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Covered loans

Old National entered into an agreement with the FDIC on June 22, 2016 to terminate its loss share agreements. As a result of the termination of the loss share agreements, the remaining loans that were covered by the loss share arrangements were reclassified to noncovered loans effective June 22, 2016. All future gains and losses associated with covered loans will be recognized entirely by Old National.

Prior to the termination of the loss share agreements, certain loans acquired from the FDIC were classified as covered loans. Covered loans were subject to loss share agreements whereby Old National was indemnified against 80% of losses up to $275.0 million, losses in excess of $275.0 million up to $467.2 million at 0% reimbursement, and 80% of losses in excess of $467.2 million. See Note 9 to the consolidated financial statements for further details on our covered loans.

Allowance for loan losses

The allowance for loan losses is maintained at a level believed adequate by management to absorb probable losses incurred in the consolidated loan portfolio. Management’s evaluation of the adequacy of the allowance is an estimate based on reviews of individual loans, pools of homogeneous loans, assessments of the impact of current and anticipated economic conditions on the portfolio, and historical loss experience. The allowance is increased through a provision charged to operating expense. Loans deemed to be uncollectible are charged to the allowance. Recoveries of loans previously charged-off are added to the allowance.

We utilize a probability of default (“PD”) and loss given default (“LGD”) model as a tool to determine the adequacy of the allowance for loan losses for performing commercial and commercial real estate loans. The PD is forecast using a transition matrix to determine the likelihood of a customer’s asset quality rating (“AQR”) migrating from its current AQR to any other status within the time horizon. Transition rates are measured using Old National’s own historical experience. The model assumes that recent historical transition rates will continue into the future. The LGD is defined as credit loss incurred when an obligor of the bank defaults. The sum of all net charge-offs for a particular portfolio segment are divided by all loans that have defaulted over a given period of time. The expected loss derived from the model considers the PD, LGD, and exposure at default. Additionally, qualitative factors, such as changes in lending policies or procedures, and economic business conditions are also considered.

We use historic loss ratios adjusted for economic conditions to determine the appropriate level of allowance for residential real estate and consumer loans.

No allowance was brought forward on any of the acquired loans as any credit deterioration evident in the loans was included in the determination of the fair value of the loans at the acquisition date. An allowance for loan losses will be established for any subsequent credit deterioration or adverse changes in expected cash flows.

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Old National’s activity in the allowance for loan losses for the three and six months ended June 30, 2016 and 2015 is as follows:

				Commercial
(dollars in thousands)	Commercial			Real Estate			Residential			Consumer			Unallocated		Total
Three Months Ended June 30, 2016
Balance at April 1, 2016	$	25,121		$	15,771		$	1,749		$	8,059		$	—	$	50,700
Charge-offs		(432	)		(783	)		(80	)		(1,382	)		—		(2,677	)
Recoveries		876			547			187			852			—		2,462
Provision		(1,409	)		2,673			(397	)		452			—		1,319
Balance at June 30, 2016	$	24,156		$	18,208		$	1,459		$	7,981		$	—	$	51,804
Three Months Ended June 30, 2015
Balance at April 1, 2015	$	24,703		$	13,807		$	2,919		$	7,449		$	—	$	48,878
Charge-offs		(1,872	)		(514	)		(22	)		(1,494	)		—		(3,902	)
Recoveries		789			1,009			59			1,087			—		2,944
Provision		(186	)		2,023			(375	)		809			—		2,271
Balance at June 30, 2015	$	23,434		$	16,325		$	2,581		$	7,851		$	—	$	50,191
Six Months Ended June 30, 2016
Balance at January 1, 2016	$	26,347		$	15,993		$	2,051		$	7,842		$	—	$	52,233
Charge-offs		(1,959	)		(1,062	)		(220	)		(3,378	)		—		(6,619	)
Recoveries		1,694			1,387			213			1,486			—		4,780
Provision		(1,926	)		1,890			(585	)		2,031			—		1,410
Balance at June 30, 2016	$	24,156		$	18,208		$	1,459		$	7,981		$	—	$	51,804
Six Months Ended June 30, 2015
Balance at January 1, 2015	$	20,670		$	17,348		$	2,962		$	6,869		$	—	$	47,849
Charge-offs		(2,421	)		(101	)		(396	)		(3,098	)		—		(6,016	)
Recoveries		2,564			1,473			87			1,962			—		6,086
Provision		2,621			(2,395	)		(72	)		2,118			—		2,272
Balance at June 30, 2015	$	23,434		$	16,325		$	2,581		$	7,851		$	—	$	50,191

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The following table provides Old National’s recorded investment in financing receivables by portfolio segment at June 30, 2016 and December 31, 2015 and other information regarding the allowance:

			Commercial
(dollars in thousands)	Commercial		Real Estate		Residential		Consumer		Unallocated		Total
June 30, 2016
Allowance for loan losses:
Individually evaluated for impairment	$	7,489	$	3,949	$	—	$	—	$	—	$	11,438
Collectively evaluated for impairment		16,374		14,082		1,446		7,781		—		39,683
Loans acquired with deteriorated credit quality		293		177		13		200		—		683
Total allowance for loan losses	$	24,156	$	18,208	$	1,459	$	7,981	$	—	$	51,804
Loans and leases outstanding:
Individually evaluated for impairment	$	52,132	$	60,359	$	—	$	—	$	—	$	112,491
Collectively evaluated for impairment		1,839,760		2,830,350		2,084,652		1,882,832		—		8,637,594
Loans acquired with deteriorated credit quality		1,808		52,816		15,118		10,331		—		80,073
Total loans and leases outstanding	$	1,893,700	$	2,943,525	$	2,099,770	$	1,893,163	$	—	$	8,830,158
December 31, 2015
Allowance for loan losses:
Individually evaluated for impairment	$	7,467	$	4,021	$	—	$	—	$	—	$	11,488
Collectively evaluated for impairment		18,295		11,439		2,038		7,614		—		39,386
Loans acquired with deteriorated credit quality		247		533		13		70		—		863
Covered loans acquired with deteriorated credit quality		338		—		—		158		—		496
Total allowance for loan losses	$	26,347	$	15,993	$	2,051	$	7,842	$	—	$	52,233
Loans and leases outstanding:
Individually evaluated for impairment	$	60,959	$	41,987	$	—	$	—	$	—	$	102,946
Collectively evaluated for impairment		1,750,397		1,779,062		1,644,631		1,590,288		—		6,764,378
Loans acquired with deteriorated credit quality		691		28,499		127		3,925		—		33,242
Covered loans acquired with deteriorated credit quality		2,893		19,424		16,577		8,945		—		47,839
Total loans and leases outstanding	$	1,814,940	$	1,868,972	$	1,661,335	$	1,603,158	$	—	$	6,948,405

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Credit Quality

Old National’s management monitors the credit quality of its financing receivables in an on-going manner. Internally, management assigns an asset quality rating (“AQR”) to each non-homogeneous commercial and commercial real estate loan in the portfolio. The primary determinants of the AQR are based upon the reliability of the primary source of repayment and the past, present, and projected financial condition of the borrower. The AQR will also consider current industry conditions. Major factors used in determining the AQR can vary based on the nature of the loan, but commonly include factors such as debt service coverage, internal cash flow, liquidity, leverage, operating performance, debt burden, FICO scores, occupancy, interest rate sensitivity, and expense burden. Old National uses the following definitions for risk ratings:

Criticized. Special mention loans that have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Classified – Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Classified – Nonaccrual. Loans classified as nonaccrual have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection in full, on the basis of currently existing facts, conditions, and values, in doubt.

Classified – Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as nonaccrual, with the added characteristic that the weaknesses make collection in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Pass rated loans are those loans that are other than criticized, classified – substandard, classified—nonaccrual or classified – doubtful.

As of June 30, 2016 and December 31, 2015, the risk category of commercial and commercial real estate loans by class of loans is as follows:

(dollars in thousands)					Commercial				Commercial
					Real Estate -				Real Estate -
Corporate Credit Exposure	Commercial				Construction				Other
Credit Risk Profile by	June 30,		December 31,		June 30,		December 31,		June 30,		December 31,
Internally Assigned Grade	2016		2015 (1)		2016		2015 (1)		2016		2015 (1)
Grade:
Pass	$	1,774,857	$	1,672,672	$	256,427	$	182,701	$	2,484,795	$	1,508,309
Criticized		38,867		55,570		4,014		3,300		64,005		75,477
Classified - substandard		25,422		24,723		1,572		1,857		56,982		49,091
Classified - nonaccrual		52,226		58,469		1,483		830		64,338		39,521
Classified - doubtful		2,328		3,506		—		—		9,909		7,886
Total	$	1,893,700	$	1,814,940	$	263,496	$	188,688	$	2,680,029	$	1,680,284

(1) Includes loans previously covered by loss share agreements with the FDIC.

Other commercial real estate as of June 30, 2016 in the table above includes loans attributable to the acquisition of Anchor totaling $9.4 million in the criticized category, $3.6 million in the classified – substandard category, and $24.8 million in the classified – nonaccrual category.

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Old National considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential and consumer loan classes, Old National also evaluates credit quality based on the aging status of the loan and by payment activity. The following table presents the recorded investment in residential and consumer loans based on payment activity as of June 30, 2016 and December 31, 2015:

	Residential		Consumer
(dollars in thousands)			Heloc		Auto		Other
June 30, 2016
Performing	$	2,082,585	$	469,711	$	1,143,932	$	266,649
Nonperforming		17,185		3,839		1,266		7,766
Total	$	2,099,770	$	473,550	$	1,145,198	$	274,415
December 31, 2015 (1)
Performing	$	1,645,293	$	410,243	$	1,048,763	$	138,031
Nonperforming		16,042		3,051		1,573		1,497
Total	$	1,661,335	$	413,294	$	1,050,336	$	139,528

(1) Includes loans previously covered by loss share agreements with the FDIC.

Other consumer loans as of June 30, 2016 in the table above includes loans attributable to the acquisition of Anchor totaling $6.1 million in the nonperforming category, the majority of which are student loans that are guaranteed by the government on average from 97% to 100%.

Impaired Loans

Large commercial credits are subject to individual evaluation for impairment. Retail credits and other small balance credits that are part of a homogeneous group are not tested for individual impairment unless they are modified as a troubled debt restructuring. A loan is considered impaired when it is probable that contractual interest and principal payments will not be collected either for the amounts or by the dates as scheduled in the loan agreement. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported net, at the present value of estimated cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Old National’s policy, for all but purchased credit impaired loans, is to recognize interest income on impaired loans unless the loan is placed on nonaccrual status.

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The following table shows Old National’s impaired loans as of June 30, 2016 and December 31, 2015, respectively. Only purchased loans that have experienced subsequent impairment since the date acquired are included in the table below.

(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
June 30, 2016
With no related allowance recorded:
Commercial	$	36,975	$	34,584	$	—
Commercial Real Estate - Other		41,334		45,139		—
Residential		1,353		1,374		—
Consumer		904		1,041		—
With an allowance recorded:
Commercial		18,903		18,905		7,489
Commercial Real Estate - Other		15,279		15,353		3,949
Residential		1,105		1,105		55
Consumer		2,785		2,785		139
Total	$	118,638	$	120,286	$	11,632
December 31, 2015 (1)
With no related allowance recorded:
Commercial	$	40,414	$	41,212	$	—
Commercial Real Estate - Other		26,998		30,264		—
Residential		1,383		1,422		—
Consumer		1,201		1,305		—
With an allowance recorded:
Commercial		16,377		16,483		7,111
Commercial Real Estate - Construction		237		237		6
Commercial Real Estate - Other		14,752		14,802		4,015
Residential		985		985		49
Consumer		2,525		2,525		126
Total	$	104,872	$	109,235	$	11,307

(1) Does not include $4.2 million of loans that were previously covered by loss share agreements with the FDIC.

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The average balance of impaired loans and interest income recognized on impaired loans during the three months ended June 30, 2016 and 2015 are included in the table below.

(dollars in thousands)	Average Recorded Investment		Interest Income Recognized (1)
Three Months Ended June 30, 2016
With no related allowance recorded:
Commercial	$	32,951	$	33
Commercial Real Estate - Other		34,344		162
Residential		1,348		2
Consumer		871		1
With an allowance recorded:
Commercial		19,546		79
Commercial Real Estate - Construction		116		—
Commercial Real Estate - Other		12,230		134
Residential		1,060		—
Consumer		2,781		—
Total	$	105,247	$	411
Three Months Ended June 30, 2015 (2)
With no related allowance recorded:
Commercial	$	30,769	$	85
Commercial Real Estate - Construction		2,107		1
Commercial Real Estate - Other		38,758		189
Residential		920		1
Consumer		869		1
With an allowance recorded:
Commercial		25,069		355
Commercial Real Estate - Construction		117		—
Commercial Real Estate - Other		10,274		121
Residential		1,469		2
Consumer		1,518		29
Total	$	111,870	$	784

(1) The Company does not record interest on nonaccrual loans until principal is recovered.

(2) Does not include $4.7 million of loans that were previously covered by loss share agreements with the FDIC.

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The average balance of impaired loans and interest income recognized on impaired loans during the six months ended June 30, 2016 and 2015 are included in the table below.

(dollars in thousands)	Average Recorded Investment		Interest Income Recognized (1)
Six Months Ended June 30, 2016
With no related allowance recorded:
Commercial	$	38,029	$	61
Commercial Real Estate - Other		38,197		257
Residential		1,359		2
Consumer		981		2
With an allowance recorded:
Commercial		17,641		92
Commercial Real Estate - Construction		119		—
Commercial Real Estate - Other		15,016		182
Residential		1,035		38
Consumer		2,695		37
Total	$	115,072	$	671
Six Months Ended June 30, 2015 (2)
With no related allowance recorded:
Commercial	$	31,505	$	127
Commercial Real Estate - Construction		2,025		4
Commercial Real Estate - Other		32,402		274
Residential		761		1
Consumer		824		2
With an allowance recorded:
Commercial		21,359		403
Commercial Real Estate - Construction		49		—
Commercial Real Estate - Other		13,980		122
Residential		1,469		64
Consumer		1,568		49
Total	$	105,942	$	1,046

(1) The Company does not record interest on nonaccrual loans until principal is recovered.

(2) Does not include $4.7 million of loans that were previously covered by loss share agreements with the FDIC.

For all loan classes, a loan is generally placed on nonaccrual status when principal or interest becomes 90 days past due unless it is well secured and in the process of collection, or earlier when concern exists as to the ultimate collectibility of principal or interest. Interest accrued during the current year on such loans is reversed against earnings. Interest accrued in the prior year, if any, is charged to the allowance for loan losses. Cash interest received on these loans is applied to the principal balance until the principal is recovered or until the loan returns to accrual status. Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current, remain current for a prescribed period, and future payments are reasonably assured.

Loans accounted for under FASB ASC Topic 310-30 accrue interest, even though they may be contractually past due, as any nonpayment of contractual principal or interest is considered in the periodic re-estimation of expected cash flows and is included in the resulting recognition of current period loan loss provision or prospective yield adjustments.

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Old National’s past due financing receivables as of June 30, 2016 and December 31, 2015 are as follows:

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Recorded Investment > 90 Days and Accruing		Nonaccrual		Total Past Due		Current
June 30, 2016
Commercial	$	496	$	227	$	175	$	54,554	$	55,452	$	1,838,248
Commercial Real Estate:
Construction		—		—		—		1,483		1,483		262,013
Other		1,779		—		—		74,247		76,026		2,604,003
Residential		14,221		1,726		101		17,185		33,233		2,066,537
Consumer:
Heloc		1,286		220		240		3,839		5,585		467,965
Auto		2,962		684		104		1,266		5,016		1,140,182
Other		7,251		3,119		50		7,766		18,186		256,229
Total loans	$	27,995	$	5,976	$	670	$	160,340	$	194,981	$	8,635,177
December 31, 2015
Commercial	$	802	$	100	$	565	$	57,536	$	59,003	$	1,745,612
Commercial Real Estate:
Construction		—		—		—		749		749		184,700
Other		438		135		—		46,601		47,174		1,615,198
Residential		9,300		2,246		114		14,953		26,613		1,618,001
Consumer:
Heloc		283		402		—		2,369		3,054		356,900
Auto		3,804		730		202		1,573		6,309		1,044,027
Other		830		165		25		1,256		2,276		131,202
Covered loans		809		312		10		7,336		8,467		99,120
Total loans	$	16,266	$	4,090	$	916	$	132,373	$	153,645	$	6,794,760

Loan Participations

Old National has loan participations, which qualify as participating interests, with other financial institutions. At June 30, 2016, these loans totaled $392.2 million, of which $209.6 million had been sold to other financial institutions and $182.6 million was retained by Old National. The loan participations convey proportionate ownership rights with equal priority to each participating interest holder, involve no recourse (other than ordinary representations and warranties) to, or subordination by, any participating interest holder, all cash flows are divided among the participating interest holders in proportion to each holder’s share of ownership, and no holder has the right to pledge the entire financial asset unless all participating interest holders agree.

Troubled Debt Restructurings

Old National may choose to restructure the contractual terms of certain loans. The decision to restructure a loan, versus aggressively enforcing the collection of the loan, may benefit Old National by increasing the ultimate probability of collection.

Any loans that are modified are reviewed by Old National to identify if a troubled debt restructuring (“TDR”) has occurred, which is when for economic or legal reasons related to a borrower’s financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status. The modification of the terms of such loans include one or a combination of the following: a reduction of the stated interest rate of the loan, an extension of the maturity date at a stated rate of interest lower than the current market rate of new debt with similar risk, or a permanent reduction of the recorded investment of the loan.

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Loans modified in a TDR are typically placed on nonaccrual status until we determine the future collection of principal and interest is reasonably assured, which generally requires that the borrower demonstrate a period of performance according to the restructured terms for six months.

If we are unable to resolve a nonperforming loan issue, the credit will be charged off when it is apparent there will be a loss. For large commercial type loans, each relationship is individually analyzed for evidence of apparent loss based on quantitative benchmarks or subjectively based upon certain events or particular circumstances. Old National charges off small commercial loans scored through our small business credit center with contractual balances under $250,000 that have been placed on nonaccrual status or became 90 days or more delinquent, without regard to the collateral position. For residential and consumer loans, a charge off is recorded at the time foreclosure is initiated or when the loan becomes 120 to 180 days past due, whichever is earlier.

For commercial TDRs, an allocated reserve is established within the allowance for loan losses for the difference between the carrying value of the loan and its computed value. To determine the value of the loan, one of the following methods is selected: (1) the present value of expected cash flows discounted at the loan’s original effective interest rate, (2) the loan’s observable market price, or (3) the fair value of the collateral value, if the loan is collateral dependent. The allocated reserve is established as the difference between the carrying value of the loan and the collectable value. If there are significant changes in the amount or timing of the loan’s expected future cash flows, impairment is recalculated and the valuation allowance is adjusted accordingly.

When a residential or consumer loan is identified as a troubled debt restructuring, the loan is typically written down to its collateral value less selling costs.

The following table presents activity in TDRs for the six months ended June 30, 2016 and 2015:

(dollars in thousands)	Commercial			Commercial Real Estate			Residential			Consumer			Total
Six Months Ended June 30, 2016
Balance at January 1, 2016	$	23,354		$	14,602		$	2,693		$	3,602		$	44,251
(Charge-offs)/recoveries		(742	)		108			42			(23	)		(615	)
Payments		(10,819	)		(4,035	)		(462	)		(425	)		(15,741	)
Additions		11,233			10,581			335			385			22,534
Other		1,251			173			—			—			1,424
Balance at June 30, 2016	$	24,277		$	21,429		$	2,608		$	3,539		$	51,853
Six Months Ended June 30, 2015
Balance at January 1, 2015	$	15,205		$	15,226		$	2,063		$	2,459		$	34,953
(Charge-offs)/recoveries		574			648			(15	)		(27	)		1,180
Payments		(3,505	)		(3,135	)		(85	)		(320	)		(7,045	)
Additions		5,573			3,321			419			681			9,994
Balance at June 30, 2015	$	17,847		$	16,060		$	2,382		$	2,793		$	39,082

Approximately $38.1 million of the TDRs at June 30, 2016 were included with nonaccrual loans, compared to $30.0 million at December 31, 2015. Old National has allocated specific reserves to customers whose loan terms have been modified in TDRs totaling $5.6 million at June 30, 2016 and $2.3 million at December 31, 2015. As of June 30, 2016, Old National had committed to lend an additional $4.2 million to customers with outstanding loans that are classified as TDRs.

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The pre-modification and post-modification outstanding recorded investments of loans modified as TDRs during the six months ended June 30, 2016 and 2015 are the same except for when the loan modifications involve the forgiveness of principal. The following table presents loans by class modified as TDRs that occurred during the six months ended June 30, 2016 and 2015:

(dollars in thousands)	Number of Loans		Pre-modification Outstanding Recorded Investment		Post-modification Outstanding Recorded Investment
Six Months Ended June 30, 2016
Troubled Debt Restructuring:
Commercial		16	$	11,233	$	10,681
Commercial Real Estate - Other		9		10,581		10,581
Residential		3		335		335
Consumer		8		385		385
Total		36	$	22,534	$	21,982
Six Months Ended June 30, 2015
Troubled Debt Restructuring:
Commercial		18	$	5,573	$	5,573
Commercial Real Estate - Construction		5		1,162		1,162
Commercial Real Estate - Other		14		2,159		2,159
Residential		3		419		419
Consumer		18		681		681
Total		58	$	9,994	$	9,994

The TDRs that occurred during the six months ended June 30, 2016 decreased the allowance for loan losses by $1.2 million due to an improvement in specific reserves on a large commercial loan and resulted in $0.6 million of charge-offs during the six months ended June 30, 2016. The TDRs that occurred during the six months ended June 30, 2015 resulted in immaterial changes in the allowance for loan losses and charge-offs during the six months ended June 30, 2015.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

There were 10 commercial loans and 3 commercial real estate loans totaling $0.8 million that were modified as TDRs within the preceding twelve months, and for which there was a payment default during the six months ended June 30, 2016.

There were three commercial loans and four commercial real estate loans totaling $0.5 million that were modified as TDRs within the preceding twelve months, and for which there was a payment default during the six months ended June 30, 2015.

The terms of certain other loans were modified during the six months ended June 30, 2016 that did not meet the definition of a TDR. It is our process to review all classified and criticized loans that, during the period, have been renewed, have entered into a forbearance agreement, have gone from principal and interest to interest only, or have extended the maturity date. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on its debt in the foreseeable future without the modification. The evaluation is performed under our internal underwriting policy. We also evaluate whether a concession has been granted or if we were adequately compensated through a market interest rate, additional collateral or a bona fide guarantee. We also consider whether the modification was insignificant relative to the other terms of the agreement or the delay in a payment.

PCI loans are not considered impaired until after the point at which there has been a degradation of cash flows below our expected cash flows at acquisition. If a PCI loan is subsequently modified, and meets the definition of a TDR, it will be removed from PCI accounting and accounted for as a TDR only if the PCI loan was being accounted

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for individually. If the purchased credit impaired loan is being accounted for as part of a pool, it will not be removed from the pool. As of June 30, 2016, it has not been necessary to remove any loans from PCI accounting.

In general, once a modified loan is considered a TDR, the loan will always be considered a TDR, and therefore impaired, until it is paid in full, otherwise settled, sold or charged off. However, guidance also permits for loans to be removed from TDR status when subsequently restructured under these circumstances: (1) at the time of the subsequent restructuring, the borrower is not experiencing financial difficulties, and this is documented by a current credit evaluation at the time of the restructuring, (2) under the terms of the subsequent restructuring agreement, the institution has granted no concession to the borrower; and (3) the subsequent restructuring agreement includes market terms that are no less favorable than those that would be offered for a comparable new loan. For loans subsequently restructured that have cumulative principal forgiveness, the loan should continue to be measured in accordance with ASC 310-10, “Receivables – Overall”. However, consistent with ASC 310-40-50-2, “Troubled Debt Restructurings by Creditors, Creditor Disclosure of Troubled Debt Restructurings,” the loan would not be required to be reported in the years following the restructuring if the subsequent restructuring meets both of these criteria: (1) has an interest rate at the time of the subsequent restructuring that is not less than a market interest rate; and (2) is performing in compliance with its modified terms after the subsequent restructuring.

Purchased Credit Impaired Loans (“PCI”)

Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date with no carryover of the related allowance for loan and lease losses. In determining the estimated fair value of purchased loans, management considers a number of factors including, among others, the remaining life of the acquired loans, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral, and net present value of cash flows expected to be received. Purchased loans are accounted for in accordance with guidance for certain loans acquired in a transfer (ASC 310-30), when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition that the acquirer will not collect all contractually required principal and interest payments. The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference. Subsequent decreases to the expected cash flows will generally result in a provision for loan and lease losses. Subsequent increases in expected cash flows will result in a reversal of the provision for loan losses to the extent of prior charges and then an adjustment to accretable yield, which would have a positive impact on interest income.

Old National has purchased loans for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. For these loans that meet the criteria of ASC 310-30 treatment, the carrying amount is as follows:

(dollars in thousands)	June 30, 2016			December 31, 2015 (1)
Commercial	$	1,808		$	3,584
Commercial real estate		52,816			47,923
Residential		15,118			16,704
Consumer		10,331			12,870
Carrying amount		80,073			81,081
Allowance for loan losses		(683	)		(1,359	)
Carrying amount, net of allowance	$	79,390		$	79,722

(1) Includes loans previously covered by loss share agreements with the FDIC.

The outstanding balance of loans accounted for under ASC 310-30, including contractual principal, interest, fees and penalties, was $323.4 million at June 30, 2016 and $321.5 million at December 31, 2015.

The accretable difference on purchased loans acquired in a business combination is the difference between the expected cash flows and the net present value of expected cash flows with such difference accreted into earnings using the effective yield method over the term of the loans. Accretion recorded as loan interest income totaled $13.0 million during the six months ended June 30, 2016 and $15.5 million during the six months ended June 30, 2015. Improvement in cash flow expectations has resulted in a reclassification from nonaccretable difference to accretable yield as shown in the table below.

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Accretable yield of purchased credit impaired loans, or income expected to be collected, is as follows:

(dollars in thousands)	Acquisitions Prior to 2015 (1)			Founders (2)			Anchor (2)			Total
Balance at January 1, 2016	$	42,498		$	2,812		$	—		$	45,310
New loans purchased		—			—			3,217			3,217
Accretion of income		(12,137	)		(505	)		(348	)		(12,990	)
Reclassifications from (to) nonaccretable difference		5,191			428			—			5,619
Disposals/other adjustments		487			—			43			530
Balance at June 30, 2016	$	36,039		$	2,735		$	2,912		$	41,686

(1) Includes loans previously covered by loss share agreements with the FDIC.

(2) Old National acquired Founders effective January 1, 2015 and Anchor effective May 1, 2016.

Included in Old National’s allowance for loan losses is $0.7 million related to the purchased loans disclosed above at June 30, 2016, compared to $1.4 million at December 31, 2015.

PCI loans purchased during the six months ended June 30, 2016 and 2015 for which it was probable at acquisition that all contractually required payments would not be collected were as follows:

(dollars in thousands)	Founders			Anchor
Contractually required payments	$	11,103		$	29,544
Nonaccretable difference		(2,684	)		(6,153	)
Cash flows expected to be collected at acquisition		8,419			23,391
Accretable yield		(1,812	)		(3,217	)
Fair value of acquired loans at acquisition	$	6,607		$	20,174

Income would not be recognized on certain purchased loans if Old National could not reasonably estimate cash flows to be collected. Old National had no purchased loans for which it could not reasonably estimate cash flows to be collected.

NOTE 9 – COVERED LOANS

Old National entered into an agreement with the FDIC on June 22, 2016 to terminate its loss share agreements. As a result of the termination of the loss share agreements, the remaining loans that were covered by the loss share arrangements were reclassified to noncovered loans effective June 22, 2016. All future gains and losses associated with covered loans will be recognized entirely by Old National.

Prior to the termination of the loss share agreements, certain loans acquired from the FDIC were classified as covered loans. Covered loans were subject to loss share agreements. Under the early termination agreement, the FDIC made a final payment of $8.7 million to Old National as consideration for the early termination. After the elimination of the remaining FDIC indemnification asset and the payment of settlement charges, Old National realized a pre-tax gain of $0.2 million during the three months ended June 30, 2016. The carrying amount of covered loans was $95.4 million at March 31, 2016.

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The following table is a roll-forward of covered acquired impaired loans accounted for under ASC 310-30 for the six months ended June 30, 2016 and 2015. As a result of the termination of the loss share agreements, the remaining loans that were covered by the loss share arrangements were reclassified to noncovered loans effective June 22, 2016.

(dollars in thousands)	Contractual Cash Flows (1)			Nonaccretable Difference			Accretable Yield			Carrying Amount (2)
Six Months Ended June 30, 2016
Balance at January 1, 2016	$	69,857		$	(4,729	)	$	(17,785	)	$	47,343
Principal reductions and interest payments		(18,195	)		(347	)		—			(18,542	)
Accretion of loan discount		—			—			7,196			7,196
Changes in contractual and expected cash flows due to remeasurement		4,431			631			(4,927	)		135
Removals due to foreclosure or sale		(1,948	)		136			263			(1,549	)
Loans removed from loss share coverage		(54,145	)		4,309			15,253			(34,583	)
Balance at June 30, 2016	$	—		$	—		$	—		$	—
Six Months Ended June 30, 2015
Balance at January 1, 2015	$	124,809		$	(12,014	)	$	(35,742	)	$	77,053
Principal reductions and interest payments		(18,178	)		(814	)		—			(18,992	)
Accretion of loan discount		—			—			7,259			7,259
Changes in contractual and expected cash flows due to remeasurement		(3,633	)		4,412			(733	)		46
Removals due to foreclosure or sale		(506	)		162			(143	)		(487	)
Balance at June 30, 2015	$	102,492		$	(8,254	)	$	(29,359	)	$	64,879

(1) The balance of contractual cash flows includes future contractual interest and is net of amounts charged off and interest collected on nonaccrual loans.

(2) Carrying amount for this table is net of allowance for loan losses.

Prior to the termination of the loss share agreements, we estimated the cash flows expected to be collected on individual loans or on pools of loans sharing common risk characteristics which were treated in the aggregate when applying various valuation techniques. We evaluated at each balance sheet date whether the present value of loans determined using the effective interest rates had decreased and if so, recognized a provision for loan losses. For any increases in cash flows expected to be collected, we adjusted the amount of accretable yield recognized on a prospective basis over the loan’s or pool’s remaining life. Eighty percent of the prospective yield adjustments were offset as Old National would recognize a corresponding change in cash flows expected from the indemnification asset prospectively in a similar manner. The indemnification asset was adjusted over the shorter of the life of the underlying investment or the indemnification agreement.

The loss share receivable represented actual incurred losses where reimbursement had not yet been received from the FDIC. The indemnification asset represented future cash flows we expected to collect from the FDIC under the loss sharing agreements and the amount related to the estimated improvements in cash flow expectations that were being amortized over the same period for which those improved cash flows were being accreted into income.

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The following table shows a detailed analysis of the FDIC loss sharing asset for the six months ended June 30, 2016 and 2015. As a result of the termination of the loss share agreements on June 22, 2016, the table below reflects the write-off of the remaining FDIC loss sharing asset.

(dollars in thousands)	2016			2015
Balance at January 1,	$	9,030		$	20,603
Adjustments not reflected in income:
Cash received from the FDIC		(10,000	)		(2,231	)
Other		512			612
Adjustments reflected in income:
(Amortization) accretion		(816	)		(3,830	)
Higher (lower) loan loss expectations		(13	)		109
Impairment/(recovery) of value and net (gain)/loss on sales of other real estate		1,062			1,212
Gain as a result of the early termination agreement with the FDIC, effective June 22, 2016		225			—
Balance at June 30,	$	—		$	16,475

As a result of the termination of the loss share agreements, all future gains and losses associated with covered assets will be recognized entirely by Old National since the FDIC will no longer be sharing in these gains and losses.

NOTE 10 – OTHER REAL ESTATE OWNED

The following table presents activity in other real estate owned for the six months ended June 30, 2016 and 2015:

	Other Real Estate			Other Real Estate
(dollars in thousands)	Owned (1)			Owned, Covered
Six Months Ended June 30, 2016
Balance at January 1, 2016	$	7,594		$	4,904
Additions (2)		20,251			2,093
Sales		(7,060	)		(1,454	)
(Impairment)/recovery of value		(202	)		(1,872	)
Reclassification due to termination of the loss share agreements, effective June 22, 2016		3,671			(3,671	)
Balance at June 30, 2016	$	24,254		$	—
Six Months Ended June 30, 2015
Balance at January 1, 2015	$	7,241		$	9,121
Additions		4,579			429
Sales		(2,153	)		(4,580	)
(Impairment)/recovery of value		(279	)		(217	)
Balance at June 30, 2015	$	9,388		$	4,753

(1) Includes repossessed personal property of $0.2 million at June 30, 2016 and $0.3 million at June 30, 2015.

(2) Includes other real estate owned of $18.2 million acquired from Anchor in May 2016.

At June 30, 2016, foreclosed residential real estate property included in the table above totaled $1.0 million. At June 30, 2016, consumer mortgage loans collateralized by residential real property that were in the process of foreclosure totaled $4.0 million.

Old National entered into an agreement with the FDIC on June 22, 2016 to terminate its loss share agreements. As a result of the termination of the loss share agreements, the remaining other real estate owned that was covered by the loss share arrangements were reclassified to noncovered other real estate owned effective June 22, 2016.

40

Prior to the termination of the loss share agreements, covered OREO expenses and valuation write-downs were recorded in the noninterest expense section of the consolidated statements of income. Under the loss sharing agreements, the FDIC reimbursed us for 80% of expenses and valuation write-downs related to covered assets up to $275.0 million, losses in excess of $275.0 million up to $467.2 million at 0%, and 80% of losses in excess of $467.2 million. The reimbursable portion of these expenses was recorded in the FDIC indemnification asset. Changes in the FDIC indemnification asset were recorded in the noninterest income section of the consolidated statements of income. As a result of the termination of the loss share agreements, all future gains and losses associated with covered assets will be recognized entirely by Old National since the FDIC will no longer be sharing in these gains and losses.

NOTE 11 - GOODWILL AND OTHER INTANGIBLE ASSETS

The following table shows the changes in the carrying amount of goodwill for the six months ended June 30, 2016 and 2015:

(dollars in thousands)	2016			2015
Balance at January 1,	$	584,634		$	530,845
Acquisitions		111,852			57,619
Divestitures		(40,963	)		—
Balance at June 30,	$	655,523		$	588,464

Goodwill is reviewed annually for impairment. Old National completed its most recent annual goodwill impairment test as of August 31, 2015 and concluded that, based on current events and circumstances, it is not more likely than not that the carrying value of goodwill exceeds fair value. Additionally, the Company evaluated the impact of the sale of its southern Illinois franchise in August of 2015 and concluded that no impairment charge was necessary. See Note 3 to the consolidated financial statements for detail regarding goodwill associated with this divestiture.

During the six months ended June 30, 2016, Old National recorded $111.9 million of goodwill associated with the acquisition of Anchor. Also during the six months ended June 30, 2016, Old National eliminated $41.0 million of goodwill associated with the sale of its insurance operations. See Note 3 to the consolidated financial statements for detail regarding goodwill recorded in 2015 associated with prior acquisitions.

The gross carrying amount and accumulated amortization of other intangible assets at June 30, 2016 and December 31, 2015 were as follows:

	Gross		Accumulated			Net
	Carrying		Amortization			Carrying
(dollars in thousands)	Amount		and Impairment			Amount
June 30, 2016
Amortized intangible assets:
Core deposit	$	81,663	$	(47,839	)	$	33,824
Customer trust relationships		16,547		(6,769	)		9,778
Customer loan relationships		4,413		(3,778	)		635
Total intangible assets	$	102,623	$	(58,386	)	$	44,237
December 31, 2015
Amortized intangible assets:
Core deposit	$	60,103	$	(43,982	)	$	16,121
Customer business relationships		30,787		(23,341	)		7,446
Customer trust relationships		16,547		(5,286	)		11,261
Customer loan relationships		4,413		(3,933	)		480
Total intangible assets	$	111,850	$	(76,542	)	$	35,308

Other intangible assets consist of core deposit intangibles and customer relationship intangibles and are being amortized primarily on an accelerated basis over their estimated useful lives, generally over a period of 5 to 15 years.

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During the first quarter of 2016, Old National decreased customer business relationships by $0.2 million. These adjustments related to final contingency payments on acquired insurance books of business that occurred in prior years. During the second quarter of 2016, Old National increased core deposit intangibles by $21.6 million related to the Anchor acquisition. Also during the second quarter of 2016, Old National eliminated $6.5 million of customer business relationships intangibles associated with the sale of its insurance operations.

Old National reviews other intangible assets for possible impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. No impairment charges were recorded during the six months ended June 30, 2016 or 2015. Total amortization expense associated with intangible assets was $6.0 million for the six months ended June 30, 2016 and $6.1 million for the six months ended June 30, 2015.

Estimated amortization expense for future years is as follows:

(dollars in thousands)
2016 remaining	$	6,560
2017		11,015
2018		8,687
2019		6,737
2020		4,883
Thereafter		6,355
Total	$	44,237

NOTE 12 – LOAN SERVICING RIGHTS

Loan servicing rights were assumed in Old National’s acquisitions of United and LSB in 2014, Founders in 2015, and Anchor in May, 2016.

At June 30, 2016, loan servicing rights derived from loans sold with servicing retained totaled $25.8 million and were included in other assets in the consolidated balance sheet, compared to $10.5 million at December 31, 2015. Loans serviced for others are not reported as assets. The principal balance of loans serviced for others was $3.483 billion at June 30, 2016, compared to $1.263 billion at December 31, 2015. Approximately 99% of the loans serviced for others at June 30, 2016 were residential mortgage loans. Custodial escrow balances maintained in connection with serviced loans were $32.7 million at June 30, 2016 and $3.0 million at December 31, 2015.

The following table summarizes the carrying values and activity related to loan servicing rights and the related valuation allowance for the six months ended June 30, 2016 and 2015:

(dollars in thousands)	2016			2015
Balance at January 1,	$	10,502		$	9,584
Additions (1)		17,126			1,754
Amortization		(1,866	)		(1,271	)
Balance before valuation allowance at June 30,		25,762			10,067
Valuation allowance:
Balance at January 1,		(34	)		(50	)
(Additions)/recoveries		28			10
Balance at June 30,		(6	)		(40	)
Loan servicing rights, net	$	25,756		$	10,027

(1) In May 2016, the Company assumed $15.3 million of loan servicing rights related to the Anchor acquisition.

At June 30, 2016, the fair value of servicing rights was $28.4 million, which was determined using a discount rate of 8.07% and a weighted average prepayment speed of 210% PSA. At December 31, 2015, the fair value of servicing rights was $11.3 million, which was determined using a discount rate of 11% and a weighted average prepayment speed of 166% PSA.

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NOTE 13 – SHORT-TERM BORROWINGS

The following table presents the distribution of Old National’s short-term borrowings and related weighted-average interest rates as of June 30, 2016:

	Federal			Repurchase			Financial
	Funds			Agreements /			Exchange			Revolving
(dollars in thousands)	Purchased			Sweeps			Borrowings (1)			Loan			Total
2016
Outstanding at June 30, 2016	$	263,536		$	304,123		$	—		$	—		$	567,659
Average amount outstanding		141,664			332,441			5,083			8,242			487,430
Maximum amount outstanding at any month-end		263,536			346,695			25,000			50,000
Weighted average interest rate:
During the six months ended June 30, 2016		0.46	%		0.08	%		0.71	%		3.00	%		0.24	%
At June 30, 2016		0.42			0.07			—			—			0.23

(1) In 2015, the Company joined the American Financial Exchange, which is an overnight source of borrowings. No collateral was pledged on these funds.

The following table presents the contractual maturity of our secured borrowings and class of collateral pledged:

	At June 30, 2016
	Remaining Contractual Maturity of the Agreements
	Overnight and		Up to				Greater Than
(dollars in thousands)	Continuous		30 Days		30-90 Days		90 days		Total
Repurchase Agreements:
U.S. Treasury and agency securities	$	304,123	$	—	$	—	$	—	$	304,123
Total	$	304,123	$	—	$	—	$	—	$	304,123

The fair value of securities pledged to secure repurchase agreements may decline. The Company has pledged securities valued at 111% of the gross outstanding balance of repurchase agreements at June 30, 2016 to manage this risk.

REVOLVING LOAN

In May 2016, the Company entered into a $75.0 million revolving line of credit agreement. The 364 day revolving loan has a variable rate of interest priced at the one-month LIBOR plus 200 basis points. As of June 30, 2016, no amount was outstanding on the loan.

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NOTE 14 - FINANCING ACTIVITIES

The following table summarizes Old National’s and its subsidiaries’ other borrowings at June 30, 2016 and December 31, 2015:

	June 30,			December 31,
(dollars in thousands)	2016			2015
Old National Bancorp:
Senior unsecured bank notes (fixed rate 4.125%) maturing August 2024	$	175,000		$	175,000
Unamortized debt issuance costs related to Senior unsecured bank notes		(1,260	)		(1,338	)
Junior subordinated debentures (variable rates of 1.99% to 2.41%) maturing March 2035 to June 2037		45,000			45,000
ASC 815 fair value hedge and other basis adjustments		(4,210	)		(4,442	)
Old National Bank:
Securities sold under agreements to repurchase (fixed rates 2.47% to 2.50%) maturing January 2017 to January 2018		50,000			50,000
Federal Home Loan Bank advances (fixed rates 0.44% to 6.76% and variable rates 0.74% to 0.78%) maturing July 2016 to January 2025		1,097,212			1,022,766
Capital lease obligation		4,126			4,036
ASC 815 fair value hedge and other basis adjustments		2,028			725
Total other borrowings	$	1,367,896		$	1,291,747

Contractual maturities of other borrowings at June 30, 2016 were as follows:

(dollars in thousands)
Due in 2016	$	617,384
Due in 2017		95,806
Due in 2018		195,224
Due in 2019		2,517
Due in 2020		50,091
Thereafter		410,316
ASC 815 fair value hedge, unamortized debt issuance costs, and other basis adjustments		(3,442	)
Total	$	1,367,896

SENIOR NOTES

In August 2014, Old National issued $175.0 million of senior unsecured notes with a 4.125% interest rate. These notes pay interest on February 15 and August 15. The notes mature on August 15, 2024.

FEDERAL HOME LOAN BANK

Federal Home Loan Bank (“FHLB”) advances had weighted-average rates of 0.83% at June 30, 2016 and 0.72% at December 31, 2015. These borrowings are collateralized by investment securities and residential real estate loans up to 140% of outstanding debt.

JUNIOR SUBORDINATED DEBENTURES

Junior subordinated debentures related to trust preferred securities are classified in “other borrowings”. These securities qualify as Tier 1 capital for regulatory purposes, subject to certain limitations.

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In 2007, Old National acquired St. Joseph Capital Trust II in conjunction with its acquisition of St. Joseph Capital Corporation. Old National guarantees the payment of distributions on the trust preferred securities issued by St. Joseph Capital Trust II. St. Joseph Capital Trust II issued $5.0 million in preferred securities in March 2005. The preferred securities have a variable rate of interest priced at the three-month London Interbank Offered Rate (“LIBOR”) plus 175 basis points, payable quarterly and maturing on March 17, 2035. Proceeds from the issuance of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by St. Joseph Capital Trust II.

In 2011, Old National acquired Monroe Bancorp Capital Trust I and Monroe Bancorp Statutory Trust II in conjunction with its acquisition of Monroe Bancorp. Old National guarantees the payment of distributions on the trust preferred securities issued by Monroe Bancorp Capital Trust I and Monroe Bancorp Statutory Trust II. Monroe Bancorp Capital Trust I issued $3.0 million in preferred securities in July 2006. The preferred securities have a variable rate of interest priced at the three-month LIBOR plus 160 basis points. Proceeds from the issuance of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by Monroe Bancorp Capital Trust I. Monroe Bancorp Statutory Trust II issued $5.0 million in preferred securities in March 2007. The preferred securities have a variable rate of interest priced at the three-month LIBOR plus 160 basis points. Proceeds from the issuance of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by Monroe Bancorp Statutory Trust II.

In 2012, Old National acquired Home Federal Statutory Trust I in conjunction with its acquisition of Indiana Community Bancorp. Old National guarantees the payment of distributions on the trust preferred securities issued by Home Federal Statutory Trust I. Home Federal Statutory Trust I issued $15.0 million in preferred securities in September 2006. The preferred securities carry a variable rate of interest priced at the three-month LIBOR plus 165 basis points. Proceeds from the issuance of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by Home Federal Statutory Trust I.

On April 25, 2014, Old National acquired Tower Capital Trust 2 and Tower Capital Trust 3 in conjunction with its acquisition of Tower Financial Corporation. Old National guarantees the payment of distributions on the trust preferred securities issued by Tower Capital Trust 2 and Tower Capital Trust 3. Tower Capital Trust 2 issued $8.0 million in preferred securities in December 2005. The preferred securities carry a variable rate of interest priced at the three-month LIBOR plus 134 basis points. Proceeds from the issuance of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by Tower Capital Trust 2. Tower Capital Trust 3 issued $9.0 million in preferred securities in December 2006. The preferred securities carry a variable rate of interest priced at the three-month LIBOR plus 169 basis points. Proceeds from the issuance of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by Tower Capital Trust 3.

Old National, at any time, may redeem the junior subordinated debentures at par and thereby cause a redemption of the trust preferred securities in whole or in part.

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase are secured borrowings. The Company pledges investment securities to secure these borrowings. The fair value of securities pledged to secure repurchase agreements may decline. The Company has pledged securities valued at 118% of the gross outstanding balance of repurchase agreements at June 30, 2016 to manage this risk.

CAPITAL LEASE OBLIGATION

On January 1, 2004, Old National entered into a long-term capital lease obligation for a branch office building in Owensboro, Kentucky, which extends for 25 years with one renewal option for 10 years. The economic substance of this lease is that Old National is financing the acquisition of the building through the lease and accordingly, the building is recorded as an asset and the lease is recorded as a liability. The fair value of the capital lease obligation was estimated using a discounted cash flow analysis based on Old National’s current incremental borrowing rate for similar types of borrowing arrangements.

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At June 30, 2016, the future minimum lease payments under the capital lease were as follows:

(dollars in thousands)
2016 remaining	$	267
2017		472
2018		410
2019		430
2020		430
Thereafter		8,406
Total minimum lease payments		10,415
Less amounts representing interest		6,289
Present value of net minimum lease payments	$	4,126

NOTE 15 - EMPLOYEE BENEFIT PLANS

RETIREMENT PLAN

Old National maintains a funded noncontributory defined benefit plan (the “Retirement Plan”) that was frozen as of December 31, 2005. Retirement benefits are based on years of service and compensation during the highest paid five years of employment. The freezing of the plan provides that future salary increases will not be considered. Old National’s policy is to contribute at least the minimum funding requirement determined by the plan’s actuary. Old National does not expect to contribute cash payments to the Retirement Plan in 2016.

Old National also maintains an unfunded pension restoration plan (the “Restoration Plan”) which provides benefits for eligible employees that are in excess of the limits under Section 415 of the Internal Revenue Code of 1986, as amended, that apply to the Retirement Plan. The Restoration Plan is designed to comply with the requirements of ERISA. The entire cost of the plan, which was also frozen as of December 31, 2005, is supported by contributions from the Company.

Old National contributed $19 thousand to cover benefit payments from the Restoration Plan during the six months ended June 30, 2016. Old National expects to contribute an additional $19 thousand to cover benefit payments from the Restoration Plan during the remainder of 2016.

The net periodic benefit cost and its components were as follows for the three and six months ended June 30:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(dollars in thousands)	2016			2015			2016			2015
Interest cost	$	440		$	415		$	880		$	830
Expected return on plan assets		(442	)		(511	)		(885	)		(1,023	)
Recognized actuarial loss		494			531			988			1,062
Settlement loss		235			196			441			402
Net periodic benefit cost	$	727		$	631		$	1,424		$	1,271

In March 2016, we sent to participants and beneficiaries a Notice of Intent to Terminate the Employee Retirement Plan effective May 15, 2016. The complete distribution of the trust fund during the fourth quarter of 2016 is expected to result in a pre-tax charge of $11 million to $13 million and relieve Old National of all future obligations and expense.

NOTE 16 - STOCK-BASED COMPENSATION

At June 30, 2016, Old National had 4.9 million shares remaining available for issuance under the Company’s Amended and Restated 2008 Incentive Compensation Plan. The granting of awards to key employees is typically in the form of restricted stock awards or units.

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Restricted Stock Awards

The Company granted 172 thousand time-based restricted stock awards to certain key officers and assumed 173 thousand time-based restricted stock awards in conjunction with the acquisition of Anchor during the six months ended June 30, 2016, with shares vesting over a thirty-six month period. Compensation expense is recognized on a straight-line basis over the vesting period. Shares are subject to certain restrictions and risk of forfeiture by the participants. As of June 30, 2016, unrecognized compensation expense was estimated to be $6.0 million for unvested restricted stock awards.

Old National recorded expense of $0.9 million, net of tax, during the six months ended June 30, 2016, compared to $0.5 million, net of tax, during the six months ended June 30, 2015 related to the vesting of restricted stock awards.

Restricted Stock Units

The Company granted 276 thousand shares of performance based restricted stock units to certain key officers during the six months ended June 30, 2016, with shares vesting at the end of a thirty-six month period based on the achievement of certain targets. For certain awards, the level of performance could increase or decrease the percentage of shares earned. Compensation expense is recognized on a straight-line basis over the vesting period. Shares are subject to certain restrictions and risk of forfeiture by the participants. As of June 30, 2016, unrecognized compensation expense was estimated to be $4.4 million.

Old National recorded stock based compensation expense, net of tax, related to restricted stock units of $1.2 million during the six months ended June 30, 2016, compared to $0.8 million during the six months ended June 30, 2015.

Stock Options

Old National has not granted stock options since 2009. However, Old National did acquire stock options through prior year acquisitions. Old National did not record any stock based compensation expense related to these stock options during the six months ended June 30, 2016 or 2015.

Stock Appreciation Rights

Old National has never granted stock appreciation rights. However, Old National did acquire stock appreciation rights through a prior year acquisition. Old National did not record any incremental expense associated with the conversion of these stock appreciation rights during the six months ended June 30, 2016 or 2015. At June 30, 2016, 81 thousand stock appreciation rights remained outstanding.

NOTE 17 - INCOME TAXES

Following is a summary of the major items comprising the differences in taxes from continuing operations computed at the federal statutory rate and as recorded in the consolidated statements of income for the three and six months ended June 30:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(dollars in thousands)	2016			2015			2016			2015
Provision at statutory rate of 35%	$	24,477		$	12,290		$	37,304		$	22,836
Tax-exempt income		(4,233	)		(3,930	)		(8,401	)		(7,783	)
State income taxes		2,064			520			2,647			1,796
Interim period effective rate adjustment		(37	)		314			(185	)		1,821
ONB Insurance Group, Inc. nondeductible goodwill		8,305			—			8,305			—
Other, net		236			(235	)		813			(486	)
Income tax expense	$	30,812		$	8,959		$	40,483		$	18,184
Effective tax rate		44.1	%		25.5	%		38.0	%		27.9	%

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In accordance with ASC 740-270, Accounting for Interim Reporting, the provision for income taxes was recorded at June 30, 2016 and 2015 based on the current estimate of the effective annual rate.

The higher effective tax rate during the three and six months ended June 30, 2016 when compared to the three and six months ended June 30, 2015 is the result of an increase in pretax book income, primarily due to the sale of ONB Insurance Group, Inc. in May 2016, as well as additional tax expense of $8.3 million to record a deferred tax liability relating to ONB Insurance Group, Inc.’s nondeductible goodwill.

Unrecognized Tax Benefits

The Company and its subsidiaries file a consolidated U.S. federal income tax return, as well as filing various state returns. Unrecognized state income tax benefits are reported net of their related deferred federal income tax benefit.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(dollars in thousands)	2016		2015
Balance at January 1,	$	124	$	77
Additions based on tax positions related to the current year		58		27
Additions based on tax positions related to prior years		584		—
Balance at June 30,	$	766	$	104

If recognized, approximately $0.8 million of unrecognized tax benefits, net of interest, would favorably affect the effective income tax rate in future periods.

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Net Deferred Tax Assets

Significant components of net deferred tax assets (liabilities) were as follows at June 30, 2016 and December 31, 2015:

	June 30,			December 31,
(dollars in thousands)	2016			2015
Deferred Tax Assets
Allowance for loan losses, net of recapture	$	17,838		$	17,125
Benefit plan accruals		19,418			18,066
AMT credit		17,152			18,378
Unrealized losses on benefit plans		3,964			4,507
Net operating loss carryforwards		66,923			2,041
Premises and equipment		7,301			12,735
Federal tax credits		35			422
Other-than-temporary impairment		3,620			3,558
Acquired loans		54,000			34,870
Lease exit obligation		2,818			2,626
Unrealized losses on available-for-sale investment securities		—			3,002
Unrealized losses on held-to-maturity investment securities		7,406			7,724
Unrealized losses on hedges		10,532			5,685
Other real estate owned		3,272			—
Other, net		2,550			4,914
Total deferred tax assets		216,829			135,653
Deferred Tax Liabilities
Accretion on investment securities		(649	)		(599	)
Other real estate owned		—			(284	)
Purchase accounting		(18,291	)		(16,615	)
FDIC indemnification asset		—			(2,565	)
Loan servicing rights		(9,674	)		(3,890	)
Unrealized losses on available-for-sale investment securities		(7,052	)		—
Other, net		(1,715	)		(1,716	)
Total deferred tax liabilities		(37,381	)		(25,669	)
Net deferred tax assets	$	179,448		$	109,984

Net deferred tax assets increased $69.5 million since December 31, 2015 primarily due to the acquisition of Anchor. Net deferred tax assets acquired from Anchor totaled $98.2 million, consisting primarily of deferred tax assets related to federal and state net operating loss carryforwards and acquired loans. Offsetting the increases in net deferred tax assets were reversals of $28.8 million since December 31, 2015, comprised primarily of pre-acquisition book and tax differences.

Through the acquisition of Anchor in the second quarter of 2016 and Lafayette Savings Bank in the fourth quarter of 2014, both former thrifts, Old National Bank’s retained earnings at June 30, 2016 include base-year bad debt reserves, created for tax purposes prior to 1988, totaling $52.8 million. Of this total, $50.9 million was acquired from Anchor, and $1.9 million was acquired from Lafayette Savings Bank. Base-year reserves are subject to recapture in the unlikely event that Old National Bank (1) makes distributions in excess of current and accumulated earnings and profits, as calculated for federal income tax purposes, (2) redeems its stock, or (3) liquidates. Old National Bank has no intention of making such a nondividend distribution. Accordingly, under current accounting principles, a related deferred income tax liability of $19.8 million has not been recognized.

No valuation allowance was recorded at June 30, 2016 or 2015 because, based on current expectations, Old National believes it will generate sufficient income in future years to realize deferred tax assets. Old National has federal net operating loss carryforwards totaling $162.9 million at June 30, 2016 and $1.3 million at December 31, 2015. This federal net operating loss was acquired from the acquisitions of IBT in 2012 and Anchor in 2016. If not used, the federal net operating loss carryforwards will begin to expire in 2027. Old National has alternative minimum tax credit carryforwards totaling $17.2 million at June 30, 2016 and $18.4 million at December 31, 2015. The

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alternative minimum tax credit carryforward does not expire. Old National has state net operating loss carryforwards totaling $206.5 million at June 30, 2016 and $46.3 million at December 31, 2015. If not used, the state net operating loss carryforwards will begin to expire in 2023.

NOTE 18 - DERIVATIVE FINANCIAL INSTRUMENTS

As part of our overall interest rate risk management, Old National uses derivative instruments, including interest rate swaps, caps and floors. The notional amount of these derivative instruments was $661.5 million at June 30, 2016 and $761.5 million at December 31, 2015. The June 30, 2016 balances consist of $36.5 million notional amount of receive-fixed, pay-variable interest rate swaps on certain of its FHLB advances and $625.0 million notional amount of pay-fixed, receive-variable interest rate swaps on certain of its FHLB advances. During the first quarter of 2016, $50.0 million notional amount of receive-fixed, pay-variable interest rate swaps on certain commercial loans was terminated resulting in an immaterial gain. During the second quarter of 2016, $100.0 million notional amount of pay-fixed, receive-variable interest rate swaps on certain of its FHLB advances matured. The December 31, 2015 balances consist of consist of $36.5 million notional amount of receive-fixed, pay-variable interest rate swaps on certain of its FHLB advances, $675.0 million notional amount of pay-fixed, receive-variable interest rate swaps on certain of its FHLB advances and $50.0 million notional amount of receive-fixed, pay-variable interest rate swaps on certain of its commercial loans. These hedges were entered into to manage interest rate risk. Derivative instruments are recognized on the balance sheet at their fair value and are not reported on a net basis.

In addition, commitments to fund certain mortgage loans (interest rate lock commitments) and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. At June 30, 2016, the notional amount of the interest rate lock commitments was $106.3 million and forward commitments were $123.6 million. At December 31, 2015, the notional amount of the interest rate lock commitments was $30.4 million and forward commitments were $33.3 million. It is our practice to enter into forward commitments for the future delivery of residential mortgage loans to third party investors when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from our commitment to fund the loans.

Old National also enters into derivative instruments for the benefit of its customers. The notional amounts of these customer derivative instruments and the offsetting counterparty derivative instruments were $569.3 million and $569.3 million, respectively, at June 30, 2016. At December 31, 2015, the notional amounts of the customer derivative instruments and the offsetting counterparty derivative instruments were $428.4 million and $428.4 million, respectively. These derivative contracts do not qualify for hedge accounting. These instruments include interest rate swaps, caps and collars. Commonly, Old National will economically hedge significant exposures related to these derivative contracts entered into for the benefit of customers by entering into offsetting contracts with approved, reputable, independent counterparties with substantially matching terms.

Credit risk arises from the possible inability of counterparties to meet the terms of their contracts. Old National’s exposure is limited to the replacement value of the contracts rather than the notional, principal or contract amounts. There are provisions in our agreements with the counterparties that allow for certain unsecured credit exposure up to an agreed threshold. Exposures in excess of the agreed thresholds are collateralized. In addition, we minimize credit risk through credit approvals, limits, and monitoring procedures.

Amounts reported in AOCI related to cash flow hedges will be reclassified to interest income or interest expense as interest payments are received or paid on the Company’s derivative instruments. During the next 12 months, the Company estimates that $0.3 million will be reclassified to interest income and $8.6 million will be reclassified to interest expense.

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On the balance sheet, asset derivatives are included in other assets, and liability derivatives are included in other liabilities. The following table summarizes the fair value of derivative financial instruments utilized by Old National:

	June 30, 2016				December 31, 2015
	Asset		Liability		Asset		Liability
(dollars in thousands)	Derivatives		Derivatives		Derivatives		Derivatives
Derivatives designated as hedging instruments
Interest rate contracts	$	5,134	$	28,540	$	3,794	$	15,554
Total derivatives designated as hedging instruments	$	5,134	$	28,540	$	3,794	$	15,554
Derivatives not designated as hedging instruments
Interest rate contracts	$	28,169	$	28,371	$	11,296	$	11,414
Mortgage contracts		2,906		1,129		835		—
Total derivatives not designated as hedging instruments	$	31,075	$	29,500	$	12,131	$	11,414
Total	$	36,209	$	58,040	$	15,925	$	26,968

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The effect of derivative instruments on the consolidated statements of income for the three and six months ended June 30, 2016 and 2015 are as follows:

		Three Months Ended June 30,
(dollars in thousands)		2016			2015
Derivatives in Fair Value Hedging Relationships	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (1)	Interest income / (expense)	$	(1,310	)	$	(212	)
Interest rate contracts (2)	Other income / (expense)		50			23
Total		$	(1,260	)	$	(189	)
Derivatives in Cash Flow Hedging Relationships	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (1)	Interest income / (expense)	$	81		$	167
Total		$	81		$	167
Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (3)	Other income / (expense)	$	(81	)	$	19
Mortgage contracts	Mortgage banking revenue		(35	)		362
Total		$	(116	)	$	381
		Six Months Ended June 30,
(dollars in thousands)		2016			2015
Derivatives in Fair Value Hedging Relationships	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (1)	Interest income / (expense)	$	(2,352	)	$	(189	)
Interest rate contracts (2)	Other income / (expense)		101			82
Total		$	(2,251	)	$	(107	)
Derivatives in Cash Flow Hedging Relationships	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (1)	Interest income / (expense)	$	167		$	333
Total		$	167		$	333
Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (3)	Other income / (expense)	$	(84	)	$	19
Mortgage contracts	Mortgage banking revenue		425			1,150
Total		$	341		$	1,169

(1) Amounts represent the net interest payments as stated in the contractual agreements.

(2) Amounts represent ineffectiveness on derivatives designated as fair value hedges.

(3) Includes the valuation differences between the customer and offsetting counterparty swaps.

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NOTE 19 - COMMITMENTS AND CONTINGENCIES

LITIGATION

In the normal course of business, Old National Bancorp and its subsidiaries have been named, from time to time, as defendants in various legal actions. Certain of the actual or threatened legal actions may include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages.

Old National contests liability and/or the amount of damages as appropriate in each pending matter. In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases where claimants seek substantial or indeterminate damages or where investigations and proceedings are in the early stages, Old National cannot predict with certainty the loss or range of loss, if any, related to such matters, how or if such matters will be resolved, when they will ultimately be resolved, or what the eventual settlement, or other relief, if any, might be. Subject to the foregoing, Old National believes, based on current knowledge and after consultation with counsel, that the outcome of such pending matters will not have a material adverse effect on the consolidated financial condition of Old National, although the outcome of such matters could be material to Old National’s operating results and cash flows for a particular future period, depending on, among other things, the level of Old National’s revenues or income for such period. Old National will accrue for a loss contingency if (1) it is probable that a future event will occur and confirm the loss and (2) the amount of the loss can be reasonably estimated.

In November 2010, Old National was named in a class action lawsuit in Vanderburgh Circuit Court challenging our checking account practices associated with the assessment of overdraft fees. On April 5, 2016, Old National entered into a settlement agreement with plaintiffs providing for a cash payment from Old National in the amount of $4,750,000 in exchange for a full release and dismissal of plaintiffs’ complaint. By entering into the settlement agreement, Old National did not admit any liability with respect to the lawsuit. The settlement amount was accrued for in the December 31, 2015 financial statements.

On April 14, 2016, the Circuit Court preliminarily approved the settlement agreement, entered an order authorizing notice of the settlement to the class participants. On June 13, 2016, the Circuit Court entered its Final Judgment and Final Order approving the class action settlement and dismissed, in its entirety, the class action lawsuit against Old National with prejudice. No other material litigation is currently pending.

LEASES

Old National rents certain premises and equipment under operating leases, which expire at various dates. Many of these leases require the payment of property taxes, insurance premiums, maintenance, and other costs. In some cases, rentals are subject to increase in relation to a cost-of-living index. The leases have original terms ranging from less than one year to twenty-four years, and Old National has the right, at its option, to extend the terms of certain leases for four additional successive terms of five years. Old National does not have any material sub-lease agreements.

Old National had deferred gains remaining associated with prior sale leaseback transactions totaling $35.8 million as of June 30, 2016 and $40.7 million as of December 31, 2015. The gains are being recognized over the remaining term of the leases. The leases had original terms ranging from five to twenty-four years. New accounting guidance has been issued for leases, and it is probable that this accounting treatment will change in the future.

CREDIT-RELATED FINANCIAL INSTRUMENTS

In the normal course of business, Old National’s banking affiliates have entered into various agreements to extend credit, including loan commitments of $2.251 billion and standby letters of credit of $61.6 million at June 30, 2016. At June 30, 2016, approximately $2.136 billion of the loan commitments had fixed rates and $115.8 million had floating rates, with the floating interest rates ranging from 0% to 25%. At December 31, 2015, loan commitments totaled $1.746 billion and standby letters of credit totaled $62.6 million. These commitments are not reflected in the consolidated financial statements. The allowance for unfunded loan commitments totaled $4.4 million at June 30, 2016 and $3.6 million at December 31, 2015.

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Old National had credit extensions with various unaffiliated banks related to letter of credit commitments issued on behalf of Old National’s clients totaling $13.8 million at June 30, 2016 and $14.5 million at December 31, 2015. Old National provided collateral to the unaffiliated banks to secure credit extensions totaling $12.9 million at June 30, 2016 and $13.6 million December 31, 2015. Old National did not provide collateral for the remaining credit extensions.

NOTE 20 - FINANCIAL GUARANTEES

Old National holds instruments, in the normal course of business with clients, that are considered financial guarantees in accordance with FASB ASC 460-10 (FIN 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others), which requires the Company to record the instruments at fair value. Standby letters of credit guarantees are issued in connection with agreements made by clients to counterparties. Standby letters of credit are contingent upon failure of the client to perform the terms of the underlying contract. Credit risk associated with standby letters of credit is essentially the same as that associated with extending loans to clients and is subject to normal credit policies. The term of these standby letters of credit is typically one year or less. At June 30, 2016, the notional amount of standby letters of credit was $61.6 million, which represented the maximum amount of future funding requirements, and the carrying value was $0.4 million. At December 31, 2015, the notional amount of standby letters of credit was $62.6 million, which represented the maximum amount of future funding requirements, and the carrying value was $0.4 million.

Old National entered into a risk participation in an interest rate swap during the second quarter of 2007, which had a notional amount of $7.2 million at June 30, 2016. Old National entered into an additional risk participation in an interest rate swap during the third quarter of 2014, which had a notional amount of $10.9 million at June 30, 2016.

NOTE 21 – SEGMENT INFORMATION

During the second quarter of 2016, Old National sold its insurance operations, ONB Insurance Group, Inc. During the year ended December 31, 2015, the insurance segment’s net income was $2.1 million and its assets totaled $61.8 million at December 31, 2015. In conjunction with the divestiture, Old National re-evaluated its business segments.

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Old National Bank, Old National’s bank subsidiary, is the only significant subsidiary upon which management makes decisions regarding how to allocate resources and assess performance. Each of the branches of Old National Bank provide a group of similar community banking services, including such products and services as commercial, real estate and consumer loans, time deposits, checking and savings accounts, cash management, brokerage, trust, and investment advisory services. The individual bank branches located throughout our Midwest footprint have similar operating and economic characteristics. While the chief decision maker monitors the revenue streams of the various products, services, and regional locations, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the community banking services and branch locations are considered by management to be aggregated into one reportable operating segment, community banking.

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NOTE 22 – FAIR VALUE

FASB ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair values:

• Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

• Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Old National used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Investment securities: The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Discounted cash flows are calculated using swap and LIBOR curves plus spreads that adjust for loss severities, volatility, credit risk, and optionality. During times when trading is more liquid, broker quotes are used (if available) to validate the model. Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.

Residential loans held for sale: The fair value of loans held for sale is determined using quoted prices for a similar asset, adjusted for specific attributes of that loan (Level 2).

Derivative financial instruments: The fair values of derivative financial instruments are based on derivative valuation models using market data inputs as of the valuation date (Level 2).

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Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which we have elected the fair value option, are summarized below:

			Fair Value Measurements at June 30, 2016 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Trading securities	$	4,838	$	4,838	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury		12,269		12,269		—		—
U.S. government-sponsored entities and agencies		540,775		—		540,775		—
Mortgage-backed securities - Agency		1,336,605		—		1,336,605		—
States and political subdivisions		417,163		—		417,163		—
Pooled trust preferred securities		6,720		—		—		6,720
Other securities		335,369		32,139		303,230		—
Residential loans held for sale		44,422		—		44,422		—
Derivative assets		36,209		—		36,209		—
Financial Liabilities
Derivative liabilities		58,040		—		58,040		—
			Fair Value Measurements at December 31, 2015 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Trading securities	$	3,941	$	3,941	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury		12,150		12,150		—		—
U.S. government-sponsored entities and agencies		613,550		—		613,550		—
Mortgage-backed securities - Agency		1,066,361		—		1,066,361		—
States and political subdivisions		387,296		—		387,296		—
Pooled trust preferred securities		7,900		—		—		7,900
Other securities		330,964		31,443		299,521		—
Residential loans held for sale		13,810		—		13,810		—
Derivative assets		15,925		—		15,925		—
Financial Liabilities
Derivative liabilities		26,968		—		26,968		—

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2016:

(dollars in thousands)	Pooled Trust Preferred Securities Available-for-Sale
Balance at January 1, 2016	$	7,900
Accretion of discount		9
Sales/payments received		(270	)
Decrease in fair value of securities		(919	)
Balance at June 30, 2016	$	6,720

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The accretion of discounts on securities totaling $9 thousand for the six months ended June 30, 2016 is included in interest income. The decrease in fair value is reflected in the balance sheet as a decrease in the fair value of investment securities available-for-sale, a decrease in accumulated other comprehensive income (included in shareholders’ equity), and an increase in other assets related to the tax impact.

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2015:

(dollars in thousands)	Pooled Trust Preferred Securities Available-for-Sale			State and Political Subdivisions
Balance at January 1, 2015	$	6,607		$	325
Accretion of discount		9			—
Sales/payments received		(514	)		—
Matured securities		—			(325	)
Increase in fair value of securities		994			—
Balance at June 30, 2015	$	7,096		$	—

The accretion of discounts on securities totaling $9 thousand for the six months ended June 30, 2015 is included in interest income. The increase in fair value is reflected in the balance sheet as an increase in the fair value of investment securities available-for-sale, an increase in accumulated other comprehensive income (included in shareholders’ equity), and a decrease in other assets related to the tax impact.

The tables below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy as of June 30, 2016 and December 31, 2015:

	Fair Value at		Valuation	Unobservable	Range (Weighted
(dollars in thousands)	June 30, 2016		Techniques	Input	Average)
Pooled trust preferred securities	$	6,720	Discounted cash flow	Constant prepayment rate (a)	0.00%
				Additional asset defaults (b)	3.3% - 4.4%(4.1%)
				Expected asset recoveries (c)	0.0% - 9.8%(2.7%)

(a) Assuming no prepayments.

(b) Each currently performing pool asset is assigned a default probability based on the banking environment, which is adjusted for specific issuer evaluation, of 0%, 50%, or 100%.

(c) Each currently defaulted pool asset is assigned a recovery probability based on specific issuer evaluation of 0%, 25%, or 100%.

	Fair Value at		Valuation	Unobservable	Range (Weighted
(dollars in thousands)	Dec. 31, 2015		Techniques	Input	Average)
Pooled trust preferred securities	$	7,900	Discounted cash flow	Constant prepayment rate (a)	0.00%
				Additional asset defaults (b)	4.1% - 11.5%(8.1%)
				Expected asset recoveries (c)	0.0% - 11.5%(3.1%)

(a) Assuming no prepayments.

(b) Each currently performing pool asset is assigned a default probability based on the banking environment, which is adjusted for specific issuer evaluation, of 0%, 50%, or 100%.

(c) Each currently defaulted pool asset is assigned a recovery probability based on specific issuer evaluation of 0%, 25%, or 100%.

Significant changes in any of the unobservable inputs used in the fair value measurement in isolation would result in a significant change to the fair value measurement. The pooled trust preferred securities Old National owns are subordinate note classes that rely on an ongoing cash flow stream to support their values. The senior note classes receive the benefit of prepayments to the detriment of subordinate note classes since the ongoing interest cash flow stream is reduced by the early redemption. Generally, a change in prepayment rates or additional pool asset defaults has an impact that is directionally opposite from a change in the expected recovery of a defaulted pool asset.

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Assets measured at fair value on a non-recurring basis at June 30, 2016 are summarized below:

			Fair Value Measurements at June 30, 2016 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Impaired Loans
Commercial loans	$	11,218	$	—	$	—	$	11,218
Commercial real estate loans		15,064		—		—		15,064
Foreclosed Assets
Commercial real estate		1,263		—		—		1,263
Residential		296		—		—		296

Impaired commercial and commercial real estate loans that are deemed collateral dependent are valued based on the fair value of the underlying collateral. These estimates are based on the most recently available appraisals with certain adjustments made based on the type of property, age of appraisal, current status of the property, and other related factors to estimate the current value of the collateral. These impaired commercial and commercial real estate loans had a principal amount of $37.7 million, with a valuation allowance of $11.4 million at June 30, 2016. Old National recorded provision expense associated with these loans totaling $1.5 million for the three months ended June 30, 2016 and $3.7 million for the six months ended June 30, 2016. Old National recorded provision expense associated with impaired commercial and commercial real estate loans that were deemed collateral dependent totaling $2.8 million for the three months ended June 30, 2015 and $7.6 million for the six months ended June 30, 2015.

Other real estate owned and other repossessed property is measured at fair value less costs to sell and had a net carrying amount of $1.6 million at June 30, 2016. The estimates of fair value are based on the most recently available appraisals with certain adjustments made based on the type of property, age of appraisal, current status of the property, and other related factors to estimate the current value of the collateral. There were write-downs of other real estate owned of $1.8 million for the three months ended June 30, 2016 and $2.2 for the six months ended June 30, 2016. There were write-downs of other real estate owned of $0.4 million for the three months ended June 30, 2015 and $1.5 for the six months ended June 30, 2015.

Assets measured at fair value on a non-recurring basis at December 31, 2015 are summarized below:

			Fair Value Measurements at December 31, 2015 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Impaired Loans
Commercial loans	$	13,332	$	—	$	—	$	13,332
Commercial real estate loans		11,857		—		—		11,857
Foreclosed Assets
Commercial real estate		2,526		—		—		2,526
Residential		203		—		—		203

As of December 31, 2015, impaired commercial and commercial real estate loans had a principal amount of $36.8 million, with a valuation allowance of $11.5 million.

Other real estate owned and other repossessed property is measured at fair value less costs to sell and had a net carrying amount of $2.7 million at December 31, 2015.

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The tables below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy:

	Fair Value at		Valuation	Unobservable	Range (Weighted
(dollars in thousands)	June 30, 2016		Techniques	Input	Average)
Collateral Dependent Impaired Loans
Commercial loans	$	11,218	Fair value of collateral	Discount for type of property, age of appraisal, and current status		0% - 98% (47%)
Commercial real estate loans		15,064	Fair value of collateral	Discount for type of property, age of appraisal and current status		10% - 51% (35%)
Foreclosed Assets
Commercial real estate		1,263	Fair value of collateral	Discount for type of property, age of appraisal, and current status		0% - 58% (23%)
Residential		296	Fair value of collateral	Discount for type of property, age of appraisal, and current status		7% - 47% (31%)
	Fair Value at		Valuation	Unobservable	Range (Weighted
(dollars in thousands)	Dec. 31, 2015		Techniques	Input	Average)
Collateral Dependent Impaired Loans
Commercial loans	$	13,332	Fair value of collateral	Discount for type of property, age of appraisal, and current status		0% - 86% (28%)
Commercial real estate loans		11,857	Fair value of collateral	Discount for type of property, age of appraisal, and current status		0% - 61% (33%)
Foreclosed Assets
Commercial real estate		2,526	Fair value of collateral	Discount for type of property, age of appraisal, and current status		3% - 80% (26%)
Residential		203	Fair value of collateral	Discount for type of property, age of appraisal, and current status		7% - 53% (29%)

Financial instruments recorded using fair value option

Under FASB ASC 825-10, we may elect to report most financial instruments and certain other items at fair value on an instrument-by instrument basis with changes in fair value reported in net income. After the initial adoption, the election is made at the acquisition of an eligible financial asset, financial liability or firm commitment or when certain specified reconsideration events occur. The fair value election may not be revoked once an election is made.

We have elected the fair value option for residential loans held for sale. For these loans, interest income is recorded in the consolidated statements of income based on the contractual amount of interest income earned on the financial assets (except any that are on nonaccrual status). None of these loans are 90 days or more past due, nor are any on nonaccrual status. Included in the income statement is interest income for loans held for sale totaling $26 thousand for the three months ended June 30, 2016 and $48 thousand for the six months ended June 30, 2016. Included in the income statement is interest income for loans held for sale totaling $45 thousand for the three months ended June 30, 2015 and $84 thousand for the six months ended June 30, 2015.

Residential loans held for sale

Old National has elected the fair value option for newly originated conforming fixed-rate and adjustable-rate first mortgage loans held for sale. These loans are intended for sale and are hedged with derivative instruments. Old National has elected the fair value option to mitigate accounting mismatches in cases where hedge accounting is complex and to achieve operational simplification. The fair value option was not elected for loans held for investment.

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The difference between the aggregate fair value and the aggregate remaining principal balance for loans for which the fair value option has been elected as of June 30, 2016 and December 31, 2015 is as follows:

	Aggregate				Contractual
(dollars in thousands)	Fair Value		Difference		Principal
June 30, 2016
Residential loans held for sale	$	44,422	$	1,453	$	42,969
December 31, 2015
Residential loans held for sale	$	13,810	$	236	$	13,574

Accrued interest at period end is included in the fair value of the instruments.

The following table presents the amount of gains and losses from fair value changes included in income before income taxes for financial assets carried at fair value for the three and six months ended June 30:

(dollars in thousands)	Other Gains and (Losses)			Interest Income		Interest (Expense)		Total Changes in Fair Values Included in Current Period Earnings
Three months ended June 30, 2016
Residential loans held for sale	$	846		$	1	$	—	$	847
Three months ended June 30, 2015
Residential loans held for sale	$	(430	)	$	1	$	—	$	(429	)
Six months ended June 30, 2016
Residential loans held for sale	$	1,218		$	—	$	—	$	1,218
Six months ended June 30, 2015
Residential loans held for sale	$	(213	)	$	1	$	—	$	(212	)

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The carrying amounts and estimated fair values of financial instruments, not previously presented in this note, at June 30, 2016 and December 31, 2015 are as follows:

			Fair Value Measurements at June 30, 2016 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash, due from banks, federal funds sold, and money market investments	$	267,920	$	267,920	$	—	$	—
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies		141,220		—		143,148		—
Mortgage-backed securities - Agency		13,200		—		13,723		—
State and political subdivisions		711,537		—		782,984		—
Federal Home Loan Bank/Federal Reserve Bank stock		90,742		N/A		N/A		N/A
Loans, net:
Commercial		1,869,544		—		—		1,978,864
Commercial real estate		2,925,317		—		—		3,215,841
Residential real estate		2,098,311		—		—		2,354,067
Consumer credit		1,885,182		—		—		2,062,010
Accrued interest receivable		79,536		29		23,155		56,352
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits	$	2,883,917	$	2,883,917	$	—	$	—
NOW, savings, and money market deposits		6,088,664		6,088,664		—		—
Time deposits		1,479,021		—		1,484,973		—
Short-term borrowings:
Federal funds purchased		263,536		263,536		—		—
Repurchase agreements		304,123		304,123		—		—
Other borrowings:
Senior unsecured bank notes		173,740		—		186,383		—
Junior subordinated debentures		40,790		—		32,984		—
Repurchase agreements		50,000		—		51,203		—
Federal Home Loan Bank advances		1,099,240		—		—		1,110,405
Capital lease obligation		4,126		—		4,963		—
Accrued interest payable		6		—		6		—
Standby letters of credit		361		—		—		361
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	4,507

N/A = not applicable

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			Fair Value Measurements at December 31, 2015 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash, due from banks, federal funds sold, and money market investments	$	219,818	$	219,818	$	—	$	—
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies		142,864		—		145,763		—
Mortgage-backed securities - Agency		16,042		—		16,604		—
State and political subdivisions		713,205		—		767,050		—
Federal Home Loan Bank/Federal Reserve Bank stock		86,146		N/A		N/A		N/A
Loans, net (including covered loans):
Commercial		1,788,593		—		—		1,829,824
Commercial real estate		1,852,979		—		—		1,946,163
Residential real estate		1,659,284		—		—		1,745,248
Consumer credit		1,595,316		—		—		1,587,879
FDIC indemnification asset		9,030		—		—		5,700
Accrued interest receivable		69,098		29		22,821		46,248
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits	$	2,488,855	$	2,488,855	$	—	$	—
NOW, savings, and money market deposits		4,911,938		4,911,938		—		—
Time deposits		1,000,067		—		998,878		—
Short-term borrowings:
Federal funds purchased		241,090		241,090		—		—
Repurchase agreements		337,409		337,409		—		—
Other short-term borrowings		50,000		50,000		—		—
Other borrowings:
Senior unsecured bank notes		173,662		—		162,445		—
Junior subordinated debentures		40,558		—		33,318		—
Repurchase agreements		50,000		—		51,370		—
Federal Home Loan Bank advances		1,023,491		—		—		1,029,779
Capital lease obligation		4,036		—		5,375		—
Accrued interest payable		4,859		—		4,859		—
Standby letters of credit		429		—		—		429
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	2,364

N/A = not applicable

The following methods and assumptions were used to estimate the fair value of each type of financial instrument.

Cash, due from banks, federal funds sold and resell agreements, and money market investments: For these instruments, the carrying amounts approximate fair value (Level 1).

Investment securities: Fair values for investment securities held-to-maturity are based on quoted market prices, if available. For securities where quoted prices are not available, fair values are estimated based on market prices of similar securities (Level 2).

Federal Home Loan Bank and Federal Reserve Bank stock: Old National Bank is a member of the FHLB and the Federal Reserve System. The carrying value is our basis because it is not practical to determine the fair value due to restrictions placed on transferability.

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Loans: The fair value of loans is estimated by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities (Level 3). The method utilized to estimate the fair value of loans does not necessarily represent an exit price.

Covered loans: Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting current market rates for new originations of comparable loans adjusted for the risk inherent in the cash flow estimates. Loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques (Level 3).

FDIC indemnification asset: The loss sharing asset was measured separately from the related covered assets as it was not contractually embedded in the assets and was not transferable with the assets should we have chosen to dispose of the assets. Fair value was originally estimated using projected cash flows related to the loss sharing agreement based on the expected reimbursements for losses and the applicable loss sharing percentage and these projected cash flows were updated with the cash flow estimates on covered assets. These cash flows were discounted to reflect the uncertainty of the timing and receipt of the loss sharing reimbursement from the FDIC (Level 3).

Accrued interest receivable and payable: The carrying amount approximates fair value and is aligned with the underlying assets or liabilities (Level 1, Level 2 or Level 3).

Deposits: The fair value of noninterest-bearing demand deposits and savings, NOW, and money market deposits is the amount payable as of the reporting date (Level 1). The fair value of fixed-maturity certificates of deposit is estimated using rates currently offered for deposits with similar remaining maturities (Level 2).

Short-term borrowings: Federal funds purchased and other short-term borrowings generally have an original term to maturity of 30 days or less and, therefore, their carrying amount is a reasonable estimate of fair value (Level 1). The fair value of securities sold under agreements to repurchase is determined using end of day market prices (Level 1).

Other borrowings: The fair value of medium-term notes, subordinated debt, and senior bank notes is determined using market quotes (Level 2). The fair value of FHLB advances is determined using calculated prices for new FHLB advances with similar risk characteristics (Level 3). The fair value of other debt is determined using comparable security market prices or dealer quotes (Level 2).

Standby letters of credit: Fair values for standby letters of credit are based on fees currently charged to enter into similar agreements. The fair value for standby letters of credit was recorded in “Accrued expenses and other liabilities” on the consolidated balance sheet in accordance with FASB ASC 460-10 (FIN 45) (Level 3).

Off-balance sheet financial instruments: Fair values for off-balance sheet credit-related financial instruments are based on fees currently charged to enter into similar agreements (Level 3). For further information regarding the amounts of these financial instruments, see Notes 19 and 20.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is an analysis of our results of operations for the three and six months ended June 30, 2016 and 2015, and financial condition as of June 30, 2016, compared to June 30, 2015 and December 31, 2015. This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes. This discussion contains forward-looking statements concerning our business that are based on estimates and involves certain risks and uncertainties. Therefore, future results could differ significantly from our current expectations and the related forward-looking statements.

EXECUTIVE SUMMARY

During the second quarter of 2016, net income was $39.1 million, or $0.31 per diluted share. This compares to $26.2 million, or $0.22 per diluted share reported in the second quarter of 2015.

We completed our previously announced acquisition of Anchor BanCorp Wisconsin Inc. (“Anchor”) during the second quarter of 2016, increasing our asset size by $2.166 billion and representing our entry into the demographically attractive Wisconsin markets of Madison, Fox Valley, and Milwaukee. Acquisition and integration charges of $7.2 million were recorded during the quarter.

In addition, we finalized the sale of Old National Insurance (“ONI”) to Prime Risk Partners receiving $91.8 million in cash and recognizing an after-tax gain of $17.6 million. The second quarter of 2016 also marked the end of our loss share agreements with the FDIC, resulting in a nominal gain.

Management’s primary focus, however, remains basic banking – loan growth, fee income, and expense management:

Loan Growth: Our loan balances, excluding loans held for sale, grew $1.823 billion to $8.830 billion at June 30, 2016 compared to $7.007 billion at the end of the first quarter. This loan growth was attributable to the $1.637 billion loans acquired from Anchor in addition to $186.5 million of organic loan growth during the quarter. Our new Wisconsin region produced $38.9 million of new loans from the May 1, 2016, acquisition date to the end of the quarter, representing annualized growth of 14.2%. We are encouraged by the level of loan demand experienced in the first half of 2016, and our sales teams remain energized and committed to building new relationships throughout our entire footprint.

Fee Income: We remain keenly focused on fee revenue. Service charge fees on deposit accounts remain challenged and declined year over year, due in part to our divestiture of the southern Illinois region during the third quarter of 2015, partially offset by the acquisition of Anchor. Likewise, debit card fee income declined year over year, driven by the Durbin Amendment, which limits interchange fees on debit card transactions for banks with $10 billion or more in assets and became effective for us on July 1, 2015. Despite these headwinds, we believe we are positioned well and are optimistic that wealth management fee revenue will improve to the extent that our fixed income and equity markets improve.

Expenses: Consistent with our expense management strategy, Old National notified participants and beneficiaries of our intent to terminate the Employee Retirement Plan, which has been frozen since 2005. The complete distribution of the trust fund during the fourth quarter of 2016 is expected to result in a pre-tax charge of $11 million to $13 million and relieve Old National of all future obligations and expense. In addition, the first half of 2016 benefitted from the early retirement program and branch rationalization projects completed during 2015. We will continue to monitor our service and delivery network.

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RESULTS OF OPERATIONS

The following table sets forth certain income statement information of Old National for the three and six months ended June 30, 2016 and 2015:

	Three Months Ended									Six Months Ended
	June 30,						%			June 30,						%
(dollars in thousands)	2016			2015			Change			2016			2015			Change
Income Statement Summary:
Net interest income	$	99,340		$	92,097			7.9	%	$	184,983		$	183,090			1.0	%
Provision for loan losses		1,319			2,271			(41.9	)		1,410			2,272			(37.9	)
Noninterest income		93,385			54,979			69.9			142,836			110,274			29.5
Noninterest expense		121,472			109,690			10.7			219,827			225,846			(2.7	)
Other Data:
Return on average common equity		9.22	%		7.11	%					8.26	%		6.33	%
Efficiency ratio (1)		60.22			70.52						63.76			73.36
Tier 1 leverage ratio		8.86			8.20						8.86			8.20
Net charge-offs/(recoveries) to average loans		0.01			0.06						0.05			0.00

(1) Efficiency ratio is defined as noninterest expense before amortization of intangibles as a percent of fully taxable net interest income and noninterest income, excluding net gains from securities transactions. This presentation excludes intangible amortization and net securities gains, as is common in other company disclosures, and better aligns with true operating performance. This is a non-GAAP financial measure that management believes to be helpful in understanding Old National’s results of operations.

Net Interest Income

Net interest income is the most significant component of our earnings, comprising 56% of revenues for the six months ended June 30, 2016. Net interest income and margin are influenced by many factors, primarily the volume and mix of earning assets, funding sources, and interest rate fluctuations. Other factors include the level of accretion income on purchased loans, prepayment risk on mortgage and investment-related assets, and the composition and maturity of earning assets and interest-bearing liabilities. Loans typically generate more interest income than investment securities with similar maturities. Funding from client deposits generally costs less than wholesale funding sources. Factors such as general economic activity, Federal Reserve Board monetary policy, and price volatility of competing alternative investments, can also exert significant influence on our ability to optimize the mix of assets and funding and the net interest income and margin.

Net interest income is the excess of interest received from earning assets over interest paid on interest-bearing liabilities. For analytical purposes, net interest income is also presented in the table that follows, adjusted to a taxable equivalent basis to reflect what our tax-exempt assets would need to yield in order to achieve the same after-tax yield as a taxable asset. We used the federal statutory tax rate in effect of 35% for all periods adjusted for the TEFRA interest disallowance applicable to certain tax-exempt obligations. This analysis portrays the income tax benefits associated in tax-exempt assets and helps to facilitate a comparison between taxable and tax-exempt assets. Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully taxable equivalent basis. Therefore, management believes these measures provide useful information for both management and investors by allowing them to make peer comparisons.

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	Three Months Ended						Six Months Ended
	June 30,						June 30,
(dollars in thousands)	2016			2015			2016			2015
Net interest income	$	99,340		$	92,097		$	184,983		$	183,090
Conversion to fully taxable equivalent		5,267			4,757			10,467			9,415
Net interest income - taxable equivalent basis	$	104,607		$	96,854		$	195,450		$	192,505
Average earning assets	$	11,726,383		$	10,325,938		$	11,028,706		$	10,335,997
Net interest margin		3.39	%		3.57	%		3.35	%		3.54	%
Net interest margin - taxable equivalent basis		3.57	%		3.75	%		3.54	%		3.72	%

Net interest income for the three and six months ended June 30, 2016 and 2015 includes accretion income (interest income in excess of contractual interest income) associated with acquired loans. Excluding this accretion income, net interest income on a fully taxable equivalent basis would have been $90.4 million for the three months ended June 30, 2016 and $170.0 million for the six months ended June 30, 2016, compared to $81.3 million for the three months ended June 30, 2015 and $162.4 million for the six months ended June 30, 2016; and the net interest margin on a fully taxable equivalent basis would have been 3.08% for the three and six months ended June 30, 2016, compared to 3.15% for the three months ended June 30, 2015 and 3.14% for the six months ended June 30, 2015.

The increase in net interest income for the three and six months ended June 30, 2016 when compared to the same periods in 2015 was primarily due to increases in average earning assets of $1.400 billion in the three months ended June 30, 2016 and $692.7 million in the six months ended June 30, 2016 when compared to the same periods in 2015. Partially offsetting the higher average earning assets were decreases in accretion income of $1.4 million in the three months ended June 30, 2016 and $4.7 million in the six months ended June 30, 2016 when compared to the same periods in 2015 reflecting higher payoffs of purchased credit impaired loans in 2015 when compared to the six months ended June 30, 2016. We expect accretion income on these purchased credit impaired loans to decrease over time, but this may be offset by future acquisitions.

The decrease in the net interest margin for the three and six months ended June 30, 2016 when compared to the same periods in 2015 was primarily due to lower yields associated with decreased accretion income on acquired loans, lower interest rates on interest earning assets, higher costs of interest bearing liabilities, and a change in the mix of average interest earning assets and interest bearing liabilities. The yield on interest earning assets decreased 10 basis points and the cost of interest-bearing liabilities increased 8 basis points in the quarterly year-over-year comparison. The yield on interest earning assets is calculated by dividing annualized taxable equivalent net interest income by average interest earning assets while the cost of interest-bearing liabilities is calculated by dividing annualized interest expense by average interest-bearing liabilities. The yield on interest earning assets decreased 11 basis points and the cost of interest-bearing liabilities increased 10 basis points in the six months ended June 30, 2016 when compared to the six months ended June 30, 2015.

Average earning assets were $11.726 billion for the three months ended June 30, 2016, compared to $10.326 billion for the three months ended June 30, 2015, an increase of $1.400 billion, or 14%. Average earning assets were $11.029 billion for the six months ended June 30, 2016, compared to $10.336 billion for the six months ended June 30, 2015, an increase of $692.7 million, or 7%. The increases in average earning assets for the three and six months ended June 30, 2016 were primarily due to the acquisition of Anchor in May 2016. The loan portfolio including loans held for sale, which generally has an average yield higher than the investment portfolio, was approximately 69% of average interest earning assets for the six months ended June 30, 2016, compared to 67% for the six months ended June 30, 2015.

Average loans including loans held for sale increased $1.303 billion for the three months ended June 30, 2016 and $715.5 million for the six months ended June 30, 2016 when compared to the same periods in 2015 reflecting the Anchor acquisition, along with organic loan growth. These increases were partially offset by the sale of $193.6 million of loans associated with our branch divestitures during the third quarter of 2015.

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Average investments increased $97.4 million for the three months ended June 30, 2016 and decreased $22.8 million for the six months ended June 30, 2016 when compared to the same periods in 2015. Average investments resulting from the Anchor acquisition totaled $158.3 million for the three months ended June 30, 2016 and $79.1 million for the six months ended June 30, 2016.

Average non-interest bearing deposits increased $209.7 million for the three months ended June 30, 2016 and $89.8 million for the six months ended June 30, 2016 when compared to the same periods in 2015 reflecting the Anchor acquisition. Average interest bearing deposits increased $762.0 million for the three months ended June 30, 2016 and $169.1 million for the six months ended June 30, 2016 when compared to the same periods in 2015 reflecting the Anchor acquisition. These increases were partially offset by a $555.8 million reduction associated with our branch divestitures during the third quarter of 2015.

Average borrowed funds increased $416.4 million for the three months ended June 30, 2016 and $432.7 million for the six months ended June 30, 2016 when compared to the same periods in 2015.

Provision for Loan Losses

The provision for loan losses was $1.3 million for the three months ended June 30, 2016, compared to $2.3 million for the three months ended June 30, 2015. Net charge-offs totaled $0.2 million during the three months ended June 30, 2016, compared to $1.0 million during the three months ended June 30, 2015. The provision for loan losses was $1.4 million for the six months ended June 30, 2016, compared to $2.3 million for the six months ended June 30, 2015. Net charge-offs totaled $1.8 million during the six months ended June 30, 2016, compared to net recoveries of $0.1 million during the six months ended June 30, 2015. Continued loan growth in future periods, increases in net charge-offs, or credit quality deterioration would result in additional provision expense.

Noninterest Income

We generate revenues in the form of noninterest income through client fees and sales commissions from our core banking franchise and other related businesses, such as wealth management, investment consulting, and investment products. Noninterest income for the three months ended June 30, 2016 was $93.4 million, an increase of $38.4 million, or 70%, compared to $55.0 million for the three months ended June 30, 2015. Noninterest income for the six months ended June 30, 2016 was $142.8 million, an increase of $32.6 million, or 30%, compared to $110.3 million for the six months ended June 30, 2015. The increases were primarily due to a pre-tax gain of $41.9 million resulting from the sale of ONB Insurance Group, Inc. (“ONI”) in May 2016 and noninterest income attributable to the Anchor acquisition. The increases in noninterest income were partially offset by lower debit card and ATM fees, service charges and overdraft fees, and insurance premiums and commissions.

Wealth management fees decreased $0.5 million for the six months ended June 30, 2016 when compared to the same period in 2015 reflecting lower personal trust fees and fiduciary account fees. Wealth management fees fluctuate in tandem with the fixed income and equities markets.

Service charges and overdraft fees were $10.4 million for the three months ended June 30, 2016, a $0.9 million decrease from $11.3 million for the three months ended June 30, 2015. Service charges and overdraft fees were $20.1 million for the six months ended June 30, 2016, a $2.2 million decrease from $22.3 million for the six months ended June 30, 2015. The decreases were primarily due to our divestiture of the southern Illinois region during the third quarter of 2015, partially offset by service charges and overdraft fees attributable to the Anchor acquisition.

Debit card and ATM fees decreased $2.6 million for the three months ended June 30, 2016 and $5.6 million for the six months ended June 30, 2016 when compared to the same periods in 2015 as the Durbin Amendment, which limits interchange fees on debit card transactions for banks with $10 billion or more in assets, became effective for us on July 1, 2015. The decreases in debit card and ATM fees were partially offset by debit card and ATM fees attributable to the Anchor acquisition.

Insurance premiums and commissions decreased $3.1 million for the three months ended June 30, 2016 and $2.0 million for the six months ended June 30, 2016 when compared to the same periods in 2015 reflecting the sale of ONI in May 2016.

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In the second quarter of 2016, we recorded a $41.9 million pre-tax gain resulting from the sale of ONB Insurance Group, Inc. in May 2016. The after-tax gain related to the sale totaled $17.6 million.

Noninterest Income Related to Covered Assets

In 2011, Old National acquired the banking operations of Integra Bank N.A. in an FDIC-assisted transaction. The FDIC had agreed to reimburse Old National for losses incurred on certain acquired loans, and we recorded an indemnification asset at fair value on the date that we acquired these loans. The indemnification asset, on the acquisition date, reflected the reimbursements expected to be received from the FDIC. Deterioration in the expected credit quality of both OREO and loans increased the basis of the indemnification asset. The offset for both OREO and loans was recorded through the consolidated statement of income. Increases in the credit quality or cash flows of loans (reflected as an adjustment to yield and accreted into income over the remaining life of the loans) decreased the basis of the indemnification asset, with the decrease being amortized into income over the same period or the life of the loss share agreements, whichever was shorter.

Old National entered into an agreement with the FDIC on June 22, 2016 to terminate its loss share agreements. Under the early termination agreement, the FDIC made a final payment of $8.7 million to Old National as consideration for the early termination. After the elimination of the remaining FDIC indemnification asset and the payment of settlement charges, Old National realized a pre-tax gain of $0.2 million during the three months ended June 30, 2016. All remaining assets that were covered by the loss share arrangements were reclassified to noncovered assets effective June 22, 2016. All future gains and losses associated with covered assets will be recognized entirely by Old National.

Changes in the FDIC indemnification asset resulted in a positive adjustment to noninterest income of $0.9 million for the three months ended June 30, 2016, compared to a negative adjustment to noninterest income of $1.5 million for the three months ended June 30, 2015. Changes in the FDIC indemnification asset resulted in a positive adjustment to noninterest income of $0.2 million for the six months ended June 30, 2016, compared to a negative adjustment to noninterest income of $2.5 million for the six months ended June 30, 2015.

Noninterest Expense

Noninterest expense for the three months ended June 30, 2016 totaled $121.5 million, an increase of $11.8 million, or 11%, from $109.7 million for the three months ended June 30, 2015. The increase was primarily due to higher salaries and benefits, charitable contributions, professional fees, other real estate owned expenses, and marketing expenses. Operating expenses associated with the acquisition of Anchor totaled $11.4 million for the three months ended June 30, 2016. In addition, noninterest expense also included acquisition and integration costs associated with Anchor totaling $7.2 million. Noninterest expense for the three months ended June 30, 2015 included $1.5 million of acquisition and integration costs associated with prior acquisitions and $4.0 million of costs associated with branch divestitures, closures and consolidations.

Noninterest expense for the six months ended June 30, 2016 totaled $219.8 million, a decrease of $6.0 million, or 3%, from $225.8 million for the six months ended June 30, 2015. The decrease was primarily due to lower salaries and benefits, occupancy expenses, and equipment expenses. The decreases in noninterest expense were partially offset by higher charitable contributions, professional fees, and marketing expenses. Operating expenses associated with the acquisition of Anchor totaled $11.3 million for the six months ended June 30, 2016. In addition, noninterest expense also included acquisition and integration costs associated with Anchor totaling $8.7 million. Noninterest expense for the six months ended June 30, 2015 included $5.5 million of acquisition and integration costs associated with prior acquisitions and $6.6 million of costs associated with branch divestitures, closures and consolidations.

Salaries and benefits is the largest component of noninterest expense. For the three months ended June 30, 2016, salaries and benefits increased $3.5 million to $62.7 million when compared to $59.2 million for the three months ended June 30, 2015. Salaries and benefits associated with the acquisition of Anchor totaled $9.5 million for the three months ended June 30, 2016. The increase in salaries and benefits for the three months ended June 30, 2016 was partially offset by lower salaries and benefits expenses resulting from the sale of ONI in May 2016, branch divestures and consolidations in the third quarter of 2015, and lower hospitalization expense of $0.2 million. Salaries and benefits for the six months ended June 30, 2016 totaled $119.7 million, a decrease of $9.2 million from

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$128.9 million for the six months ended June 30, 2015. The decrease in salaries and benefits for the six months ended June 30, 2016 was primarily due to lower salaries and benefits expenses resulting from the sale of ONI in May 2016, branch divestures and consolidations in the third quarter of 2015, and lower hospitalization expense of $1.6 million. In addition, severance expense related to early retirement offers and other workforce reductions totaling $4.4 million were included in the six months ended June 30, 2015. The decrease in salaries and benefits for the six months ended June 30, 2016 was partially offset by salaries and benefits associated with the acquisition of Anchor totaling $9.5 million. In March 2016, we sent to participants and beneficiaries a Notice of Intent to Terminate the Employee Retirement Plan, which has been frozen since December 31, 2005. We expect to record an estimated settlement loss of approximately $11 million to $13 million in the fourth quarter of 2016.

Occupancy expenses decreased $0.6 million for the three months ended June 30, 2016 and $2.0 million for the six months ended June 30, 2016 when compared to the same periods in 2015 primarily due to branch divestures and consolidations in the third quarter of 2015. The decreases were partially offset by occupancy expenses attributable to the Anchor acquisition.

Professional fees increased $1.8 million for the three months ended June 30, 2016 and $2.0 million for the six months ended June 30, 2016 when compared to the same periods in 2015 primarily due additional expenses recorded in 2016 associated with the Anchor acquisition.

Other expense was $10.2 million for the three months ended June 30, 2016, compared to $7.5 million for the three months ended June 30, 2015. Other expense was $14.1 million for the six months ended June 30, 2016, compared to $12.9 million for the six months ended June 30, 2015. The increases reflected higher charitable contributions of $3.6 million for the three months ended June 30, 2016 and $2.9 million for the six months ended June 30, 2016, higher provision for unfunded commitments of $2.2 million for the six months ended June 30, 2016, and other expenses associated with the Anchor acquisition of $1.5 million for the three and six months ended June 30, 2016. Offsetting these increases were decreases in costs associated with branch divestitures, closures, and consolidations primarily due to asset impairments and lease termination settlements totaling $3.4 million for the three months ended June 30, 2015 and $5.3 million for the six months ended June 30, 2015.

Provision for Income Taxes

We record a provision for income taxes currently payable and for income taxes payable or benefits to be received in the future, which arise due to timing differences in the recognition of certain items for financial statement and income tax purposes. The major difference between the effective tax rate applied to our financial statement income and the federal statutory tax rate is caused by interest on tax-exempt securities and loans. The provision for income taxes, as a percentage of pre-tax income, was 44.1% for the three months ended June 30, 2016, compared to 25.5% for the three months ended June 30, 2015. The provision for income taxes, as a percentage of pre-tax income, was 38.0% for the six months ended June 30, 2016, compared to 27.9% for the six months ended June 30, 2015. In accordance with ASC 740-270, Accounting for Interim Reporting, the provision for income taxes was recorded at June 30, 2016 based on the current estimate of the effective annual rate. The higher effective tax rate during the three and six months ended June 30, 2016 when compared to the three and six months ended June 30, 2015 is the result of an increase in pretax book income, primarily due to the sale of ONB Insurance Group, Inc. in May 2016, as well as additional tax expense of $8.3 million to record a deferred tax liability relating to ONB Insurance Group, Inc.’s nondeductible goodwill. See Note 17 to the consolidated financial statements for additional information.

FINANCIAL CONDITION

Overview

At June 30, 2016, our assets were $14.420 billion, a $2.346 billion increase compared to assets of $12.074 billion at June 30, 2015, and a $2.429 billion increase compared to assets of $11.992 billion at December 31, 2015. The increases were primarily due to the acquisition of Anchor in May 2016, which had $2.166 billion in assets as of the closing date of the acquisition.

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Earning Assets

Our earning assets are comprised of investment securities, portfolio loans, loans held for sale, money market investments, interest earning accounts with the Federal Reserve, and trading securities. Earning assets were $12.547 billion at June 30, 2016, a $2.076 billion increase compared to earning assets of $10.471 billion at June 30, 2015, and a $2.076 billion increase compared to earning assets of $10.471 billion at December 31, 2015.

Investment Securities

We classify the majority of our investment securities as available-for-sale to give management the flexibility to sell the securities prior to maturity if needed, based on fluctuating interest rates or changes in our funding requirements. However, we also have $13.2 million of 15- and 20-year fixed-rate mortgage-backed securities, $141.2 million of U.S. government-sponsored entity and agency securities, and $711.5 million of state and political subdivision securities in our held-to-maturity investment portfolio at June 30, 2016.

Trading securities, which consist of mutual funds held in trusts associated with deferred compensation plans for former directors and executives, are recorded at fair value and totaled $4.8 million at June 30, 2016 compared to $4.0 million at June 30, 2015.

At June 30, 2016, the investment securities portfolio was $3.610 billion compared to $3.471 billion at June 30, 2015, an increase of $139.0 million, or 4.0%. Investment securities increased $230.0 million, or 7%, compared to December 31, 2015. Investment securities represented 29% of earning assets at June 30, 2016, compared to 33% at June 30, 2015, and 32% at December 31, 2015. Investment securities attributable to the Anchor acquisition totaled $239.8 million as of the closing date of the acquisition. Investment securities also decreased as a percentage of total earning assets due to a proportionately larger increase in loan balances. Stronger commercial loan demand in the future and management’s decision to deleverage the balance sheet could result in a reduction in the securities portfolio. As of June 30, 2016, Old National does not intend to sell any securities in an unrealized loss position and does not believe it will be required to sell such securities.

The investment securities available-for-sale portfolio had net unrealized gains of $21.7 million at June 30, 2016, compared to net unrealized losses of $12.4 million at June 30, 2015, and net unrealized losses of $5.8 million at December 31, 2015. Net unrealized gains (losses) improved from December 31, 2015 to June 30, 2016 due to a decline in interest rates and a change in the mix of investment securities.

The investment portfolio had an effective duration of 3.59 at June 30, 2016, compared to 4.23 at June 30, 2015, and 3.99 at December 31, 2015. Effective duration measures the percentage change in value of the portfolio in response to a change in interest rates. Generally, there is more uncertainty in interest rates over a longer average maturity, resulting in a higher duration percentage. The annualized average yields on investment securities, on a taxable equivalent basis, were 2.80% for the three months ended June 30, 2016 and 2015, and 2.87% for the three months ended December 31, 2015. The annualized average yields on investment securities, on a taxable equivalent basis, were 2.87% for the six months ended June 30, 2016, compared to 2.77% for the six months ended June 30, 2015, and 2.82% for the year ended December 31, 2015.

Loans Held for Sale

Loans held for sale were $44.4 million at June 30, 2016, compared to $217.7 million at June 30, 2015 and $13.8 million at December 31, 2015. Included in loans held for sale at June 30, 2016 were $44.4 million of mortgage loans held for immediate sale in the secondary market. Included in loans held for sale at June 30, 2015 were $197.4 million of loans identified to be sold in connection with the southern Illinois and eastern Indiana branch divestitures, and $20.3 million of mortgage loans held for immediate sale in the secondary market. The mortgage loans are sold at or prior to origination at a contracted price to an outside investor on a best efforts basis and remain on the Company’s balance sheet for a short period of time (typically 30 to 60 days). These loans are sold without recourse and Old National has experienced no material losses. Mortgage originations are subject to volatility due to interest rates and home sales.

We have elected the fair value option under FASB ASC 825-10 (SFAS No. 159) for residential loans held for sale. The aggregate fair value exceeded the unpaid principal balance by $1.5 million as of June 30, 2016 and $0.2 million as of June 30, 2015. The aggregate fair value exceeded the unpaid principal balance by $0.2 million as of December 31, 2015.

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During the fourth quarter of 2014, $197.9 million of loans were reclassified to loans held for sale at the lower of cost or fair value. When the branch divestitures closed during the third quarter of 2015, these loans were valued at $193.6 million, resulting in a gain of $0.1 million. At June 30, 2016, there were no loans held for sale under this arrangement. See Note 3 to the consolidated financial statements for additional information.

Commercial and Commercial Real Estate Loans

Commercial and commercial real estate loans are the largest classification within earning assets, representing 39% of earning assets at June 30, 2016, compared to 34% at June 30, 2015, and 35% at December 31, 2015. At June 30, 2016, commercial and commercial real estate loans were $4.837 billion, an increase of $1.242 billion, or 35%, compared to June 30, 2015, and an increase of $1.153 billion, or 31%, compared to December 31, 2015. Commercial and commercial real estate loans attributable to the Anchor acquisition totaled $967.4 million as of the closing date of the acquisition.

Residential Real Estate Loans

At June 30, 2016, residential real estate loans held in our loan portfolio were $2.100 billion, an increase of $457.7 million, or 28%, compared to June 30, 2015, and an increase of $438.4 million, or 26%, compared to December 31, 2015. Residential real estate loans attributable to the Anchor acquisition totaled $456.1 million as of the closing date of the acquisition.

Consumer Loans

At June 30, 2016, consumer loans, including automobile loans and personal and home equity loans and lines of credit, increased $364.4 million, or 24%, compared to June 30, 2015, and increased $290.0 million, or 18%, from December 31, 2015. Consumer loans attributable to the Anchor acquisition totaled $213.0 million as of the closing date of the acquisition.

Covered Assets

On July 29, 2011, Old National acquired the banking operations of Integra in an FDIC assisted transaction. We entered into separate loss sharing agreements with the FDIC providing for specified credit loss protection for substantially all acquired single family residential loans, commercial loans, and OREO. Loans comprised the majority of the assets acquired and were subject to loss share agreements with the FDIC whereby Old National was indemnified against 80% of losses up to $275.0 million, losses in excess of $275.0 million up to $467.2 million at 0% reimbursement, and 80% of losses in excess of $467.2 million with respect to covered assets.

Old National entered into an agreement with the FDIC on June 22, 2016 to terminate its loss share agreements. Under the early termination agreement, the FDIC made a final payment of $8.7 million to Old National as consideration for the early termination. After the elimination of the remaining FDIC indemnification asset and the payment of settlement charges, Old National realized a pre-tax gain of $0.2 million during the three months ended June 30, 2016. All remaining assets that were covered by the loss share arrangements were reclassified to noncovered assets effective June 22, 2016. All future gains and losses associated with covered assets will be recognized entirely by Old National.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets at June 30, 2016 totaled $699.8 million, an increase of $70.3 million compared to $629.5 million at June 30, 2015, and an increase of $79.8 million compared to $619.9 million at December 31, 2015. During the six months ended June 30, 2016, we recorded $133.5 million of goodwill and other intangible assets associated with the acquisition of Anchor. Also during the six months ended June 30, 2016, Old National eliminated $47.5 million of goodwill and intangible assets associated with the sale of its insurance operations.

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Net Deferred Tax Assets

Net deferred tax assets increased $51.8 million since June 30, 2015 and $69.5 million since December 31, 2015 primarily due to the acquisition of Anchor. Net deferred tax assets acquired from Anchor totaled $98.2 million, consisting primarily of deferred tax assets related to federal and state net operating loss carryforwards and acquired loans. Offsetting the increases in net deferred tax assets were reversals of $46.4 million and $28.8 million since June 30, 2015 and December 31, 2015, respectively, comprised primarily of pre-acquisition book and tax differences. See Note 17 to the consolidated financial statements for additional information.

Other Assets

Other assets increased $17.0 million, or 16%, since December 31, 2015 primarily due to fluctuations in the value of our derivative assets.

Funding

Total funding, comprised of deposits and wholesale borrowings, was $12.387 billion at June 30, 2016, an increase of $1.979 billion from $10.408 billion at June 30, 2015, and an increase of $2.066 million from $10.321 billion at December 31, 2015. Included in total funding were deposits of $10.452 billion at June 30, 2016, an increase of $1.642 billion, or 19%, compared to June 30, 2015, and an increase of $2.051 billion, or 24%, compared to December 31, 2015. Deposits attributable to the Anchor acquisition totaled $1.853 billion as of the closing date of the acquisition. Offsetting the increase in total deposits from June 30, 2015 to June 30, 2016 was a $555.8 million reduction associated with our branch divestitures during the third quarter of 2015. Noninterest-bearing deposits increased $326.3 million from June 30, 2015 to June 30, 2016. NOW deposits increased $243.1 million from June 30, 2015 to June 30, 2016, while savings deposits increased $263.4 million. Money market deposits increased $413.0 million from June 30, 2015 to June 30, 2016, while time deposits increased $396.2 million.

We use wholesale funding to augment deposit funding and to help maintain our desired interest rate risk position. At June 30, 2016, wholesale borrowings, including short-term borrowings and other borrowings, totaled $1.936 billion, an increase of $337.2 million, or 21%, from June 30, 2015, and an increase of $15.3 million, or 1%, from December 31, 2015. Wholesale funding as a percentage of total funding was 16% at June 30, 2016, 15% at June 30, 2015, and 19% at December 31, 2015. The increase in wholesale funding from June 30, 2015 to June 30, 2016 was primarily due to an increase in Federal Home Loan Bank advances, which is reported in other borrowings.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities increased $42.7 million, or 24%, from December 31, 2015 primarily due to an increase in derivative liabilities and other liabilities attributable to the acquisition of Anchor.

Capital

Shareholders’ equity totaled $1.811 billion at June 30, 2016, compared to $1.457 billion at June 30, 2015 and $1.491 billion at December 31, 2015. Shareholders’ equity at June 30, 2016 included $273.6 million from the 20.4 million shares of common stock that were issued in conjunction with the acquisition of Anchor. The change in unrealized gains (losses) on investment securities increased equity by $17.6 million during the six months ended June 30, 2016. We paid cash dividends of $0.26 per share for the six months ended June 30, 2016, which reduced equity by $32.4 million.

Capital Adequacy

Old National and the banking industry are subject to various regulatory capital requirements administered by the federal banking agencies. Beginning in 2015, we are reflecting the new Basel III requirements in the tables below. At June 30, 2016, Old National and its bank subsidiary exceeded the regulatory minimums and Old National Bank met the regulatory definition of well-capitalized based on the most recent regulatory definition.

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As of June 30, 2016, Old National’s consolidated capital position remains strong as evidenced by the following comparisons of key industry ratios.

	Fully Phased-In Regulatory Guidelines			June 30,						December 31,
	Minimum			2016			2015			2015
Risk-based capital:
Tier 1 capital to total average assets (leverage ratio)		4.00	%		8.86	%		8.20	%		8.54	%
Common equity Tier 1 capital to risk-adjusted total assets		7.00			11.64			11.16			12.11
Tier 1 capital to risk-adjusted total assets		8.50			11.79			11.56			12.55
Total capital to risk-adjusted total assets		10.50			12.38			12.21			13.28
Shareholders’ equity to assets		N/A			12.56			12.06			12.44

N/A = not applicable

As of June 30, 2016, Old National Bank, Old National’s bank subsidiary, maintained a strong capital position as evidenced by the following comparisons of key industry ratios.

	Fully Phased-In Regulatory Guidelines			Well Capitalized			June 30,						December 31,
	Minimum			Guidelines			2016			2015			2015
Risk-based capital:
Tier 1 capital to total average assets (leverage ratio)		4.00	%		5.00	%		8.98	%		8.52	%		9.11	%
Common equity Tier 1 capital to risk-adjusted total assets		7.00			6.50			11.89			11.99			13.38
Tier 1 capital to risk-adjusted total assets		8.50			8.00			11.89			11.99			13.38
Total capital to risk-adjusted total assets		10.50			10.00			12.48			12.65			14.11

RISK MANAGEMENT

Overview

Old National has adopted a Risk Appetite Statement to enable the Board of Directors, Executive Leadership Group, and Senior Management to better assess, understand, and mitigate the risks of the Company. The Risk Appetite Statement addresses the following major risks: strategic, market, liquidity, credit, operational/technology, regulatory/compliance/legal, reputational, and human resources. Our Chief Risk Officer is independent of management and reports directly to the Chair of the Board’s Enterprise Risk Management Committee. The following discussion addresses three of these major risks: credit, market, and liquidity.

Credit Risk

Credit risk represents the risk of loss arising from an obligor’s inability or failure to meet contractual payment or performance terms. Our primary credit risks result from our investment and lending activities.

Investment Activities

We carry a higher exposure to loss in our pooled trust preferred securities, which are collateralized debt obligations, due to illiquidity in that market and the performance of the underlying collateral. At June 30, 2016, we had pooled trust preferred securities with a fair value of $6.7 million, or less than 1% of the available-for-sale securities portfolio. These securities remained classified as available-for-sale and at June 30, 2016, the unrealized loss on our pooled trust preferred securities was approximately $10.3 million. The fair value of these securities should improve as we get closer to maturity. There was no other-than-temporary-impairment recorded during the six months ended June 30, 2016 or 2015.

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All of our mortgage-backed securities are backed by U.S. government-sponsored or federal agencies. Municipal bonds, corporate bonds, and other debt securities are evaluated by reviewing the credit-worthiness of the issuer and general market conditions. See Note 6 to the consolidated financial statements for additional details about our investment security portfolio.

Counterparty Exposure

Counterparty exposure is the risk that the other party in a financial transaction will not fulfill its obligation. We define counterparty exposure as nonperformance risk in transactions involving federal funds sold and purchased, repurchase agreements, correspondent bank relationships, and derivative contracts with companies in the financial services industry. Old National manages exposure to counterparty risk in connection with its derivatives transactions by generally engaging in transactions with counterparties having ratings of at least A by Standard & Poor’s Rating Service or A2 by Moody’s Investors Service. Total credit exposure is monitored by counterparty, and managed within limits that management believes to be prudent. Old National’s net counterparty exposure was an asset of $111.3 million at June 30, 2016.

Lending Activities

Commercial

Commercial and industrial loans are made primarily for the purpose of financing equipment acquisition, expansion, working capital, and other general business purposes. Lease financing consists of direct financing leases and are used by commercial customers to finance capital purchases ranging from computer equipment to transportation equipment. The credit decisions for these transactions are based upon an assessment of the overall financial capacity of the applicant. A determination is made as to the applicant’s ability to repay in accordance with the proposed terms as well as an overall assessment of the risks involved. In addition to an evaluation of the applicant’s financial condition, a determination is made of the probable adequacy of the primary and secondary sources of repayment, such as additional collateral or personal guarantees, to be relied upon in the transaction. Credit agency reports of the applicant’s credit history supplement the analysis of the applicant’s creditworthiness.

Commercial mortgages and construction loans are offered to real estate investors, developers, and builders primarily domiciled in the geographic market areas we serve: Indiana, Kentucky, Michigan, and Wisconsin. These loans are secured by first mortgages on real estate at loan-to-value (“LTV”) margins deemed appropriate for the property type, quality, location, and sponsorship. Generally, these LTV ratios do not exceed 80%. The commercial properties are predominantly non-residential properties such as retail centers, apartments, industrial properties and, to a lesser extent, more specialized properties. Substantially all of our commercial real estate loans are secured by properties located in our primary market area.

In the underwriting of our commercial real estate loans, we obtain appraisals for the underlying properties. Decisions to lend are based on the economic viability of the property and the creditworthiness of the borrower. In evaluating a proposed commercial real estate loan, we primarily emphasize the ratio of the property’s projected net cash flows to the loan’s debt service requirement. The debt service coverage ratio normally is not less than 120% and it is computed after deduction for a vacancy factor and property expenses as appropriate. In addition, a personal guarantee of the loan or a portion thereof is often required from the principal(s) of the borrower. In most cases, we require title insurance insuring the priority of our lien, fire, and extended coverage casualty insurance, and flood insurance, if appropriate, in order to protect our security interest in the underlying property. In addition, business interruption insurance or other insurance may be required.

Construction loans are underwritten against projected cash flows derived from rental income, business income from an owner-occupant, or the sale of the property to an end-user. We may mitigate the risks associated with these types of loans by requiring fixed-price construction contracts, performance and payment bonding, controlled disbursements, and pre-sale contracts or pre-lease agreements.

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Consumer

We offer a variety of first mortgage and junior lien loans to consumers within our markets, with residential home mortgages comprising our largest consumer loan category. These loans are secured by a primary residence and are underwritten using traditional underwriting systems to assess the credit risks of the consumer. Decisions are primarily based on LTV ratios, debt-to-income (“DTI”) ratios, liquidity, and credit scores. A maximum LTV ratio of 80% is generally required, although higher levels are permitted with mortgage insurance or other mitigating factors. We offer fixed rate mortgages and variable rate mortgages with interest rates that are subject to change every year after the first, third, fifth, or seventh year, depending on the product and are based on fully-indexed rates such as the Prime Rate. We do not offer payment-option facilities, sub-prime loans, or any product with negative amortization.

Home equity loans are secured primarily by second mortgages on residential property of the borrower. The underwriting terms for the home equity product generally permits borrowing availability, in the aggregate, up to 90% of the appraised value of the collateral property at the time of origination. We offer fixed and variable rate home equity loans, with variable rate loans underwritten at fully-indexed rates. Decisions are primarily based on LTV ratios, DTI ratios, liquidity, and credit scores. We do not offer home equity loan products with reduced documentation.

Automobile loans include loans and leases secured by new or used automobiles. We originate automobile loans and leases primarily on an indirect basis through selected dealerships. We require borrowers to maintain collision insurance on automobiles securing consumer loans, with us listed as loss payee. Our procedures for underwriting automobile loans include an assessment of an applicant’s overall financial capacity, including credit history and the ability to meet existing obligations and payments on the proposed loan. Although an applicant’s creditworthiness is the primary consideration, the underwriting process also includes a comparison of the value of the collateral security to the proposed loan amount.

We assumed student loans in the acquisition of Anchor in May 2016. As of June 30, 2016, student loans totaled $83.3 million and are guaranteed by the government on average from 97% to 100%.

Asset Quality

Community-based lending personnel, along with region-based independent underwriting and analytic support staff, extend credit under guidelines established and administered by our Enterprise Risk Committee. This committee, which meets quarterly, is made up of outside directors. The committee monitors credit quality through its review of information such as delinquencies, credit exposures, peer comparisons, problem loans, and charge-offs. In addition, the committee reviews and approves recommended loan policy changes to assure it remains appropriate for the current lending environment.

We lend primarily to small- and medium-sized commercial and commercial real estate clients in various industries including manufacturing, agribusiness, transportation, mining, wholesaling, and retailing. At June 30, 2016, we had no concentration of loans in any single industry exceeding 10% of our portfolio and had minimal exposure to foreign borrowers and no sovereign debt. Our policy is to concentrate our lending activity in the geographic market areas we serve, primarily Indiana, Kentucky, Michigan, and Wisconsin. We are experiencing a slow and gradual improvement in the economy of our principal markets. Management expects that trends in under-performing, criticized, and classified loans will be influenced by the degree to which the economy strengthens or weakens.

During the third quarter of 2011, Old National acquired the banking operations of Integra Bank in an FDIC assisted transaction. The Company entered into separate loss sharing agreements with the FDIC providing for specified credit loss protection for substantially all acquired single family residential loans, commercial loans, and other real estate owned. In accordance with accounting for business combinations, there was no allowance brought forward on any of the acquired loans, as the credit losses evident in the loans were included in the determination of the fair value of the loans at the acquisition date. Under the terms of the loss sharing agreements, the FDIC reimbursed Old National for 80% of losses up to $275.0 million. On June 22, 2016, Old National entered into an agreement with the FDIC that terminated its loss share agreements. As a result of the termination of the loss share agreements, the remaining assets that were covered by the loss share arrangements were reclassified to noncovered assets effective June 22, 2016.

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On May 1, 2016, Old National closed on its acquisition of Anchor. As of the closing date of the acquisition, loans totaled $1.637 billion and other real estate owned totaled $18.2 million. In accordance with accounting for business combinations, there was no allowance brought forward on any of the acquired loans, as the credit losses evident in the loans were included in the determination of the fair value of the loans at the acquisition date. Old National reviewed the acquired loans and determined that as of June 30, 2016, $9.4 million met the definition of criticized and $39.3 million were considered classified (of which $35.0 million are reported with nonaccrual loans). Our current preference would be to work these loans and avoid foreclosure actions unless additional credit deterioration becomes apparent. These acquired impaired loans, along with $14.9 million of other real estate owned, are included in our summary of under-performing, criticized, and classified assets found below.

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Summary of under-performing, criticized, and classified assets:

	June 30,						December 31,
(dollars in thousands)	2016			2015			2015
Nonaccrual loans:
Commercial	$	54,554		$	70,665		$	57,536
Commercial real estate		75,730			66,250			47,350
Residential real estate		17,185			14,058			14,953
Consumer		12,871			5,389			5,198
Covered loans (1)		—			11,440			7,336
Total nonaccrual loans (2)		160,340			167,802			132,373
Renegotiated loans not on nonaccrual:
Noncovered loans		13,904			13,398			14,147
Covered loans (1)		—			165			138
Past due loans (90 days or more and still accruing):
Commercial		175			325			565
Commercial real estate		—			—			—
Residential real estate		101			88			114
Consumer		394			185			227
Covered loans (1)		—			—			10
Total past due loans		670			598			916
Other real estate owned		24,254			9,388			7,594
Other real estate owned, covered (1)		—			4,753			4,904
Total under-performing assets	$	199,168		$	196,104		$	160,072
Classified loans (includes nonaccrual, renegotiated, past due 90 days, and other problem loans)	$	250,214		$	242,681		$	204,710
Classified loans, covered (1)		—			14,425			8,584
Other classified assets (3)		6,392			11,371			6,857
Criticized loans		106,886			163,660			132,898
Criticized loans, covered (1)		—			10,261			1,449
Total criticized and classified assets	$	363,492		$	442,398		$	354,498
Asset Quality Ratios including covered assets:
Non-performing loans/total loans (4) (5)		1.97	%		2.68	%		2.11
Under-performing assets/total loans and other real estate owned (4)		2.25			2.89			2.30
Under-performing assets/total assets		1.38			1.62			1.33
Allowance for loan losses/under-performing assets (6)		26.01			25.59			32.63
Allowance for loan losses/nonaccrual loans (2)		32.31			29.91			39.46

(1) The Company entered into separate loss sharing agreements with the FDIC providing for specified credit loss protection for substantially all acquired single family residential loans, commercial loans, and other real estate owned. On June 22, 2016, Old National entered into an early termination agreement with the FDIC that terminated all loss share agreements. The Company reclassifed all covered assets to noncovered assets effective June 22, 2016.

(2) Includes purchased credit impaired loans of approximately $28.4 million at June 30, 2016, $31.7 million at June 30, 2015, and $15.9 million at December 31, 2015 that are categorized as nonaccrual because the collection of principal or interest is doubtful. These loans are accounted for under FASB ASC 310-30 and accordingly treated as performing assets.

(3) Includes 2 pooled trust preferred securities, 2 corporate securities, and 1 insurance policy at June 30, 2016.

(4) Loans exclude loans held for sale.

(5) Non-performing loans include nonaccrual and renegotiated loans.

(6) Because the acquired loans were recorded at fair value in accordance with ASC 805 at the date of acquisition, the credit risk is incorporated in the fair value recorded. No allowance for loan losses is recorded on the acquisition date.

Under-performing assets totaled $199.2 million at June 30, 2016, compared to $196.1 million at June 30, 2015 and $160.1 million at December 31, 2015. Under-performing assets as a percentage of total loans and other real estate owned at June 30, 2016 were 2.25%, a decrease of 64 basis points from 2.89% at June 30, 2015 and a decrease of 5 basis points from 2.30% at December 31, 2015.

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Nonaccrual loans were $160.3 million at June 30, 2016, compared to $167.8 million at June 30, 2015 and $132.4 million at December 31, 2015. Nonaccrual loans decreased from June 30, 2015 primarily due to a decrease in nonaccrual commercial loans. Nonaccrual loans at June 30, 2016 included $35.0 million of loans related to the Anchor acquisition. As a percentage of nonaccrual loans, the allowance for loan losses was 32.31% at June 30, 2016, compared to 29.91% at June 30, 2015 and 39.46% at December 31, 2015. Purchased credit impaired loans that were included in the nonaccrual category because the collection of principal or interest is doubtful totaled $28.4 million at June 30, 2016, compared to $31.7 million at June 30, 2015 and $15.9 million at December 31, 2015. However, they are accounted for under FASB ASC 310-30 and accordingly treated as performing assets. We would expect our nonaccrual loans to remain at elevated levels until management can work through and resolve these purchased credit impaired loans.

Total criticized and classified assets were $363.5 million at June 30, 2016, a decrease of $78.9 million from June 30, 2015, and an increase of $9.0 million from December 31, 2015. Other classified assets include investment securities that fell below investment grade rating totaling $6.4 million at June 30, 2016, compared to $11.4 million at June 30, 2015 and $6.9 million at December 31, 2015.

Old National may choose to restructure the contractual terms of certain loans. The decision to restructure a loan, versus aggressively enforcing the collection of the loan, may benefit Old National by increasing the ultimate probability of collection.

Any loans that are modified are reviewed by Old National to identify if a troubled debt restructuring (“TDR”) has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status. The modification of the terms of such loans include one or a combination of the following: a reduction of the stated interest rate of the loan, an extension of the maturity date at a stated rate of interest lower than the current market rate of new debt with similar risk, or a permanent reduction of the recorded investment of the loan.

Loans modified in a TDR are typically placed on nonaccrual status until we determine the future collection of principal and interest is reasonably assured, which generally requires that the borrower demonstrate a period of performance according to the restructured terms for six months.

If we are unable to resolve a nonperforming loan issue, the credit will be charged off when it is apparent there will be a loss. For large commercial type loans, each relationship is individually analyzed for evidence of apparent loss based on quantitative benchmarks or subjectively based upon certain events or particular circumstances. Old National charges off small commercial loans scored through our small business credit center with contractual balances under $250,000 that have been placed on nonaccrual status or became 90 days or more delinquent, without regard to the collateral position. For residential and consumer loans, a charge off is recorded at the time foreclosure is initiated or when the loan becomes 120 to 180 days past due, whichever is earlier.

For commercial TDRs, an allocated reserve is established within the allowance for loan losses for the difference between the carrying value of the loan and its computed value. To determine the value of the loan, one of the following methods is selected: (1) the present value of expected cash flows discounted at the loan’s original effective interest rate, (2) the loan’s observable market price, or (3) the fair value of the collateral value, if the loan is collateral dependent. The allocated reserve is established as the difference between the carrying value of the loan and the collectable value. If there are significant changes in the amount or timing of the loan’s expected future cash flows, impairment is recalculated and the valuation allowance is adjusted accordingly.

When a residential or consumer loan is identified as a troubled debt restructuring, the loan is typically written down to its collateral value less selling costs.

At June 30, 2016, our TDRs consisted of $24.3 million of commercial loans, $21.4 million of commercial real estate loans, $2.6 million of residential loans, and $3.6 million of consumer loans totaling $51.9 million. Approximately $38.1 million of the TDRs at June 30, 2016 were included with nonaccrual loans. At December 31, 2015, our TDRs consisted of $23.4 million of commercial loans, $14.6 million of commercial real estate loans, $2.7 million of residential loans, and $3.6 million of consumer loans totaling $44.3 million. Approximately $30.0 million of the TDRs at December 31, 2015 were included with nonaccrual loans.

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Old National has allocated specific reserves to customers whose loan terms have been modified in TDRs totaling $5.6 million as of June 30, 2016 and $2.3 million of December 31, 2015. As of June 30, 2016, Old National had committed to lend an additional $4.2 million to customers with outstanding loans that are classified as TDRs.

The terms of certain other loans were modified during the six months ended June 30, 2016 that did not meet the definition of a TDR. It is our process to review all classified and criticized loans that, during the period, have been renewed, have entered into a forbearance agreement, have gone from principal and interest to interest only, or have extended the maturity date. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on its debt in the foreseeable future without the modification. The evaluation is performed under our internal underwriting policy. We also evaluate whether a concession has been granted or if we were adequately compensated through a market interest rate, additional collateral, or a bona fide guarantee. We also consider whether the modification was insignificant relative to the other terms of the agreement or the delay in a payment.

Purchased credit impaired (“PCI”) loans are not considered impaired until after the point at which there has been a degradation of cash flows below our expected cash flows at acquisition. If a PCI loan is subsequently modified, and meets the definition of a TDR, it will be removed from PCI accounting and accounted for as a TDR only if the PCI loan was being accounted for individually. If the purchased credit impaired loan is being accounted for as part of a pool, it will not be removed from the pool. As of June 30, 2016, it has not been necessary to remove any loans from PCI accounting.

In general, once a modified loan is considered a TDR, the loan will always be considered a TDR, and therefore impaired, until it is paid in full, otherwise settled, sold, or charged off. However, guidance also permits for loans to be removed from TDR status when subsequently restructured under these circumstances: (1) at the time of the subsequent restructuring, the borrower is not experiencing financial difficulties, and this is documented by a current credit evaluation at the time of the restructuring, (2) under the terms of the subsequent restructuring agreement, the institution has granted no concession to the borrower; and (3) the subsequent restructuring agreement includes market terms that are no less favorable than those that would be offered for a comparable new loan. For loans subsequently restructured that have cumulative principal forgiveness, the loan should continue to be measured in accordance with ASC 310-10, “Receivables – Overall”. However, consistent with ASC 310-40-50-2, “Troubled Debt Restructurings by Creditors, Creditor Disclosure of Troubled Debt Restructurings,” the loan would not be required to be reported in the years following the restructuring if the subsequent restructuring meets both of these criteria: (1) has an interest rate at the time of the subsequent restructuring that is not less than a market interest rate; and (2) is performing in compliance with its modified terms after the subsequent restructuring.

Allowance for Loan Losses and Reserve for Unfunded Commitments

Loan charge-offs, net of recoveries, totaled $0.2 million for the three months ended June 30, 2016, compared to $1.0 million for the three months ended June 30, 2015. Annualized, net charge-offs (recoveries) to average loans were 0.01% for the three months ended June 30, 2016 compared to 0.06% for the three months ended June 30, 2015. Loan charge-offs, net of recoveries, totaled $1.8 million for the six months ended June 30, 2016, compared to $(1.0) million for the six months ended June 30, 2015. Annualized, net charge-offs (recoveries) to average loans were 0.05% for the six months ended June 30, 2016 compared to 0.00% for the six months ended June 30, 2015. Management will continue its efforts to reduce the level of non-performing loans and may consider the possibility of sales of troubled and non-performing loans, which could result in additional charge-offs to the allowance for loan losses.

To provide for the risk of loss inherent in extending credit, we maintain an allowance for loan losses. The allowance for loan losses is maintained at a level believed adequate by management to absorb probable losses incurred in the consolidated loan portfolio. Management’s evaluation of the adequacy of the allowance is an estimate based on reviews of individual loans, pools of homogeneous loans, assessments of the impact of current and anticipated economic conditions on the portfolio, and historical loss experience.

At June 30, 2016, the allowance for loan losses was $51.8 million, an increase of $1.6 million compared to $50.2 million at June 30, 2015, and a decrease of $0.4 million compared to $52.2 million at December 31, 2015. Over the last twelve months, charge-offs have remained low. Continued loan growth in future periods could result in an increase in provision expense.

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As a percentage of total loans excluding loans held for sale, the allowance was 0.59% at June 30, 2016, compared to 0.74% at June 30, 2015, and 0.75% at December 31, 2015. Our ratio of allowance for loan losses to total loans declined as of June 30, 2016 compared to June 30, 2015 and December 31, 2015 with the addition of Anchor’s $1.637 billion loan portfolio. In accordance with ASC 805, no allowance for loan losses is recorded at the date of acquisition and a reserve is only established to absorb any subsequent credit deterioration or adverse changes in expected cash flows. At June 30, 2016, $0.7 million had been reserved for previously purchased credits.

The following table provides additional details of the following components of the allowance for loan losses at June 30, 2016, including FAS 5/ASC 450 (Accounting for Contingencies), FAS 114/ASC 310-35 (Accounting by Creditors for Impairment of a Loan) and SOP 03-3/ASC 310-30 (Accounting for Certain Loans or Debt Securities Acquired in a Transfer):

(dollars in thousands)	FAS 5			FAS 114			SOP 03-3			Total
Loan balance	$	8,637,594		$	112,491		$	80,073		$	8,830,158
Remaining purchase discount		108,791			9,706			40,919			159,416
Allowance, January 1, 2016	$	39,386		$	11,488		$	1,359		$	52,233
Charge-offs		(2,972	)		(2,746	)		(901	)		(6,619	)
Recoveries		734			3,398			648			4,780
Provision expense		2,535			(702	)		(423	)		1,410
Allowance, June 30, 2016	$	39,683		$	11,438		$	683		$	51,804

We maintain an allowance for losses on unfunded commercial lending commitments and letters of credit to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the allowance for loan losses, modified to take into account the probability of a drawdown on the commitment. The reserve for unfunded loan commitments is classified as a liability account on the balance sheet and totaled $4.4 million at June 30, 2016, compared to $3.6 million at December 31, 2015.

Market Risk

Market risk is the risk that the estimated fair value of our assets, liabilities, and derivative financial instruments will decline as a result of changes in interest rates or financial market volatility, or that our net income will be significantly reduced by interest rate changes.

Interest rates have remained low for an extended period of time. The yield curve has flattened as the 10 year Treasury reached a low of 1.439% during the second quarter of 2016. These factors continue to put pressure on our net interest income and margin.

The objective of our interest rate management process is to maximize net interest income while operating within acceptable limits established for interest rate risk and maintaining adequate levels of funding and liquidity.

Potential cash flows, sales, or replacement value of many of our assets and liabilities, especially those that earn or pay interest, are sensitive to changes in the general level of interest rates. This interest rate risk arises primarily from our normal business activities of gathering deposits and extending loans. Many factors affect our exposure to changes in interest rates, such as general economic and financial conditions, customer preferences, historical pricing relationships, and re-pricing characteristics of financial instruments. Our earnings can also be affected by the monetary and fiscal policies of the U.S. Government and its agencies, particularly the Federal Reserve Board.

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In managing interest rate risk, we, through the Funds Management Committee, a committee of the Board of Directors, establish guidelines, for asset and liability management, including measurement of short and long-term sensitivities to changes in interest rates. Based on the results of our analysis, we may use different techniques to manage changing trends in interest rates including:

• adjusting balance sheet mix or altering interest rate characteristics of assets and liabilities;

• changing product pricing strategies;

• modifying characteristics of the investment securities portfolio; or

• using derivative financial instruments, to a limited degree.

A key element in our ongoing process is to measure and monitor interest rate risk using a model to quantify the impact of changing interest rates on the Company. The model quantifies the effects of various possible interest rate scenarios on projected net interest income. The model measures the impact on net interest income relative to a base case scenario. The base case scenario assumes that the balance sheet and interest rates are held at current levels. The model shows our projected net interest income sensitivity based on interest rate changes only and does not consider other forecast assumptions.

The following table illustrates our projected net interest income sensitivity over a two year cumulative horizon based on the asset/liability model as of June 30, 2016 and 2015:

	Immediate
	Rate Decrease					Immediate Rate Increase
(dollars in thousands)	-50 Basis Points			Base		+100 Basis Points			+200 Basis Points			+300 Basis Points
June 30, 2016
Projected interest income:
Money market, other interest earning investments, and investment securities	$	207,606		$	219,294	$	235,172		$	248,160		$	259,314
Loans		591,557			633,419		719,172			802,883			885,833
Total interest income		799,163			852,713		954,344			1,051,043			1,145,147
Projected interest expense:
Deposits		18,803			35,488		93,291			151,090			208,883
Borrowings		46,190			56,843		80,733			104,540			128,325
Total interest expense		64,993			92,331		174,024			255,630			337,208
Net interest income	$	734,170		$	760,382	$	780,320		$	795,413		$	807,939
Change from base	$	(26,212	)			$	19,938		$	35,031		$	47,557
% change from base		-3.45	%				2.62	%		4.61	%		6.25	%
June 30, 2015
Projected interest income:
Money market, other interest earning investments, and investment securities	$	199,066		$	209,848	$	225,069		$	237,314		$	248,185
Loans		490,430			509,859		573,990			638,279			701,302
Total interest income		689,496			719,707		799,059			875,593			949,487
Projected interest expense:
Deposits		18,810			29,199		77,705			126,211			174,716
Borrowings		43,597			47,180		64,046			80,912			97,778
Total interest expense		62,407			76,379		141,751			207,123			272,494
Net interest income	$	627,089		$	643,328	$	657,308		$	668,470		$	676,993
Change from base	$	(16,239	)			$	13,980		$	25,142		$	33,665
% change from base		-2.52	%				2.17	%		3.91	%		5.23	%

Our asset sensitivity increased slightly year over year primarily due to the Anchor acquisition in May 2016 and the resulting changes in our balance sheet mix. We use derivative instruments to mitigate interest rate risk, including certain cash flow hedges on variable-rate debt with a notional amount of $625 million at June 30, 2016.

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A key element in the measurement and modeling of interest rate risk is the re-pricing assumptions of our transaction deposit accounts, which have no contractual maturity dates. We assume this deposit base is comprised of both core and more volatile balances and consists of both non-interest bearing and interest bearing accounts. Core deposit balances are assumed to be less interest rate sensitive and provide longer term funding. Volatile balances are assumed to be more interest rate sensitive and shorter in term. As part of our semi-static balance sheet modeling, we assume interest rates paid on the volatile deposits move in conjunction with changes in interest rates, in order to retain these deposits. This may include current non-interest bearing accounts.

Because the models are driven by expected behavior in various interest rate scenarios and many factors besides market interest rates affect our net interest income, we recognize that model outputs are not guarantees of actual results. For this reason, we model many different combinations of interest rates and balance sheet assumptions to understand our overall sensitivity to market interest rate changes, including shocks, yield curve flattening, yield curve steepening, as well as forecasts of likely interest rate scenarios. As of June 30, 2016, our projected net interest income sensitivity based on the asset/liability models we utilize was within the limits of the Company’s interest rate risk policy for the scenarios tested.

We use derivatives, primarily interest rate swaps, as one method to manage interest rate risk in the ordinary course of business. We also provide derivatives to our commercial customers in connection with managing interest rate risk. Our derivatives had an estimated fair value loss of $21.8 million at June 30, 2016, compared to an estimated fair value loss of $11.0 million at December 31, 2015. See Note 18 to the consolidated financial statements for further discussion of derivative financial instruments.

Liquidity Risk

Liquidity risk arises from the possibility that we may not be able to satisfy current or future financial commitments, or may become unduly reliant on alternative funding sources. The Funds Management Committee of the Board of Directors establishes liquidity risk guidelines and, along with the Balance Sheet Management Committee, monitors liquidity risk. The objective of liquidity management is to ensure we have the ability to fund balance sheet growth and meet deposit and debt obligations in a timely and cost-effective manner. Management monitors liquidity through a regular review of asset and liability maturities, funding sources, and loan and deposit forecasts. We maintain strategic and contingency liquidity plans to ensure sufficient available funding to satisfy requirements for balance sheet growth, properly manage capital markets’ funding sources and to address unexpected liquidity requirements.

Loan repayments and maturing investment securities are a relatively predictable source of funds. However, deposit flows, calls of investment securities and prepayments of loans and mortgage-related securities are strongly influenced by interest rates, the housing market, general and local economic conditions, and competition in the marketplace. We continually monitor marketplace trends to identify patterns that might improve the predictability of the timing of deposit flows or asset prepayments.

A time deposit maturity schedule for Old National Bank is shown in the following table for June 30, 2016.

(dollars in thousands)
Maturity Bucket	Amount		Rate
2016	$	540,337		1.01	%
2017		526,060		0.61
2018		191,582		0.99
2019		88,771		1.35
2020		86,161		1.72
2021 and beyond		46,110		1.32
Total	$	1,479,021		0.94	%

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Our ability to acquire funding at competitive prices is influenced by rating agencies’ views of our credit quality, liquidity, capital, and earnings. All of the rating agencies place us in an investment grade that indicates a low risk of default. For both Old National and Old National Bank:

• Moody’s Investor Service confirmed the Long-Term Rating of A3 of Old National Bancorp’s senior unsecured/issuer rating on May 2, 2016.

• Moody’s Investor Service confirmed Old National Bank’s long-term deposit rating of Aa3 on May 2, 2016. The bank’s short-term deposit rating was affirmed at P-1 and the bank’s issuer rating was confirmed at A3.

The rating outlook from Moody’s Investor Service is stable. Moody’s Investor Service concluded a rating review of Old National Bank on May 2, 2016.

The credit ratings of Old National and Old National Bank at June 30, 2016, are shown in the following table.

	Moody’s Investor Service
	Long-term	Short-term
Old National Bancorp	A3	N/A
Old National Bank	Aa3	P-1

N/A = not applicable

Old National Bank maintains relationships in capital markets with brokers and dealers to issue certificates of deposit and short-term and medium-term bank notes as well. As of June 30, 2016, Old National Bancorp and its subsidiaries had the following availability of liquid funds and borrowings:

	Parent
(dollars in thousands)	Company		Subsidiaries
Available liquid funds:
Cash and due from banks	$	129,858	$	138,062
Unencumbered government-issued debt securities		—		1,278,411
Unencumbered investment grade municipal securities		—		498,329
Unencumbered corporate securities		—		88,021
Availability of borrowings:
Amount available from Federal Reserve discount window*		—		465,558
Amount available from Federal Home Loan Bank Indianapolis*		—		317,428
Total available funds	$	129,858	$	2,785,809

* Based on collateral pledged

The Parent Company (Old National Bancorp) has routine funding requirements consisting primarily of operating expenses, dividends to shareholders, debt service, net derivative cash flows, and funds used for acquisitions. The Parent Company can obtain funding to meet its obligations from dividends and management fees collected from its subsidiaries, operating line of credit, and through the issuance of debt securities. Additionally, the Parent Company has a shelf registration in place with the Securities and Exchange Commission permitting ready access to the public debt and equity markets. At June 30, 2016, the Parent Company’s other borrowings outstanding were $214.5 million.

Federal banking laws regulate the amount of dividends that may be paid by banking subsidiaries without prior 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 2015 or 2016 and is not currently required.

OFF-BALANCE SHEET ARRANGEMENTS

Off-balance sheet arrangements include commitments to extend credit and financial guarantees. Commitments to extend credit and financial guarantees are used to meet the financial needs of our customers. Our banking affiliates have entered into various agreements to extend credit, including loan commitments of $2.251 billion and standby letters of credit of $61.6 million at June 30, 2016. At June 30, 2016, approximately $2.136 billion of the loan

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commitments had fixed rates and $115.8 million had floating rates, with the floating rates ranging from 0% to 25%. At December 31, 2015, loan commitments were $1.746 billion and standby letters of credit were $62.6 million. The term of these off-balance sheet arrangements is typically one year or less.

Old National entered into a risk participation in an interest rate swap during the second quarter of 2007, which had a notional amount of $7.2 million at June 30, 2016. Old National entered into an additional risk participation in an interest rate swap during the third quarter of 2014, which had a notional amount of $10.9 million at June 30, 2016.

CONTRACTUAL OBLIGATIONS

The following table presents our significant fixed and determinable contractual obligations at June 30, 2016:

	Payments Due In
	One Year		One to		Three to		Over
(dollars in thousands)	or Less (1)		Three Years		Five Years		Five Years		Total
Deposits without stated maturity	$	8,972,581	$	—	$	—	$	—	$	8,972,581
IRAs, consumer, and brokered certificates of deposit		540,337		717,642		174,932		46,110		1,479,021
Short-term borrowings		567,659		—		—		—		567,659
Other borrowings		617,384		291,030		52,608		406,874		1,367,896
Fixed interest payments (2)		8,159		27,495		23,742		54,399		113,795
Operating leases		14,650		56,804		52,490		205,555		329,499
Other long-term liabilities (3)		19		—		—		—		19

(1) For the remaining six months of fiscal 2016.

(2) Our senior notes, subordinated notes, certain trust preferred securities, and certain Federal Home Loan Bank advances have fixed-rates ranging from 0.44% to 6.76%. All of our other long-term debt is at LIBOR based variable-rates at June 30, 2016. The projected variable interest assumes no increase in LIBOR rates from June 30, 2016.

(3) Amount expected to be contributed to the pension plans in 2016. Amounts for 2017 and beyond are unknown at this time.

We rent certain premises and equipment under operating leases. See Note 19 to the consolidated financial statements for additional information on long-term lease arrangements.

We are party to various derivative contracts as a means to manage the balance sheet and our related exposure to changes in interest rates, to manage our residential real estate loan origination and sale activity, and to provide derivative contracts to our clients. Since the derivative liabilities recorded on the balance sheet change frequently and do not represent the amounts that may ultimately be paid under these contracts, these liabilities are not included in the table of contractual obligations presented above. Further discussion of derivative instruments is included in Note 18 to the consolidated financial statements.

In the normal course of business, various legal actions and proceedings are pending against us and our affiliates which are incidental to the business in which they are engaged. Further discussion of contingent liabilities is included in Note 19 to the consolidated financial statements.

In addition, liabilities recorded under FASB ASC 740-10 (FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109) are not included in the table because the amount and timing of any cash payments cannot be reasonably estimated. Further discussion of income taxes and liabilities recorded under FASB ASC 740-10 is included in Note 14 to the consolidated financial statements of our Annual Report on Form 10-K for the year ended December 31, 2015.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015. Certain accounting policies require management to use significant judgment and estimates, which can have a material impact on the carrying value of certain assets and liabilities. We consider these policies to be critical accounting policies. The judgment and assumptions made are based upon historical experience or other factors that management believes to be reasonable under the circumstances. Because of the nature of the judgment and assumptions, actual results could differ from estimates, which could have a material effect on our financial condition and results of operations.

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The following accounting policies materially affect our reported earnings and financial condition and require significant judgments and estimates. Management has reviewed these critical accounting estimates and related disclosures with our Audit Committee.

Goodwill and Intangibles

• Description. For acquisitions, we are required to record the assets acquired, including identified intangible assets, and the liabilities assumed at their fair value. These often involve estimates based on third party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques that may include estimates of attrition, inflation, asset growth rates, or other relevant factors. In addition, the determination of the useful lives over which an intangible asset will be amortized is subjective. Under FASB ASC 350 (SFAS No. 142 Goodwill and Other Intangible Assets), goodwill and indefinite-lived assets recorded must be reviewed for impairment on an annual basis, as well as on an interim basis if events or changes indicate that the asset might be impaired. An impairment loss must be recognized for any excess of carrying value over fair value of the goodwill or the indefinite-lived intangible asset.

• Judgments and Uncertainties. The determination of fair values is based on valuations using management’s assumptions of future growth rates, future attrition, discount rates, multiples of earnings or other relevant factors.

• Effect if Actual Results Differ From Assumptions. Changes in these factors, as well as downturns in economic or business conditions, could have a significant adverse impact on the carrying values of goodwill or intangible assets and could result in impairment losses affecting our financials as a whole and the individual lines of business in which the goodwill or intangibles reside.

Acquired Impaired Loans

• Description. Loans acquired with evidence of credit deterioration since inception and for which it is probable that all contractual payments will not be received are accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”). These loans are recorded at fair value at the time of acquisition, with no carryover of the related allowance for loan losses. Fair value of acquired loans is determined using a discounted cash flow methodology based on assumptions about the amount and timing of principal and interest payments, principal prepayments and principal defaults and losses, and current market rates. In recording the acquisition date fair values of acquired impaired loans, management calculates a non-accretable difference (the credit component of the purchased loans) and an accretable difference (the yield component of the purchased loans).

Over the life of the acquired loans, we continue to estimate cash flows expected to be collected on pools of loans sharing common risk characteristics, which are treated in the aggregate when applying various valuation techniques. We evaluate at each balance sheet date whether the present value of our pools of loans determined using the effective interest rates has decreased significantly and if so, recognize a provision for loan loss in our consolidated statement of income. For any significant increases in cash flows expected to be collected, we adjust the amount of accretable yield recognized on a prospective basis over the pool’s remaining life.

• Judgments and Uncertainties. These cash flow evaluations are inherently subjective as they require management to make estimates about expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change.

• Effect if Actual Results Differ From Assumptions. Changes in these factors, as well as changing economic conditions will likely impact the carrying value of these acquired loans.

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Allowance for Loan Losses

• Description. The allowance for loan losses is maintained at a level believed adequate by management to absorb probable incurred losses in the consolidated loan portfolio. Management’s evaluation of the adequacy of the allowance is an estimate based on reviews of individual loans, pools of homogeneous loans, assessments of the impact of current and anticipated economic conditions on the portfolio, and historical loss experience. The allowance represents management’s best estimate, but significant downturns in circumstances relating to loan quality and economic conditions could result in a requirement for additional allowance. Likewise, an upturn in loan quality and improved economic conditions may allow a reduction in the required allowance. In either instance, unanticipated changes could have a significant impact on results of operations.

The allowance is increased through a provision charged to operating expense. Uncollectible loans are charged-off through the allowance. Recoveries of loans previously charged-off are added to the allowance. A loan is considered impaired when it is probable that contractual interest and principal payments will not be collected either for the amounts or by the dates as scheduled in the loan agreement. Our policy for recognizing income on impaired loans is to accrue interest unless a loan is placed on nonaccrual status. A loan is generally placed on nonaccrual status when principal or interest becomes 90 days past due unless it is well secured and in the process of collection, or earlier when concern exists as to the ultimate collectibility of principal or interest. We monitor the quality of our loan portfolio on an on-going basis and use a combination of detailed credit assessments by relationship managers and credit officers, historic loss trends, and economic and business environment factors in determining the allowance for loan losses. We record provisions for loan losses based on current loans outstanding, grade changes, mix of loans, and expected losses. A detailed loan loss evaluation on an individual loan basis for our highest risk loans is performed quarterly. Management follows the progress of the economy and how it might affect our borrowers in both the near and the intermediate term. We have a formalized and disciplined independent loan review program to evaluate loan administration, credit quality, and compliance with corporate loan standards. This program includes periodic reviews and regular reviews of problem loan reports, delinquencies and charge-offs.

• Judgments and Uncertainties. We utilize a probability of default (“PD”)/loss given default (“LGD”) model as a tool to determine the adequacy of the allowance for loan losses for performing commercial and commercial real estate loans. The PD is forecast using a transition matrix to determine the likelihood of a customer’s asset quality rating (“AQR”) migrating from its current AQR to any other status within the time horizon. Transition rates are measured using Old National’s own historical experience. The model assumes that recent historical transition rates will continue into the future. The LGD is defined as credit loss incurred when an obligor of the bank defaults. The sum of all net charge-offs for a particular portfolio segment are divided by all loans that have defaulted over a given period of time. The expected loss derived from the model considers the PD, LGD, and exposure at default. Additionally, qualitative factors, such as changes in lending policies or procedures, and economic business conditions are also considered.

We use historic loss ratios adjusted for economic conditions to determine the appropriate level of allowance for residential real estate and consumer loans.

• Effect if Actual Results Differ From Assumptions. The allowance represents management’s best estimate, but significant downturns in circumstances relating to loan quality and economic conditions could result in a requirement for additional allowance. Likewise, an upturn in loan quality and improved economic conditions may allow a reduction in the required allowance. In either instance, unanticipated changes could have a significant impact on results of operations.

Management’s analysis of probable losses in the portfolio at June 30, 2016, resulted in a range for allowance for loan losses of $15.2 million. The range pertains to general (FASB ASC 450, Contingencies/SFAS 5) reserves for both retail and performing commercial loans. Specific (FASB ASC 310, Receivables/SFAS 114) reserves do not have a range of probable loss. Due to the risks and uncertainty associated with the economy and our projection of FAS 5 loss rates inherent in the portfolio, we establish a range of probable outcomes (a high-end estimate and a low-end estimate) and evaluate our position within this range. The potential effect to net income based on our position in the range relative to the high and low endpoints is a decrease of $1.9 million and an increase of $7.9 million, respectively, after taking into account the tax effects. These sensitivities are hypothetical and are not intended to represent actual results.

86

Derivative Financial Instruments

• Description. As part of our overall interest rate risk management, we use derivative instruments to reduce exposure to changes in interest rates and market prices for financial instruments. The application of the hedge accounting policy requires judgment in the assessment of hedge effectiveness, identification of similar hedged item groupings and measurement of changes in the fair value of derivative financial instruments and hedged items. To the extent hedging relationships are found to be effective, as determined by FASB ASC 815 (SFAS No. 133 Accounting for Derivative Instruments and Hedging Activities) (“ASC Topic 815”), changes in fair value of the derivatives are offset by changes in the fair value of the related hedged item or recorded to other comprehensive income. Management believes hedge effectiveness is evaluated properly in preparation of the financial statements. All of the derivative financial instruments we use have an active market and indications of fair value can be readily obtained. We are not using the “short-cut” method of accounting for any fair value derivatives.

• Judgments and Uncertainties. The application of the hedge accounting policy requires judgment in the assessment of hedge effectiveness, identification of similar hedged item groupings and measurement of changes in the fair value of derivative financial instruments and hedged items.

• Effect if Actual Results Differ From Assumptions. To the extent hedging relationships are found to be effective, as determined by ASC Topic 815, changes in fair value of the derivatives are offset by changes in the fair value of the related hedged item or recorded to other comprehensive income. However, if in the future the derivative financial instruments used by us no longer qualify for hedge accounting treatment, all changes in fair value of the derivative would flow through the consolidated statements of income in other noninterest income, resulting in greater volatility in our earnings.

Income Taxes

• Description. We are subject to the income tax laws of the U.S., its states, and the municipalities in which we operate. These tax laws are complex and subject to different interpretations by the taxpayer and the relevant government taxing authorities. We review income tax expense and the carrying value of deferred tax assets quarterly; and as new information becomes available, the balances are adjusted as appropriate. FASB ASC 740-10 (FIN 48) prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements. See Note 14 to the consolidated financial statements of our Annual Report on Form 10-K for the year ended December 31, 2015 for a further description of our provision and related income tax assets and liabilities.

• Judgments and Uncertainties. In establishing a provision for income tax expense, we must make judgments and interpretations about the application of these inherently complex tax laws. We must also make estimates about when in the future certain items will affect taxable income in the various tax jurisdictions. Disputes over interpretations of the tax laws may be subject to review/adjudication by the court systems of the various tax jurisdictions or may be settled with the taxing authority upon examination or audit.

• Effect if Actual Results Differ From Assumptions. Although management believes that the judgments and estimates used are reasonable, actual results could differ and we may be exposed to losses or gains that could be material. To the extent we prevail in matters for which reserves have been established, or are required to pay amounts in excess of our reserves, our effective income tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement would result in an increase in our effective income tax rate in the period of resolution. A favorable tax settlement would result in a reduction in our effective income tax rate in the period of resolution.

87

FORWARD-LOOKING STATEMENTS

In this report, we have made various statements regarding current expectations or forecasts of future events, which speak only as of the date the statements are made. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are also made from time-to-time in press releases and in oral statements made by the officers of Old National Bancorp (“Old National,” or the “Company”). Forward-looking statements are identified by the words “expect,” “may,” “could,” “intend,” “project,” “estimate,” “believe”, “anticipate” and similar expressions. Forward-looking statements also include, but are not limited to, statements regarding estimated cost savings, plans and objectives for future operations, the Company’s business and growth strategies, including future acquisitions of banks, regulatory developments, and expectations about performance as well as economic and market conditions and trends.

Such forward-looking statements are based on assumptions and estimates, which although believed to be reasonable, may turn out to be incorrect. Therefore, undue reliance should not be placed upon these estimates and statements. We cannot assure that any of these statements, estimates, or beliefs will be realized and actual results may differ from those contemplated in these “forward-looking statements.” We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise. You are advised to consult further disclosures we may make on related subjects in our filings with the SEC. In addition to other factors discussed in this report, some of the important factors that could cause actual results to differ materially from those discussed in the forward-looking statements include the following:

• economic, market, operational, liquidity, credit and interest rate risks associated with our business;

• economic conditions generally and in the financial services industry;

• expected cost savings in connection with the consolidation of recent acquisitions may not be fully realized or realized within the expected time frames, and deposit attrition, customer loss and revenue loss following completed acquisitions may be greater than expected;

• failure to properly understand risk characteristics of newly entered markets;

• increased competition in the financial services industry either nationally or regionally, resulting in, among other things, credit quality deterioration;

• our ability to achieve loan and deposit growth;

• volatility and direction of market interest rates;

• governmental legislation and regulation, including changes in accounting regulation or standards;

• our ability to execute our business plan;

• a weakening of the economy which could materially impact credit quality trends and the ability to generate loans;

• changes in the securities markets; and

• changes in fiscal, monetary, and tax policies.

Investors should consider these risks, uncertainties and other factors in addition to risk factors included in our other filings with the SEC.

ITEM 3. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Risk and Liquidity Risk.

ITEM 4. CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Evaluation of disclosure controls and procedures. Old National’s principal executive officer and principal financial officer have concluded that Old National’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended), based on their evaluation of these controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q, are effective at the reasonable assurance level as discussed below to ensure that information required to be disclosed by Old National in the reports it files under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to Old National’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

88

Limitations on the Effectiveness of Controls. Management, including the principal executive officer and principal financial officer, does not expect that Old National’s disclosure controls and internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be only reasonable assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting. There were no changes in Old National’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, Old National’s internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors previously disclosed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
04/01/16 - 04/30/16		2,917	$	12.69		—		—
05/01/16 - 05/31/16		32,836		13.32		—		—
06/01/16 - 06/30/16		—		—		—		—
Quarter-to-date 06/30/16		35,753	$	13.27		—		—

The Board of Directors did not authorize a new stock repurchase plan for 2016. During the three months ended June 30, 2016, Old National repurchased a limited number of shares associated with employee share-based incentive programs.

ITEM 5. OTHER INFORMATION

(a) None

(b) There have been no material changes in the procedure by which security holders recommend nominees to the Company’s board of directors.

89

ITEM 6. EXHIBITS

Exhibit No.	Description
2.1*	Stock Purchase Agreement dated as of April 30, 2016 by and among Prime Risk Partners Inc., ONB Insurance Group, Inc., and Old National Bancorp.
3.1	Fourth Amended and Restated Articles of Incorporation of Old National, amended May 13, 2016 (incorporated by reference to Exhibit 3.1 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 16, 2016).
3.2	Amended and Restated By-Laws of Old National Bancorp, amended July 28, 2016 (incorporated by reference to Exhibit 3.1 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 1, 2016).
4.1	Senior Indenture between Old National and The Bank of New York Trust Company (as successor to J.P. Morgan Trust Company, National Association (as successor to Bank One, NA)), as trustee, dated as of July 23, 1997 (incorporated by reference to Exhibit 4.3 to Old National’s Registration Statement on Form S-3, Registration No. 333-118374, filed with the Securities and Exchange Commission on December 2, 2004).
4.2	Second Indenture Supplement, dated as of August 15, 2014, between Old National and The Bank of New York Mellon Trust Company, N.A., as trustee, providing for the issuance of its 4.125% Senior Notes due 2024 (incorporated by reference to Exhibit 4.1 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 15, 2014).
10.1	Employment Agreement dated as of March 18, 2014, as amended and effective as of May 12, 2016, between Old National Bancorp and James A. Sandgren (incorporated by reference to Exhibit 10.1 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 12, 2016).
10.2	Employment Agreement dated as of May 12, 2016 between Old National Bancorp and James C. Ryan, III (incorporated by reference to Exhibit 10.2 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 12, 2016).
10.3	Employment Agreement dated as of January 1, 2008, as amended and effective as of January 1, 2009, January 1, 2011, and May 12, 2016, between Old National Bancorp and Christopher A. Wolking (incorporated by reference to Exhibit 10.3 of Old National’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 12, 2016).
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from Old National Bancorp’s Form 10-Q Report for the quarterly period ended June 30, 2016, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.

* Certain schedules or similar attachments to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K and Old National agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule upon request.

90

SIGNATURE

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/ James C. Ryan, III
	James C. Ryan, III Senior Executive Vice President and Chief Financial Officer Duly Authorized Officer and Principal Financial Officer
	Date: August 5, 2016

91

EX-2.1

Exhibit 2.1

STOCK PURCHASE AGREEMENT

by and among

PRIME RISK PARTNERS INC.

ONB INSURANCE GROUP, INC.

and

OLD NATIONAL BANCORP

Dated as of April 30, 2016

TABLE OF CONTENTS

		PAGE
SECTION 1 THE STOCK PURCHASE			1
1.01.	Purchase and Sale of the Shares		1
1.02.	Taxable Transaction		2
SECTION 2 PURCHASE PRICE OF SHARES			2
2.01.	Purchase Price		2
2.02.	Calculation		2
2.03.	Purchase Price Adjustment		3
2.04.	Payment Dispute Resolution		4
2.05.	ONI Participants		4
2.06.	Minimum Cash Amount		5
SECTION 3 REPRESENTATIONS AND WARRANTIES OF INSURANCE GROUP AND ONB			5
3.01.	Organization and Authority		6
3.02.	Authority; No Conflict		6
3.03.	Capitalization		8
3.04.	Organizational Documents; Books and Records		8
3.05.	Financial Statements and Reports		9
3.06.	Condition and Sufficiency of Assets		9
3.07.	Absence of Undisclosed Liabilities		9
3.08.	Indebtedness		10

i

3.09.	Accounts Receivable	11
3.10.	Contracts	11
3.11.	No Defaults	12
3.12.	Title to Assets and Leasehold Interests	13
3.13.	Litigation and Pending Proceedings	13
3.14.	Taxes, Returns, and Reports	14
3.15.	Affiliated Transactions	16
3.16.	Environmental Matters	16
3.17.	Employee Benefit Plans	17
3.18.	Obligations to Employees	19
3.19.	Employee Matters	19
3.20.	Clients	20
3.21.	Insurance	20
3.22.	Intellectual Property	20
3.23.	Licenses and Permits	21
3.24.	No Third Party Consents	22
3.25.	Restrictive Agreements	22
3.26.	Compliance with Laws	22
3.27.	Absence of Changes	22
3.28.	Broker’s, Finder’s, or Other Fees	25
3.29.	Indemnification Agreements	25
3.30.	Trade Relations	25
3.31.	Privacy of Customer Information	25

ii

SECTION 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER		26
4.01.	Organization and Authority	27
4.02.	Authorization	27
4.03.	Shareholder Approval	27
4.04.	Financial Statements and Reports	27
4.05.	Broker’s, Finder’s or Other Fees	28
4.06.	Absence of Changes	28
4.07.	Financing	28
4.08.	Purchaser Intent	28
4.09.	Solvency	28
SECTION 5 COVENANTS OF ONB AND INSURANCE GROUP		29
5.01.	Information, Access Thereto, Confidentiality	29
5.02.	Preservation of Business	29
5.03.	Conduct of Business	30
5.04.	Press Releases	33
5.05.	Other Negotiations	33
5.06.	Subsequent Financial Statements	33
5.07.	Employee Benefit Plans	34
5.08.	Adverse Actions	34
5.09.	Reasonable Best Efforts	34
5.10.	E&O Tail	35
5.11.	Transfer of Excluded Assets	35

iii

5.12.	Exclusive Broker	35
5.13.	Branch Referral	35
5.14.	Settlement of Inter-Company Balances	36
5.15.	Restrictive Covenants	36
5.16	Confidentiality and Non-Solicitation Agreements	37
5.17	Assignment of ONI Trademark	37
SECTION 6 COVENANTS OF PURCHASER		38
6.01.	Filings	38
6.02.	Press Releases	38
6.03.	Adverse Actions	38
6.04.	Reasonable Best Efforts	38
6.05.	Restrictive Covenants	39
6.06.	Employee Benefit Plans	39
SECTION 7 CONDITIONS PRECEDENT TO THE TRANSACTION		41
7.01.	Purchaser	41
7.02.	Insurance Group and ONB	42
SECTION 8 TERMINATION OF THE TRANSACTION		44
8.01.	Manner of Termination	44
8.02.	Effect of Termination	45
SECTION 9 INDEMNIFICATION		46
9.01.	Indemnification by Purchaser and ONB	46
9.02.	Notice and Opportunity to Defend Third Party Claims	47
9.03.	Non-Third Party Claims, Costs, and Expenses	49

iv

9.04.	Amount and Survival	49
9.05.	Exclusive Remedy	50
9.06.	Tax Matters	51
SECTION 10 CLOSING		53
10.01.	Effective Time	53
10.02.	Closing Date and Place	53
10.03.	Deliveries	53
SECTION 11 MISCELLANEOUS		54
11.01.	Successors and Assigns	54
11.02.	Waiver; Amendment	54
11.03.	Notices	54
11.04.	Headings	56
11.05.	Severability	56
11.06.	Counterparts	56
11.07.	Governing Law	56
11.08.	Entire Agreement	57
11.09.	Expenses	57
11.10.	Certain References	57
11.11.	Construction	57
11.12.	Schedules	57
11.13.	Knowledge	57

v

Index of Defined Terms

Accounting Referee	4
accumulated funding deficiency	18
Acquiror	37
Acquisition	37
Acquisition Proposal	33
Affiliated Group	14
Agreement	1
beneficial ownership	24
BHC Act	1
Big Four	4
Business Employee	20
Cash Consideration	2
Change of Control Payments	2
Closing	53
Closing Date	53
Code	2
Company Health Plan	19
Computer Systems	26
Confidentiality Agreement	45
Continuing Employees	34
Contract	12
Control	24
Controlled By	24
Controlling	24
Current Liabilities	24
Defense Election Notice	47
Disclosure Schedules	5

vi

E&O Tail	35
E&O Tails	35
Effective Time	53
employee pension benefit plan	19
Encumbrance	1
Environmental Laws	16
ERISA	17
ERISA Affiliate	17
Excluded Assets	35
Final Cash Consideration	4
Final Excess Working Capital	3
Final Indebtedness	2
Final Shortage Working Capital	3
Final Transaction Expenses	2
Final Working Capital	2
Financial Statements	9
GAAP	26
group health plan	19
HCERA	19
Healthcare Reform Laws	19
HSR Act	22
Indebtedness	10
Indemnification Notice	47
Indemnified Parties	46
Indemnifying Party	47
Initial Cash Consideration	4
Initial Excess Working Capital	3
Initial Shortage Working Capital	3
Insurance Group	1

vii

Insurance Group Common Stock	8
Intellectual Property	21
Interim Statement	9
Legal Requirement	7
Liability	10
Long-Term Liability	24
Loss	47
Losses	47
Material Adverse Effect	5
Material Contract	11
Material Interest	24
nondisclosed noneconomic substance	16
nonqualified deferred compensation plan	17
ONB	1
ONB Indemnified Party	46
ONB KSOP	34
ONI Personal Property	9
Order	14
parachute payment	18
Payment	4
Pension Plan	19
Permits	21
Permitted Encumbrances	10
Permitted Indebtedness	11
Permitted Products and Services	37
Person	8
Personal Data	25
Plan	17
Post-Closing Tax Period	51

viii

PPACA	19
Pre-Closing Indebtedness	2
Pre-Closing Tax Period	51
Pre-Closing Transaction Expenses	2
Pre-Closing Working Capital	2
Proceeding	14
Purchaser	1
Purchaser Financial Statements	27
Purchaser Indemnified Party	46
Related Person	24
reportable event	18
Restricted Period	36
Restricted Territory	36
Retained Personal Property	9
Seller Group	33
Shares	1
Straddle Period	51
Subsequent Financial Statements	33
Subsidiary	6
Tax	16
Tax Liability	16
tax shelter	16
Taxes	16
Transaction	1
Transaction Expenses	2
Under Common Control With	24
United States real property holding corporation	15
Working Capital	2

ix

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is made and entered into effective as of the 30th day of April, 2016, by and among Prime Risk Partners Inc. (“Purchaser”), a Delaware corporation, Old National Bancorp (“ONB”), an Indiana corporation, and ONB Insurance Group (“Insurance Group”), an Indiana corporation.

W I T N E S S E T H

WHEREAS, Purchaser is a Delaware corporation with its principal office located in Alpharetta, Georgia; and

WHEREAS, Insurance Group is an Indiana corporation, and licensed insurance agency, with its principal office located in Indianapolis, Indiana; and

WHEREAS, ONB is an Indiana corporation, registered as a financial holding company under the federal Bank Holding Company Act of 1956, as amended (the “BHC Act”), with its principal office located in Evansville, Indiana; and

WHEREAS, ONB is the owner of all the issued and outstanding shares of Insurance Group Common Stock (the “Shares”); and

WHEREAS, ONB desires to sell to Purchaser, and Purchaser desires to acquire from ONB, the Shares for the consideration set forth in Section 2; and

WHEREAS, each of the respective Board of Directors of Purchaser, ONB and Insurance Group has determined that it is in the best interests of the respective entities to consummate the strategic business combination contemplated hereby and each has approved this Agreement and authorized its execution.

NOW, THEREFORE, in consideration of the foregoing premises, the representations, warranties, covenants, and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Purchaser, ONB and Insurance Group hereby make this Agreement and prescribe the terms and conditions of the transaction as follows:

SECTION 1

THE STOCK PURCHASE

1.01. Purchase and Sale of the Shares. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, ONB shall sell, transfer, assign and deliver to Purchaser, and Purchaser shall purchase and acquire from ONB, all right, title and interest in and to the Shares (the “Transaction”), free and clear of any and all Encumbrances. For purposes of this Agreement, “Encumbrance” means any charge, claim, community, or other marital property interest, condition, equitable interest, lien, option, pledge, security interest, mortgage, right of first option, right of first refusal, or any other restriction with respect to transferability or assignability.

1

1.02. Taxable Transaction. ONB and Purchaser intend for the Transaction to qualify as a taxable transaction, and ONB agrees to join in an election under Section 338(h)(10) of the Internal Revenue Code of 1986 or any successor law, and regulations issued by the Internal Revenue Service (“IRS”) pursuant to the Internal Revenue Code or any successor law (the “Code”), if requested by Purchaser.

SECTION 2

PURCHASE PRICE OF SHARES

2.01. Purchase Price. On the terms and subject to the conditions of this Agreement and on the basis of and in reliance upon the representations, warranties, obligations and agreements set forth in this Agreement, upon Closing, ONB shall sell, transfer and deliver to Purchaser, and Purchaser shall purchase from ONB, for the Purchase Price, all of the Shares. Subject to adjustment as provided in Sections 2.02 and 2.03, the aggregate consideration to be paid for the Shares is Ninety-Three Million and No/100 Dollars ($93,000,000.00) less the amount of Pre-Closing Indebtedness, less the Pre-Closing Transaction Expenses (the “Cash Consideration”), subject to adjustment based upon the Working Capital of Insurance Group, the Indebtedness of Insurance Group and the Insurance Group Transaction Expenses, as provided in Sections 2.02 and 2.03.

2.02. Calculation. (a) At least five (5) business days before the Effective Time, ONB shall provide to Purchaser its calculation of the Working Capital as of the end of the month immediately preceding the Effective Time (the “Pre-Closing Working Capital”), its calculation of Indebtedness (including Permitted Indebtedness and accrued interest on the Indebtedness through the Effective Date) as of the end of the month immediately preceding the Effective Time (the “Pre-Closing Indebtedness”) and its calculation of the Transaction Expenses (the “Pre-Closing Transaction Expenses”). “Working Capital” means the current operating assets of Insurance Group less the current operating liabilities of Insurance Group, in each case determined in accordance with GAAP, except as set forth on Schedule 3.05. “Transaction Expenses” means, to the extent not paid prior to the Closing: (i) all costs, fees and expenses incurred in connection with or in anticipation of the negotiation, execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, including any brokerage fees, commissions, finders’ fees or financial advisory fees so incurred and any fees and expenses of legal counsel, accountants, consultants or other experts or advisors so incurred; and (ii) any transaction bonus, change-of-control payment or other transaction-related compensatory payments payable by Insurance Group or any of its Subsidiaries to any employee or other service provider of Insurance Group or any of its Subsidiaries in connection with the execution of this Agreement or the transactions contemplated hereby (“Change of Control Payments”).

(b) As promptly as practicable after the Effective Time (but in no event later than thirty (30) days following the Closing), ONB shall provide to Purchaser (i) its calculation of the Working Capital as of the Closing Date (the “Final Working Capital”); (ii) its calculation of the Indebtedness as of the Closing Date (the “Final Indebtedness”); and (iii) its calculation of the Transaction Expenses as of the Closing Date (the “Final Transaction Expenses”); including the amount of the Final Cash Consideration determined pursuant to Section 2.03.

2

(c) For purposes of illustration and interpretation, the calculation of Working Capital is shown on Schedule 2.02(c). The parties acknowledge and agree that, based upon the consolidated financial statements of Insurance Group as of March 31, 2016, the Working Capital would have been ($2,341,493), if determined as of such date.

2.03. Purchase Price Adjustment. (a) If the amount of the Pre-Closing Working Capital is less than Two Million, Six Hundred Eighty-Seven Thousand Eighty-Three and No/100 Dollars ($2,687,083.00) (the amount of such deficit being referred to hereinafter as the “Initial Shortage Working Capital”), then the Cash Consideration to be received by ONB on or as of the Closing Date (defined below) pursuant to Section 2 shall be decreased by subtracting the amount of the Initial Shortage Working Capital.

(b) If the amount of the Pre-Closing Working Capital is greater than Two Million, Six Hundred Eighty-Seven Thousand Eighty-Three and No/100 Dollars ($2,687,083.00) (the amount of such excess being referred to hereinafter as the “Initial Excess Working Capital”), then the Cash Consideration received by ONB on or as of the Closing Date pursuant to Section 2 shall be increased by adding the amount of the Initial Excess Working Capital.

(c) If the amount of the Final Working Capital is less than the Pre-Closing Working Capital (the amount of such deficit being referred to hereinafter as the “Final Shortage Working Capital”), then the Cash Consideration received by ONB pursuant to Section 2 shall be decreased by subtracting the amount of the Final Shortage Working Capital.

(d) If the amount of the Final Working Capital is greater than the Pre-Closing Working Capital (the amount of such excess being referred to hereinafter as the “Final Excess Working Capital”), then the Cash Consideration received by ONB pursuant to Section 2 shall be increased by adding the amount of the Final Excess Working Capital.

(e) If the amount of the Pre-Closing Indebtedness is greater than the amount of the Final Indebtedness, then the Cash Consideration received by ONB pursuant to Section 2 shall be increased by an amount of cash in dollars equal to such excess. If the amount of the Final Indebtedness is greater than the amount of the Pre-Closing Indebtedness, then the Cash Consideration received by ONB pursuant to Section 2 shall be decreased by an amount of cash in dollars equal to such excess.

(f) If the amount of the Pre-Closing Transaction Expenses is greater than the amount of the Final Transaction Expenses, then the Cash Consideration received by ONB pursuant to Section 2 shall be increased by an amount of cash in dollars equal to such excess. If the amount of the Final Transaction Expenses is greater than the amount of the Pre-Closing Transaction Expenses, then the Cash Consideration received by ONB pursuant to Section 2 shall be decreased by an amount of cash in dollars equal to such excess.

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(g) If the amount of the Cash Consideration as recalculated based upon the Final Working Capital, Final Indebtedness and Final Transaction Expenses pursuant to Sections 2.03(c) through (f) (referred to herein as the “Final Cash Consideration”) is less than the amount of the Cash Consideration as re-calculated based upon the Pre-Closing Working Capital pursuant to Sections 2.03(a) or (b) and theretofore delivered to ONB (the “Initial Cash Consideration”), then ONB shall pay the amount of the difference to Purchaser within thirty (30) days of the determination of such amount. If the amount of the Final Cash Consideration is greater than the amount of the Initial Cash Consideration, then Purchaser shall pay the amount of the difference to ONB within thirty (30) days of the determination of such amount.

2.04. Payment Dispute Resolution. (a) If Purchaser disagrees with ONB’s calculation pursuant to Sections 2.02 and 2.03 relating to the amount of the Final Working Capital, the Final Indebtedness, the Final Transaction Expenses and the Final Cash Consideration (collectively, the “Payment”), Purchaser shall, within thirty (30) days after delivery of such calculation by ONB, deliver a notice to ONB disagreeing with such calculation and setting forth its calculation of such amount. Any such notice of disagreement shall specify those items or amounts as to which Purchaser disagrees, and Purchaser shall be deemed to have agreed with all other items or amounts. If Purchaser does not deliver a notice of disagreement to ONB within the required period of time, the calculation shall be final and binding upon the parties hereto. If Purchaser delivers a notice of disagreement to ONB within the required period of time, ONB shall nevertheless be required to make a payment in the amount, if any, that is not in dispute, but shall not be required to make the balance of the Payment until as provided in Section 2.04(b).

(b) During the twenty (20) days following delivery of the notice of disagreement, the parties shall use their reasonable best efforts to reach an agreement on the disputed items or amounts in order to determine the Payment at issue. If, during such period, Purchaser and ONB are unable to reach agreement, they shall mutually agree in a prompt manner upon an independent accounting firm (the “Accounting Referee”) to review this Agreement and the disputed items or amounts for the purpose of calculating the Payment at issue. The Accounting Referee shall deliver to Purchaser and ONB, as promptly as practicable, a report setting forth its calculation of the Payment at issue. Such report shall be final and binding upon the parties hereto, and the Payment as calculated by the Accounting Referee shall be made within ten (10) days of receipt of the report from the Accounting Referee. The cost of the Accounting Referee shall be borne: (i) by ONB, if Purchaser’s calculation of the Payment at issue is closer to the Accounting Referee’s calculation than ONB’s calculation; (ii) by Purchaser if the reverse is true; and (iii) otherwise, equally by Purchaser and ONB.

(c) If Purchaser and ONB cannot agree on an independent accounting firm within ten (10) days, then the names of the nationally recognized “Big Four” accounting firms or their successors, exclusive of any such firm which is rendering or has within the past three (3) years rendered services to Purchaser shall be selected by lottery until one such firm is willing to compute the Payment at issue.

2.05. ONI Participants. In addition to the Purchase Price, Purchaser shall, promptly after Closing (but in all events no later than thirty (30) days after the respective ONI Participant

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has submitted fully executed copies of subscription documents and a joinder agreement for the QMP Insurance Holdings, LLC limited liability company agreement):

(a) Pay an aggregate of Nine Hundred Twenty Thousand and No/100 Dollars ($920,000.00) payable to the ONI Participants listed on Schedule 2.05.

(b) Grant an aggregate of One Million Three Hundred Eighty Thousand and No/100 Dollars ($1,380,000.00) of Class A Units of QMP Insurance Holdings, LLC, a Delaware LLC, to the ONI Participants.

(c) Establish for the benefit of certain employees of Insurance Group (to be determined by Purchaser and the Chief Executive Officer of Insurance Group after the Closing) a Long-Term Incentive Plan substantially in the form of Exhibit A.

2.06. Minimum Cash Amount. ONB and the Insurance Group agree that the cash held by Insurance Group as of the Closing Date will in no event be less than the collected premiums payable as of the Closing Date.

SECTION 3

REPRESENTATIONS AND WARRANTIES OF INSURANCE GROUP AND ONB

ONB and Insurance Group hereby, jointly and severally, represent and warrant to Purchaser as set forth in this Section 3.

On or prior to the date hereof, ONB has delivered to Purchaser schedules (the “Disclosure Schedules”) setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in this Section 3; provided, however, that (a) the mere inclusion of an item in the Disclosure Schedules as an exception to a representation or warranty shall not be deemed an admission by ONB that such item represents a material exception or fact, event, or circumstance or that such item is reasonably likely to result in a Material Adverse Effect; and (b) the inclusion of an item on one Disclosure Schedule shall be deemed to be a disclosure of such item on all other Disclosure Schedules for which that item is relevant (solely to the extent the relevance of such item to such other Disclosure Schedule is reasonably apparent).

For the purpose of this Agreement, and in relation to Insurance Group, a “Material Adverse Effect” means any effect that (i) is material and adverse to the financial position, results of operations, or business of Insurance Group taken as a whole, or (ii) would materially impair the ability of Insurance Group to perform its obligations under this Agreement or otherwise materially threaten or materially impede the consummation of the Transaction and the other transactions contemplated hereby; provided, however, that Material Adverse Effect shall not include the impact of (a) changes in insurance and similar laws of general applicability or interpretations thereof by courts or governmental agencies or authorities, (b) changes in

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accounting requirements applicable to insurance agencies, brokers, and companies generally, (c) any modifications or changes to valuation policies and practices in connection with the Transaction or restructuring charges taken in connection with the Transaction, (d) effects of any action taken with the prior written consent of Purchaser or the taking of any action pursuant to this Agreement and the other agreements contemplated hereby, (e) conditions or circumstances that affect the insurance industry generally, (f) general economic conditions, (g) economic conditions of the industry in which Insurance Group participates, or (h) the public announcement of this Agreement or the consummation of the transactions contemplated hereby and the effect that such public announcement or consummation has on the business or continuing relationships of Insurance Group with its clients and customers; except, in the case of (a), (b), (e), (f) and (g), where the impact has a materially disproportionate effect on Insurance Group as compared to other Persons engaged in the insurance industry.

3.01. Organization and Authority.

(a) Insurance Group is a corporation duly organized, validly existing, and in good standing under the laws of the State of Indiana. Insurance Group has full power and authority (corporate and otherwise) to lease its properties as presently leased and to conduct its business in the manner and by the means utilized as of the date hereof. Insurance Group is duly qualified to do business and is in good standing in each state and jurisdiction set forth on Schedule 3.01(a), which are the only states and jurisdictions in which the character or location of the properties leased by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to be so qualified would not, either individually or in the aggregate, reasonably be likely to have a Material Adverse Effect on Insurance Group or the Subsidiaries.

(b) Schedule 3.01(b) sets forth a complete and correct list of all of the subsidiaries of Insurance Group (each, a “Subsidiary” and collectively, the “Subsidiaries”). Each Subsidiary of Insurance Group is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation as reflected on Schedule 3.01(b). Each Subsidiary has full corporate or limited liability company, as applicable, power and authority to conduct its business as it has been, is currently or is proposed to be conducted, to own or use its properties, and to perform all its obligations under its Contracts. Schedule 3.01(b) contains a complete list of each jurisdiction in which each Subsidiary is required to be qualified as a foreign corporation authorized to do business, except where the failure to be so qualified would not, either individually or in the aggregate, reasonably be likely to have a Material Adverse Effect on Insurance Group or the Subsidiaries. Each of the Subsidiaries is duly qualified and is in good standing in each jurisdiction listed on Schedule 3.01(b).

3.02. Authority; No Conflict. (a) Each of ONB and Insurance Group has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder, subject to the fulfillment of the conditions precedent set forth in Section 7.02. As of the date hereof, neither ONB nor Insurance Group is aware of any reason why the conditions set forth in Section 7.02 will not be satisfied in a timely manner and without the imposition of a condition, restriction, or requirement of the type described in Section 7.02. This Agreement and its execution and delivery by Insurance Group and ONB has been duly authorized and approved

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by their respective Boards of Directors and by ONB as shareholder of Insurance Group. Assuming due execution and delivery by Purchaser, this Agreement constitutes a valid and binding obligation of ONB and Insurance Group, subject to the fulfillment of the conditions precedent set forth in Section 7.02, and are enforceable against ONB and Insurance Group in accordance with their terms, except to the extent limited by general principles of equity and public policy and by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium, readjustment of debt, or other laws of general application relating to or affecting the enforcement of creditors’ rights.

(b) Except as set forth in Schedule 3.02(b), neither the execution of this Agreement nor the consummation of the Transaction or the transactions contemplated hereby, directly or indirectly (with or without notice or lapse of time): (i) conflicts with or violates the Articles of Incorporation or By-Laws of Insurance Group or ONB or any resolution adopted by the Board of Directors of Insurance Group or ONB; (ii) conflicts with or violates any federal, state, or local law, ordinance, principle of common law, code, regulation, statute, or treaty (a “Legal Requirement”) (provided that the approvals of or filings with applicable governmental agencies or authorities required for consummation of the Transaction and the transactions contemplated hereby are obtained) or any Order; (iii) conflicts with, results in a breach of, or constitutes a default under any note, bond, indenture, mortgage, deed of trust, license, lease, contract, agreement, understanding, arrangement, commitment, instrument, or other writing to which Insurance Group is a party or by which Insurance Group is subject or bound; (iv) results in the creation of or gives any Person the right to challenge or to create any Encumbrance or any other adverse interest, upon any right, property, or asset of Insurance Group or gives any Person the right to revoke, withdraw, suspend, cancel, terminate, or modify any authorization that is held by Insurance Group or that otherwise relates to the business of, or any of the assets owned or used by, Insurance Group; (v) terminates or gives any Person the right to terminate, accelerate, amend, modify, or refuse to perform under any note, bond, indenture, mortgage, deed of trust, license, lease, contract, agreement, understanding, arrangement, commitment, instrument, or other writing to which Insurance Group is a party or is subject or bound or with respect to which Insurance Group is to perform any duties or obligations or receive any rights or benefits; (vi) conflicts with, results in a breach of, or requires any consent, offer, or other action under any will, trust, buy-sell agreement, shareholder agreement, employment agreement, or other agreement; (vii) causes Purchaser, or Insurance Group to become subject to or to become liable for the payment of, any Tax (other than with respect to the operation of the Insurance Group post-closing); or (viii) causes any of the assets owned by Insurance Group to be reassessed or revalued by any taxing authority or governmental agency or authority except (in the case of clauses (ii) through (vi) above) for such violations, conflicts, breaches, terminations, cancellations, accelerations, creations or defaults which, either individually or in the aggregate, would not reasonably be likely to have a Material Adverse Effect on Insurance Group.

(c) Except as set forth in Schedule 3.02(c), no notice to, filing with, exemption by, or consent, authorization, or approval of any governmental agency or authority is necessary for consummation by Insurance Group of the Transaction or the transactions contemplated hereby.

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(d) For purposes of this Agreement, the term “Person” means any natural person, organization, firm, business, proprietorship, joint venture, corporation, limited liability company, partnership, association, trade group, trust, or other entity and any governmental agency or authority.

3.03. Capitalization.

(a) The authorized capital stock of Insurance Group as of the date hereof consists of, and at the Effective Time shall consist of, Sixty Thousand (60,000) shares of common stock (“Insurance Group Common Stock”), no par value, of which Twenty-Five Thousand Nine Hundred (25,900) shares are issued and outstanding. The Shares have been duly and validly authorized by all necessary corporate action of Insurance Group, are validly issued, fully paid, and nonassessable, and have not been issued in violation of any preemptive rights of any present or former shareholder of Insurance Group. Insurance Group has no capital stock authorized, issued, or outstanding other than as described in this Section 3.03(a) and has no intention or obligation to authorize or issue any other capital stock or any additional shares of capital stock.

(b) Except as set forth in Schedule 3.03(b), there are no options, warrants, commitments, calls, puts, agreements, understandings, arrangements, or rights relating to any of the Shares or any securities convertible into or representing the right to purchase or otherwise acquire any capital stock or debt securities of Insurance Group or any Subsidiary, by which Insurance Group or any Subsidiary is or may become bound. Except as set forth in Schedule 3.03(b), Insurance Group has no outstanding contractual or other obligation to repurchase, redeem, or otherwise acquire any of the Shares.

(c) ONB is and will be on the Closing Date the record and beneficial owner and holder of the Shares, and ONB owns the Shares free and clear of any and all Encumbrances. Except as set forth in Schedule 3.03(c), no consent, approval, authorization, or waiver of any Person is required for the execution, delivery, and performance of this Agreement or the other agreements contemplated hereunder or the consummation of the Transaction or the transactions contemplated hereby. Except as set forth in Schedule 3.03(c), ONB, and none of the Shares, are subject to or bound by any buy-sell agreement, shareholder agreement, employment agreement, or other agreement or any other option, commitment, understanding, or obligation relating to the pledge, sale, purchase, acquisition, transfer, gift, or other disposition of any of the Shares.

(d) Insurance Group is and will be on the Closing Date the record and beneficial owner and holder of all of the shares of capital stock of each Subsidiary, free and clear of any and all Encumbrances. Except as set forth in Schedule 3.03(d), none of the capital stock of any Subsidiary is subject to or bound by any buy-sell agreement, shareholder agreement, employment agreement, or other agreement or any other option, commitment, understanding, or obligation relating to the pledge, sale, purchase, acquisition, transfer, gift, or other disposition of any of the capital stock of any Subsidiary.

3.04. Organizational Documents; Books and Records. Insurance Group’s and the Subsidiaries’ books of account, minute books (including the Articles of Incorporation and By-Laws

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of Insurance Group and the Subsidiaries), stock record books, and other records, all of which have been made available to Purchaser, are complete and correct and have been maintained in accordance with sound business practices, including the maintenance of an adequate system of internal controls. The minute books of Insurance Group contain accurate and complete records of all meetings of, and corporate action taken by Insurance Group, the Board of Directors, and committees of the Board of Directors of Insurance Group.

3.05. Financial Statements and Reports. ONB has delivered to Purchaser true and complete copies of the Consolidated Balance Sheets and Consolidated Statements of Income of Insurance Group as of and for the years ended December 31, 2014 and 2015, and as of and for the three (3) months ended March 31, 2016 (the “Interim Statement”), including the notes thereto (collectively, the “Financial Statements”). Except as set forth in Schedule 3.05, the Financial Statements have been prepared in accordance with GAAP and on a basis consistent with past accounting practices, to the extent those practices are consistent with GAAP, and fairly present the financial condition and results of operations as of the dates and for the periods presented, subject to regular year-end adjustments and the absence of footnotes for the Interim Statement.

3.06. Condition and Sufficiency of Assets.

(a) Except as set forth in Schedule 3.06(a), all vehicles, equipment, furniture and fixtures, leasehold improvements and other material items of tangible personal property owned or used by Insurance Group and the Subsidiaries as of the date hereof (collectively, the “ONI Personal Property”) are in good operating condition and repair, subject to normal wear and tear and are adequate for the uses to which they are being put, and none of such personal property is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. Purchaser acknowledges and agrees that Insurance Group is not conveying all assets necessary to conduct the business of Insurance Group (the assets not being transferred are identified in Schedule 3.06(b)), and that such assets as are being transferred are not sufficient to conduct the business of Insurance Group as it is currently conducted. The real property and improvements thereon leased by Insurance Group, are adequate and suitable for the purposes for which they are presently being used and the operation of the business of Insurance Group as it is currently conducted.

(b) Schedule 3.06(b) sets forth all vehicles, equipment, furniture and fixtures, leasehold improvements and other material items of tangible personal property owned or used by ONB that ONB is not conveying to Purchaser under this Agreement and the transactions contemplated hereby that are necessary to conduct the business of Insurance Group as it is currently conducted (collectively, the “Retained Personal Property”). The ONI Personal Property and the Retained Personal Property collectively constitute all assets necessary to conduct the business of Insurance Group as it is currently conducted in all material respects.

3.07. Absence of Undisclosed Liabilities. (a) As of the date hereof, Insurance Group has no Liabilities that would be required to be reserved against or otherwise disclosed on a balance sheet or in the notes thereto except for Liabilities (i) reflected, disclosed, or reserved against in the Financial Statements as of March 31, 2016, (ii) incurred after the date of the

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Financial Statements in the ordinary course of business consistent with past practice, or (iii) incurred pursuant to or in connection with this Agreement and the transactions contemplated thereby in accordance with this Agreement. For purposes of this Agreement, the term “Liability” means any liability or obligation of any kind, character, or description, whether known or unknown, absolute or contingent, accrued and unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable, or otherwise, whether or not the same is required to be accrued on the Financial Statements of Insurance Group.

3.08. Indebtedness.

(a) For purposes of this Agreement, the term “Indebtedness” means, without duplication: (i) all obligations (including the principal amount thereof or, if applicable, the accreted amount thereof and the amount of accrued and unpaid interest thereon through the Closing Date) of Insurance Group and its Subsidiaries, whether or not represented by bonds, debentures, notes or other securities (whether or not convertible into any other security), for the repayment of money borrowed, whether owing to banks, financial institutions, on equipment leases or otherwise; (ii) all deferred indebtedness of Insurance Group and its Subsidiaries for the payment of the purchase price of property or assets purchased, including any earnout payments (other than current accounts payable incurred in the ordinary course of business); (iii) all obligations of Insurance Group and its Subsidiaries to pay rent or other payment amounts under a lease which is required to be classified as a capital lease on the face of a balance sheet prepared in accordance with GAAP; (iv) all outstanding reimbursement obligations of Insurance Group and its Subsidiaries with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of Insurance Group or its Subsidiaries; (v) all obligations of Insurance Group and its Subsidiaries under any interest rate swap agreement, forward rate agreement, interest rate cap or collar agreement or other financial agreement or arrangement entered into for the purpose of limiting or managing interest rate risks; (vi) all obligations secured by any Encumbrance (other than Permitted Encumbrances) existing on property owned by Insurance Group or its Subsidiaries, whether or not indebtedness secured thereby will have been assumed; (vii) all guaranties, endorsements, assumptions and other contingent obligations of Insurance Group and its Subsidiaries in respect of, or to purchase or to otherwise acquire, Indebtedness of others; and (viii) all premiums, penalties, fees, expenses, breakage costs and change of control payments required to be paid or offered in respect of any of the foregoing on prepayment (regardless if any of such are actually paid), as a result of the consummation of the transactions contemplated by the Agreement or in connection with any lender consent; provided, however, that Indebtedness will not include any of the foregoing that is solely among Insurance Group or any of its Subsidiaries.

For purposes of this Agreement, the term “Permitted Encumbrances” means (a) liens for Taxes not yet due and payable or being contested in good faith by appropriate procedures; (b) mechanics’, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the ordinary course of business; (c) easements, rights of way, zoning ordinances and other similar encumbrances affecting real property; (d) liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business; and (e) liens securing lines of credit provided such liens are released as of the Closing Date.

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For purposes of this Agreement, the term “Permitted Indebtedness” means the Indebtedness listed on Schedule 3.08(a).

(b) Schedule 3.08(b) sets forth a complete and correct list of all Indebtedness of Insurance Group as of the date hereof, identifying the creditor including name and address of such creditor, the type of instrument under which the Indebtedness is owed and the amount of the Indebtedness as of the close of business on the date hereof. No Indebtedness of Insurance Group contains any restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by Insurance Group, or (iii) the ability of Insurance Group to grant any Encumbrance on its properties or assets. With respect to each item of Indebtedness, Insurance Group is not in default and no payments are past due. Insurance Group has not received any notice of a default, alleged failure to perform or any offset or counterclaim with respect to any item of Indebtedness that has not been fully remedied and withdrawn. The consummation of the transactions contemplated hereby will not cause a default, breach or an acceleration, automatic or otherwise, of any conditions, covenants or any other terms of any item of Indebtedness. Insurance Group has not guaranteed and is not responsible or liable for any Indebtedness of any other Person.

3.09. Accounts Receivable. Except as set forth on Schedule 3.09, the accounts receivable through March 31, 2016 of Insurance Group, as reflected on the Financial Statements, (a) are valid and genuine; (b) are current and collectible in the ordinary course of business in accordance with the terms thereof; (c) represent bona fide obligations resulting from the provision of services in the ordinary course of business; (d) are not subject to defenses, set-offs, or counterclaims; and (e) with respect to the accounts receivable existing as of March 31, 2016, are properly reflected on the Financial Statements and, with respect to the accounts receivable recorded or arising since March 31, 2016, are properly reflected on the books and records of Insurance Group.

3.10. Contracts. Set forth in Schedule 3.10 is a list of the following Contracts by which Insurance Group is bound as of the date hereof (each a “Material Contract”):

(a) Contracts involving any lease of real property;

(b) All loan or credit agreements, lines of credit, letters of credit, promissory notes, land or conditional sales contracts, other title retention agreements, security agreements, mortgages, deeds of trust, indentures, bonds, and guaranties of the debts or obligations of a third party relating to Insurance Group or to which Insurance Group is a party;

(c) Contracts relating to the purchase of goods, products, supplies, or other items or services in excess of Fifty Thousand and No/100 Dollars ($50,000.00), whether individually or in the aggregate, in any calendar year;

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(d) Contracts, other than in the ordinary course of business, involving payment of more than Fifty Thousand and No/100 Dollars ($50,000.00), any commissions to ONB, or directors or officers of Insurance Group;

(e) Contracts involving any partnership, joint venture, or ownership interest of Insurance Group;

(f) Inter-company accounts/agreements between Insurance Group and ONB;

(g) Contracts relating to the employment of any director, officer, and employee of Insurance Group whose compensation (salary, bonus, commissions) is, or would reasonable be expected to be, in excess of One Hundred Thousand and No/100 Dollars ($100,000.00) over a period of twelve (12) consecutive calendar months, or that provides for any severance compensation or other post-termination benefits to any director, officer, and employee of Insurance Group;

(h) Contracts relating to collective bargaining agreements with any labor unions or associations representing employees of Insurance Group; and

(i) For each of Insurance Group and the Subsidiaries, the twenty (20) largest property and casualty Contracts (based upon dollar premium volume) and twenty (20) largest group benefits Contracts (based upon dollar premium volume) between Insurance Group or such Subsidiary and any insurance company pursuant to which Insurance Group or such Subsidiary acts as agent or otherwise sells products of such insurance company.

As of the date hereof, no party to any Material Contract (i) has provided notice to Insurance Group of its intent to terminate, or withdraw its participation in, any such Material Contract or (ii) to Insurance Group’s Knowledge intends to terminate or otherwise materially adversely change its business relationship with Insurance Group or any subsidiary.

For purposes of this Agreement, the term “Contract” means any and all oral or written agreements, contracts, leases, licenses, lines of credit, understandings, commitments or obligations of Insurance Group.

3.11. No Defaults. Except as set forth in Schedule 3.11, and in each case, except as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Insurance Group (i) each of the Contracts set forth in Schedule 3.10 is valid and enforceable in accordance with its terms, except to the extent limited by general principles of equity and public policy or by bankruptcy, insolvency, fraudulent transfer, readjustment of debt, or other laws of general application relative to or affecting the enforcement of creditors’ rights; and (ii) as of the date hereof Insurance Group is not in default in the performance, observance, or fulfillment of any obligation, covenant, or provision contained therein. Except as set forth on Schedule 3.11, none of such Contracts requires the consent of any party as a result of the Transaction or any other transaction contemplated hereby, except those which have already been (or will be) obtained by Insurance Group prior to the Effective Time and which do not extend, amend, change, or affect, or impose any additional Liability or obligation under, any such Contracts.

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3.12. Title to Assets and Leasehold Interests. In each case, except as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Insurance Group and (a)(i) except as described in this Section 3.12 or set forth on Schedule 3.12(a), Insurance Group has (A) good and marketable title in fee simple absolute to all real property reflected in the Financial Statements as of December 31, 2015, (B) good title to all personal property reflected in the Financial Statements as of December 31, 2015, other than personal property disposed of in the ordinary course of business since December 31, 2015, (C) good title to or right to use by valid and enforceable Contract all other property and assets (whether real or personal, tangible or intangible) which Insurance Group uses in its business; and good title to all property and assets acquired and not disposed of or leased since December 31, 2015; and (ii) all such property and assets that are owned by Insurance Group are owned by Insurance Group free and clear of any and all Encumbrances, except: (A) as set forth in Schedule 3.12(a); (B) as disclosed in the Financial Statements; and (C) statutory liens for taxes not yet delinquent or being contested in good faith by appropriate Proceedings.

(b) With respect to each lease of real or personal property to which Insurance Group is a party as of the date hereof: (i) Insurance Group has a valid leasehold interest in such real or personal property; (ii) such lease is in full force and effect and enforceable against the parties thereto in accordance with its terms; (iii) prior to the Closing Date, all rents and other monetary amounts that have become due and payable thereunder have been paid in full in accordance with their terms; (iv) no waiver, indulgence, release, extension, or postponement of any obligations thereunder has been granted by any party thereto; (v) there exists no default or breach (or an event that, with notice or lapse of time or both, would constitute a default or breach) under such lease with respect to Insurance Group and, to the Knowledge of Insurance Group, with respect to any other party thereto; (vi) it is in compliance with all applicable zoning, land use, public health, fire safety, building code, and similar Legal Requirements applicable thereto or relating to the ownership, occupancy, or operation thereof; (vii) except as set forth in Schedule 3.12(b), the Transaction and the transactions contemplated hereby will not constitute a default or breach, or cause the termination or any modification, of such lease; and (viii) true and complete copies of real property leases have been made available to Purchaser.

(c) All real property sold, transferred, or otherwise disposed of or owned, leased, or used by Insurance Group during the past five (5) years is accurately described on Schedule 3.12(c).

3.13. Litigation and Pending Proceedings. (a) Except as set forth in Schedule 3.13(a), there are no Proceedings pending or, to the Knowledge of Insurance Group, threatened in any court or before any government agency or authority, mediator, arbitration panel, or otherwise (nor has any event occurred or circumstance arisen that may give rise to or serve as a basis for any Proceeding) as of the date hereof (i) against, by, or affecting Insurance Group; or (ii) which would prevent, delay, make illegal, or otherwise interfere with the performance of this Agreement, the other agreements contemplated hereunder, the Transaction, or the transactions contemplated hereby, or declare the same unenforceable or cause the rescission hereof.

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(b) Insurance Group is not as of the date hereof (i) subject to any outstanding Order of any court, arbitration panel, or governmental agency or authority; (ii) presently charged with or, to the Knowledge of Insurance Group, under governmental investigation with respect to any actual or alleged violations of any Legal Requirement; or (iii) the subject of any pending or, to the Knowledge of Insurance Group, threatened Proceeding by any government agency or authority having jurisdiction over their respective businesses, assets, capital, properties, or operations.

(c) No director, officer, employee, agent, or representative of Insurance Group as of the date hereof is subject to any award, decision, injunction, judgment, order, directive, decree, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, arbitrator, or government agency or authority (an “Order”) that prohibits such director, officer, employee, agent, or representative from engaging in or continuing any conduct, activity, or practice relating to the business of Insurance Group.

(d) For purposes of this Agreement, the term “Proceeding” means any claim, action, proceeding, mediation, arbitration, audit, hearing, investigation, litigation, or lawsuit (whether civil, criminal, administrative, judicial, or investigative, whether formal or informal whether public or private).

3.14. Taxes, Returns, and Reports.

(a) Except as set forth in Schedule 3.14(a), beginning on January 1, 2010 and for each year thereafter, Insurance Group has filed a consolidated return as a member of an affiliated group of corporations (within the meaning of Section 1504 of the Code) with ONB as the common parent (the “Affiliated Group”) and has: (i) timely, accurately, and duly filed all material federal, state, local, and foreign Tax Returns of every type and kind required to be filed with any taxing authority, and each such Tax Return is true, accurate, and complete in all material respects; (ii) paid or otherwise adequately reserved for all material Taxes, assessments, and other governmental charges due or claimed to be due upon Insurance Group or any of its income, properties, or assets or transactions, whether or not shown on any Tax Return; and (iii) not deferred or delayed any material remittance of payments beyond the due date for such payments for any such payments or requested an extension of time for filing any Tax Return (except for any extension which is no longer in force). Insurance Group has established a reserve for Taxes adequate to cover all of Insurance Group’s Tax Liabilities for the taxable periods covered by the Financial Statements. Insurance Group does not, and will not, have any Tax Liability of any material nature for or with respect to the operation of its business, or ownership of its assets, from the date hereof up to and including the Effective Time, except to the extent set forth in the Financial Statements or as accrued or reserved on the books and records of Insurance Group. Insurance group is not currently under audit by any federal, state, local, or other taxing authority, and there is not currently pending, or, to the Knowledge of Insurance Group, likely to occur, any Proceeding, assessment, notice of deficiency or demand for

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payment by any taxing authority with respect to its Taxes. Except as disclosed in Schedule 3.14(a), no federal, state, or local Tax Return of Insurance Group has been audited by any taxing authority. There are no liens for Taxes nor has any levy action been taken on any of the assets of Insurance Group.

(b) The Affiliated Group has filed on a timely basis all income Tax Returns that it was required to file for each taxable period during which Insurance Group was a member of the group. All such Tax Returns were true, accurate, and complete in all material respects. All income Taxes owed by the Affiliated Group (whether or not shown on any Tax Return) have been paid for each taxable period during which Insurance Group was a member of the group. Neither Insurance Group nor any director or officer (or employee responsible for Tax matters) of any of Insurance Group and its subsidiaries has Knowledge of or expects any authority to assess any additional income Taxes against Insurance Group for any taxable period during which any of Insurance Group was a member of the Affiliated Group. There is no proposed assessment, notice of deficiency, dispute or claim concerning any income Tax Liability of the Affiliated Group for any taxable period during which Insurance Group was a member of the group either claimed or pending.

(c) With respect to Insurance Group and its business, operations, affairs, and ownership of assets: (i) all elections with respect to any Taxes affecting Insurance Group are set forth in Schedule 3.14(c); (ii) all Taxes that Insurance Group is required by law to withhold or collect have been duly withheld or collected or for which it has a fiduciary duty have been timely paid over to the IRS or appropriate governmental agencies or authorities to the extent due and payable and are not subject to any Tax Liability in connection with amounts paid or owing to any employee, creditor, independent contractor, or other third party; (iii) all deficiencies of Taxes and any corresponding interest and penalties which have been assessed, claimed, proposed, or asserted against Insurance Group have been fully paid or finally settled, and no issue has been raised in any examination which may be expected to result in the assessment, proposal, notice or assertion of a deficiency of Taxes for any other year not so examined; (iv) no facts or circumstances exist that would constitute the basis for the assessment, proposal or assertion of any deficiencies of Taxes against Insurance Group for any unexamined year or for the recharacterization of any item of income, or denial, restriction or limitation of any expense or deduction set forth on any income tax return filed by Insurance Group resulting in any Taxes payable by Insurance Group; (v) Insurance Group has complied in all material respects with all Legal Requirements relating to all Taxes; (vi) no claim exists or has been proposed, asserted, or to the Knowledge of Insurance Group, threatened or discussed, by a government agency or authority for a jurisdiction where Insurance Group files tax returns to the effect that Insurance Group is or may be subject to taxation by that governmental agency or authority or which may result in any asserted liability, assessment or deficiency; and (vii) Insurance Group has not agreed, and is not required, to make any adjustment under Section 481(a) of the Code, or any comparable provision of state, county, local, or foreign law, by reason of a change in accounting method or otherwise.

(d) Insurance Group has never been a “United States real property holding corporation” (as defined in Section 897(c) of the Code) during the applicable period specified in

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Section 897(c)(1)(A)(ii) of the Code. The Transaction and the transactions contemplated hereby are not subject to the Tax withholding provisions of the Code or any other law. Insurance Group has adequately disclosed on its federal, state, county, local, and foreign income tax returns and has a reasonable basis for or is supported by substantial authority for, all positions taken therein that could, if not so disclosed or supported by substantial authority, reasonably give rise to an accuracy-related penalty under Section 6662 of the Code (or any corresponding provision of state, county, local, or foreign Tax law). Insurance Group has not engaged in any transactions that involve a “tax shelter” or in any “nondisclosed noneconomic substance” transaction as those terms are defined in Section 6662.

(e) For purposes of this Agreement, the term “Tax” (or “Taxes” where applicable) means any and all federal, state, county, local, foreign, or other income, gross receipts, capital stock, franchise, employee income withholding, foreign withholding, other withholding, social security, unemployment, disability, environmental, real property, personal property, sales, use, excise, payroll, transfer, value added, alternative, or add-on minimum or other tax, assessment, fee, or charge, including any interest, penalties, or additions to tax in respect of the foregoing, whether disputed or not. The term “Tax Liability” means any Liability (whether known, unknown, absolute, fixed, matured, unmatured, contingent, assessed, liquidated, or unliquidated, and whether due or to become due) with respect to any Taxes, including any Liability to indemnify, assume, withhold or succeed to a Tax Liability of a third party.

3.15. Affiliated Transactions. Except as set forth in Schedule 3.15, Insurance Group does not lease any assets or properties from, owe any amounts to, ONB or any other Person affiliated with ONB.

3.16. Environmental Matters. Except as set forth on Schedule 3.16, (a) and except as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Insurance Group, Insurance Group is in compliance, and has complied, with all applicable federal, state, and local laws (including common law), statutes, rules, regulations, orders, decrees, permits, authorizations or legal requirements of any governmental agency as of the date hereof relating to: (i) the protection or restoration of the environment or natural resources, (ii) the handling, storage, use, presence, disposal, release or threatened release of, or exposure to, any hazardous substance, or (iii) noise, odor, wetlands, indoor air, pollution, contamination, or any injury to persons or property from exposure to any hazardous substance (collectively, “Environmental Laws”); and (b) there are no legal, administrative, arbitral or other proceedings, claims or actions, or, to the Knowledge of Insurance Group, investigations of any governmental agency or other person pending or threatened against Insurance Group as of the date hereof of any nature seeking to impose, or that could reasonably be expected to result in the imposition, on Insurance Group of any Liability arising under any Environmental Law, and, to the Knowledge of Insurance Group, there is no reasonable basis for any such proceeding, claim, action or investigation. Insurance Group is not subject to any agreement, Order, judgment, decree, letter agreement or memorandum of agreement by or with any governmental agency or third party as of the date hereof imposing any Liability with respect to the foregoing.

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3.17. Employee Benefit Plans.

(a) With respect to the employee benefit plans, as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended and the regulations promulgated thereunder (“ERISA”), whether or not subject to ERISA, and each stock option, stock appreciation right, restricted stock, stock purchase, stock unit, performance share, incentive, bonus, profit-sharing, savings, deferred compensation, health, medical, dental, life insurance, disability, accident, supplemental unemployment or retirement, employment, consulting, severance or salary or benefits continuation or fringe benefit plan, program, arrangement, agreement or commitment sponsored, contributed to (or to which there is an obligation to contribute), or otherwise maintained by Insurance Group or any employer that would be treated together with the Insurance Group as a single employer within the meaning of Section 414 of the Code (an “ERISA Affiliate”), whether written or oral, in which Insurance Group participates as a participating employer or to which Insurance Group has any liability or is a party (including any such plans which within the preceding six (6) years have been terminated, merged into another plan of Insurance Group, frozen, or discontinued) (each, a “Plan” and collectively, the “Plans”), except as set forth in Schedule 3.17(a): (i) the Plans have been, in all material respects, maintained, administered, and operated in accordance with their terms and in compliance with the requirements prescribed by all applicable Legal Requirements, including ERISA, the Code, and the regulations promulgated by the United States Department of Labor and United States Treasury; (ii) the Plans intended to constitute tax-qualified plans under Section 401(a) of the Code have received favorable determination, advisory or opinion letters, as applicable, from the IRS , and to the Knowledge of Insurance Group no event has occurred and no circumstances exist that could reasonably be expected to result in revocation of any such favorable determination, advisory, or opinion letter; (iii) except as set forth in Schedule 3.17(a), neither Insurance Group nor any ERISA Affiliate thereof has filed, or is considering filing, an application under the IRS Employee Plans Compliance Resolution System or the Department of Labor’s Voluntary Fiduciary Correction Program with respect to any Plan; (iv) each Plan which is a “nonqualified deferred compensation plan” (within the meaning of Section 409A of the Code) that the Insurance Group is a party to has been operated and administered in compliance with Section 409A of the Code and any proposed and final guidance under Section 409A of the Code; (v) except as set forth in Schedule 3.17(a), no Plan (or its related trust) holds any stock or other securities of Insurance Group or any ERISA Affiliate; (vi) except as set forth in Schedule 3.17(a), Insurance Group has not engaged in any transaction, that may subject Insurance Group, or any of the Plans, to a civil penalty imposed by Section 502 of ERISA; (vii) except as set forth in Schedule 3.17(a), to the Knowledge of Insurance Group, no prohibited transaction (as defined in Section 406 of ERISA and as defined in Section 4975(c) of the Code) has occurred with respect to any of the Plans; and (viii) except as set forth in Schedule 3.17(a), there are no Proceedings pending (other than routine claims for benefits) as of the date hereof or, to the Knowledge of Insurance Group, threatened against Insurance Group, any of the Plans, any fiduciary of any of the Plans, or the assets of any of the Plans as to which Insurance Group would have a Liability.

(b) Except as provided in Schedule 3.17(b), neither Insurance Group nor any ERISA Affiliate thereof contributes to, has an obligation to contribute to, or has any liability with respect to (i) a multiemployer plan within the meaning of ERISA Section 3(37), (ii) a multiple employer plan within the meaning of the Code or ERISA, or (iii) a Plan subject to or covered by Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA.

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(c) With respect to each Plan, ONB has made available to Purchaser with regard to Insurance Group true, accurate, and complete copies of the: (i) Plans and all amendments thereto and all summary plan descriptions thereof (including any modifications thereto); (ii) the three most recently filed annual report on Internal Revenue Service Form 5500-series, including any attachments thereto; (iii) the most recent actuarial valuation report; (iv) the most recent determination, advisory and/or opinion letter; and (v) any materials relating to any government investigation or audit or any submissions under any voluntary compliance procedures.

(d) Except as set forth in Schedule 3.17(d), no current or former director, officer, or employee of Insurance Group is entitled to any benefit under any Plans that are welfare benefit plans (as defined in Section 3(1) of ERISA) after termination of employment with Insurance Group, except that such individuals may be entitled to continue their group health care coverage pursuant to Section 4980B of the Code if they pay the cost of such coverage pursuant to the applicable requirements of that plan or the Code with respect thereto, whichever is applicable.

(e) Except as set forth in Schedule 3.17(e), there are no collective bargaining, employment, management, consulting, deferred compensation, reimbursement, indemnity, retirement, early retirement, severance, or similar plans or agreements, under discussion or negotiation by Insurance Group with any employee or group of employees, any member of management, or any other individual.

(f) Except as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Insurance Group, all contributions required to be made under the terms of any of the Plans have been or will be timely made or have been reflected on the Financial Statements or accrued in the account records of the Insurance Group. No Plan has failed to satisfy the minimum funding standard within the meaning of Section 412 of the Code or Section 302 of ERISA or has an “accumulated funding deficiency” (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA, and no ERISA Affiliate has an outstanding funding waiver. Insurance Group has not provided, and is not required to provide, security to any Plan pursuant to Section 401(a)(29) of the Code. No Plan has been terminated and no proceedings have been instituted to terminate or appoint a trustee under Title IV of ERISA to administer any such plan. No “reportable event” (as defined in Section 4043 of ERISA) has occurred or is expected to occur as a result of the transactions contemplated by this Agreement, or otherwise, with respect to any Plan.

(g) The execution of this Agreement and the consummation of the transactions contemplated hereby do not constitute a triggering event under any Plan which (either alone or upon the occurrence of any additional or subsequent event) will or may result in any payment, “parachute payment” (as such term is defined in Section 280G of the Code), severance, bonus, retirement or job security or similar-type benefit, or increase any benefits or accelerate the payment or vesting of any benefits to any employee or former employee or director of the Insurance Group or any of the Subsidiaries and no Plan provides for the payment of severance, termination, change in control or similar-type payments or benefits.

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(h) The Insurance Group and each Plan that is a “group health plan” as defined in Section 733(a)(1) of ERISA (a “Company Health Plan”) (i) is currently in compliance with the Patient Protection and Affordable Care Act, Pub. L. No. 111-148 (“PPACA”), the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152 (“HCERA”), and all regulations and guidance issued thereunder (collectively, with PPACA and HCERA, the “Healthcare Reform Laws”) and (ii) has been in compliance with all applicable Healthcare Reform Laws since March 23, 2010. No event has occurred, and no condition or circumstance exists, that could reasonably be expected to subject the Insurance Group or any Company Health Plan to penalties or excise taxes under Sections 4980D, 4980H, or 4980I of the Code or any other provision of the Healthcare Reform Laws.

3.18. Obligations to Employees. Except as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Insurance Group, all contributions required to be made under the terms of any of the Plans have been or will be timely made or have been reflected on the Financial Statements. Neither of the Plans which is an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA (a “Pension Plan”) nor any single-employer plan or any ERISA Affiliate has an “accumulated funding deficiency” (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA, and no ERISA Affiliate has an outstanding funding waiver. Insurance Group has not provided, and is not required to provide, security to any Pension Plan or to any single-employer plan of any ERISA Affiliate pursuant to Section 401(a)(29) of the Code.

3.19. Employee Matters. (a) Except as set forth on Schedule 3.19(a), each Business Employee of Insurance Group is an employee or independent contractor at-will whose employment or engagement and may be terminated by Insurance Group at any time, with or without cause.

(b) Schedule 3.19(b) sets forth a true, accurate, and complete list of the following information with respect to each individual who is a Business Employee on the date of this Agreement: name, title or position held, date of hire, current annual compensation (including base salary, commissions and deferred compensation), the amount of accrued bonus as of the date hereof, and accrued vacation and other paid-time-off entitlements as of the date hereof. Except as set forth in Schedule 3.19(b), all compensation (including deferred compensation, bonuses, commissions, and overtime) which was due and owed prior to the Closing Date has been or will be paid prior to the Closing Date or otherwise in accordance with the terms thereof, and any paid-time-off or vacation taken prior to the Closing Date has been or will be paid prior to the Closing Date. ONB has previously provided to Purchaser copies of all employee policies, handbooks, and manuals in effect and currently used by Insurance Group.

(c) In each case, except as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Insurance Group, Insurance Group has maintained and continues to maintain true, accurate, and complete payroll, personnel, and time

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records for purposes of compliance with all federal and state minimum wage and overtime laws and right to work laws, including adequate documentation of the applicability of exemptions under such laws. Except as set forth in Schedule 3.19(c), Insurance Group is in compliance with all applicable Legal Requirements with respect to (i) employment and employment practices, (ii) terms and conditions of employment, (iii) wages and hours, and (iv) occupational safety and health.

(d) Except as set forth in Schedule 3.19(d), as of the date hereof there are no, and during the last three (3) years have not been any, formal, informal, or internal charges or complaints of, or any Proceedings pending or, to the Knowledge of Insurance Group, threatened involving, discrimination or harassment (including, but not limited to, discrimination or harassment based upon gender, age, marital status, race, religion, color, creed, national origin, sexual preference, handicap, or veteran status), nor is there any investigation pending or, to the Knowledge of Insurance Group, threatened before the Equal Employment Opportunity Commission or any other governmental agency or authority with respect to alleged or actual discrimination or harassment by Insurance Group or any of its present or former shareholders, directors, officers, employees, agents, or representatives.

(e) There is no arbitration proceeding or grievance pending, or to the Knowledge of Insurance Group threatened, as of the date hereof involving any of the current, former, or prospective employees of Insurance Group.

(f) Insurance Group is in compliance with the Family and Medical Leave Act, the Americans With Disabilities Act, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Civil Rights Acts of 1968 and 1991, as amended, and all laws, rules, and regulations relating to occupational health and safety as of the date hereof.

(g) For purposes of this Agreement, “Business Employee” means the employees and independent contractors of Insurance Group.

3.20. Clients. Except as set forth in Schedule 3.20, all insurance business is a direct account of Insurance Group, and no third party (including any Business Employee) owns or otherwise has any right, title, or interest in or to the book of insurance business of Insurance Group or the revenues derived therefrom.

3.21. Insurance. Set forth in Schedule 3.21 is a list and brief description of all policies of insurance covering the properties and operations (including errors and omissions, property and casualty insurance, and workers compensation insurance) owned or held by Insurance Group on the date hereof or with respect to which Insurance Group pays any premiums. Except as set forth on Schedule 3.21, each such policy is in full force and effect and all premiums due thereon have been paid when due, and a true, accurate, and complete copy thereof has been made available to Purchaser prior to the date hereof.

3.22. Intellectual Property. (a) Except as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Insurance Group, Insurance Group

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owns all right, title, and interest in and to, or is licensed or otherwise possesses the legal rights to use, all Intellectual Property used by Insurance Group, in each case free and clear of all Encumbrances. Schedule 3.22(a) sets forth a list of all material owned or licensed Intellectual Property. None of the Intellectual Property owned by Insurance Group has been registered or is the subject of an application for registration with any governmental agency.

(b) To the Knowledge of Insurance Group, (i) Insurance Group does not infringe, misappropriate, or otherwise violate any Intellectual Property rights of any third party; (ii) there are no Proceedings, pending or threatened alleging that Insurance Group’s use of the Intellectual Property infringes, misappropriates, or otherwise violates the Intellectual Property rights of any third party; and (iii) no third party (including any current or former employee of Insurance Group) infringes, misappropriates, or otherwise violates any Intellectual Property owned by Insurance Group; except (in the case of clauses (i) and (iii) above) as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Insurance Group.

(c) For purposes of this Agreement, “Intellectual Property” means trademarks, service marks, brand names, internet domain names, logos, symbols, certification marks, trade dress and other indications of origin, the goodwill associated with the foregoing and registrations in any jurisdiction of, and applications in any jurisdiction to register, the foregoing, including any extension, modification or renewal of any such registration or application; patents, applications for patents (including divisions, continuations, continuations in part and renewal applications), all improvements thereto, and any renewals, extensions or reissues thereof, in any jurisdiction; trade secrets; copyrights and registrations or applications for registration of copyrights in any jurisdiction, and any renewals or extensions thereof.

3.23. Licenses and Permits. Except as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Insurance Group, Insurance Group, and each director, officer, employee, agent, and representative of Insurance Group possesses and holds all licenses, franchises, permits, certificates, and other authorizations (collectively, the “Permits”) necessary for the continued conduct of its business without interference or interruption and for the continued lawful performance of such individual’s duties on behalf of Insurance Group. A copy of each such Permit is set forth in Schedule 3.23 and, except as set forth on Schedule 3.23, shall remain in full force and effect in accordance with their respective terms from and after the Closing Date, without any restrictions or limitations thereon or the need to obtain any consents or approvals of any government agencies or authorities or any other third parties. No such Permit, or any renewal thereof, will be terminated, revoked, suspended, limited, or modified in any respect as a result of the Transaction or the transactions contemplated hereby. Except as otherwise disclosed on Schedule 3.23 and except as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Insurance Group, Insurance Group has been in compliance with all such Permits, and Insurance Group has not received notice of any violation or alleged violation of, and is not subject to a Liability for past or continuing violation of, any Permit.

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3.24. No Third Party Consents. (a) Except for the filing under the HSR Act and as set forth in Schedule 3.24(a), and except as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Insurance Group, no consent, approval, authorization, clearance, or waiver of or any filing with or notice to any Person or third party or any government agency or authority is required for the execution, delivery, and performance by Insurance Group or ONB of this Agreement, the other agreements contemplated hereunder, the Transaction, or the transactions contemplated hereby.

(b) For purposes of this Agreement, “HSR Act” means §7A of the Clayton Act (Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the rules and regulations promulgated thereunder.

3.25. Restrictive Agreements. Except as set forth in Schedule 3.25, Insurance Group is not a party to or bound by any Contract which limits or restrains its ability to engage in any line of business in which Insurance Group competes or which would prohibit Insurance Group from conducting its business as heretofore conducted.

3.26. Compliance with Laws. Except as set forth on Schedule 3.26, and except as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Insurance Group, neither Insurance Group nor any of the employees of Insurance Group has engaged in any activity or taken or omitted to take any action which has resulted in the violation of any Legal Requirement, or in the violation of any Order of any court or government agency or authority that would result in any Liability to Insurance Group.

3.27. Absence of Changes. Since December 31, 2015, except as set forth on Schedule 3.27:

(a) No event or events have occurred that have had or would reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Insurance Group;

(b) except with respect to the transactions contemplated hereby or as required or permitted by this Agreement, Insurance Group has carried on its businesses in all material respects in the ordinary course and consistent with past practice;

(c) Insurance Group has not incurred any liabilities of any nature other than items incurred in the regular and ordinary course of business, consistent with past practice, or increased, decreased or otherwise changed (or experienced any change in the assumptions underlying or the methods of calculating) any bad debt, contingency, or other reserve, other than in the ordinary course of business consistent with past practice;

(d) Insurance Group has not paid, discharged, or satisfied any lien or liability other than the payment, discharge, or satisfaction in the ordinary course of business consistent with past practice of liens or liabilities of the type reflected or reserved against in the Financial Statements or which were incurred since December 31, 2015 in the ordinary course of business consistent with past practice;

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(e) Insurance Group has not permitted, allowed, or suffered any of its assets or properties (real, personal or mixed, tangible or intangible) to be subjected to any lien other than Permitted Encumbrances;

(f) Insurance Group has not canceled any debts or waived any claims or rights in excess of Ten Thousand and No/100 Dollars ($10,000.00) individually or Twenty-Five Thousand and No/100 Dollars ($25,000.00) in the aggregate;

(g) Insurance Group has not disposed of or permitted to lapse any right to the use of any intellectual property owned by Insurance Group or used in the business of Insurance Group or disposed of or, to the Knowledge of Insurance Group and ONB, disclosed to any Person not authorized to have such information any of such intellectual property not previously a matter of public knowledge or existing in the public domain;

(h) Insurance Group has not made any material capital expenditure or commitment for additions to property, plant, equipment, intangible, or capital assets or for any other purpose, other than for emergency repairs or replacement;

(i) Insurance Group has not incurred any Long-Term Liability;

(j) Insurance Group has not paid, loaned, distributed or advanced any amounts to or sold, transferred, or leased any assets or properties (real, personal or mixed, tangible or intangible) to or purchased, leased, licensed, or otherwise acquired any assets or properties from, or entered into any other agreement or arrangement with (i) any Related Person of the Company, or (ii) any Person Controlling, Controlled By or Under Common Control With any such Related Person, except compensation of officer and employees of Insurance Group and its Subsidiaries and reimbursement of properly incurred expenses in each case in the ordinary course of business;

(k) Insurance Group has not sold, transferred, or otherwise disposed of any of its assets or properties, except in the ordinary course of business consistent with past practice;

(l) Insurance Group has not granted or incurred any obligation for any increase in the compensation of any officer or employee of Insurance Group except for raises to employees in the ordinary course of business consistent with past practice, or adopted, modified or amended any of the Plans to increase benefits provided thereunder or having the effect of increasing the cost thereof;

(m) Insurance Group has not made any change in any method of accounting or accounting principle, practice, or policy;

(n) Insurance Group has not suffered any casualty loss or damage in excess of Ten Thousand and No/100 Dollars ($10,000.00) in the aggregate (whether or not insured against);

(o) Insurance Group has not made or agreed to make any charitable contributions or incurred or agreed to incur any non-business expenses in excess of Ten Thousand and No/100 Dollars ($10,000.00) in the aggregate;

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(p) As of the date hereof, Insurance Group has not suffered any loss of, or agreed to a material reduction in fees from, a client or customer relationship from which Insurance Group collected fees and revenues in excess of Ten Thousand and No/100 Dollars ($10,000.00) in the last twelve months from the date hereof;

(q) Insurance Group has not amended any provision of the Articles of Incorporation or By-Laws of Insurance Group or changed any of its authorized or issued capital stock; and

(r) Insurance Group has not agreed, so as to legally bind Insurance Group whether in writing or otherwise, to take any of the actions set forth in this Section 3.27 and not otherwise expressly permitted by this Agreement.

“Control” “Controlling” “Controlled By” and “Under Common Control With” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and shall be construed as such term is used in the rules promulgated under the Securities Act.

“Current Liabilities” means the current liabilities of Insurance Group and its Subsidiaries on a consolidated basis, determined in accordance with GAAP, including (a) unpaid transaction expenses incurred in connection with the preparation, execution, and performance of this Agreement and the transactions contemplated by this Agreement, whether consummated or not, (b) customary premium accounts payable to insurance carriers incurred in the ordinary course of business, and (c) deferred tax liabilities (regardless of whether or not such deferred tax liabilities would otherwise be classified as current liabilities under GAAP or otherwise).

“Long-Term Liability” means any liability required to be disclosed on a balance sheet prepared in accordance with GAAP other than the Current Liabilities.

“Material Interest” means direct or indirect “beneficial ownership” (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended, without regard to the 60-day period referred to in Rule 13d-3(d)(i)) of two percent (2%) or more of any class of securities in an entity.

“Related Person” means with respect to a particular individual: (i) each other member of such individual’s family; (ii) any Person that is directly or indirectly Controlled By any one or more members of such individual’s family; (iii) any Person in which members of such individual’s family hold (individually or in the aggregate) a Material Interest; and (iv) any Person with respect to which one or more members of such individual’s family serves as a director, officer, partner, executor or trustee (or in a similar capacity). With respect to a specified Person other than an individual: (I) any Person that directly or indirectly Controls, is directly or indirectly Controlled By or is directly or indirectly Under Common Control With such specified Person; (II) any Person that holds a Material Interest in such specified Person; (III) each Person that serves as a director, officer, partner, executor or trustee of such specified Person (or in a similar capacity); (IV) any Person in which such specified Person holds a Material

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Interest; and (V) any Person with respect to which such specified Person serves as a general partner or a trustee (or in a similar capacity). The family of an individual includes (A) the individual, (B) the individual’s spouse, (C) any other natural person who is the parent, child, grandparent, grandchild or sibling of the individual or the individual’s spouse, and (D) any other natural person who resides with such individual.

3.28. Broker’s, Finder’s, or Other Fees. Except as set forth on Schedule 3.28, no agent, broker, or other person acting on behalf of Insurance Group or ONB or under any authority of Insurance Group or ONB are or shall be entitled to any commission, broker’s, or finder’s fee or any other form of compensation or payment from any of the parties hereto relating to the Transaction or the transactions contemplated hereby. The fees set forth on Schedule 3.28 shall be paid by Insurance Group prior to the Effective Time.

3.29. Indemnification Agreements. (a) Insurance Group is not a party to any indemnification, indemnity, or reimbursement Contract to indemnify any present or former shareholder, director, officer, employee, agent, or representative against Liability or hold the same harmless from Liability, other than as expressly provided in the Articles of Incorporation or By-Laws of Insurance Group.

(b) No claims have been made against or filed with Insurance Group as of the date hereof, nor have, to the Knowledge of Insurance Group, any claims been threatened against Insurance Group, for indemnification against Liability or for reimbursement of any costs or expenses incurred in connection with any Proceeding by any present or former shareholder, director, officer, employee, agent, or representative of Insurance Group.

3.30. Trade Relations. Except as set forth on Schedule 3.30, neither Insurance Group nor ONB has as of the date hereof received any notice of a threatened termination, cancellation or limitation of, or material modification or change in, the business relationship of Insurance Group or any Subsidiary, or the business of Insurance Group or any Subsidiary, with any customer, supplier or insurance carrier and, to the Knowledge of Insurance Group, there exists no present condition or state of fact or circumstances that would have a Material Adverse Effect on the ability of Insurance Group and its Subsidiaries to conduct its business relationships or business with its customers, suppliers or insurance carriers, taken as a whole, in the same manner as heretofore conducted by Insurance Group and such Subsidiaries.

3.31. Privacy of Customer Information. Each of Insurance Group and the Subsidiaries has complied with all contracts, privacy policies and applicable Legal Requirements regarding personal, private, health or financial information, including personally identifiable information, about current, former and prospective employees, customers, consumers or other natural persons that is or has been collected, processed or stored by Insurance Group or the Subsidiaries (“Personal Data”). As of the date of this Agreement, to the Knowledge of Insurance Group, each agent of Insurance Group or the Subsidiaries has complied with all such contracts, privacy policies and applicable Legal Requirements regarding Personal Data. As of the date of this Agreement, no customer, consumer or employee of Insurance Group or the Subsidiaries has made any claim, or otherwise asserted, to Insurance Group or the Subsidiaries in writing or to the

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Knowledge of Insurance Group that Insurance Group or the Subsidiaries or an agent of Insurance Group or the Subsidiaries has breached any confidentiality or security obligation, violated any privacy policies, failed to fulfill obligations under any contract relating to data security or privacy, misappropriated any information or violated any Legal Requirement pertaining to Personal Data. Neither Insurance Group nor the Subsidiaries has received any written inquiries from or been subject to any audit or other legal proceeding by any governmental agency, regarding compliance with its privacy policy or any Legal Requirement pertaining to Personal Data. Insurance Group and the Subsidiaries have established and are in compliance in all material respects with, and to the Knowledge of Insurance Group, each third-party vendor of Insurance Group or the Subsidiaries has established and is compliance in all material respects with: (i) commercially reasonable security programs designed to protect (A) the integrity, security and confidentiality of information processed and transactions executed through any servers, computer hardware, networks, software (whether embodied in software, firmware or otherwise), databases, telecommunications systems, data centers, storage devices, voice and data network services interfaces and related systems maintained by or on behalf of Insurance Group or the Subsidiaries (“Computer Systems”), and (B) the integrity, security and confidentiality of all confidential or proprietary data and Personal Data in its possession; and (ii) commercially reasonable security policies and privacy policies that comply with all applicable Legal Requirements. Except as set forth on Schedule 3.31, neither Insurance Group, the Subsidiaries, nor, to the Knowledge of Insurance Group, any third-party vendor of Insurance Group or the Subsidiaries has (i) to the Knowledge of Insurance Group, suffered a security incident or breach with respect to its data or Computer Systems any part of which occurred since the date that is three (3) years prior to the date of this Agreement or (ii) been required pursuant to any Legal Requirement to notify customers, consumers or employees of any information security incident or breach related to the Personal Data of such customers, consumers or employees.

SECTION 4

REPRESENTATIONS AND WARRANTIES OF PURCHASER

For the purpose of this Agreement, a Material Adverse Effect on Purchaser means any effect that (i) is material and adverse to the financial position, results of operations, or business of Purchaser and its parent and affiliates taken as a whole, or (ii) would materially impair the ability of Purchaser to perform its obligations under this Agreement or otherwise materially threaten or materially impede the consummation of the Transaction and the transactions contemplated hereby; provided, however, that Material Adverse Effect on Purchaser shall not include the impact of (a) changes in banking and similar laws of general applicability or interpretations thereof by courts or governmental agencies and authorities, (b) changes in generally accepted accounting principles (“GAAP”) or regulatory accounting requirements applicable to banks and their holding companies generally, (c) any modifications or changes to valuation policies and practices in connection with the Transaction or restructuring charges taken in connection with the Transaction, in each case in accordance with GAAP, (d) changes in general level of interest rates or conditions or circumstances that affect the banking industry generally, (e) general economic conditions, (f) economic conditions of the industries in which Purchaser or Insurance Group participates, (g) the taking of any action pursuant to this Agreement and the other agreements contemplated hereby, or (h) the public announcement of this Agreement or the consummation of the transactions contemplated hereby.

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Purchaser hereby represents and warrants to Insurance Group and ONB as follows:

4.01. Organization and Authority. Purchaser is a corporation duly organized and validly existing under the laws of the State of Delaware, and has full power and authority (corporate and otherwise) to own and lease its properties as presently owned and leased and to conduct its business in the manner and by the means utilized as of the date hereof.

4.02. Authorization. (a) Purchaser has the requisite power and authority to enter into this Agreement and to carry out their respective obligations hereunder, subject to the fulfillment of the conditions precedent set forth in Section 7.01. As of the date hereof, Purchaser is not aware of any reason why the conditions set forth in Section 7.01 will not be satisfied in a timely manner and without the imposition of a condition, restriction, or requirement of the type described in Section 7.01. This Agreement and the other agreements contemplated hereunder and their execution and delivery by Purchaser has been duly authorized by its Board of Directors. Assuming due execution and delivery by ONB and Insurance Group, this Agreement constitutes a valid and binding obligation of Purchaser, subject to the conditions precedent set forth in Section 7.01, and is enforceable in accordance with its terms, except to the extent limited by general principles of equity and public policy and by bankruptcy, insolvency, reorganization, liquidation, moratorium, readjustment of debt, or other laws of general application relating to or affecting the enforcement of creditors’ rights.

(b) Other than in connection or in compliance with corporation statutes and federal and state securities laws, all as amended, and the rules and regulations promulgated thereunder, no notice to, filing with, exemption by, or consent, authorization, or approval of any governmental agency or body is necessary for the consummation by Purchaser of the Transaction or the transactions contemplated hereby, except filings required under the HSR Act.

4.03. Shareholder Approval. Approval by the shareholders of Purchaser of the Transaction or for any other actions contemplated by this Agreement is not required.

4.04. Financial Statements and Reports. (a) Purchaser has delivered to Insurance Group copies of the following financial statements and reports of Purchaser and its subsidiaries, including the notes thereto (collectively, the “Purchaser Financial Statements”):

(i) Consolidated Balance Sheets and related Consolidated Statements of Income and Consolidated Statements of Changes in Stockholders’ Equity of Purchaser as of and for the years ended December 31, 2014 and 2015, and for the period ended February 29, 2016; and

(ii) Consolidated Statements of Cash Flows of Purchaser for the years ended December 31, 2014 and 2015.

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(b) The Purchaser Financial Statements fairly present the consolidated financial position of Purchaser and its subsidiaries as of and at the dates shown and the consolidated results of operations for the periods covered thereby. The Purchaser Financial Statements described in clauses (i) and (ii) above, which consist of fiscal year-end information, are unaudited financial statements and have been prepared in conformance with GAAP applied on a consistent basis except as may otherwise be indicated in any accountants’ notes or reports with respect to the Financial Statements. The Purchaser Financial Statements do not include any assets, liabilities, or obligations or omit to state any assets, liabilities, or obligations, absolute or contingent, or any other facts, which inclusion or omission would render any of the Purchaser Financial Statements false, misleading, or inaccurate in any respect.

4.05. Broker’s, Finder’s or Other Fees. Except for reasonable fees of Purchaser’s attorneys and accountants and investment bankers, no agent, broker, or other person acting on behalf of Purchaser or under any authority of Purchaser is or shall be entitled to any commission, broker’s, or finder’s fee or any other form of compensation or payment from any of the parties hereto relating to this Agreement and the Transaction contemplated hereby.

4.06. Absence of Changes. Since December 31, 2015, no event or events have occurred that have had or would reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Purchaser.

4.07. Financing. Purchaser has commitments for all funds necessary to satisfy its obligations hereunder.

4.08. Purchaser Intent. The Purchaser is acquiring the Shares solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. The Purchaser acknowledges that the Shares are not registered under the Securities Act of 1933, as amended, or any state securities laws, and that the Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act of 1933, as amended or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable. The Purchaser is able to bear the economic risk of holding the Shares for an indefinite period (including total loss of its investment), and has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risk of its investment.

4.09. Solvency. Upon the Closing and consummation of the Transaction, (a) Purchaser will not be insolvent, (b) Purchaser will not be left with unreasonably small capital, and (c) Purchaser will not have incurred debts beyond its ability to pay such debts as they mature.

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SECTION 5

COVENANTS OF ONB AND INSURANCE GROUP

ONB and Insurance Group each covenants and agrees with Purchaser as follows:

5.01. Information, Access Thereto, Confidentiality. Purchaser and its agents and representatives shall, on reasonable notice and during normal business hours prior to the Effective Time, have full and continuing access to the properties, facilities, operations, books, and records of Insurance Group. Purchaser and its agents and representatives may, prior to the Effective Time, make or cause to be made such reasonable investigation of the operations, books, records, and properties of Insurance Group and of its financial and legal condition as deemed necessary or advisable to familiarize themselves with such operations, books, records, properties, and other matters; provided, however, that such access or investigation shall not interfere with the normal business operations of Insurance Group. Upon request, Insurance Group shall furnish Purchaser or its agents or representatives, its attorneys’ responses to external auditors’ requests for information, management letters received from its external auditors, and such financial, loan, and operating data and other information reasonably requested by Purchaser which has been or is developed by Insurance Group, its auditors, accountants, or attorneys (provided, with respect to attorneys, such disclosure (i) would not result in the waiver by Insurance Group or ONB of any claim of attorney-client privilege, and (ii) shall not include information related to the Transaction or the transactions contemplated hereby), and will permit Purchaser and its agents or representatives to discuss such information directly with any Person performing auditing or accounting functions for Insurance Group, and such auditors and accountants shall be directed to furnish copies of any reports or financial information as developed to Purchaser or its agents or representatives. No investigation by Purchaser or its agents or representatives shall affect the representations and warranties made by ONB. Any confidential information or trade secrets received by Purchaser or its agents or representatives in the course of such examination (whether conducted prior to or after the date of this Agreement) shall be treated confidentially and in accordance with the Confidentiality Agreement.

5.02. Preservation of Business. On and after the date of this Agreement and until the Effective Time or until this Agreement is terminated as provided herein, Insurance Group shall: (a) carry on the business of Insurance Group substantially in the manner as is presently being conducted and in the ordinary course of business; (b) use reasonable best efforts to preserve its business organization intact, keep available the services of the present directors, officers, and employees, and preserve their present relationships with clients and Persons having business dealings with each of them; (c) maintain all of the properties and assets that Insurance Group owns or utilizes in good operating condition and repair, reasonable wear and tear excepted, and maintain insurance upon such properties and assets in amounts and kinds comparable to that in effect on the date of this Agreement; (d) maintain the books, records, and accounts of Insurance Group in the usual, regular, and ordinary manner, on a basis consistent with prior years and in compliance with all Legal Requirements applicable to them; (e) not knowingly do or fail to do anything which will cause a breach of, or default in, any Contract to which Insurance Group is a party or is otherwise subject or bound; and (f) otherwise report, as requested by Purchaser, periodically to Purchaser concerning the status of the business, operations, and finances of Insurance Group. ONB will provide prompt written notice to Purchaser if ONB or the Insurance Group receives any notice of a threatened termination, cancellation or limitation of, or material modification or change in, the business relationship of Insurance Group or any Subsidiary, or the business of Insurance Group or any Subsidiary, with any customer with revenues in excess of $10,000 during the twelve months prior to the date hereof, supplier or insurance carrier after the date hereof.

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5.03. Conduct of Business. (a) On and after the date of this Agreement, and until the Effective Time or until this Agreement shall be terminated as herein provided, Insurance Group shall not, without the prior written consent of Purchaser, do the following:

(i) make any changes to the capital stock accounts of Insurance Group (including any stock split, stock dividend, recapitalization, or reclassification);

(ii) authorize a class of stock or issue, or authorize the issuance of, securities other than or in addition to the issued and outstanding Insurance Group Common Stock as set forth in Section 3.03;

(iii) distribute or pay any dividends on the Shares, other than cash dividends paid in the ordinary course of business, except as provided by Section 5.11;

(iv) redeem, transfer, convey, or sell any of the Shares;

(v) merge, combine, or consolidate or effect a share transaction with or sell the assets of Insurance Group or any of their securities to any other Person or enter into any other similar transaction not in the ordinary course of business;

(vi) purchase any assets or securities or assume any Liabilities of another Person, other than items incurred in the regular and ordinary course of business, consistent with past practice, or increase, decrease or otherwise change the assumptions underlying or the methods of calculating any bad debt, contingency, or other reserve, other than in the ordinary course of business consistent with past practice;

(vii) permit, allow, or suffer any of its assets or properties (real, personal or mixed, tangible or intangible) to be subjected to any lien other than Permitted Encumbrances;

(viii) make any loan or commitment to lend money;

(ix) acquire or dispose of any personal property or acquire any real property or fixed asset constituting a capital investment in excess of Ten Thousand and No/100 Dollars ($10,000.00) individually or Twenty-Five Thousand and No/100 Dollars ($25,000.00) in the aggregate;

(x) subject any of its properties or assets to an Encumbrance, except for Tax and other liens which arise by operation of law and with respect to which payment is not past due or is being contested in good faith by appropriate Proceedings;

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(xi) promote to a new position or increase the rate of compensation or enter into any agreement to promote to a new position or increase the rate of compensation, of any shareholder, director, officer, or employee of Insurance Group (except for promotions and compensation increases in the ordinary course of business and in accordance with past practices and established employment policies of Insurance Group);

(xii) except pursuant to this Agreement, execute, create, institute, modify, amend, or terminate (except with respect to any amendments to the Plans required by law, rule, or regulation) any Plan or collective bargaining agreement; any group insurance or health contract or policy; or any other plan, agreement, or understanding for current or former directors, officers, or employees of Insurance Group; or change the level of benefits or payments under any of the foregoing or increase or decrease any severance or termination of pay benefits or any other fringe or employee benefits other than as required by law or regulatory authorities or the terms of any of the foregoing;

(xiii) modify, amend, or institute new employment policies or practices, or enter into, renew, or extend any Plan, employment, indemnity, reimbursement, consulting, compensation, or severance agreements with respect to any present or former shareholders, directors, officers, or employees of Insurance Group;

(xiv) hire or employ any new or additional employees of Insurance Group, except those which are reasonably necessary for the proper operation of Insurance Group;

(xv) elect or appoint any directors or officers of Insurance Group who are not presently serving in such capacities;

(xvi) enter into any new line of business other than the business as currently conducted by Insurance Group;

(xvii) amend, modify, or restate the Articles of Incorporation or By-Laws of Insurance Group from those in effect on the date of this Agreement and as delivered to Purchaser hereunder;

(xviii) give, dispose of, sell, convey, or transfer; assign, hypothecate, pledge, or encumber; or grant a security interest in or option to or right to acquire any shares of capital stock or substantially all of the assets of Insurance Group, or enter into any agreement or commitment relative to the foregoing;

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(xix) fail to accrue, pay, discharge, or satisfy any or all debts, Liabilities, or expenses, including trade payables, incurred in the ordinary course of business as such debts, Liabilities, or expenses become due;

(xx) except for (A) obligations disclosed within this Agreement or the Disclosure Schedules, (B) trade payables and similar Liabilities incurred in the ordinary course of business, (C) the payment, discharge, or satisfaction in the ordinary course of business of Liabilities reflected in the Financial Statements, Insurance Group, and (D) inter-company accounts/agreements, shall not (I) borrow any money, (II) incur any indebtedness, or (III) incur any Liability (whether absolute, accrued, contingent or otherwise), in an aggregate amount exceeding Twenty-Five Thousand and No/100 Dollars ($25,000.00);

(xxi) open, close, move, or expand or diminish, renovate, alter, or change any of its offices;

(xxii) pay or commit to pay any management or consulting or other similar type of fees, except in the ordinary course of business;

(xxiii) guarantee any debt or obligation of any shareholder or any other Person;

(xxiv) change any of the terms of, or amend, modify, or restate, any Contract or employee benefit plan to which Insurance Group is bound or subject or pursuant to which Insurance Group receives or may receive any benefits or makes or may make any payments, which has or would reasonably be expected to have a Material Adverse Effect on Insurance Group;

(xxv) dispose of or permit to lapse any right to the use of any intellectual property owned by Insurance Group or used in the business of Insurance Group or dispose of or, to the Knowledge of Insurance Group and ONB, disclose to any Person not authorized to have such information any of such intellectual property not previously a matter of public knowledge or existing in the public domain;

(xxvi) pay, loan, distribute or advance any amounts to or sell, transfer, or lease any assets or properties (real, personal or mixed, tangible or intangible) to or purchase, lease, license, or otherwise acquire any assets or properties from, or enter into any other agreement or arrangement with (i) any Related Person of Insurance Group, or (ii) any Person Controlling, Controlled By or Under Common Control With any such Related Person, except compensation of officers and employees of Insurance Group and its Subsidiaries and reimbursement of properly incurred expenses in each case in the ordinary course of business;

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(xxvii) make any change in any method of accounting or accounting principle, practice, or policy;

(xxviii) make or agree to make any charitable contributions or incur or agree to incur any non-business expenses in excess of Ten Thousand and No/100 Dollars ($10,000.00) in the aggregate; or

(xxix) taken any other action which is not either in the ordinary course of business and consistent with past practice or expressly provided for in this Agreement.

(b) Insurance Group shall maintain, or cause to be maintained, in full force and effect, insurance on its assets, properties, and operations, and errors and omissions insurance on its employees, in such amounts and with regard to such Liabilities and hazards insured by Insurance Group as of the date of this Agreement.

5.04. Press Releases. Except as required by law or except with the prior written consent of all of the parties hereto (which consent shall not be unreasonably withheld), neither Insurance Group nor ONB shall issue any news or press release or make any other public announcement or disclosure relating to the Transaction or the transactions contemplated hereby.

5.05. Other Negotiations. On and after the date of this Agreement and until the Effective Time or until this Agreement is terminated as herein provided, except with the prior written approval of Purchaser, Insurance Group and ONB shall not, and their respective directors, officers, employees, agents, or representatives to (ONB collectively with Insurance Group and all such persons and entities, the “Seller Group”), directly or indirectly, initiate, solicit, encourage, provide information to, discuss with, or negotiate with any Person or group concerning any merger, consolidation, share transaction, combination, purchase, or sale of substantial assets, sale of capital stock (or securities convertible or transactionable into or otherwise evidencing, or any agreement or instrument evidencing the right to acquire, capital stock), or similar transaction relating to Insurance Group to which Insurance Group or ONB or may become a party (an “Acquisition Proposal”). ONB agrees to notify Purchaser within forty-eight (48) hours if any member of the Seller Group receives any indications of interest, requests for information, or offers in respect of an Acquisition Proposal and will communicate to Purchaser in reasonable detail the terms of any such indication, request, or offer, and will provide Purchaser with copies of all written communications relating to any such indication, request, or offer.

5.06. Subsequent Financial Statements. As soon as reasonably available after the date of this Agreement until the Closing Date, and in any event within ten (10) business days after the end of the applicable month, Insurance Group shall deliver to Purchaser the monthly unaudited balance sheets and profit and loss or income statements of Insurance Group prepared for its internal use, and all other financial reports or statements submitted to regulatory authorities after the date hereof, to the extent permitted by law (collectively, “Subsequent Financial Statements”). The Subsequent Financial Statements shall be prepared on a basis consistent with past

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accounting practices and shall fairly present the financial condition and results of operations as of the dates and for the periods presented, subject to year-end audit adjustments and the absence of footnotes for Interim Statements.

5.07. Employee Benefit Plans. (i) Purchaser shall not be obligated to assume, continue or maintain any of the Plans, and (ii) no assets or liabilities of the Plans shall be transferred to, or assumed by, Purchaser or Purchaser’s benefit plans, except as provided in Section 6.06. Prior to the Effective Time, ONB and/or Insurance Group shall take all necessary actions to (I) terminate Insurance Group’s participation in any Plan effective immediately prior to the Effective Time, (II) permit Continuing Employee participants in the Old National Bancorp Employee Stock Ownership and Savings Plan (the “ONB KSOP”) to rollover the vested account balances, including any outstanding loans, of employees of the Insurance Group who continue employment with Purchaser following the Closing (“Continuing Employees”) from such Plan to a plan of Purchaser that is qualified under Section 401(a) of the Code as soon as administratively practicable following the Effective Time, and (III) provide that Continuing Employees have a fully vested and nonforfeitable interest in their entire respective account balances under the ONB KSOP as of the Effective Time, to the extent not already vested. At the Closing, ONB and/or Insurance Group shall provide to Purchaser executed copies of the resolutions authorizing the actions required by this Section 5.07.

5.08. Adverse Actions. Insurance Group and ONB shall not knowingly take any action that is intended or is reasonably likely to result in (i) any of its representations and warranties set forth in this Agreement being or becoming untrue in any respect at any time at or prior to the Effective Time, (ii) any of the conditions to the Transaction set forth in Section 7.01 not being satisfied, (iii) a material violation of any provision of this Agreement, or (iv) a delay in the consummation of the Transaction except, in each case, as may be required by applicable law or regulation.

5.09. Reasonable Best Efforts. (a) Subject to the terms and conditions of this Agreement, Insurance Group shall use its reasonable best efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper, or desirable, or advisable under applicable laws, so as to permit consummation of the Transaction as promptly as practicable and otherwise to enable consummation of the transactions contemplated hereby and shall cooperate fully with Purchaser to that end.

(b) Without limiting the generality of the foregoing, the Insurance Group and the Purchaser shall, prior to or promptly after the date of this Agreement, prepare and file the notifications required under the HSR Act in connection with the Transaction. The Insurance Group and the Purchaser shall respond as promptly as practicable to (a) any inquiries or requests received from the Federal Trade Commission or the Department of Justice for additional information or documentations and (b) any inquiries or requests received from any state attorney general or other governmental agency or authority in connection with antitrust or related matters. Each of Insurance Group and the Purchaser shall (i) give the other parties prompt notice of the commencement of any legal proceeding by or before any governmental agency or authority with respect to the Transaction or any of the other transactions contemplated by this Agreement, (ii)

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keep the other party informed as to the status of any such legal proceeding and (iii) promptly inform the other party of any communication to or from the Federal Trade Commission, the Department of Justice or any other governmental agency or authority regarding the Transaction. Insurance Group and the Purchaser will consult and cooperate with one another, and will consider in good faith the views of one another, in connection with any analysis, appearance, presentation, memorandum, brief, argument, opinion or proposal made or submitted in connection with any legal proceeding under or relating to the HSR Act or any other federal or state antitrust or fair trade law.

5.10. E&O Tail.

(a) ONB shall purchase, at its own cost and expense, an extended reporting period endorsement to Insurance Group’s existing professional liability (errors and omissions) insurance policies listed in Schedule 3.21 (each, an “E&O Tail” and collectively, the “E&O Tails”). Each E&O Tail (i) will extend for a period of at least three (3) years following the Closing Date, the period during which a claim may be made under such policy for acts and omissions alleged to have occurred prior to the Effective Time, (ii) will have per claim and aggregate limits of at least the amount of such limits set forth on Schedule 3.21 with respect to each such professional liability insurance policy, and (iii) will have per claim and aggregate deductibles of no more than the amount of such deductibles set forth on Schedule 3.21 with respect to each such professional liability insurance policy.

(b) If any errors and omissions insurance claim is asserted against the Purchaser or Insurance Group arising out of or relating to any action, inaction, event or condition that occurred or existed prior to the Effective Time, ONB shall be responsible for any deductible payment required under the E&O Tails with respect to such claim.

(c) If, after the third anniversary of the Closing Date and prior to the sixth anniversary of the Closing Date, ONB no longer carries D&O insurance that would provide coverage for the directors and officers of Insurance Group for acts and omissions occurring prior to Closing Date, then ONB will provide Purchaser with such reasonable assistance and information as is necessary to permit Insurance Group to acquire tail coverage (at the expense of the Insurance Group).

5.11. Transfer of Excluded Assets. Notwithstanding anything in this Agreement to the contrary, concurrently or immediately prior to the Effective Time, ownership of the assets listed on Exhibit F (“Excluded Assets”) shall be transferred to ONB.

5.12. Exclusive Broker. Purchaser and ONB shall enter into an exclusive agreement to use the services of Insurance Group to procure ONB’s insurance substantially in the form of Exhibit B.

5.13. Branch Referral. Purchaser and ONB shall enter into a Branch Referral Agreement substantially in the form of Exhibit C.

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5.14. Settlement of Inter-Company Balances. Prior to Closing, Insurance Group and ONB shall settle all inter-company balances.

5.15. Restrictive Covenants.

(a) For a period of five (5) years commencing on the Effective Time (the “Restricted Period”), ONB shall not, and shall not permit any of its affiliates to, directly or indirectly, (i) engage in or assist others in engaging in the insurance business in the United States (the “Restricted Territory”); or (ii) have an interest in any Person that engages directly or indirectly in the insurance industry in the Restricted Territory in any capacity, including as a partner, shareholder, member, employee, independent contractor, principal, agent, trustee or consultant.

(b) During the Restricted Period, ONB shall not, and shall not permit any of its affiliates to, directly or indirectly: (i) hire or solicit any employee or independent contractor of Insurance Group, (ii) encourage any such employee or independent contractor to leave such employment or independent contractor relationship, or (iii) hire or solicit any former employee or independent contractor of Insurance Group within one hundred eighty (180) days from the date of termination of such employee’s or independent contractor’s employment or independent contractor relationship.

(c) During the Restricted Period, ONB shall not, and shall not permit any of its affiliates to, directly or indirectly, induce or attempt to induce any customer or prospective customer, supplier, or other business relation of Insurance Group to cease doing business with Insurance Group or in any other way interfere with Insurance Group’s relationship between any such customer or prospective customer, supplier, or other business relation of Insurance Group.

(d) ONB acknowledges that a breach or threatened breach of this Section 5.15 could give rise to irreparable harm to Purchaser, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by ONB of any such obligations, Purchaser shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to seek equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).

(e) ONB acknowledges that the restrictions contained in this Section 5.15 are reasonable and necessary to protect the legitimate interests of Purchaser and constitute a material inducement to Purchaser to enter into this Agreement and consummate the transactions contemplated by this Agreement. If any covenant contained in this Section 5.15 should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable law. The covenants contained in this Section 5.15 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

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(f) Notwithstanding anything herein to the contrary, it shall not be a breach of the covenants contained in Section 5.15(a) for ONB to (i) own, directly or indirectly, solely as a passive investment, securities of any entity traded on any national securities exchange if ONB is not a controlling person of or a member of a group which controls such entity and does not own a Material Interest in such entity, and (ii) acquire or merge with any bank holding company which, prior to such acquisition or merger, has a subsidiary that is engaged in the insurance agency business (an “Acquired Insurance Subsidiary”), so long as (1) ONB itself and its subsidiaries (other than the Acquired Insurance Subsidiary or its successor) do not engage in the insurance business, and (2) the Acquired Insurance Subsidiary does not use the ONB platform to conduct its insurance business (including by marketing to ONB customers, using ONB customer lists, or using ONB locations other than locations that were previously used by the Acquired Insurance Subsidiary prior to the acquisition of the Acquired Insurance Subsidiary by ONB), or (iii) directly or indirectly sell individual annuities, individual life insurance, individual long-term care insurance, or similar products for individuals offered in connection with ONB’s individual retirement planning and investment services (the “Permitted Products and Services”).

(g) If ONB consummates a merger, reorganization, or consolidation in which the shareholders of ONB immediately prior to the transaction own, in the aggregate, less than 50% of the combined voting power of the resulting entity (an “Acquisition”), then the acquiring entity and its affiliates (the “Acquiror”) will not be subject to the restrictions of this Section 5.15, except as follows (i) the restrictions in Section 5.15(a) will apply to (and be limited to) the office and branch locations of ONB existing at the time of the closing of the Acquisition, (ii) the Acquiror must not use the customer list of Insurance Group existing at the time of the Closing Date to solicit insurance products or services (other than the Permitted Products and Services), (iii) the Acquiror will be subject to the restrictions set forth in Section 5.15(b), except when such employees and independent contractors are performing services for Insurance Group primarily outside of the State of Indiana, Louisville, Kentucky, and Danville, Illinois, (iv) none of the employees of ONB as of the date of closing of the Acquisition may be engaged in any of the activities otherwise prohibited under this Section 5.15, and (v) the Acquiror may not use the “Old National” brand to engage in any activities that would otherwise be restricted in this Section 5.15.

5.16. Confidentiality and Non-Solicitation Agreements. ONB and Insurance Group will use good faith efforts to cause the Employees of Insurance Group listed on Schedule 5.16 (and any Employees hired by Insurance Group after the date hereof) to execute and deliver the confidentiality and non-solicitation agreements substantially in the form of Exhibit D.

5.17. Assignment of ONI Trademark. At Closing, ONB will assign all rights in and to the trademark “ONI” under a trademark assignment in form mutually acceptable to Purchaser and ONB.

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SECTION 6

COVENANTS OF PURCHASER

Purchaser covenants and agrees with Insurance Group and ONB as follows:

6.01. Filings. Purchaser or its agents or representatives shall have responsibility for the preparation, filing, and costs of all regulatory filings related to the Transaction (except as provided in Section 5.10(b)).

6.02. Press Releases. Except as required by law or except with the prior written consent of all of the parties hereto (which consent shall not be unreasonably withheld), neither Purchaser nor any of its affiliates shall issue any news or press release or make any other public announcement or disclosure relating to Insurance Group or ONB with respect to the Transaction and the transactions contemplated hereby.

6.03. Adverse Actions. Purchaser shall not knowingly take any action that is intended or is reasonably likely to result in (i) any of its representations and warranties set forth in this Agreement being or becoming untrue, or subject to any materiality or other qualification set forth in any such representations and warranties, in any respect at any time at or prior to the Effective Time; (ii) any of the conditions to the Transaction set forth in Section 7.02 not being satisfied; (iii) a material violation of any provision of this Agreement, or (iv) a delay in the consummation of the Transaction or the transactions contemplated hereby, except, in each case, as may be required by applicable law or regulation.

6.04. Reasonable Best Efforts.

(a) Subject to the terms and conditions of this Agreement, Purchaser shall use its reasonable best efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper, or desirable, or advisable under applicable laws, so as to permit consummation of the Transaction as promptly as practicable and otherwise to enable consummation of the transactions contemplated hereby and shall cooperate fully with Insurance Group to that end.

(b) Without limiting the generality of the foregoing, the Insurance Group and the Purchaser shall, prior to or promptly after the date of this Agreement, prepare and file the notifications required under the HSR Act in connection with the Transaction. The Insurance Group and the Purchaser shall respond as promptly as practicable to (a) any inquiries or requests received from the Federal Trade Commission or the Department of Justice for additional information or documentations and (b) any inquiries or requests received from any state attorney general or other governmental agency or authority in connection with antitrust or related matters. Each of Insurance Group and the Purchaser shall (i) give the other parties prompt notice of the commencement of any legal proceeding by or before any governmental agency or authority with respect to the Transaction or any of the other transactions contemplated by this Agreement, (ii) keep the other party informed as to the status of any such legal proceeding and (iii) promptly inform the other party of any communication to or from the Federal Trade Commission, the

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Department of Justice or any other governmental agency or authority regarding the Transaction. Insurance Group and the Purchaser will consult and cooperate with one another, and will consider in good faith the views of one another, in connection with any analysis, appearance, presentation, memorandum, brief, argument, opinion or proposal made or submitted in connection with any legal proceeding under or relating to the HSR Act or any other federal or state antitrust or fair trade law.

6.05. Restrictive Covenants. During the Restricted Period, Purchaser shall not, and shall not permit any subsidiaries controlled by Purchaser, including Insurance Group, to, directly or indirectly: (i) hire or solicit any employee or independent contractor of ONB or any of its affiliates, (ii) encourage any such employee or independent contractor to leave such employment or independent contractor relationship, or (iii) hire or solicit any former employee or independent contractor of ONB or any of its affiliates within one hundred eighty (180) days from the date of termination of such employee’s or independent contractor’s employment or independent contractor relationship.

6.06. Employee Benefit Plans.

(a) Purchaser shall waive, or cause to be waived, any waiting periods under any Purchaser Employee Benefit Plan which is an “employee welfare benefit plan” (within the meaning of Section 3(1) of ERISA) that provides health care benefits in which the Continuing Employees are eligible to participate. For the purposes of this paragraph, “Purchaser Employee Benefit Plan” shall mean all “employee welfare benefit plans” set forth on Schedule 6.06(a).

(b) As soon as reasonably practicable following the Closing Date, Purchaser shall cause a defined contribution retirement plan intended to qualify under Sections 401(a) and 401(k) of the Code (the “Purchaser Savings Plan”) to accept a transfer of assets and liabilities attributable to the Continuing Employees from the Old National Bancorp Employee Stock Ownership and Savings Plan (“ONB KSOP”), in accordance with this Section 6.06(b). As soon as practicable following Purchaser’s adoption of the Purchaser Savings Plan (the “Transfer Date”), the Purchaser Savings Plan will permit receipt of Continuing Employees’ lump sum cash distributions, in the form of an eligible rollover distribution from the ONB KSOP for a period of thirty (30) days (“Election Window”) following the Transfer Date to make an eligible rollover distribution, provided such rollovers are made at the election of the Continuing Employees and in accordance with the terms of the Purchaser Savings Plan. As soon as reasonably practicable following the end of the Election Window, ONB shall direct the trustee of the ONB KSOP to transfer to the trustee of the Purchaser Savings Plan the remaining account balances in the ONB KSOP (the “Transferred Accounts”) of the Continuing Employees. Such transfer shall be made in cash and as transfers of outstanding participant loans to the Continuing Employees. All outstanding participant loans to the Continuing Employees shall be transferred to the Purchaser Savings Plan in kind. The transfer described herein shall be subject to the requirements of Section 414(l) of the Code and Section 1.414(l)-1 of Treasury Regulations. The Continuing Employees shall receive credit for eligibility and vesting purposes for the service of such employees with ONB, Insurance Group or any Subsidiaries or any predecessors prior to the Closing Date, as if such service were with Purchaser or its affiliates. ONB shall provide any and all such information to Purchaser (or Purchaser’s designee) as soon as practicable following the Closing Date in a form reasonably acceptable to Purchaser.

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(c) As soon as reasonably practicable following the Closing Date, the Purchaser shall establish or cause to be established a cafeteria plan as defined in Section 125(d) of the Code (the “Purchaser Cafeteria Plan”), which includes as a qualified benefit thereunder health and dependent care flexible spending arrangements. For the remainder of the 2016 plan year following the Closing Date, Purchaser, to the extent Purchaser deems practicable in its sole discretion, will administer the health and dependent care flexible spending accounts for Continuing Employees (the “ONB Cafeteria Plan Participants”) in accordance with the following provisions: (i) the ONB Cafeteria Plan Participants will be covered under the Purchaser Cafeteria Plan; (ii) the salary reduction elections of each of the ONB Cafeteria Plan Participants in effect from time to time for the 2016 plan year will be taken into account for the remainder of the 2016 plan year under the Purchaser Cafeteria Plan; (iii) all remaining dependent care flexible spending and health care flexible spending account balances for ONB Cafeteria Plan Participants will be transferred to accounts established for the Continuing Employees in the Purchaser Cafeteria Plan; and (iv) each ONB Cafeteria Plan Participant may be reimbursed for eligible medical care and dependent care expenses (as defined in the Purchaser Cafeteria Plan and which shall be substantially similar to the definition in the Old National Bancorp Tax Saver Benefit Plan (the “ONB Cafeteria Plan”) incurred at any time during 2016, including such expenses incurred prior to the Closing Date, up to the level of coverage elected by such ONB Cafeteria Plan Participant from time to time reduced by expense reimbursements paid by the Insurance Group to the ONB Cafeteria Plan Participants under the ONB Cafeteria Plan prior to the Closing Date for eligible expenses incurred in 2016. ONB shall provide any and all such information to Purchaser (or Purchaser’s designee) as soon as practicable following the Purchaser’s request in a form reasonably acceptable to Purchaser.

(e) As of the Closing Date, Purchaser shall maintain for the benefit of Continuing Employees vacation and sick time policies. Purchaser shall grant credit for the Continuing Employees’ accrued and unused vacation as of the Closing Date for the remainder of 2016 (if any). ONB shall provide any and all such information to Purchaser as soon as practicable following the Closing Date in a form reasonably acceptable to Purchaser.

(f) Within five (5) business days following the date hereof, Purchaser and ONB will use good faith efforts to cause Thomas A. Flynn to enter into a new Employment Agreement with ONI (to be effective upon Closing) and a termination agreement and release with ONB terminating the existing change of control agreement with ONB.

(g) The provisions of this Section 6.06 are for the benefit of Purchaser and ONB only, and no employee of Insurance Group or any of its Subsidiaries, or any Continuing Employee, or any other Person shall have any rights hereunder. Nothing herein expressed or implied shall be deemed an amendment of any employee benefit plan, constitute the establishment of an employee benefit plan, or otherwise confer upon Insurance Group or any of its Subsidiaries, any Continuing Employee, any Person, or any legal representatives or beneficiaries thereof, any rights or remedies, including any right to employment or continued employment for any specified period or to be covered under or by any employee benefit plan or arrangement, or shall cause the employment status of any employee to be other than terminable at will.

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SECTION 7

CONDITIONS PRECEDENT TO THE TRANSACTION

7.01. Purchaser. The obligation of Purchaser to consummate the Transaction and the transactions contemplated hereby is subject to the satisfaction and fulfillment of each of the following conditions on or prior to the Effective Time, unless waived in writing by Purchaser:

(a) Representations and Warranties at the Effective Time. Each of the representations and warranties of ONB and Insurance Group contained in this Agreement (other than a representation qualified by Material Adverse Effect and Fundamental Representations) shall be true, accurate and correct in all respects on and as of the Effective Time as though the representations and warranties had been made or given at and as of the Effective Time (except that representations and warranties that by their express terms speak as of the date of this Agreement or some other date shall be true and correct only as of such date); provided that no representation or warranty of ONB or Insurance Group, other than a representation qualified by Material Adverse Effect and Fundamental Representations, shall be deemed untrue, inaccurate or incorrect for purposes hereunder as a consequence of the existence of any fact, event or circumstance inconsistent with such representation or warranty, unless such fact, event or circumstance, individually or taken together with all other facts, events or circumstances inconsistent with any representations or warranty of ONB or Insurance Group, has had or would result in a Material Adverse Effect on Insurance Group. Any representation or warranty that is qualified by Material Adverse Effect shall be true, accurate and correct in all respects on and as of the Effective Time (except that representations and warranties that by their express terms speak as of the date of this Agreement or some other date shall be true and correct only as of such date). Fundamental Representations shall be true, accurate and correct in all respects on and as of the Effective Time (except that representations and warranties that by their express terms speak as of the date of this Agreement or some other date shall be true and correct only as of such date).

(b) Covenants. Each of the covenants and agreements of ONB and Insurance Group to be performed on or prior to the Effective Time shall have been fulfilled or complied with from the date of this Agreement through and as of the Effective Time.

(c) Indebtedness. Insurance Group and its Subsidiaries shall have no outstanding Indebtedness (other than Permitted Indebtedness).

(d) Deliveries at Closing. Purchaser shall have received from ONB and Insurance Group at the Closing the items and documents, in form and content reasonably satisfactory to Purchaser, listed in Section 10.03(b).

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(e) Consents and Approvals. All governmental consents and approvals necessary to permit the consummation of the Transaction and the transactions contemplated hereby, or to permit the continued operation of the business of Insurance Group, in substantially the same manner after the Closing Date as before, shall have been received; and the third party consents listed on Schedule 7.01(e) shall have been received.

(f) Officer/Shareholder Certificates. ONB shall have delivered to Purchaser a certificate signed by its Chief Executive Officer or any Executive Vice President and its Secretary, dated as of the Effective Time, certifying that (i) all of the representations and warranties of ONB are true, accurate, and complete in all respects on and as of the Effective Time and (ii) all of the covenants and agreements of ONB and Insurance Group to be performed on or prior to the Effective Time hereunder have been complied with through and as of the Effective Time.

(g) No Restraining Actions. No Proceeding shall be pending, commenced, or threatened against Insurance Group, Purchaser or any of the principals, directors, or officers of any of them or ONB, seeking to restrain, prevent, or change the Transaction or the transactions contemplated hereby or questioning the legality or validity of any such transactions or seeking damages in connection with any such transactions.

(h) Transition Services Agreement. Insurance Group and ONB shall enter into the Transition Services Agreement substantially in the form of Exhibit E.

(i) Termination of Intercompany Agreements. All intercompany agreements between the Insurance Group and ONB or any of its affiliates (other than the Insurance Group) shall have been terminated.

(j) Flynn Employment Agreement. Thomas A. Flynn shall have executed and delivered to the Purchaser and ONB the agreements contemplated under Section 6.06(f).

7.02. Insurance Group and ONB. The obligation of ONB and Insurance Group to consummate the Transaction and the transactions contemplated hereby is subject to the satisfaction and fulfillment of each of the following conditions on or prior to the Effective Time, unless waived in writing by ONB:

(a) Representations and Warranties at Effective Time. Each of the representations and warranties of Purchaser contained in this Agreement (other than a representation qualified by Material Adverse Effect and Fundamental Representations) shall be true, accurate and correct in all respects on and as of the Effective Time as though the representations and warranties had been made or given at and as of the Effective Time (except that representations and warranties that by their express terms speak as of the date of this Agreement or some other date shall be true and correct only as of such date); provided that no representation or warranty of Purchaser, other than a representation qualified by Material Adverse Effect and Fundamental Representations, shall be deemed untrue, inaccurate or incorrect for purposes hereunder as a consequence of the existence of any fact, event or circumstance inconsistent with such representation or warranty,

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unless such fact, event or circumstance, individually or taken together with all other facts, events or circumstances inconsistent with any representations or warranty of Purchaser, has had or would result in a Material Adverse Effect on Purchaser. Any representation or warranty that is qualified by Material Adverse Effect shall be true, accurate and correct in all respects on and as of the Effective Time (except that representations and warranties that by their express terms speak as of the date of this Agreement or some other date shall be true and correct only as of such date). Fundamental Representations shall be true, accurate and correct in all respects on and as of the Effective Time (except that representations and warranties that by their express terms speak as of the date of this Agreement or some other date shall be true and correct only as of such date).

(b) Covenants. Each of the covenants and agreements of Purchaser to be performed on or prior to the Effective Time shall have been fulfilled or complied with from the date of this Agreement through and as of the Effective Time.

(c) Deliveries at Closing. ONB shall have received from Purchaser at the Closing the items and documents, in form and content reasonably satisfactory to Insurance Group and ONB, listed in Section 10.03(a).

(d) Officer Certificate. Purchaser shall have delivered to ONB a certificate signed by its Chairman or President and its Corporate Secretary, dated as of the Effective Time, certifying that: (i) all of the representations and warranties of Purchaser hereunder are true, accurate, and complete in all respects on and as of the Effective Time; (ii) all of the covenants of Purchaser hereunder have been complied with through and as of the Effective Time; and (iii) all of the obligations of Purchaser hereunder have been satisfied or performed through and as of the Effective Time.

(e) No Restraining Actions. No Proceeding shall be pending, commenced, or threatened against Insurance Group, Purchaser, ONB, or any of the principals, directors, or officers of any of them, seeking to restrain, prevent, or change the Transaction or the transactions contemplated hereby or questioning the legality or validity of any such transactions or seeking damages in connection with any such transactions.

(f) Consents and Approvals. All material third-party and governmental consents and approvals necessary to permit the consummation of the Transaction and the transactions contemplated hereby, or to permit the continued operation of the business of Insurance Group, in substantially the same manner after the Closing Date as before, shall have been received.

(g) Flynn Employment Agreement. Thomas A. Flynn shall have executed and delivered to the Purchaser and ONB the agreements contemplated under Section 6.06(f).

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SECTION 8

TERMINATION OF THE TRANSACTION

8.01. Manner of Termination. This Agreement and the Transaction and the transactions contemplated hereby may be terminated at any time prior to the Effective Time by written notice delivered by Purchaser to Insurance Group, or by Insurance Group to Purchaser, as follows (with no ONB, in such capacity, having the right to terminate this Agreement or the transactions contemplated hereby):

(a) By Purchaser or Insurance Group, if:

(i) the Transaction contemplated by this Agreement has not been consummated on or before June 30, 2016, and the party seeking such termination is not then in breach hereunder; or

(ii) the respective Boards of Directors of Purchaser and Insurance Group mutually agree to terminate this Agreement.

(b) By Purchaser, if:

(i) at any time prior to the Effective Time, either of the following has occurred:

(A) a misrepresentation or breach by ONB of any of its representations or warranties contained herein or in any of the Schedules hereto; or

(B) a breach of or a failure to comply by ONB or Insurance Group of any of their respective covenants or agreements contained herein, which breach or failure cannot be or has not been cured within thirty (30) days after the giving of written notice by Purchaser to ONB or Insurance Group of such breach or failure; or

(ii) Purchaser shall reasonably determine that the Transaction has become impracticable by reason of commencement or threat of any Proceeding against Purchaser, ONB, Insurance Group, or any director or officer of any of such entities relating to this Agreement, the Transaction, or the transactions contemplated hereby; or

(iii) there has been a material adverse change in the business, assets, capitalization, financial condition, results of operations, or prospects of Insurance Group as of any time prior to the Effective Time as compared to that in existence as of the date of this Agreement which would have a Material Adverse Effect on Insurance Group.

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(c) By ONB, if:

(i) at any time prior to the Effective Time, either of the following has occurred:

(A) a misrepresentation or breach by Purchaser of any of its representations or warranties contained herein; or

(B) a breach of or a failure to comply by Purchaser of any of its covenants or agreements contained herein, which breach or failure cannot be or has not been cured within thirty (30) days after the giving of written notice to Purchaser by ONB or Insurance Group of such breach or failure; or

(ii) ONB shall reasonably determine that the Transaction has become impracticable by reason of commencement or threat of any Proceeding against Purchaser, ONB, Insurance Group, or any director or officer of any of such entities relating to this Agreement, the Transaction, or the transactions contemplated hereby.

(iii) there has been a material adverse change in the business, assets, capitalization, financial condition, results of operations, or prospects of Purchaser as of any time prior to the Effective Time as compared to that in existence as of the date of this Agreement which would have a Material Adverse Effect on Purchaser.

8.02. Effect of Termination. Upon termination of this Agreement as provided herein, this Agreement shall terminate and be of no further force or effect, and there shall be no further obligations or restrictions on future activities on the part of Purchaser, Insurance Group, or ONB or their respective directors, officers, employees, agents, or representatives, except as provided in (a) the confidentiality provisions of this Agreement set forth herein and in the Confidentiality Agreement dated January 14, 2016 by and between Insurance Group, Purchaser and Sandler O’Neil & Partners, L.P. (the “Confidentiality Agreement”), and (b) the payment of each party’s respective expenses set forth in Section 11.09; provided, however, that if such termination was the result of an intentional breach of any representation, warranty, covenant, or other provision in this Agreement, or an intentional act or omission which resulted in any representation, warranty, covenant, or other provision, in this Agreement to be breached, then the party or parties who breached the representation, warranty, covenant, or other provision or who committed the intentional act or omission shall be liable to the other parties hereto for damages and all costs and expenses incurred in connection with the preparation, negotiation, and execution of this Agreement, including reasonable attorneys’ fees and disbursements, and reasonable fees and disbursements of accountants and tax advisors.

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SECTION 9

INDEMNIFICATION

9.01. Indemnification by Purchaser and ONB.

(a) Subject to the provisions of this Section 9, Purchaser hereby unconditionally, irrevocably, and absolutely agrees to protect, defend, indemnify, and hold harmless ONB and their respective affiliates, successors, assigns, directors, officers, employees, agents, and representatives (each an “ONB Indemnified Party” or, collectively, the “ONB Indemnified Parties”) from and against any and all Losses incurred, paid, or sustained by any of the foregoing, in each case in connection with, arising out of, based upon, relating to, or otherwise involving (i) any misrepresentation or breach of the representations and warranties made by Purchaser in this Agreement, and (ii) any breach of any covenant or agreement of Purchaser contained in this Agreement.

(b) Subject to the provisions of this Section 9, ONB hereby unconditionally, irrevocably, and absolutely agrees to protect, defend, indemnify, and hold harmless Purchaser and its affiliates, successors, assigns, directors, officers, employees, agents, and representatives (each a “Purchaser Indemnified Party” or, collectively, the “Purchaser Indemnified Parties”; together with the ONB Indemnified Parties, the “Indemnified Parties”) from and against any and all Losses incurred, paid, or sustained by any of the foregoing, in each case in connection with, arising out of, based upon, relating to, or otherwise involving

(i) any misrepresentation or breach of the representations and warranties made by ONB or Insurance Group in this Agreement;

(ii) any breach of any covenant or agreement of ONB or Insurance Group contained in this Agreement;

(iii) any Indebtedness of Insurance Group or any of its Subsidiaries that has not been taken into account in calculating the amount of Cash Consideration;

(iv) any liability for errors and omissions claims against Insurance Group or any of its Subsidiaries for acts or omissions occurring prior to the Closing (including the payment of deductibles under insurance policies therefor) and any liability for any retroactive or retrospective premium adjustments under the Company’s insurance policies;

(v) any liability for acts or omissions occurring prior to the Closing now existing in favor of the current or former directors or officers of Insurance Group and its Subsidiaries as provided in their respective charters, by-laws, or other agreements under which Insurance Group or the Subsidiaries may be liable to current or former directors or officers thereof as of the date hereof, to the extent permitted by law; or

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(vi) any liability or obligation relating to Estate of Joan Megel v. C&K Transport, ONB Insurance Group Inc., et al. Cause No. 40c011-1105-CT-000110 & Amy Jones v. C&K Transport, ONB Insurance Group Inc., et al. Cause No. 40C01-1205-CT-000016 (the Megel litigation).

As used in this Section 9, “Loss” and “Losses” mean any and all actual or threatened losses, claims, demands, damages, awards, liabilities, obligations, judgments, settlements, orders, fines, penalties, taxes, interest, forfeitures, costs, and expenses (including reasonable attorney, accountant, consultant, and other professional fees, costs, and disbursements of every kind, nature, and description).

(c) For purposes of (i) determining whether a breach of representation or warranty has occurred, and (ii) calculating the amount of Losses related to any breach of representation or warranty, any qualification as to materiality, “Material Adverse Effect” or any similar qualification or standard contained in Section 3 or Section 4 of this Agreement shall be disregarded (it being understood that the word Material in the defined term “Material Contracts” shall not be disregarded for any such purposes).

9.02. Notice and Opportunity to Defend Third Party Claims. Promptly after (a) receipt by any Indemnified Party of notice of the assertion of any claim against such Indemnified Party by a Person not a party to this Agreement or (b) the discovery by any Indemnified Party of any Loss giving rise to indemnification hereunder, in each case with respect to which such Indemnified Party expects to make a request for indemnification hereunder, such Indemnified Party shall give the party or parties that may become obligated to provide indemnification hereunder (the “Indemnifying Party”) written notice describing such Loss in reasonable detail and an estimate of the amount thereof (an “Indemnification Notice”). If the Indemnified Party fails to give the Indemnification Notice in a timely manner and the Indemnifying Party is materially prejudiced in its defense by such failure, the Indemnifying Party’s liability in respect of such Loss shall be reduced to the extent of such prejudice. Except as otherwise provided in this Section 9, such Indemnifying Party shall have the right, at its option, to defend, at its own expense and through counsel of its own choosing, any such claim involving the asserted Liability of the Indemnified Party as to which the Indemnifying Party shall have acknowledged its obligation to indemnify the party seeking indemnification hereunder; provided, however, that such counsel shall be reasonably satisfactory to the Indemnified Party. If counsel reasonably satisfactory to the Indemnified Party is not selected by the Indemnifying Party within thirty (30) days of any Indemnification Notice, then the Indemnified Party may select counsel to defend any such claim (provided that such counsel is reasonably satisfactory to the Indemnifying Party) and, in such event, the Indemnifying Party shall be responsible for and pay all reasonable attorney’s fees, costs and expenses of such counsel and all Losses arising from or relating to such claim, and the Indemnifying Party shall no longer be entitled to select counsel with respect to such claim. If any Indemnifying Party shall undertake to defend a claim asserted by a Person not a party to this Agreement, it shall give a notice (a “Defense Election Notice”) to the Indemnified Party of its intention to do so within ten (10) business days of the Indemnification Notice to which it relates.

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Whether or not the Indemnifying Party does choose so to defend such claim, the parties hereto shall cooperate in the defense thereof and shall furnish such records, information, and testimony and attend such conferences, discovery proceedings, hearings, trials, and appeals as may be reasonably requested in connection therewith. So long as the Indemnifying Party is defending in good faith any such claim, the Indemnified Party shall not compromise or settle such claim without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld. If the Indemnifying Party desires to accept a final and complete settlement of any claim by a Person not a party to this Agreement offered or agreed to by such Person, which settlement complies with the provisions of this Agreement, and the Indemnified Party refuses to consent to such settlement, then the Indemnity Party’s liability under this Agreement with respect to such claims is limited to the amount so offered or agreed to in settlement by such Person and the Indemnified Party must reimburse the Indemnifying Party for any additional costs of defense which the Indemnifying Party subsequently incurs with respect to such claim and all additional costs of settlement or judgment. Notwithstanding an election by an Indemnifying Party to assume the defense of such Proceeding, such Indemnified Party shall have the right to employ separate counsel and to participate in the defense of such Proceeding, and the Indemnifying Party shall bear the reasonable fees, costs, and expenses of such separate counsel (and shall pay such reasonable attorney’s fees, costs, and expenses at least quarterly), if (a) the use of counsel chosen by the Indemnifying Party to represent such Indemnified Party would present such counsel with a conflict of interest; (b) the defendants in, or targets of, any such Proceeding include both an Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have reasonably concluded that there may be legal defenses available to it or to other Indemnified Parties which are different from or additional to those available to the Indemnifying Party (in which case the Indemnifying Party shall not have the right to direct the defense of such Proceeding on behalf of the Indemnified Party); (c) the Indemnifying Party shall not have employed counsel reasonably satisfactory to such Indemnified Party in the exercise of the Indemnified Party’s reasonable judgment to represent such Indemnified Party within the time period referred to in the preceding sentence after notice of the institution of such Proceeding; (d) the Indemnifying Party fails to provide reasonable assurance to the Indemnified Party of its financial capacity to defend against any Loss; or (e) the Indemnifying Party shall authorize such Indemnified Party to employ separate counsel at the Indemnifying Party’s expense. All out-of-pocket costs and expenses incurred in connection with an Indemnified Party’s cooperation shall be borne by the Indemnifying Party (provided that such cooperation is requested by the Indemnifying Party and such costs and expenses are approved in advance by the Indemnifying Party). In any event, the Indemnified Party shall have the right at its own expense to participate in the defense of such asserted Loss.

Notwithstanding anything herein to the contrary, if the Indemnifying Party does not give a Defense Election Notice within ten (10) business days of the Indemnification Notice, the Indemnified Party shall be free, in its sole discretion, to defend, compromise, or settle the claim for which indemnification is sought, and the Indemnifying Party shall pay all Losses incurred by the Indemnified Party arising from or relating to such Losses.

Notwithstanding anything to the contrary herein, if an Indemnified Party determines in good faith that there is a reasonable probability that a Loss may adversely affect it or its affiliates

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other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the Indemnified Party may, by notice to the Indemnifying Party, assume the exclusive right to defend, compromise, or settle such Loss, but the Indemnifying Party will not be bound by any determination of a Loss so defended or any compromise or settlement effected without its consent (which consent may not be unreasonably withheld).

9.03. Non-Third Party Claims, Costs, and Expenses. If any Indemnification Notice delivered pursuant to Section 9.02 does not relate to a Loss or the commencement of any action or proceeding by a third party, the Indemnifying Party shall promptly pay to the Indemnified Party the full amount of the Loss set forth in such notice. In any case where an Indemnifying Party is obligated to pay costs or other expenses, such Indemnifying Party shall promptly pay to the Indemnified Party, upon the request of the Indemnified Party, the amount of such costs or expenses.

9.04. Amount and Survival. (a) Notwithstanding any other provisions of this Agreement to the contrary and other than with respect to a payment required to be made by Purchaser hereunder, (i) no amount shall be payable under Section 9.01(b)(i) by ONB or by Purchaser under Section 9.01(a)(i) unless and until the aggregate amount otherwise payable by the Indemnifying Party (other than Losses based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of the ONB Fundamental Representations or Purchaser Fundamental Representations) exceeds Six Hundred Fifty Thousand and No/100 Dollars ($650,000.00), at which point and thereafter the Indemnified Party shall be entitled to seek indemnification for the amount of all Losses, but not the initial Three Hundred Twenty-Five Thousand and No/100 Dollars ($325,000.00) in Losses; (ii) the maximum indemnification obligation of an Indemnifying Party for all Losses under Section 9.01(a)(i) or under Section 9.01(b)(i) (other than Losses based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of the ONB Fundamental Representations or Purchaser Fundamental Representations) is Twelve Million Two Hundred Fifty Thousand and No/100 Dollars ($12,250,000.00), in the aggregate. The Indemnifying Parties shall be obligated to indemnify the Indemnified Parties for all Losses arising from any breach of the ONB Fundamental Representations or the Purchaser Fundamental Representations, as the case may be, and for other indemnification obligations under Sections 9.01(a)(ii), 9.01(b)(ii), 9.01(b)(iii), 9.01(b)(iv), 9.01(b)(v), 9.01(b)(vi), and 9.06, from the first dollar up to an aggregate amount equal to the Purchase Price.

(b) All indemnification claims against an Indemnifying Party under this Section 9 based upon, arising out of or relating to any inaccuracies in or breaches by the Indemnifying Party of any of its representations or warranties (other than breaches of the ONB Fundamental Representations and the Purchaser Fundamental Representations) must be made by the close of business on the date which is eighteen (18) months following the Closing Date, provided, however, that any claims made during such eighteen (18) month period can be pursued after such eighteen (18) month period (and such claim will continue to survive and shall remain a basis for indemnity hereunder until such claim is finally resolved in accordance with this Section 9). “ONB Fundamental Representations means the representations and warranties of ONB set forth in Section 3.01 (Organization and Authority), Section 3.02 (Authority; No Conflict), Section 3.03

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(Capitalization), Section 3.14 (Taxes, Returns, and Reports), 3.17 (Employee Benefit Plans), 3.28 (Broker’s, Finder’s, or Other Fees). “Purchaser Fundamental Representations” means the representations and warranties of Purchaser set forth in Section 4.01 (Organization and Authority), Section 4.02 (Authorization), and Section 4.05 (Broker’s, Finder’s, or Other Fees). Claims for breach of ONB Fundamental Representations and Purchaser Fundamental Representations will survive indefinitely and a claim may be made until the latest date permitted by applicable law.

(c) All indemnification claims against an Indemnifying Party under this Section 9 based upon, arising out of or relating to any breaches by such Indemnifying Party of any of its covenants or agreements shall survive the Closing until the date explicitly specified therein or, if not so specified, indefinitely or until the latest date permitted by applicable law. ONB’s liability for pre-Closing E&O claims shall survive for the term of the E&O Tail. ONB’s liability for claims arising related to directors and officers liability related to Insurance Group shall survive for three (3) years after the Closing Date.

(d) The amount of any Losses incurred or suffered by an Indemnified Party and for which indemnification is provided under this Section 9 shall be calculated net of (i) any net amount actually recovered by such Indemnified Party from a third party with respect to such Losses or (ii) any insurance proceeds actually received by such Indemnified Party with respect to such Losses under any insurance policy, excluding self-insurance arrangements and net of any deductible or other expenses incurred by such Indemnified Party in collecting any such insurance proceeds (including reasonable attorneys’ fees directly related to obtaining such insurance proceeds).

(e) The Purchaser Indemnified Parties shall not be entitled to make any indemnification claim for Losses to the extent such Losses were included as Liabilities in the calculation of Final Working Capital.

(f) Mitigation. Each Indemnified Party agrees to take reasonable steps to mitigate any Losses that such Indemnified Party asserts under this Section 9. Any costs and expenses incurred by such Indemnified Party in connection with such mitigation shall constitute Losses that may be recovered hereunder.

9.05. Exclusive Remedy. Except for cases involving fraudulent or intentional misrepresentations by a party in this Agreement, the Disclosure Schedules, and the certificates and other documents delivered by one party to another, each party acknowledges and agrees that its rights and remedies under this Agreement shall be the exclusive remedy of such party and its subsidiaries and affiliates, and the transactions contemplated by this Agreement, including for any Losses incurred by such party, and its respective affiliates, successors, assigns, directors, officers, employees, agents, and representatives based upon, arising out of, in respect of, or relating to: (i) any inaccuracy in or breach of any representation or warranty of a party made pursuant to this Agreement, the Disclosure Schedules, and the certificates and other documents delivered to the other party, and (ii) any breach of any covenant or agreement of another party contained in this Agreement.

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9.06. Tax Matters. The following provisions shall govern the allocation of responsibility as between ONB and Insurance Group, on the one hand, and Purchaser, on the other hand, for certain Tax matters following the Effective Time.

(a) Indemnification. ONB shall indemnify Purchaser and hold it harmless from and against any loss, claim, liability, expense, assessment, lien or other damage attributable to (i) all Taxes, or the nonpayment or failure to withhold thereof, of Insurance Group for all taxable periods ending on or before the Effective Time and the portion through the end of the day immediately preceding the day on which the Effective Time occurs for any taxable period that includes, but does not end on, the Effective Time (“Pre-Closing Tax Period”), (ii) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which Insurance Group is or was a member on or prior to the Effective Time, including pursuant to Treas. Reg. § 1.1502-6 or any analogous or similar state, local, or foreign law, statute or regulation, and (iii) any and all Taxes of any Person (other than Insurance Group) imposed on Purchaser as a transferee, fiduciary or successor, by contract or pursuant to any law, rule or regulation, which Taxes related to an event, proceeding or transaction occurring before the Effective Time.

Purchaser shall indemnify ONB and hold it harmless from and against any loss, claim, liability, assessment, expense, lien or other damage attributable to (i) all Taxes, or the nonpayment thereof, of Surviving Corporation for all taxable periods beginning on or after the day on which the Effective Time occurs and the portion after the Effective Time for any taxable period that includes, but does not begin with, the Effective Time (“Post-Closing Tax Period”), (ii) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which Purchaser or Surviving Corporation is or was a member after the Effective Time, including pursuant to Treas. Reg. § 1.1502-6 or any as a transferee, fiduciary or successor, by contract or pursuant to any law, rule or regulation, which Taxes related to an event, proceeding or transaction occurred after the Effective Time analogous or similar state, local, or foreign law, statute or regulation, and (iii) any and all Taxes of any Person (other than Purchaser or Surviving Corporation) imposed or assessed on Purchaser or Surviving Corporation as a transferee or successor, by contract or pursuant to any law, rule or regulation, which Taxes related to an event or transaction occurring after the Effective Time.

(b) Straddle Period. In the case of any taxable period that includes, but does not end on, the Effective Time (a “Straddle Period”), the amount of any Taxes based on or measured by income, accretion to wealth or value or receipts of Insurance Group for the Pre-Closing Tax Period shall be determined based on an interim closing of the books as of the close of business on the Effective Time.

(c) Responsibility for Filing Tax Returns. Purchaser shall prepare or cause to be prepared and file or cause to be filed on a timely basis all Tax Returns for Insurance Group that are filed after the Effective Time (other than income Tax Returns with respect to periods for which a consolidated, unitary or combined income Tax Return of ONB will include the operations of Insurance Group and any separate company state or local returns required to be filed for Insurance Group for the tax period ending at or before the Effective Time). Purchaser shall be reimbursed by ONB for Taxes of Insurance Group that are due in connection with any

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such Tax Return to the extent attributable to a taxable period ending on or before the Closing Date or the portion of a Straddle Period ending on the Closing Date at least two (2) business days before payment by the Purchaser or Insurance Group of such Taxes is due, except to the extent such Taxes were reflected as a liability in Final Working Capital and taken into account as an adjustment to the Purchase Price.

(d) Cooperation on Tax Matters.

(i) ONB and Purchaser shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the timely filing of Tax Returns pursuant to this Section 9.06 and any audit, examination, administrative hearing, litigation or other Proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information that are reasonably relevant to any such audit, examination, administrative hearing, litigation, or other proceeding and making employees or contractors available on a mutually convenient basis to provide additional information, analysis and explanation of any material provided hereunder. ONB and Purchaser shall (A) retain all books and records with respect to Tax matters pertinent to Insurance Group relating to any taxable period beginning before the Effective Time until the expiration of the general three (3) year statute of limitation (and, to the extent notified by the other party, any extensions thereof by agreement or due to the nature or amount of any proposed or actual liability) of the respective taxable periods, and to abide by all statutory record retention requirements or record retention agreements entered into with any taxing authority, and (B) give the other party reasonable written notice prior to transferring, destroying, or discarding any such books and records and, if the other party so requests, ONB or Purchaser, as the case may be, shall allow the other party to take possession of such books and records.

(ii) ONB and Purchaser further agree, upon request, to use their best efforts to obtain any certificate, closing agreement or other document from any governmental authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby).

(iii) ONB and Purchaser further agree, upon request, to provide the other party with all information that either party may be required to report pursuant to Section 6043 of the Code and the regulations thereunder.

(e) Tax Sharing Agreements. All tax sharing agreements or similar agreements with respect to or involving Insurance Group shall be terminated by ONB as of the Effective Time, and after the Effective Time, Insurance Group shall not be bound thereby or have any Liability thereunder.

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SECTION 10

CLOSING

10.01. Effective Time. Unless otherwise mutually agreed upon by the parties hereto, the Transaction shall become effective (the “Effective Time”) at 11:59 p.m., Indianapolis, Indiana time, as follows: If the conditions to the Transactions set forth in Section 7 have been satisfied prior to May 30, 2016, then the Effective Time will occur on May 31, 2016, and if the conditions to the Transactions set forth in Section 7 have been satisfied after May 30 but before June 30, the Effective Time will occur on June 30.

10.02. Closing Date and Place. The closing of the Transaction (the “Closing”) shall take place on the date on which the Effective Time occurs (the “Closing Date”), at the law office of Krieg DeVault LLP, One Indiana Square, Suite 2800, Indianapolis, Indiana 46204, or by remote exchange of documents.

10.03. Deliveries.

(a) At the Closing, Purchaser shall deliver to ONB the following:

(i) the Cash Consideration as set forth in Section 2.01;

(ii) the officer certificate contemplated by Section 7.02(d);

(iii) copies of the resolutions of the Board of Directors of Purchaser certified by the Corporate Secretary of Purchaser relative to the approval of this Agreement, the other agreements contemplated hereunder, the Transaction, and the transactions contemplated hereby;

(iv) such other documents as Insurance Group or its legal counsel may reasonably request.

(b) At the Closing, ONB shall deliver, or cause Insurance Group to deliver, to Purchaser the following:

(i) the officer and shareholder certificates contemplated by Section 7.01(e);

(ii) copies of the resolutions adopted by the Board of Directors and ONB of Insurance Group certified by the Secretary of Insurance Group, relative to the approval of this Agreement, the Transaction, and the transactions contemplated hereby;

(iii) evidence that Insurance Group shall have obtained the Tail Coverages; and

(iv) such other documents as Purchaser or its legal counsel may reasonably request.

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SECTION 11

MISCELLANEOUS

11.01. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective parties hereto and their respective successors and assigns; provided, however, that this Agreement may not be assigned by Insurance Group or ONB without the prior written consent of Purchaser. Purchaser may assign this Agreement to any direct or indirect subsidiary of Purchaser or any of its affiliates without the consent of Insurance Group or ONB, but no such assignment shall release or affect Purchaser’s duties or liabilities hereunder. The representations, warranties, covenants, and agreements contained in this Agreement are for the sole benefit of the parties hereto and their successors and permitted assigns, and they shall not be construed as conferring any rights on any other persons, except that the Indemnified Parties shall be deemed to be third party beneficiaries of Section 9 and shall be entitled to enforce the obligations of Purchaser thereunder to the same extent as if it were a party hereto.

11.02. Waiver; Amendment. (a) Purchaser and ONB may by an instrument in writing: (i) extend the time for the performance of or otherwise amend any of the covenants, conditions, or agreements of the other parties under this Agreement; (ii) waive any inaccuracies in the representations or warranties of the other party contained in this Agreement or in any document delivered pursuant hereto; (iii) waive the performance by the other party of any of the covenants or agreements to be performed by it or them under this Agreement; or (iv) waive the satisfaction or fulfillment of any condition, the satisfaction or fulfillment of which is a condition to the right of the party so waiving to consummate the Transaction. The waiver by any party hereto of a breach of or noncompliance with any provision of this Agreement shall not operate or be construed as a continuing waiver or a waiver of any other or subsequent breach or noncompliance hereunder.

(b) This Agreement may be amended, modified or supplemented only by a written agreement executed by Purchaser, ONB and Insurance Group.

11.03. Notices. All notices, requests and other communications hereunder must be in writing (which shall include e-mail communication) and shall be deemed to have been duly given if delivered by hand and receipted for, sent by certified United States Mail, return receipt requested, first class postage pre-paid, delivered by overnight express receipted delivery service or e-mailed if confirmed immediately thereafter by also mailing a copy of such notice, request or other communication by certified United States Mail, return receipt requested, with first class postage pre-paid as follows:

If to ONB:	with a copy to (which shall not constitute notice):
Old National Bancorp	Krieg DeVault LLP
P.O. Box 718	One Indiana Square, Suite 2800
Evansville, Indiana 47708	Indianapolis, Indiana 46204
ATTN: Jeffrey L. Knight, Executive	ATTN: Michael J. Messaglia, Esq.
Vice President, Corporate Secretary	Telephone: (317) 238-6249
and Chief Legal Counsel	Email: mmessaglia@kdlegal.com
Telephone: (812) 464-1363
Email: jeff.knight@oldnational.com

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If to Insurance Group:

Old National Insurance

One Main Street

Evansville, Indiana 47708

ATTN: Scott J. Evernham, Esq.

    President

Telephone: (812) 461-9001

Email: scott.evernham@oldnational.com

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If to Purchaser:	with a copy to (which shall not constitute notice):
Prime Risk Partners Inc.	King & Spalding LLP
2475 Northwinds Parkway	1180 Peachtree Street, NE
Suite 200	Atlanta, Georgia 30309
Alpharetta, Georgia 30009	Attention: William G. Roche
Attention: Scot Kees	Telephone: (404) 572-4936
Telephone: (404) 285-6706	Email: broche@kslaw.com
Email: skees@primeriskpartners.com

or such substituted address or person as any of them has given to the other in writing. All such notices, requests or other communications shall be effective: (a) if delivered by hand, when delivered; (b) if mailed in the manner provided herein, five (5) business days after deposit with the United States Postal Service; (c) if delivered by overnight express delivery service, on the next business day after deposit with such service; and (d) if by e-mail, on the next business day if also confirmed by mail in the manner provided herein.

11.04. Headings. The headings in this Agreement have been inserted solely for ease of reference and should not be considered in the interpretation or construction of this Agreement.

11.05. Severability. In case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal, or unenforceable provision or provisions had never been contained herein.

11.06. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute one and the same instrument.

11.07. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware and applicable federal laws, without regard to principles of conflicts of law. The parties hereto hereby agree that all Proceedings initiated by Purchaser relating to this Agreement shall be filed, tried, and litigated only in the Circuit or Superior Courts of Marion County or the United States District Court in the Southern District of Indiana, and all Proceedings initiated by ONB relating to this Agreement shall be filed, tried, and litigated only in the State or Superior Courts of Fulton County, Georgia or the United States District Court in the Northern District of Georgia. In connection with the foregoing, the parties hereto consent to the jurisdiction and venue of such courts and expressly waive any claims or defenses of lack of personal jurisdiction of or proper venue by such courts. EACH OF THE PARTIES WAIVES ANY RIGHTS THAT HE OR IT MAY HAVE TO BRING A CAUSE OF ACTION IN ANY COURT OR IN ANY PROCEEDING INVOLVING A JURY TO THE MAXIMUM EXTENT PERMITTED BY LAW.

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11.08. Entire Agreement. This Agreement, and the other agreements to be executed and delivered pursuant to this Agreement, supersede all other prior understandings, commitments, representations, negotiations, or agreements, whether oral or written, among the parties hereto relating to the Transaction and the transactions contemplated hereby and constitute the entire agreement between and among the parties hereto with respect to the subject matter hereof, except for the Confidentiality Agreement, which shall continue in full force and effect following the date hereof. No representation, warranty, promise, inducement, or statement of intention has been made by any party hereto which is not embodied in this Agreement, the other agreements contemplated hereby or the Disclosure Schedules, and no party hereto shall be liable for or bound by any information not so set forth.

11.09. Expenses. Purchaser shall pay its expenses incidental to the Transaction and the transactions contemplated hereby. Except as otherwise expressly provided herein, Insurance Group and ONB shall pay their respective expenses incidental to the Transaction and the transactions contemplated hereby.

11.10. Certain References. Whenever in this Agreement a singular word is used, it also shall include the plural wherever required by the context and vice-versa. Except expressly stated otherwise, all references in this Agreement to periods of days shall be construed to refer to calendar days. The word “including” is not intended to be limiting and shall be deemed to mean “including, without limitation” in each instance.

11.11. Construction. The parties hereto agree that each party and its counsel reviewed and revised this Agreement and the other agreements contemplated hereunder and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement and the other agreements contemplated hereunder or any amendments or exhibits hereto or thereto.

11.12. Schedules and Exhibits. The Disclosure Schedules and Exhibits attached to this Agreement are incorporated herein and made a part of this Agreement.

11.13. Knowledge. All references in this Agreement to the knowledge of Insurance Group means the knowledge, after due inquiry, of the individuals identified on Schedule 11.13.

*    *    *

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IN WITNESS WHEREOF, Purchaser, Insurance Group, and ONB have made and entered into this Agreement as of the day and year first above written and have caused this Agreement to be executed and delivered by their duly authorized officers.

PRIME RISK PARTNERS, INC.
By:	/s/ Bret Quigley
OLD NATIONAL BANCORP
By:	/s/ James C. Ryan, III
ONB INSURANCE GROUP, INC.
By:	/s/ Scott J. Evernham

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EX-31.1

Exhibit 31.1

FORM OF SECTION 302 CERTIFICATION

I, Robert G. Jones, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Old National Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

c) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2016	By:	/s/ Robert G. Jones
		Robert G. Jones
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

FORM OF SECTION 302 CERTIFICATION

I, James C. Ryan, III, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Old National Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

c) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2016	By:	/s/ James C. Ryan, III
		James C. Ryan, III
		Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Old National Bancorp (the “Company”) on Form 10-Q for the quarter ending June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert G. Jones, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By	/s/ Robert G. Jones
	Robert G. Jones
	Chief Executive Officer
	(Principal Executive Officer)
	August 5, 2016

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Old National Bancorp (the “Company”) on Form 10-Q for the quarter ending June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James C. Ryan, III, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By:	/s/ James C. Ryan, III
	James C. Ryan, III
	Chief Financial Officer
	(Principal Financial Officer)
	August 5, 2016

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2016 shares
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Trading Symbol	ONB
Entity Registrant Name	Old National Bancorp /IN/
Entity Central Index Key	0000707179
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	135,005,000

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Assets
Cash and due from banks	$ 205,973	$ 91,311	$ 178,985
Money market and other interest-earning investments	61,947	128,507	16,228
Total cash and cash equivalents	267,920	219,818	195,213
Trading securities - at fair value	4,838	3,941	3,995
Investment securities - available-for-sale, at fair value:
Total investment securities - available-for-sale	2,648,901	2,418,221	2,572,521
Investment securities - held-to-maturity, at amortized cost (fair value $939,855; $929,417; and $867,345, respectively)	865,957	872,111	823,255
Federal Home Loan Bank/Federal Reserve Bank stock, at cost	90,742	86,146	71,669
Loans held for sale ($44,422; $13,810; and $20,287, respectively at fair value)	44,422	13,810	217,667
Loans:
Commercial	1,893,700	1,804,615	1,775,954
Commercial real estate	2,943,525	1,847,821	1,767,341
Residential real estate	2,099,770	1,644,614	1,622,819
Consumer credit, net of unearned income	1,893,163	1,543,768	1,464,541
Covered loans, net of discount		107,587	135,407
Total loans	8,830,158	6,948,405	6,766,062
Allowance for loan losses	(51,804)	(51,296)	(48,479)
Allowance for loan losses - covered loans		(937)	(1,712)
Net loans	8,778,354	6,896,172	6,715,871
FDIC indemnification asset		9,030	16,475
Premises and equipment, net	231,656	196,676	131,336
Accrued interest receivable	79,536	69,098	66,605
Goodwill	655,523	584,634	588,464
Other intangible assets	44,237	35,308	40,996
Company-owned life insurance	350,193	341,294	337,802
Net deferred tax assets	179,448	109,984	127,622
Loan servicing rights	25,756	10,468	10,027
Assets held for sale	4,867	5,679	9,886
Other real estate owned and repossessed personal property	24,254	7,594	9,388
Other real estate owned - covered		4,904	4,753
Other assets	123,658	106,639	130,859
Total assets	14,420,262	11,991,527	12,074,404
Deposits:
Noninterest-bearing demand	2,883,917	2,488,855	2,557,665
Interest-bearing:
NOW	2,456,963	2,133,536	2,213,862
Savings	2,616,365	2,201,352	2,352,916
Money market	1,015,336	577,050	602,287
Time	1,479,021	1,000,067	1,082,840
Total deposits	10,451,602	8,400,860	8,809,570
Short-term borrowings	567,659	628,499	530,377
Other borrowings	1,367,896	1,291,747	1,067,993
Accrued expenses and other liabilities	221,988	179,251	209,741
Total liabilities	12,609,145	10,500,357	10,617,681
Shareholders' Equity
Preferred stock, 2,000 shares authorized, no shares issued or outstanding
Common stock, $1.00 per share stated value, 300,000 shares authorized, 135,005; 114,297; and 115,205 shares issued and outstanding, respectively	135,005	114,297	115,205
Capital surplus	1,342,393	1,087,911	1,098,384
Retained earnings	357,336	323,759	281,196
Accumulated other comprehensive income (loss), net of tax	(23,617)	(34,797)	(38,062)
Total shareholders' equity	1,811,117	1,491,170	1,456,723
Total liabilities and shareholders' equity	14,420,262	11,991,527	12,074,404
U.S. Treasury [Member]
Investment securities - available-for-sale, at fair value:
Total investment securities - available-for-sale	12,269	12,150	12,171
U.S. Government-Sponsored Entities and Agencies [Member]
Investment securities - available-for-sale, at fair value:
Total investment securities - available-for-sale	540,775	613,550	695,074
Mortgage-Backed Securities - Agency [Member]
Investment securities - available-for-sale, at fair value:
Total investment securities - available-for-sale	1,336,605	1,066,361	1,104,145
States and Political Subdivisions [Member]
Investment securities - available-for-sale, at fair value:
Total investment securities - available-for-sale	417,163	387,296	388,039
Other Debt Securities Including Pooled Trust Preferred Securities [Member]
Investment securities - available-for-sale, at fair value:
Total investment securities - available-for-sale	$ 342,089	$ 338,864	$ 373,092

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Statement of Financial Position [Abstract]
Investment securities - held-to-maturity, fair value	$ 939,855	$ 929,417	$ 867,345
Loans held-for-sale, fair value	$ 44,422	$ 13,810	$ 20,287
Preferred stock, shares authorized	2,000,000	2,000,000	2,000,000
Preferred stock, shares issued	0	0	0
Preferred stock, shares outstanding	0	0	0
Common stock, stated value	$ 1.00	$ 1.00	$ 1.00
Authorized and unissued common shares reserved for issuance	300,000,000	300,000,000	300,000,000
Common stock, shares issued	135,005,000	114,297,000	115,205,000
Common stock, shares outstanding	135,005,000	114,297,000	115,205,000

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Consolidated Statements of Income (unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Loans including fees:
Taxable	$ 86,527	$ 76,579	$ 158,099	$ 151,538
Nontaxable	2,991	2,818	5,995	5,761
Investment securities:
Taxable	13,585	14,292	27,307	29,018
Nontaxable	7,119	6,267	14,101	12,227
Money market and other interest-earning investments	21	8	70	14
Total interest income	110,243	99,964	205,572	198,558
Interest Expense
Deposits	4,254	3,531	7,747	7,094
Short-term borrowings	410	112	592	208
Other borrowings	6,239	4,224	12,250	8,166
Total interest expense	10,903	7,867	20,589	15,468
Net interest income	99,340	92,097	184,983	183,090
Provision for loan losses	1,319	2,271	1,410	2,272
Net interest income after provision for loan losses	98,021	89,826	183,573	180,818
Noninterest Income
Wealth management fees	9,355	9,443	17,476	17,963
Service charges on deposit accounts	10,437	11,278	20,076	22,323
Debit card and ATM fees	4,471	7,075	8,256	13,807
Mortgage banking revenue	5,203	4,262	8,123	7,225
Insurance premiums and commissions	7,122	10,172	20,243	22,285
Investment product fees	4,724	4,719	8,629	9,122
Company-owned life insurance	2,080	2,193	4,118	4,345
Net securities gains	1,856	512	2,962	3,195
Recognition of deferred gain on sale leaseback transactions	1,038	1,468	2,090	2,992
Gain on sale of ONB Insurance Group, Inc.	41,864		41,864
Change in FDIC indemnification asset	888	(1,541)	233	(2,509)
Other income	4,347	5,398	8,766	9,526
Total noninterest income	93,385	54,979	142,836	110,274
Noninterest Expense
Salaries and employee benefits	62,715	59,248	119,687	128,942
Occupancy	13,568	14,141	26,412	28,434
Equipment	3,316	3,446	6,209	7,350
Marketing	5,111	3,678	7,597	5,914
Data processing	8,676	8,077	15,799	14,667
Communication	2,535	2,435	4,399	5,179
Professional fees	5,181	3,381	8,549	6,513
Loan expense	2,123	1,816	3,456	3,142
Supplies	598	581	1,181	1,265
FDIC assessment	2,030	1,972	3,949	3,857
Other real estate owned expense	2,099	476	2,523	1,637
Amortization of intangibles	3,365	2,977	6,012	6,058
Other expense	10,155	7,462	14,054	12,888
Total noninterest expense	121,472	109,690	219,827	225,846
Income before income taxes	69,934	35,115	106,582	65,246
Income tax expense	30,812	8,959	40,483	18,184
Net income	$ 39,122	$ 26,156	$ 66,099	$ 47,062
Net income per common share - basic	$ 0.31	$ 0.22	$ 0.55	$ 0.40
Net income per common share - diluted	$ 0.31	$ 0.22	$ 0.55	$ 0.40
Weighted average number of common shares outstanding - basic	127,508	115,732	120,753	117,128
Weighted average number of common shares outstanding - diluted	127,973	116,223	121,273	117,634
Dividends per common share	$ 0.13	$ 0.12	$ 0.26	$ 0.24

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Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 39,122	$ 26,156	$ 66,099	$ 47,062
Change in securities available-for-sale:
Unrealized holding gains (losses) for the period	12,671	(26,234)	30,528	(7,928)
Reclassification adjustment for securities gains realized in income	(1,856)	(512)	(2,962)	(3,195)
Income tax effect	(3,809)	9,716	(9,977)	3,920
Unrealized gains (losses) on available-for-sale securities	7,006	(17,030)	17,589	(7,203)
Change in securities held-to-maturity:
Amortization of fair value for securities held-to-maturity previously recognized into accumulated other comprehensive income	466	430	931	767
Income tax effect	(159)	(147)	(318)	(81)
Changes from securities held-to-maturity	307	283	613	686
Cash flow hedges:
Net unrealized derivative gains (losses) on cash flow hedges	(4,483)	3,557	(15,613)	(2,071)
Reclassification adjustment for losses realized in net income	1,585	439	2,858	625
Income tax effect	1,101	(1,519)	4,847	549
Changes from cash flow hedges	(1,797)	2,477	(7,908)	(897)
Defined benefit pension plans:
Amortization of net loss recognized in income	730	725	1,430	1,463
Income tax effect	(278)	(275)	(544)	(556)
Changes from defined benefit pension plans	452	450	886	907
Other comprehensive income (loss), net of tax	5,968	(13,820)	11,180	(6,507)
Comprehensive income	$ 45,090	$ 12,336	$ 77,279	$ 40,555

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Consolidated Statements of Changes in Shareholders' Equity (unaudited) - USD ($) $ in Thousands	Total	Founders Financial Corporation [Member]	Anchor BanCorp Wisconsin Inc [Member]	Common Stock [Member]	Common Stock [Member] Founders Financial Corporation [Member]	Common Stock [Member] Anchor BanCorp Wisconsin Inc [Member]	Capital Surplus [Member]	Capital Surplus [Member] Founders Financial Corporation [Member]	Capital Surplus [Member] Anchor BanCorp Wisconsin Inc [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning Balance at Dec. 31, 2014	$ 1,465,764			$ 116,847			$ 1,118,292			$ 262,180	$ (31,555)
Net income	47,062									47,062
Other comprehensive income (loss)	(6,507)										(6,507)
Acquisition		$ 50,626			$ 3,402			$ 47,224
Dividends - common stock	(28,065)									(28,065)
Common stock issued	192			14			178
Common stock repurchased	(74,594)			(5,385)			(69,209)
Stock based compensation expense	2,236						2,236
Stock activity under incentive compensation plans	9			327			(337)			19
Ending Balance at Jun. 30, 2015	1,456,723			115,205			1,098,384			281,196	(38,062)
Beginning Balance at Dec. 31, 2014	1,465,764			116,847			1,118,292			262,180	(31,555)
Ending Balance at Dec. 31, 2015	1,491,170			114,297			1,087,911			323,759	(34,797)
Net income	66,099									66,099
Other comprehensive income (loss)	11,180										11,180
Acquisition			$ 273,565			$ 20,415			$ 253,150
Dividends - common stock	(32,391)									(32,391)
Common stock issued	202			17			185
Common stock repurchased	(1,546)			(120)			(1,426)
Stock based compensation expense	3,391						3,391
Stock activity under incentive compensation plans	(553)			396			(818)			(131)
Ending Balance at Jun. 30, 2016	$ 1,811,117			$ 135,005			$ 1,342,393			$ 357,336	$ (23,617)

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Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash Flows From Operating Activities
Net income	$ 66,099	$ 47,062
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation	7,462	7,790
Amortization of other intangible assets	6,012	6,058
Net premium amortization on investment securities	9,198	9,481
Amortization of and net gains on termination of FDIC indemnification asset	(458)	2,509
Stock compensation expense	3,391	2,236
Provision for loan losses	1,410	2,272
Net securities gains	(2,962)	(3,195)
Recognition of deferred gain on sale leaseback transactions	(2,090)	(2,992)
Gain on sale of ONB Insurance Group, Inc.	(41,864)
Net gains on sales of other assets	(2,689)	(4,009)
Increase in cash surrender value of company-owned life insurance	(1,621)	(3,888)
Residential real estate loans originated for sale	(238,184)	(178,612)
Proceeds from sale of residential real estate loans	219,854	180,336
Increase in interest receivable	(3,130)	(4,379)
Decrease in other real estate owned	6,487	2,895
(Increase) decrease in other assets	22,266	(17,320)
Increase (decrease) in accrued expenses and other liabilities	6,345	(9,408)
Total adjustments	(10,573)	(10,226)
Net cash flows provided by operating activities	55,526	36,836
Cash Flows From Investing Activities
Cash portion of bank purchase price, net of cash acquired	(62,532)	(37,098)
Proceeds from sale of ONB Insurance Group, Inc.	91,771
Purchases of investment securities available-for-sale	(799,597)	(481,038)
Purchases of investment securities held-to-maturity		(13,406)
Purchases of Federal Home Loan Bank/Federal Reserve Bank stock		(7,394)
Proceeds from maturities, prepayments, and calls of investment securities available-for-sale	721,414	401,579
Proceeds from sales of investment securities available-for-sale	107,451	196,584
Proceeds from maturities, prepayments, and calls of investment securities held-to-maturity	2,842	30,285
Proceeds from sales of investment securities held-to-maturity		855
Proceeds from sales of Federal Home Loan Bank/Federal Reserve Bank stock		8,710
Reimbursements under FDIC loss share agreements	10,000	2,231
Net principal collected from (loans made to) loan customers	(246,987)	(108,498)
Proceeds from sale of premises and equipment and other assets	5,707	7,093
Purchases of premises and equipment and other assets	(12,317)	(10,713)
Net cash flows used in investing activities	(182,248)	(10,810)
Cash Flows From Financing Activities
Deposits	198,029	(57,750)
Short-term borrowings	(63,972)	(33,424)
Payments for maturities on other borrowings	(575,588)	(227,433)
Proceeds from issuance of other borrowings	650,000	350,000
Cash dividends paid on common stock	(32,391)	(28,065)
Common stock repurchased	(1,546)	(74,594)
Proceeds from exercise of stock options, including tax benefit	90	298
Common stock issued	202	192
Net cash flows provided by (used in) financing activities	174,824	(70,776)
Net increase (decrease) in cash and cash equivalents	48,102	(44,750)
Cash and cash equivalents at beginning of period	219,818	239,963
Cash and cash equivalents at end of period	267,920	195,213
Supplemental cash flow information:
Total interest paid	19,824	15,384
Total taxes paid (net of refunds)	$ 8,800	$ 3,784

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Basis of Presentation

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Basis of Presentation

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of Old National Bancorp and its wholly-owned affiliates (hereinafter collectively referred to as “Old National”) and have been prepared in conformity with accounting principles generally accepted in the United States of America and prevailing practices within the banking industry. Such principles require management to make estimates and assumptions that affect the reported amounts of assets, liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements and amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, the consolidated financial statements contain all the normal and recurring adjustments necessary for a fair statement of the financial position of Old National as of June 30, 2016 and 2015, and December 31, 2015, and the results of its operations for the three and six months ended June 30, 2016 and 2015. Interim results do not necessarily represent annual results. These financial statements should be read in conjunction with Old National’s Annual Report for the year ended December 31, 2015.

All significant intercompany transactions and balances have been eliminated. Certain prior year amounts have been reclassified to conform to the 2016 presentation. Such reclassifications had no effect on net income or shareholders’ equity and were insignificant amounts.

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2016

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

FASB ASC 606 – In May 2014, the FASB issued an update (ASU No. 2014-09, Revenue from Contracts with Customers) creating FASB Topic 606, Revenue from Contracts with Customers. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides steps to follow to achieve the core principle. An entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 718 – In June 2014, the FASB issued an update (ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period). Generally, an award with a performance target also requires an employee to render service until the performance target is achieved. In some cases, however, the terms of an award may provide that the performance target could be achieved after an employee completes the requisite service period. The amendments in this update require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. An entity should apply guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period for which the service has already been rendered. The amendments in this update became effective for interim and annual periods beginning after December 15, 2015 and did not have a material impact on the consolidated financial statements.

FASB ASC 350 – In April 2015, the FASB issued an update (ASU No. 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement) impacting FASB ASC 350-40, Intangibles: Goodwill and Other: Internal- Use Software. This update is part of the FASB’s Simplification Initiative. The amendments in this update provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance will not change generally accepted accounting principles for a customer’s accounting for service contracts. The amendments in this update became effective for interim and annual periods beginning after December 15, 2015 and did not have a material impact on the consolidated financial statements.

FASB ASC 944 – In May 2015, the FASB issued an update (ASU No. 2015-09, Disclosures about Short-Duration Contracts). This update applies to all insurance entities that issue short-duration contracts as defined in Topic 944, Financial Services – Insurance. The amendment requires insurance entities to disclose for annual reporting periods information about the liability for unpaid claims and claim adjustment expenses, and information about significant changes in methodologies and assumptions used to calculate the liability for unpaid claims and claim adjustment expenses, including reasons for the change and the effects on the financial statements. Additionally, the amendments require insurance entities to disclose for annual and interim reporting periods a roll-forward of the liability for unpaid claims and claim adjustment expenses. The amendments in this update become effective for annual periods beginning after December 15, 2015, and interim periods within annual periods beginning after December 15, 2016. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 805 – In September 2015, the FASB issued an update (ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments). This update applies to all entities that have reported provisional amounts for items in a business combination for which the accounting is incomplete by the end of the reporting period in which the combination occurs and during the measurement period have an adjustment to provisional amounts recognized. The amendments in this update require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this update require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this update require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The amendments in this update became effective for interim and annual periods beginning after December 15, 2015 and did not have a material impact on the consolidated financial statements.

FASB ASC 825 – In January 2016, the FASB issued an update (ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities). The amendments in this update impact public business entities as follows: 1) Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. 2) Simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. 3) Eliminate the requirement to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. 4) Require entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. 5) Require an entity to present separately in other comprehensive income the portion of the total change in fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. 6) Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. 7) Clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 842 – In February 2016, the FASB issued its new lease accounting guidance in ASU No. 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases, with the exception of short-term leases, at the commencement date: a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2018. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, which is expected to have a material impact.

FASB ASC 405 – In March 2016, the FASB issued ASU No. 2016-04, Liabilities – Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products. The amendments of this ASU narrowly address breakage, which is the monetary amount of the card that ultimately is not redeemed by the cardholder for prepaid stored-value products that are redeemable for monetary values of goods or services but may also be redeemable for cash. Examples of prepaid stored-value products included in this amendment are prepaid gift cards issued by specific payment networks and redeemable at network-accepting merchant locations, prepaid telecommunication cards, and traveler’s checks. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 815 – In March 2016, the FASB issued ASU No. 2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. The amendments apply to all reporting entities for which there is a change in the counterparty to a derivative instrument that has been designated as a hedging instrument. The amendments clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require de-designation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

In March 2016, the FASB issued ASU No. 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments. The amendments apply to all entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options. Topic 815, Derivatives and Hedging, requires that embedded derivatives be separated from the host contract and accounted for separately as derivatives if certain criteria are met. One of those criteria is that the economic characteristics and risks of the embedded derivatives are not clearly and closely related to the economic characteristics and risks of the host contract. The amendments clarify what steps are required when assessing “clearly and closely related”. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 323 – In March 2016, the FASB issued ASU No. 2016-07, Investments - Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. The amendments affect all entities that have an investment that becomes qualified for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence. The amendments eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The amendments also require that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 606 – In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments relate to when another party, along with the entity, is involved in providing a good or service to a customer. Topic 606, Revenue from Contracts with Customers, requires an entity to determine whether the nature of its promise is to provide that good or service to the customer (that is, the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (that is, the entity is an agent). This determination is based upon whether the entity controls the good or the service before it is transferred to the customer. Topic 606 includes indicators to assist in this evaluation. The amendments in this update affect the guidance in ASU No. 2014-09 above, which is not yet effective. The effective date will be the same as the effective date of ASU No. 2014-09. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: identifying performance obligations, and the licensing implementation guidance. Before an entity can identify its performance obligations in a contract with a customer, the entity first identifies the promised goods or services in the contract. The amendments in this update are expected to reduce the cost and complexity of applying the guidance on identifying promised goods or services. To identify performance obligations in a contract, an entity evaluates whether promised goods and services are distinct. Topic 606 includes two criteria for assessing whether promises to transfer goods or services are distinct. One of those criteria is that the promises are separately identifiable. This update will improve the guidance on assessing that criterion. Topic 606 also includes implementation guidance on determining whether as entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property, which is satisfied at a point in time, or a right to access the entity’s intellectual property, which is satisfied over time. The amendments in this update are intended to improve the operability and understandability of the licensing implementation guidance. The amendments in this update affect the guidance in ASU No. 2014-09 above, which is not yet effective. The effective date will be the same as the effective date of ASU No. 2014-09. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The amendments do not change the core revenue recognition principle in Topic 606. The amendments provide clarifying guidance in certain narrow areas and add some practical expedients.

FASB ASC 718 – In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Shared-Based Payment Accounting. The amendments are intended to improve the accounting for employee shared-based payments and affects all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including the income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.

FASB ASC 326 – In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The main objective of this amendment is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendment requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to enhance their credit loss estimates. The amendment requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2019. Early adoption will be permitted beginning after December 15, 2018. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements.

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Acquisition and Divestiture Activity

6 Months Ended

Jun. 30, 2016

Business Combinations [Abstract]

Acquisition and Divestiture Activity

NOTE 3 – ACQUISITION AND DIVESTITURE ACTIVITY

Acquisitions

Founders Financial Corporation

On July 28, 2014, Old National announced that it had entered into an agreement to acquire Grand Rapids, Michigan-based Founders Financial Corporation (“Founders”) through a stock and cash merger. The acquisition was completed effective January 1, 2015 (the “Closing Date”). Founders was a bank holding company with Founders Bank & Trust as its wholly-owned subsidiary and operated four full-service banking centers in Kent County. Old National believes that it will be able to achieve cost savings by integrating the two companies and combining accounting, data processing, retail and lending support, and other administrative functions after the merger, which will enable Old National to achieve economies of scale in these areas.

The total purchase price for Founders was $91.7 million, consisting of $41.0 million of cash and the issuance of 3.4 million shares of Old National Common Stock valued at $50.6 million. This acquisition was accounted for under the acquisition method of accounting. Accordingly, the Company recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values. Through December 31, 2015, transaction and integration costs of $4.9 million associated with the acquisition had been expensed.

As of December 31, 2015, the Company finalized its valuation of all assets and liabilities acquired, resulting in no material change to purchase accounting adjustments. A summary of the final purchase price allocation is as follows (in thousands):

Cash and cash equivalents	$	3,978
Investment securities		75,383
Federal Home Loan Bank stock		1,810
Loans held for sale		3,473
Loans		339,569
Premises and equipment		3,604
Accrued interest receivable		1,260
Other real estate owned		674
Company-owned life insurance		8,297
Other assets		8,804
Deposits		(376,656	)
Other borrowings		(39,380	)
Accrued expenses and other liabilities		(1,307	)
Net tangible assets acquired		29,509
Definite-lived intangible assets acquired		5,515
Loan servicing rights		664
Goodwill		56,014
Purchase price	$	91,702

The portion of the purchase price allocated to goodwill will not be deductible for tax purposes.

The components of the estimated fair value of the acquired identifiable intangible assets are in the table below. These intangible assets will be amortized on an accelerated basis over their estimated lives.

	Estimated Fair Value (in millions)		Estimated Useful Lives (Years)
Core deposit intangible	$	2.9		7
Trust customer relationship intangible	$	2.6		12

Acquired loan data for Founders can be found in the table below:

(in thousands)	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
Acquired receivables subject to ASC 310-30	$	6,607	$	11,103	$	2,684
Acquired receivables not subject to ASC 310-30	$	332,962	$	439,031	$	61,113

Anchor BanCorp Wisconsin Inc.

On January 12, 2016, Old National announced that it had entered into an agreement to acquire Madison, Wisconsin-based Anchor BanCorp Wisconsin Inc. (“Anchor”) through a stock and cash merger. The acquisition was completed effective May 1, 2016 (the “Closing Date”). Anchor was a savings and loan holding company with AnchorBank, fsb (“AnchorBank”) as its wholly-owned subsidiary. AnchorBank operated 46 banking centers, including 32 banking centers in the Madison, Milwaukee and Fox Valley triangle. Old National believes that it will be able to achieve cost savings by integrating the two companies and combining accounting, data processing, retail and lending support, and other administrative functions after the merger, which will enable Old National to achieve economies of scale in these areas.

Pursuant to the merger agreement, shareholders of Anchor could elect to receive either 3.5505 shares of Old National common stock or $48.50 in cash for each share of Anchor they held, subject to a maximum of 40% of the purchase price in cash. The total purchase price for Anchor was $459.8 million, consisting of $186.2 million of cash and the issuance of 20.4 million shares of Old National Common Stock valued at $273.6 million. This acquisition was accounted for under the acquisition method of accounting. Accordingly, the Company recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values. Through June 30, 2016, transaction and integration costs of $8.6 million associated with the acquisition have been expensed and remaining integration costs will be expensed in future periods as incurred.

Under the acquisition method of accounting, the total estimated purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of acquisition. Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on assumptions that are subject to change, the purchase price for the Anchor acquisition is allocated as follows (in thousands):

Cash and cash equivalents	$	123,657
Investment securities		235,240
Federal Home Loan Bank stock		4,596
Loans held for sale		9,334
Loans		1,636,605
Premises and equipment		35,721
Accrued interest receivable		7,308
Other real estate owned		18,243
Company-owned life insurance		7,278
Other assets		126,013
Deposits		(1,852,713	)
Other borrowings		(3,255	)
Accrued expenses and other liabilities		(36,958	)
Net tangible assets acquired		311,069
Definite-lived intangible assets acquired		21,559
Loan servicing rights		15,274
Goodwill		111,852
Purchase price	$	459,754

Prior to the end of the one year measurement period for finalizing the purchase price allocation, if information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation in the reporting period in which the adjustment amounts are determined.

The portion of the purchase price allocated to goodwill will not be deductible for tax purposes.

The estimated fair value of the core deposit intangible is $21.6 million and will be amortized over an estimated useful life of 7 years.

Acquired loan data for Anchor can be found in the table below:

(in thousands)	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
Acquired receivables subject to ASC 310-30	$	20,174	$	29,544	$	6,153
Acquired receivables not subject to ASC 310-30	$	1,616,431	$	2,143,532	$	274,155

Summary of Unaudited Pro-forma Information

The unaudited pro-forma information below for the periods ended June 30, 2016 and 2015 gives effect to the Anchor acquisition as if it had occurred on January 1, 2015. The pro-forma financial information is not necessarily indicative of the results of operations if the acquisition had been effective as of this date.

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2016		2015		2016		2015
Revenue (1)	$	203,355	$	174,238	$	370,352	$	346,322
Income before income taxes	$	82,343	$	32,437	$	135,958	$	67,354

(1) Net interest income plus noninterest income.

2016 supplemental pro-forma earnings were adjusted to exclude $7.2 million and $8.6 million of acquisition-related costs incurred during the three and six months ended June 30, 2016, respectively. 2015 supplemental pro-forma earnings were adjusted to include these charges.

Insurance Acquisitions

Effective February 1, 2015, Old National acquired certain assets from Mutual Underwriters Insurance (“Mutual Underwriters”). The total purchase price of the assets was $3.7 million, consisting of $2.6 million of customer business relationship intangibles and $1.1 million of goodwill. The customer business relationship intangibles were originally scheduled to be amortized using an accelerated method over an estimated useful life of 10 years.

On May 8, 2015, the Company issued cash consideration of $0.1 million to purchase a book of business. The acquisition terms call for further cash consideration of approximately $0.1 million if certain operating targets are met. The fair value of these payments was booked at acquisition and added $0.2 million of customer business relationships intangibles. The customer business relationship intangibles were originally scheduled to be amortized using an accelerated method over an estimated useful life of 10 years.

Divestitures

On August 14, 2015, the Company completed its previously announced branch sales. The Company divested its southern Illinois region (twelve branches) along with four branches in eastern Indiana and one in Ohio. At closing, the purchasers assumed loans of $193.6 million and deposits of $555.8 million. The Company recorded a net pre-tax gain of $15.6 million in connection with the divestitures, which included a deposit premium of $19.3 million, goodwill allocation of $3.8 million, and $0.9 million of other transaction expenses.

In addition, the Company consolidated 23 branches throughout the Old National franchise during 2015 based on an ongoing assessment of our service and delivery network and on our goal to continue to move our franchise into stronger growth markets.

On May 31, 2016 the Company completed its previously announced sale of its insurance operations, ONB Insurance Group, Inc. (“ONI”). The Company received approximately $91.8 million in cash resulting in a pre-tax gain of $41.9 million and an after-tax gain of $17.6 million. See Note 17 to the consolidated financial statements for further details on the income tax impact of this sale. Goodwill and intangible assets of approximately $47.5 million were eliminated as part of this transaction. ONI was an ancillary business and did not meet the criteria to be treated as a discontinued operation as defined in Accounting Standards Update 2014-08 “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”.

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Net Income Per Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Net Income Per Share

NOTE 4 - NET INCOME PER SHARE

The following table reconciles basic and diluted net income per share for the three and six months ended June 30, 2016 and 2015:

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars and shares in thousands, except per share data)	2016		2015		2016		2015
Basic Earnings Per Share
Net income	$	39,122	$	26,156	$	66,099	$	47,062
Weighted average common shares outstanding		127,508		115,732		120,753		117,128
Basic Earnings Per Share	$	0.31	$	0.22	$	0.55	$	0.40
Diluted Earnings Per Share
Net income	$	39,122	$	26,156	$	66,099	$	47,062
Weighted average common shares outstanding		127,508		115,732		120,753		117,128
Effect of dilutive securities:
Restricted stock (1)		425		397		480		409
Stock options (2)		40		94		40		97
Weighted average shares outstanding		127,973		116,223		121,273		117,634
Diluted Earnings Per Share	$	0.31	$	0.22	$	0.55	$	0.40

(1) 0.1 million shares of restricted stock and restricted stock units at June 30, 2016 were not included in the computation of net income per diluted share for the three months ended June 30, 2016 because the effect would be antidilutive. 0.2 million shares of restricted stock and restricted stock units at June 30, 2016 were not included in the computation of net income per diluted share for the six months ended June 30, 2016 because the effect would be antidilutive. There were no antidilutive shares excluded from the computation of net income for the three or six months ended June 30, 2015.

(2) Options to purchase 0.8 million shares and 0.9 million shares outstanding at June 30, 2016 and 2015, respectively, were not included in the computation of net income per diluted share for the three months ended June 30, 2016 and 2015, respectively, because the exercise price of these options was greater than the average market price of the common shares and, therefore, the effect would be antidilutive. Options to purchase 0.8 million shares and 0.9 million shares outstanding at June 30, 2016 and 2015, respectively, were not included in the computation of net income per diluted share for the six months ended June 30, 2016 and 2015, respectively, because the exercise price of these options was greater than the average market price of the common shares and, therefore, the effect would be antidilutive.

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Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

NOTE 5 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes within each classification of accumulated other comprehensive income (loss) (“AOCI”) net of tax for the three and six months ended June 30, 2016 and 2015:

(dollars in thousands)	Unrealized Gains and Losses on Available-for-Sale Securities			Unrealized Gains and Losses  on Held-to-Maturity Securities			Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Plans			Total
Three Months Ended June 30, 2016
Balance at April 1, 2016	$	6,777		$	(14,174	)	$	(15,387	)	$	(6,801	)	$	(29,585	)
Other comprehensive income (loss) before reclassifications		8,208			—			(2,780	)		—			5,428
Amounts reclassified from accumulated other comprehensive income (loss) (a)		(1,202	)		307			983			452			540
Net other comprehensive income (loss)		7,006			307			(1,797	)		452			5,968
Balance at June 30, 2016	$	13,783		$	(13,867	)	$	(17,184	)	$	(6,349	)	$	(23,617	)
Three Months Ended June 30, 2015
Balance at April 1, 2015	$	9,079		$	(15,373	)	$	(9,309	)	$	(8,639	)	$	(24,242	)
Other comprehensive income (loss) before reclassifications		(16,704	)		—			2,205			—			(14,499	)
Amounts reclassified from accumulated other comprehensive income (loss) (a)		(326	)		283			272			450			679
Net other comprehensive income (loss)		(17,030	)		283			2,477			450			(13,820	)
Balance at June 30, 2015	$	(7,951	)	$	(15,090	)	$	(6,832	)	$	(8,189	)	$	(38,062	)
Six Months Ended June 30, 2016
Balance at January 1, 2016	$	(3,806	)	$	(14,480	)	$	(9,276	)	$	(7,235	)	$	(34,797	)
Other comprehensive income (loss) before reclassifications		19,490			—			(9,680	)		—			9,810
Amounts reclassified from accumulated other comprehensive income (loss) (a)		(1,901	)		613			1,772			886			1,370
Net other comprehensive income (loss)		17,589			613			(7,908	)		886			11,180
Balance at June 30, 2016	$	13,783		$	(13,867	)	$	(17,184	)	$	(6,349	)	$	(23,617	)
Six Months Ended June 30, 2015
Balance at January 1, 2015	$	(748	)	$	(15,776	)	$	(5,935	)	$	(9,096	)	$	(31,555	)
Other comprehensive income (loss) before reclassifications		(5,189	)		—			(1,284	)		—			(6,473	)
Amounts reclassified from accumulated other comprehensive income (loss) (a)		(2,014	)		686			387			907			(34	)
Net other comprehensive income (loss)		(7,203	)		686			(897	)		907			(6,507	)
Balance at June 30, 2015	$	(7,951	)	$	(15,090	)	$	(6,832	)	$	(8,189	)	$	(38,062	)

(a) See table below for details about reclassifications.

The following table summarize the significant amounts reclassified out of each component of AOCI for the three months ended June 30, 2016 and 2015:

Details about AOCI Components	Amount Reclassified from AOCI						Affected Line Item in the Statement of Income
	Three Months Ended June 30,
(dollars in thousands)	2016			2015
Unrealized gains and losses on available-for-sale securities	$	1,856		$	512		Net securities gains
		(654	)		(186	)	Income tax (expense) benefit
	$	1,202		$	326		Net income
Unrealized gains and losses on held-to-maturity securities	$	(466	)	$	(430	)	Interest income/(expense)
		159			147		Income tax (expense) benefit
	$	(307	)	$	(283	)	Net income
Gains and losses on cash flow hedges Interest rate contracts	$	(1,585	)	$	(439	)	Interest income/(expense)
		602			167		Income tax (expense) benefit
	$	(983	)	$	(272	)	Net income
Amortization of defined benefit pension items
Actuarial gains/(losses)	$	(730	)	$	(725	)	Salaries and employee benefits
		278			275		Income tax (expense) benefit
	$	(452	)	$	(450	)	Net income
Total reclassifications for the period	$	(540	)	$	(679	)	Net income

The following table summarize the significant amounts reclassified out of each component of AOCI for the six months ended June 30, 2016 and 2015:

Details about AOCI Components	Amount Reclassified from AOCI						Affected Line Item in the Statement of Income
	Six Months Ended June 30,
(dollars in thousands)	2016			2015
Unrealized gains and losses on available-for-sale securities	$	2,962		$	3,195		Net securities gains
		(1,061	)		(1,181	)	Income tax (expense) benefit
	$	1,901		$	2,014		Net income
Unrealized gains and losses on held-to-maturity securities	$	(931	)	$	(767	)	Interest income/(expense)
		318			81		Income tax (expense) benefit
	$	(613	)	$	(686	)	Net income
Gains and losses on cash flow hedges Interest rate contracts	$	(2,858	)	$	(625	)	Interest income/(expense)
		1,086			238		Income tax (expense) benefit
	$	(1,772	)	$	(387	)	Net income
Amortization of defined benefit pension items
Actuarial gains/(losses)	$	(1,430	)	$	(1,463	)	Salaries and employee benefits
		544			556		Income tax (expense) benefit
	$	(886	)	$	(907	)	Net income
Total reclassifications for the period	$	(1,370	)	$	34		Net income

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Investment Securities

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Investment Securities

NOTE 6 - INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair value of the available-for-sale and held-to-maturity investment securities portfolio at June 30, 2016 and December 31, 2015 and the corresponding amounts of unrealized gains and losses therein:

	Amortized		Unrealized		Unrealized			Fair
(dollars in thousands)	Cost		Gains		Losses			Value
June 30, 2016
Available-for-Sale
U.S. Treasury	$	11,963	$	306	$	—		$	12,269
U.S. government-sponsored entities and agencies		537,728		3,264		(217	)		540,775
Mortgage-backed securities - Agency		1,323,606		15,180		(2,181	)		1,336,605
States and political subdivisions		398,727		18,579		(143	)		417,163
Pooled trust preferred securities		17,059		—		(10,339	)		6,720
Other securities		338,094		3,559		(6,284	)		335,369
Total available-for-sale securities	$	2,627,177	$	40,888	$	(19,164	)	$	2,648,901
Held-to-Maturity
U.S. government-sponsored entities and agencies	$	141,220	$	1,928	$	—		$	143,148
Mortgage-backed securities - Agency		13,200		523		—			13,723
States and political subdivisions		711,537		71,447		—			782,984
Total held-to-maturity securities	$	865,957	$	73,898	$	—		$	939,855
December 31, 2015
Available-for-Sale
U.S. Treasury	$	11,968	$	190	$	(8	)	$	12,150
U.S. government-sponsored entities and agencies		615,578		1,495		(3,523	)		613,550
Mortgage-backed securities - Agency		1,065,936		10,970		(10,545	)		1,066,361
States and political subdivisions		375,671		11,960		(335	)		387,296
Pooled trust preferred securities		17,320		—		(9,420	)		7,900
Other securities		337,590		1,151		(7,777	)		330,964
Total available-for-sale securities	$	2,424,063	$	25,766	$	(31,608	)	$	2,418,221
Held-to-Maturity
U.S. government-sponsored entities and agencies	$	142,864	$	2,899	$	—		$	145,763
Mortgage-backed securities - Agency		16,042		562		—			16,604
States and political subdivisions		713,205		53,848		(3	)		767,050
Total held-to-maturity securities	$	872,111	$	57,309	$	(3	)	$	929,417

Proceeds from sales or calls of available-for-sale investment securities, the resulting realized gains and realized losses, and other securities gains or losses were as follows for the three and six months ended June 30, 2016 and 2015:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(dollars in thousands)	2016			2015			2016			2015
Proceeds from sales of available-for-sale securities	$	30,801		$	26,319		$	107,451		$	196,584
Proceeds from calls of available-for-sale securities		239,998			161,408			364,309			213,002
Total	$	270,799		$	187,727		$	471,760		$	409,586
Realized gains on sales of available-for-sale securities	$	1,491		$	316		$	3,151		$	2,797
Realized gains on calls of available-for-sale securities		126			212			370			380
Realized losses on sales of available-for-sale securities		(1	)		(22	)		(447	)		(47	)
Realized losses on calls of available-for-sale securities		(1	)		(12	)		(88	)		(15	)
Other securities gains (losses) (1)		241			18			(24	)		80
Net securities gains	$	1,856		$	512		$	2,962		$	3,195

(1) Other securities gains (losses) includes net realized gains or losses associated with trading securities and mutual funds.

During the six months ended June 30, 2015, the Company sold a municipal bond that was classified as held-to-maturity due to credit deterioration. Proceeds from the sale were $0.8 million and resulted in a gain of $52 thousand.

Trading securities, which consist of mutual funds held in trusts associated with deferred compensation plans for former directors and executives, are recorded at fair value and totaled $4.8 million at June 30, 2016 and $3.9 million at December 31, 2015.

All of the mortgage-backed securities in the investment portfolio are residential mortgage-backed securities. The amortized cost and fair value of the investment securities portfolio are shown by expected maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Weighted average yield is based on amortized cost.

	At June 30, 2016
(dollars in thousands)					Weighted
	Amortized		Fair		Average
Maturity	Cost		Value		Yield
Available-for-Sale
Within one year	$	36,566	$	36,649		1.54	%
One to five years		400,424		405,665		2.00
Five to ten years		339,108		344,653		2.68
Beyond ten years		1,851,079		1,861,934		2.34
Total	$	2,627,177	$	2,648,901		2.32	%
Held-to-Maturity
Within one year	$	15,011	$	15,075		5.57	%
One to five years		49,934		52,935		4.53
Five to ten years		220,589		231,585		3.79
Beyond ten years		580,423		640,260		5.49
Total	$	865,957	$	939,855		5.00	%

The following table summarizes the investment securities with unrealized losses at June 30, 2016 and December 31, 2015 by aggregated major security type and length of time in a continuous unrealized loss position:

	Less than 12 months					12 months or longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
June 30, 2016
Available-for-Sale
U.S. government-sponsored entities and agencies	$	91,640	$	(217	)	$	—	$	—		$	91,640	$	(217	)
Mortgage-backed securities - Agency		156,600		(281	)		104,843		(1,900	)		261,443		(2,181	)
States and political subdivisions		1,064		(3	)		5,692		(140	)		6,756		(143	)
Pooled trust preferred securities		—		—			6,720		(10,339	)		6,720		(10,339	)
Other securities		54,406		(877	)		118,291		(5,407	)		172,697		(6,284	)
Total available-for-sale	$	303,710	$	(1,378	)	$	235,546	$	(17,786	)	$	539,256	$	(19,164	)
December 31, 2015
Available-for-Sale
U.S. Treasury	$	6,505	$	(8	)	$	—	$	—		$	6,505	$	(8	)
U.S. government-sponsored entities and agencies		160,751		(1,492	)		122,581		(2,031	)		283,332		(3,523	)
Mortgage-backed securities - Agency		256,359		(3,444	)		239,047		(7,101	)		495,406		(10,545	)
States and political subdivisions		38,373		(161	)		5,137		(174	)		43,510		(335	)
Pooled trust preferred securities		—		—			7,900		(9,420	)		7,900		(9,420	)
Other securities		156,604		(2,717	)		126,661		(5,060	)		283,265		(7,777	)
Total available-for-sale	$	618,592	$	(7,822	)	$	501,326	$	(23,786	)	$	1,119,918	$	(31,608	)
Held-to-Maturity
States and political subdivisions	$	2,026	$	(3	)	$	—	$	—		$	2,026	$	(3	)
Total held-to-maturity	$	2,026	$	(3	)	$	—	$	—		$	2,026	$	(3	)

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities classified as available-for-sale or held-to-maturity are generally evaluated for OTTI under FASB ASC 320 (SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities). However, certain purchased beneficial interests, including non-agency mortgage-backed securities, asset-backed securities, and collateralized debt obligations, that had credit ratings at the time of purchase of below AA are evaluated using the model outlined in FASB ASC 325-10 (EITF Issue No. 99-20,Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests that Continue to be Held by a Transfer in Securitized Financial Assets).

In determining OTTI under the FASB ASC 320 (SFAS No. 115) model, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time. The second segment of the portfolio uses the OTTI guidance provided by FASB ASC 325-10 (EITF 99-20) that is specific to purchased beneficial interests that, on the purchase date, were rated below AA. Under the FASB ASC 325-10 model, we compare the present value of the remaining cash flows as estimated at the preceding evaluation date to the current expected remaining cash flows. An OTTI is deemed to have occurred if there has been an adverse change in the remaining expected future cash flows.

When other-than-temporary impairment occurs under either model, the amount of the other-than-temporary impairment recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary impairment shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. Otherwise, the other-than-temporary impairment shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total other-than-temporary impairment related to other factors shall be recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the other-than-temporary impairment recognized in earnings shall become the new amortized cost basis of the investment.

We did not record other-than-temporary-impairments during the six months ended June 30, 2016 or 2015.

As of June 30, 2016, Old National’s securities portfolio consisted of 1,758 securities, 94 of which were in an unrealized loss position. The unrealized losses attributable to our U.S. government-sponsored entities and agencies, our agency mortgage-backed securities, and our other securities are the result of fluctuations in interest rates. Our pooled trust preferred securities are discussed below.

Pooled Trust Preferred Securities

At June 30, 2016, our securities portfolio contained three pooled trust preferred securities with a fair value of $6.7 million and unrealized losses of $10.3 million. One of the pooled trust preferred securities in our portfolio falls within the scope of FASB ASC 325-10 (EITF 99-20) and has a fair value of $0.2 million with an unrealized loss of $3.0 million at June 30, 2016. This security was rated A3 at inception, but is rated D at June 30, 2016. The issuers in this security are banks. We use the OTTI evaluation model to compare the present value of expected cash flows to the previous estimate to determine whether an adverse change in cash flows has occurred during the quarter. The OTTI model considers the structure and term of the collateralized debt obligation (“CDO”) and the financial condition of the underlying issuers. Specifically, the model details interest rates, principal balances of note classes and underlying issuers, the timing and amount of interest and principal payments of the underlying issuers, and the allocation of the payments to the note classes. The current estimate of expected cash flows is based on the most recent trustee reports and any other relevant market information including announcements of interest payment deferrals or defaults of underlying trust preferred securities. Assumptions used in the model include expected future default rates and prepayments. We assume no recoveries on defaults and a limited number of recoveries on current or projected interest payment deferrals. In addition, we use the model to “stress” this CDO, or make assumptions more severe than expected activity, to determine the degree to which assumptions could deteriorate before the CDO could no longer fully support repayment of Old National’s note class. For the six months ended June 30, 2016 and 2015, our model indicated no other-than-temporary-impairment losses on this security. At June 30, 2016, we had no intent to sell any securities that were in an unrealized loss position nor is it expected that we would be required to sell any securities.

Two of our pooled trust preferred securities with a fair value of $6.5 million and unrealized losses of $7.4 million at June 30, 2016 are not subject to FASB ASC 325-10. These securities are evaluated using collateral-specific assumptions to estimate the expected future interest and principal cash flows. For the six months ended June 30, 2016 and 2015, our analysis indicated no OTTI on these securities.

The table below summarizes the relevant characteristics of our pooled trust preferred securities as well as our single issuer trust preferred securities that are included in the “other securities” category in this footnote. Each of the pooled trust preferred securities support a more senior tranche of security holders. All three pooled trust preferred securities have experienced credit defaults. However, two of these securities have excess subordination and are not other-than-temporarily-impaired as a result of their class hierarchy, which provides more loss protection.

																Actual			Expected			Excess
																Deferrals			Defaults as			Subordination
														# of Issuers		and Defaults			a % of			as a % of
Trust preferred securities			Lowest						Unrealized			Realized		Currently		as a % of			Remaining			Current
June 30, 2016			Credit		Amortized		Fair		Gain/			Losses		Performing/		Original			Performing			Performing
(dollars in thousands)	Class		Rating (1)		Cost		Value		(Loss)			2016		Remaining		Collateral			Collateral			Collateral
Pooled trust preferred securities:
Reg Div Funding 2004		B-2		D	$	3,168	$	204	$	(2,964	)	$	—		23/39		33.3	%		7.4	%		0.0	%
Pretsl XXVII LTD		B		B		4,422		2,017		(2,405	)		—		33/43		18.9	%		4.2	%		49.4	%
Trapeza Ser 13A		A2A		BBB		9,469		4,499		(4,970	)		—		50/57		8.9	%		4.9	%		43.1	%
						17,059		6,720		(10,339	)		—
Single Issuer trust preferred securities:
Fleet Cap Tr V (BOA)				BB+		3,393		2,835		(558	)		—
JP Morgan Chase Cap XIII				BBB-		4,762		4,000		(762	)		—
NB-Global				BB+		777		810		33			—
Chase Cap II				BBB-		815		840		25			—
						9,747		8,485		(1,262	)		—
Total					$	26,806	$	15,205	$	(11,601	)	$	—

(1) Lowest rating for the security provided by any nationally recognized credit rating agency.

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Loans Held for Sale

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Loans Held for Sale

NOTE 7 - LOANS HELD FOR SALE

Mortgage loans held for immediate sale in the secondary market were $44.4 million at June 30, 2016, compared to $13.8 million at December 31, 2015. Residential loans that Old National has originated with the intent to sell are recorded at fair value in accordance with FASB ASC 825-10 (SFAS No. 159 – The Fair Value Option for Financial Assets and Financial Liabilities). Beginning with the inception of an in-house servicing unit in the third quarter of 2014, conventional mortgage production is sold on a servicing retained basis. Certain loans, such as government guaranteed mortgage loans are sold on servicing released basis.

During the fourth quarter of 2014, $197.9 million of loans were reclassified to loans held for sale at the lower of cost or fair value. When the branch divestitures closed during the third quarter of 2015, these loans were valued at $193.6 million, resulting in a gain of $0.1 million. At June 30, 2016, there were no loans held for sale under this arrangement.

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Loans and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2016

Text Block [Abstract]

Loans and Allowance for Credit Losses

NOTE 8 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

Old National’s finance receivables consist primarily of loans made to consumers and commercial clients in various industries including manufacturing, agribusiness, transportation, mining, wholesaling, and retailing. Most of Old National’s lending activity occurs within our principal geographic markets of Indiana, Kentucky, Michigan, and Wisconsin. Old National has no concentration of commercial or commercial real estate loans in any single industry exceeding 10% of its portfolio.

The composition of loans by lending classification was as follows:

	June 30,			December 31,
(dollars in thousands)	2016			2015
Commercial (1)	$	1,893,700		$	1,804,615
Commercial real estate:
Construction		263,496			185,449
Other		2,680,029			1,662,372
Residential real estate		2,099,770			1,644,614
Consumer credit:
Heloc		473,550			359,954
Auto		1,145,198			1,050,336
Other		274,415			133,478
Covered loans		—			107,587
Total loans		8,830,158			6,948,405
Allowance for loan losses		(51,804	)		(51,296	)
Allowance for loan losses - covered loans		—			(937	)
Net loans	$	8,778,354		$	6,896,172

(1) Includes direct finance leases of $12.7 million at June 30, 2016 and $14.4 million at December 31, 2015.

The risk characteristics of each loan portfolio segment are as follows:

Commercial

Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate

These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The properties securing Old National’s commercial real estate portfolio are diverse in terms of type and geographic location. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

Included with commercial real estate are construction loans, which are underwritten utilizing independent appraisal reviews, sensitivity analysis of absorption and lease rates, financial analysis of the developers and property owners, and feasibility studies, if available. Construction loans are generally based on estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from Old National until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions, and the availability of long-term financing.

Residential

With respect to residential loans that are secured by 1-4 family residences and are generally owner occupied, Old National typically establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in residential property values. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Consumer

Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. We assumed student loans in the acquisition of Anchor in May 2016. As of June 30, 2016, student loans totaled $83.3 million and are guaranteed by the government on average from 97% to 100%. Some consumer loans are unsecured such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in residential property or other collateral values. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Covered loans

Old National entered into an agreement with the FDIC on June 22, 2016 to terminate its loss share agreements. As a result of the termination of the loss share agreements, the remaining loans that were covered by the loss share arrangements were reclassified to noncovered loans effective June 22, 2016. All future gains and losses associated with covered loans will be recognized entirely by Old National.

Prior to the termination of the loss share agreements, certain loans acquired from the FDIC were classified as covered loans. Covered loans were subject to loss share agreements whereby Old National was indemnified against 80% of losses up to $275.0 million, losses in excess of $275.0 million up to $467.2 million at 0% reimbursement, and 80% of losses in excess of $467.2 million. See Note 9 to the consolidated financial statements for further details on our covered loans.

Allowance for loan losses

The allowance for loan losses is maintained at a level believed adequate by management to absorb probable losses incurred in the consolidated loan portfolio. Management’s evaluation of the adequacy of the allowance is an estimate based on reviews of individual loans, pools of homogeneous loans, assessments of the impact of current and anticipated economic conditions on the portfolio, and historical loss experience. The allowance is increased through a provision charged to operating expense. Loans deemed to be uncollectible are charged to the allowance. Recoveries of loans previously charged-off are added to the allowance.

We utilize a probability of default (“PD”) and loss given default (“LGD”) model as a tool to determine the adequacy of the allowance for loan losses for performing commercial and commercial real estate loans. The PD is forecast using a transition matrix to determine the likelihood of a customer’s asset quality rating (“AQR”) migrating from its current AQR to any other status within the time horizon. Transition rates are measured using Old National’s own historical experience. The model assumes that recent historical transition rates will continue into the future. The LGD is defined as credit loss incurred when an obligor of the bank defaults. The sum of all net charge-offs for a particular portfolio segment are divided by all loans that have defaulted over a given period of time. The expected loss derived from the model considers the PD, LGD, and exposure at default. Additionally, qualitative factors, such as changes in lending policies or procedures, and economic business conditions are also considered.

We use historic loss ratios adjusted for economic conditions to determine the appropriate level of allowance for residential real estate and consumer loans.

No allowance was brought forward on any of the acquired loans as any credit deterioration evident in the loans was included in the determination of the fair value of the loans at the acquisition date. An allowance for loan losses will be established for any subsequent credit deterioration or adverse changes in expected cash flows.

Old National’s activity in the allowance for loan losses for the three and six months ended June 30, 2016 and 2015 is as follows:

				Commercial
(dollars in thousands)	Commercial			Real Estate			Residential			Consumer			Unallocated		Total
Three Months Ended June 30, 2016
Balance at April 1, 2016	$	25,121		$	15,771		$	1,749		$	8,059		$	—	$	50,700
Charge-offs		(432	)		(783	)		(80	)		(1,382	)		—		(2,677	)
Recoveries		876			547			187			852			—		2,462
Provision		(1,409	)		2,673			(397	)		452			—		1,319
Balance at June 30, 2016	$	24,156		$	18,208		$	1,459		$	7,981		$	—	$	51,804
Three Months Ended June 30, 2015
Balance at April 1, 2015	$	24,703		$	13,807		$	2,919		$	7,449		$	—	$	48,878
Charge-offs		(1,872	)		(514	)		(22	)		(1,494	)		—		(3,902	)
Recoveries		789			1,009			59			1,087			—		2,944
Provision		(186	)		2,023			(375	)		809			—		2,271
Balance at June 30, 2015	$	23,434		$	16,325		$	2,581		$	7,851		$	—	$	50,191
Six Months Ended June 30, 2016
Balance at January 1, 2016	$	26,347		$	15,993		$	2,051		$	7,842		$	—	$	52,233
Charge-offs		(1,959	)		(1,062	)		(220	)		(3,378	)		—		(6,619	)
Recoveries		1,694			1,387			213			1,486			—		4,780
Provision		(1,926	)		1,890			(585	)		2,031			—		1,410
Balance at June 30, 2016	$	24,156		$	18,208		$	1,459		$	7,981		$	—	$	51,804
Six Months Ended June 30, 2015
Balance at January 1, 2015	$	20,670		$	17,348		$	2,962		$	6,869		$	—	$	47,849
Charge-offs		(2,421	)		(101	)		(396	)		(3,098	)		—		(6,016	)
Recoveries		2,564			1,473			87			1,962			—		6,086
Provision		2,621			(2,395	)		(72	)		2,118			—		2,272
Balance at June 30, 2015	$	23,434		$	16,325		$	2,581		$	7,851		$	—	$	50,191

The following table provides Old National’s recorded investment in financing receivables by portfolio segment at June 30, 2016 and December 31, 2015 and other information regarding the allowance:

			Commercial
(dollars in thousands)	Commercial		Real Estate		Residential		Consumer		Unallocated		Total
June 30, 2016
Allowance for loan losses:
Individually evaluated for impairment	$	7,489	$	3,949	$	—	$	—	$	—	$	11,438
Collectively evaluated for impairment		16,374		14,082		1,446		7,781		—		39,683
Loans acquired with deteriorated credit quality		293		177		13		200		—		683
Total allowance for loan losses	$	24,156	$	18,208	$	1,459	$	7,981	$	—	$	51,804
Loans and leases outstanding:
Individually evaluated for impairment	$	52,132	$	60,359	$	—	$	—	$	—	$	112,491
Collectively evaluated for impairment		1,839,760		2,830,350		2,084,652		1,882,832		—		8,637,594
Loans acquired with deteriorated credit quality		1,808		52,816		15,118		10,331		—		80,073
Total loans and leases outstanding	$	1,893,700	$	2,943,525	$	2,099,770	$	1,893,163	$	—	$	8,830,158
December 31, 2015
Allowance for loan losses:
Individually evaluated for impairment	$	7,467	$	4,021	$	—	$	—	$	—	$	11,488
Collectively evaluated for impairment		18,295		11,439		2,038		7,614		—		39,386
Loans acquired with deteriorated credit quality		247		533		13		70		—		863
Covered loans acquired with deteriorated credit quality		338		—		—		158		—		496
Total allowance for loan losses	$	26,347	$	15,993	$	2,051	$	7,842	$	—	$	52,233
Loans and leases outstanding:
Individually evaluated for impairment	$	60,959	$	41,987	$	—	$	—	$	—	$	102,946
Collectively evaluated for impairment		1,750,397		1,779,062		1,644,631		1,590,288		—		6,764,378
Loans acquired with deteriorated credit quality		691		28,499		127		3,925		—		33,242
Covered loans acquired with deteriorated credit quality		2,893		19,424		16,577		8,945		—		47,839
Total loans and leases outstanding	$	1,814,940	$	1,868,972	$	1,661,335	$	1,603,158	$	—	$	6,948,405

Credit Quality

Old National’s management monitors the credit quality of its financing receivables in an on-going manner. Internally, management assigns an asset quality rating (“AQR”) to each non-homogeneous commercial and commercial real estate loan in the portfolio. The primary determinants of the AQR are based upon the reliability of the primary source of repayment and the past, present, and projected financial condition of the borrower. The AQR will also consider current industry conditions. Major factors used in determining the AQR can vary based on the nature of the loan, but commonly include factors such as debt service coverage, internal cash flow, liquidity, leverage, operating performance, debt burden, FICO scores, occupancy, interest rate sensitivity, and expense burden. Old National uses the following definitions for risk ratings:

Criticized. Special mention loans that have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Classified – Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Classified – Nonaccrual. Loans classified as nonaccrual have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection in full, on the basis of currently existing facts, conditions, and values, in doubt.

Classified – Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as nonaccrual, with the added characteristic that the weaknesses make collection in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Pass rated loans are those loans that are other than criticized, classified – substandard, classified—nonaccrual or classified – doubtful.

As of June 30, 2016 and December 31, 2015, the risk category of commercial and commercial real estate loans by class of loans is as follows:

(dollars in thousands)					Commercial				Commercial
					Real Estate -				Real Estate -
Corporate Credit Exposure	Commercial				Construction				Other
Credit Risk Profile by	June 30,		December 31,		June 30,		December 31,		June 30,		December 31,
Internally Assigned Grade	2016		2015 (1)		2016		2015 (1)		2016		2015 (1)
Grade:
Pass	$	1,774,857	$	1,672,672	$	256,427	$	182,701	$	2,484,795	$	1,508,309
Criticized		38,867		55,570		4,014		3,300		64,005		75,477
Classified - substandard		25,422		24,723		1,572		1,857		56,982		49,091
Classified - nonaccrual		52,226		58,469		1,483		830		64,338		39,521
Classified - doubtful		2,328		3,506		—		—		9,909		7,886
Total	$	1,893,700	$	1,814,940	$	263,496	$	188,688	$	2,680,029	$	1,680,284

(1) Includes loans previously covered by loss share agreements with the FDIC.

Other commercial real estate as of June 30, 2016 in the table above includes loans attributable to the acquisition of Anchor totaling $9.4 million in the criticized category, $3.6 million in the classified – substandard category, and $24.8 million in the classified – nonaccrual category.

Old National considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential and consumer loan classes, Old National also evaluates credit quality based on the aging status of the loan and by payment activity. The following table presents the recorded investment in residential and consumer loans based on payment activity as of June 30, 2016 and December 31, 2015:

	Residential		Consumer
(dollars in thousands)			Heloc		Auto		Other
June 30, 2016
Performing	$	2,082,585	$	469,711	$	1,143,932	$	266,649
Nonperforming		17,185		3,839		1,266		7,766
Total	$	2,099,770	$	473,550	$	1,145,198	$	274,415
December 31, 2015 (1)
Performing	$	1,645,293	$	410,243	$	1,048,763	$	138,031
Nonperforming		16,042		3,051		1,573		1,497
Total	$	1,661,335	$	413,294	$	1,050,336	$	139,528

(1) Includes loans previously covered by loss share agreements with the FDIC.

Other consumer loans as of June 30, 2016 in the table above includes loans attributable to the acquisition of Anchor totaling $6.1 million in the nonperforming category, the majority of which are student loans that are guaranteed by the government on average from 97% to 100%.

Impaired Loans

Large commercial credits are subject to individual evaluation for impairment. Retail credits and other small balance credits that are part of a homogeneous group are not tested for individual impairment unless they are modified as a troubled debt restructuring. A loan is considered impaired when it is probable that contractual interest and principal payments will not be collected either for the amounts or by the dates as scheduled in the loan agreement. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported net, at the present value of estimated cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Old National’s policy, for all but purchased credit impaired loans, is to recognize interest income on impaired loans unless the loan is placed on nonaccrual status.

The following table shows Old National’s impaired loans as of June 30, 2016 and December 31, 2015, respectively. Only purchased loans that have experienced subsequent impairment since the date acquired are included in the table below.

(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
June 30, 2016
With no related allowance recorded:
Commercial	$	36,975	$	34,584	$	—
Commercial Real Estate - Other		41,334		45,139		—
Residential		1,353		1,374		—
Consumer		904		1,041		—
With an allowance recorded:
Commercial		18,903		18,905		7,489
Commercial Real Estate - Other		15,279		15,353		3,949
Residential		1,105		1,105		55
Consumer		2,785		2,785		139
Total	$	118,638	$	120,286	$	11,632
December 31, 2015 (1)
With no related allowance recorded:
Commercial	$	40,414	$	41,212	$	—
Commercial Real Estate - Other		26,998		30,264		—
Residential		1,383		1,422		—
Consumer		1,201		1,305		—
With an allowance recorded:
Commercial		16,377		16,483		7,111
Commercial Real Estate - Construction		237		237		6
Commercial Real Estate - Other		14,752		14,802		4,015
Residential		985		985		49
Consumer		2,525		2,525		126
Total	$	104,872	$	109,235	$	11,307

(1) Does not include $4.2 million of loans that were previously covered by loss share agreements with the FDIC.

The average balance of impaired loans and interest income recognized on impaired loans during the three months ended June 30, 2016 and 2015 are included in the table below.

(dollars in thousands)	Average Recorded Investment		Interest Income Recognized (1)
Three Months Ended June 30, 2016
With no related allowance recorded:
Commercial	$	32,951	$	33
Commercial Real Estate - Other		34,344		162
Residential		1,348		2
Consumer		871		1
With an allowance recorded:
Commercial		19,546		79
Commercial Real Estate - Construction		116		—
Commercial Real Estate - Other		12,230		134
Residential		1,060		—
Consumer		2,781		—
Total	$	105,247	$	411
Three Months Ended June 30, 2015 (2)
With no related allowance recorded:
Commercial	$	30,769	$	85
Commercial Real Estate - Construction		2,107		1
Commercial Real Estate - Other		38,758		189
Residential		920		1
Consumer		869		1
With an allowance recorded:
Commercial		25,069		355
Commercial Real Estate - Construction		117		—
Commercial Real Estate - Other		10,274		121
Residential		1,469		2
Consumer		1,518		29
Total	$	111,870	$	784

(1) The Company does not record interest on nonaccrual loans until principal is recovered.

(2) Does not include $4.7 million of loans that were previously covered by loss share agreements with the FDIC.

The average balance of impaired loans and interest income recognized on impaired loans during the six months ended June 30, 2016 and 2015 are included in the table below.

(dollars in thousands)	Average Recorded Investment		Interest Income Recognized (1)
Six Months Ended June 30, 2016
With no related allowance recorded:
Commercial	$	38,029	$	61
Commercial Real Estate - Other		38,197		257
Residential		1,359		2
Consumer		981		2
With an allowance recorded:
Commercial		17,641		92
Commercial Real Estate - Construction		119		—
Commercial Real Estate - Other		15,016		182
Residential		1,035		38
Consumer		2,695		37
Total	$	115,072	$	671
Six Months Ended June 30, 2015 (2)
With no related allowance recorded:
Commercial	$	31,505	$	127
Commercial Real Estate - Construction		2,025		4
Commercial Real Estate - Other		32,402		274
Residential		761		1
Consumer		824		2
With an allowance recorded:
Commercial		21,359		403
Commercial Real Estate - Construction		49		—
Commercial Real Estate - Other		13,980		122
Residential		1,469		64
Consumer		1,568		49
Total	$	105,942	$	1,046

(1) The Company does not record interest on nonaccrual loans until principal is recovered.

(2) Does not include $4.7 million of loans that were previously covered by loss share agreements with the FDIC.

For all loan classes, a loan is generally placed on nonaccrual status when principal or interest becomes 90 days past due unless it is well secured and in the process of collection, or earlier when concern exists as to the ultimate collectibility of principal or interest. Interest accrued during the current year on such loans is reversed against earnings. Interest accrued in the prior year, if any, is charged to the allowance for loan losses. Cash interest received on these loans is applied to the principal balance until the principal is recovered or until the loan returns to accrual status. Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current, remain current for a prescribed period, and future payments are reasonably assured.

Loans accounted for under FASB ASC Topic 310-30 accrue interest, even though they may be contractually past due, as any nonpayment of contractual principal or interest is considered in the periodic re-estimation of expected cash flows and is included in the resulting recognition of current period loan loss provision or prospective yield adjustments.

Old National’s past due financing receivables as of June 30, 2016 and December 31, 2015 are as follows:

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Recorded Investment > 90 Days and Accruing		Nonaccrual		Total Past Due		Current
June 30, 2016
Commercial	$	496	$	227	$	175	$	54,554	$	55,452	$	1,838,248
Commercial Real Estate:
Construction		—		—		—		1,483		1,483		262,013
Other		1,779		—		—		74,247		76,026		2,604,003
Residential		14,221		1,726		101		17,185		33,233		2,066,537
Consumer:
Heloc		1,286		220		240		3,839		5,585		467,965
Auto		2,962		684		104		1,266		5,016		1,140,182
Other		7,251		3,119		50		7,766		18,186		256,229
Total loans	$	27,995	$	5,976	$	670	$	160,340	$	194,981	$	8,635,177
December 31, 2015
Commercial	$	802	$	100	$	565	$	57,536	$	59,003	$	1,745,612
Commercial Real Estate:
Construction		—		—		—		749		749		184,700
Other		438		135		—		46,601		47,174		1,615,198
Residential		9,300		2,246		114		14,953		26,613		1,618,001
Consumer:
Heloc		283		402		—		2,369		3,054		356,900
Auto		3,804		730		202		1,573		6,309		1,044,027
Other		830		165		25		1,256		2,276		131,202
Covered loans		809		312		10		7,336		8,467		99,120
Total loans	$	16,266	$	4,090	$	916	$	132,373	$	153,645	$	6,794,760

Loan Participations

Old National has loan participations, which qualify as participating interests, with other financial institutions. At June 30, 2016, these loans totaled $392.2 million, of which $209.6 million had been sold to other financial institutions and $182.6 million was retained by Old National. The loan participations convey proportionate ownership rights with equal priority to each participating interest holder, involve no recourse (other than ordinary representations and warranties) to, or subordination by, any participating interest holder, all cash flows are divided among the participating interest holders in proportion to each holder’s share of ownership, and no holder has the right to pledge the entire financial asset unless all participating interest holders agree.

Troubled Debt Restructurings

Old National may choose to restructure the contractual terms of certain loans. The decision to restructure a loan, versus aggressively enforcing the collection of the loan, may benefit Old National by increasing the ultimate probability of collection.

Any loans that are modified are reviewed by Old National to identify if a troubled debt restructuring (“TDR”) has occurred, which is when for economic or legal reasons related to a borrower’s financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status. The modification of the terms of such loans include one or a combination of the following: a reduction of the stated interest rate of the loan, an extension of the maturity date at a stated rate of interest lower than the current market rate of new debt with similar risk, or a permanent reduction of the recorded investment of the loan.

Loans modified in a TDR are typically placed on nonaccrual status until we determine the future collection of principal and interest is reasonably assured, which generally requires that the borrower demonstrate a period of performance according to the restructured terms for six months.

If we are unable to resolve a nonperforming loan issue, the credit will be charged off when it is apparent there will be a loss. For large commercial type loans, each relationship is individually analyzed for evidence of apparent loss based on quantitative benchmarks or subjectively based upon certain events or particular circumstances. Old National charges off small commercial loans scored through our small business credit center with contractual balances under $250,000 that have been placed on nonaccrual status or became 90 days or more delinquent, without regard to the collateral position. For residential and consumer loans, a charge off is recorded at the time foreclosure is initiated or when the loan becomes 120 to 180 days past due, whichever is earlier.

For commercial TDRs, an allocated reserve is established within the allowance for loan losses for the difference between the carrying value of the loan and its computed value. To determine the value of the loan, one of the following methods is selected: (1) the present value of expected cash flows discounted at the loan’s original effective interest rate, (2) the loan’s observable market price, or (3) the fair value of the collateral value, if the loan is collateral dependent. The allocated reserve is established as the difference between the carrying value of the loan and the collectable value. If there are significant changes in the amount or timing of the loan’s expected future cash flows, impairment is recalculated and the valuation allowance is adjusted accordingly.

When a residential or consumer loan is identified as a troubled debt restructuring, the loan is typically written down to its collateral value less selling costs.

The following table presents activity in TDRs for the six months ended June 30, 2016 and 2015:

(dollars in thousands)	Commercial			Commercial Real Estate			Residential			Consumer			Total
Six Months Ended June 30, 2016
Balance at January 1, 2016	$	23,354		$	14,602		$	2,693		$	3,602		$	44,251
(Charge-offs)/recoveries		(742	)		108			42			(23	)		(615	)
Payments		(10,819	)		(4,035	)		(462	)		(425	)		(15,741	)
Additions		11,233			10,581			335			385			22,534
Other		1,251			173			—			—			1,424
Balance at June 30, 2016	$	24,277		$	21,429		$	2,608		$	3,539		$	51,853
Six Months Ended June 30, 2015
Balance at January 1, 2015	$	15,205		$	15,226		$	2,063		$	2,459		$	34,953
(Charge-offs)/recoveries		574			648			(15	)		(27	)		1,180
Payments		(3,505	)		(3,135	)		(85	)		(320	)		(7,045	)
Additions		5,573			3,321			419			681			9,994
Balance at June 30, 2015	$	17,847		$	16,060		$	2,382		$	2,793		$	39,082

Approximately $38.1 million of the TDRs at June 30, 2016 were included with nonaccrual loans, compared to $30.0 million at December 31, 2015. Old National has allocated specific reserves to customers whose loan terms have been modified in TDRs totaling $5.6 million at June 30, 2016 and $2.3 million at December 31, 2015. As of June 30, 2016, Old National had committed to lend an additional $4.2 million to customers with outstanding loans that are classified as TDRs.

The pre-modification and post-modification outstanding recorded investments of loans modified as TDRs during the six months ended June 30, 2016 and 2015 are the same except for when the loan modifications involve the forgiveness of principal. The following table presents loans by class modified as TDRs that occurred during the six months ended June 30, 2016 and 2015:

(dollars in thousands)	Number of Loans		Pre-modification Outstanding Recorded Investment		Post-modification Outstanding Recorded Investment
Six Months Ended June 30, 2016
Troubled Debt Restructuring:
Commercial		16	$	11,233	$	10,681
Commercial Real Estate - Other		9		10,581		10,581
Residential		3		335		335
Consumer		8		385		385
Total		36	$	22,534	$	21,982
Six Months Ended June 30, 2015
Troubled Debt Restructuring:
Commercial		18	$	5,573	$	5,573
Commercial Real Estate - Construction		5		1,162		1,162
Commercial Real Estate - Other		14		2,159		2,159
Residential		3		419		419
Consumer		18		681		681
Total		58	$	9,994	$	9,994

The TDRs that occurred during the six months ended June 30, 2016 decreased the allowance for loan losses by $1.2 million due to an improvement in specific reserves on a large commercial loan and resulted in $0.6 million of charge-offs during the six months ended June 30, 2016. The TDRs that occurred during the six months ended June 30, 2015 resulted in immaterial changes in the allowance for loan losses and charge-offs during the six months ended June 30, 2015.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

There were 10 commercial loans and 3 commercial real estate loans totaling $0.8 million that were modified as TDRs within the preceding twelve months, and for which there was a payment default during the six months ended June 30, 2016.

There were three commercial loans and four commercial real estate loans totaling $0.5 million that were modified as TDRs within the preceding twelve months, and for which there was a payment default during the six months ended June 30, 2015.

The terms of certain other loans were modified during the six months ended June 30, 2016 that did not meet the definition of a TDR. It is our process to review all classified and criticized loans that, during the period, have been renewed, have entered into a forbearance agreement, have gone from principal and interest to interest only, or have extended the maturity date. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on its debt in the foreseeable future without the modification. The evaluation is performed under our internal underwriting policy. We also evaluate whether a concession has been granted or if we were adequately compensated through a market interest rate, additional collateral or a bona fide guarantee. We also consider whether the modification was insignificant relative to the other terms of the agreement or the delay in a payment.

PCI loans are not considered impaired until after the point at which there has been a degradation of cash flows below our expected cash flows at acquisition. If a PCI loan is subsequently modified, and meets the definition of a TDR, it will be removed from PCI accounting and accounted for as a TDR only if the PCI loan was being accounted for individually. If the purchased credit impaired loan is being accounted for as part of a pool, it will not be removed from the pool. As of June 30, 2016, it has not been necessary to remove any loans from PCI accounting.

In general, once a modified loan is considered a TDR, the loan will always be considered a TDR, and therefore impaired, until it is paid in full, otherwise settled, sold or charged off. However, guidance also permits for loans to be removed from TDR status when subsequently restructured under these circumstances: (1) at the time of the subsequent restructuring, the borrower is not experiencing financial difficulties, and this is documented by a current credit evaluation at the time of the restructuring, (2) under the terms of the subsequent restructuring agreement, the institution has granted no concession to the borrower; and (3) the subsequent restructuring agreement includes market terms that are no less favorable than those that would be offered for a comparable new loan. For loans subsequently restructured that have cumulative principal forgiveness, the loan should continue to be measured in accordance with ASC 310-10, “Receivables – Overall”. However, consistent with ASC 310-40-50-2, “Troubled Debt Restructurings by Creditors, Creditor Disclosure of Troubled Debt Restructurings,” the loan would not be required to be reported in the years following the restructuring if the subsequent restructuring meets both of these criteria: (1) has an interest rate at the time of the subsequent restructuring that is not less than a market interest rate; and (2) is performing in compliance with its modified terms after the subsequent restructuring.

Purchased Credit Impaired Loans (“PCI”)

Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date with no carryover of the related allowance for loan and lease losses. In determining the estimated fair value of purchased loans, management considers a number of factors including, among others, the remaining life of the acquired loans, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral, and net present value of cash flows expected to be received. Purchased loans are accounted for in accordance with guidance for certain loans acquired in a transfer (ASC 310-30), when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition that the acquirer will not collect all contractually required principal and interest payments. The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference. Subsequent decreases to the expected cash flows will generally result in a provision for loan and lease losses. Subsequent increases in expected cash flows will result in a reversal of the provision for loan losses to the extent of prior charges and then an adjustment to accretable yield, which would have a positive impact on interest income.

Old National has purchased loans for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. For these loans that meet the criteria of ASC 310-30 treatment, the carrying amount is as follows:

(dollars in thousands)	June 30, 2016			December 31, 2015 (1)
Commercial	$	1,808		$	3,584
Commercial real estate		52,816			47,923
Residential		15,118			16,704
Consumer		10,331			12,870
Carrying amount		80,073			81,081
Allowance for loan losses		(683	)		(1,359	)
Carrying amount, net of allowance	$	79,390		$	79,722

(1) Includes loans previously covered by loss share agreements with the FDIC.

The outstanding balance of loans accounted for under ASC 310-30, including contractual principal, interest, fees and penalties, was $323.4 million at June 30, 2016 and $321.5 million at December 31, 2015.

The accretable difference on purchased loans acquired in a business combination is the difference between the expected cash flows and the net present value of expected cash flows with such difference accreted into earnings using the effective yield method over the term of the loans. Accretion recorded as loan interest income totaled $13.0 million during the six months ended June 30, 2016 and $15.5 million during the six months ended June 30, 2015. Improvement in cash flow expectations has resulted in a reclassification from nonaccretable difference to accretable yield as shown in the table below.

Accretable yield of purchased credit impaired loans, or income expected to be collected, is as follows:

(dollars in thousands)	Acquisitions Prior to 2015 (1)			Founders (2)			Anchor (2)			Total
Balance at January 1, 2016	$	42,498		$	2,812		$	—		$	45,310
New loans purchased		—			—			3,217			3,217
Accretion of income		(12,137	)		(505	)		(348	)		(12,990	)
Reclassifications from (to) nonaccretable difference		5,191			428			—			5,619
Disposals/other adjustments		487			—			43			530
Balance at June 30, 2016	$	36,039		$	2,735		$	2,912		$	41,686

(1) Includes loans previously covered by loss share agreements with the FDIC.

(2) Old National acquired Founders effective January 1, 2015 and Anchor effective May 1, 2016.

Included in Old National’s allowance for loan losses is $0.7 million related to the purchased loans disclosed above at June 30, 2016, compared to $1.4 million at December 31, 2015.

PCI loans purchased during the six months ended June 30, 2016 and 2015 for which it was probable at acquisition that all contractually required payments would not be collected were as follows:

(dollars in thousands)	Founders			Anchor
Contractually required payments	$	11,103		$	29,544
Nonaccretable difference		(2,684	)		(6,153	)
Cash flows expected to be collected at acquisition		8,419			23,391
Accretable yield		(1,812	)		(3,217	)
Fair value of acquired loans at acquisition	$	6,607		$	20,174

Income would not be recognized on certain purchased loans if Old National could not reasonably estimate cash flows to be collected. Old National had no purchased loans for which it could not reasonably estimate cash flows to be collected.

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Covered Loans

6 Months Ended

Jun. 30, 2016

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Covered Loans

NOTE 9 – COVERED LOANS

Old National entered into an agreement with the FDIC on June 22, 2016 to terminate its loss share agreements. As a result of the termination of the loss share agreements, the remaining loans that were covered by the loss share arrangements were reclassified to noncovered loans effective June 22, 2016. All future gains and losses associated with covered loans will be recognized entirely by Old National.

Prior to the termination of the loss share agreements, certain loans acquired from the FDIC were classified as covered loans. Covered loans were subject to loss share agreements. Under the early termination agreement, the FDIC made a final payment of $8.7 million to Old National as consideration for the early termination. After the elimination of the remaining FDIC indemnification asset and the payment of settlement charges, Old National realized a pre-tax gain of $0.2 million during the three months ended June 30, 2016. The carrying amount of covered loans was $95.4 million at March 31, 2016.

The following table is a roll-forward of covered acquired impaired loans accounted for under ASC 310-30 for the six months ended June 30, 2016 and 2015. As a result of the termination of the loss share agreements, the remaining loans that were covered by the loss share arrangements were reclassified to noncovered loans effective June 22, 2016.

(dollars in thousands)	Contractual Cash Flows (1)			Nonaccretable Difference			Accretable Yield			Carrying Amount (2)
Six Months Ended June 30, 2016
Balance at January 1, 2016	$	69,857		$	(4,729	)	$	(17,785	)	$	47,343
Principal reductions and interest payments		(18,195	)		(347	)		—			(18,542	)
Accretion of loan discount		—			—			7,196			7,196
Changes in contractual and expected cash flows due to remeasurement		4,431			631			(4,927	)		135
Removals due to foreclosure or sale		(1,948	)		136			263			(1,549	)
Loans removed from loss share coverage		(54,145	)		4,309			15,253			(34,583	)
Balance at June 30, 2016	$	—		$	—		$	—		$	—
Six Months Ended June 30, 2015
Balance at January 1, 2015	$	124,809		$	(12,014	)	$	(35,742	)	$	77,053
Principal reductions and interest payments		(18,178	)		(814	)		—			(18,992	)
Accretion of loan discount		—			—			7,259			7,259
Changes in contractual and expected cash flows due to remeasurement		(3,633	)		4,412			(733	)		46
Removals due to foreclosure or sale		(506	)		162			(143	)		(487	)
Balance at June 30, 2015	$	102,492		$	(8,254	)	$	(29,359	)	$	64,879

(1) The balance of contractual cash flows includes future contractual interest and is net of amounts charged off and interest collected on nonaccrual loans.

(2) Carrying amount for this table is net of allowance for loan losses.

Prior to the termination of the loss share agreements, we estimated the cash flows expected to be collected on individual loans or on pools of loans sharing common risk characteristics which were treated in the aggregate when applying various valuation techniques. We evaluated at each balance sheet date whether the present value of loans determined using the effective interest rates had decreased and if so, recognized a provision for loan losses. For any increases in cash flows expected to be collected, we adjusted the amount of accretable yield recognized on a prospective basis over the loan’s or pool’s remaining life. Eighty percent of the prospective yield adjustments were offset as Old National would recognize a corresponding change in cash flows expected from the indemnification asset prospectively in a similar manner. The indemnification asset was adjusted over the shorter of the life of the underlying investment or the indemnification agreement.

The loss share receivable represented actual incurred losses where reimbursement had not yet been received from the FDIC. The indemnification asset represented future cash flows we expected to collect from the FDIC under the loss sharing agreements and the amount related to the estimated improvements in cash flow expectations that were being amortized over the same period for which those improved cash flows were being accreted into income.

The following table shows a detailed analysis of the FDIC loss sharing asset for the six months ended June 30, 2016 and 2015. As a result of the termination of the loss share agreements on June 22, 2016, the table below reflects the write-off of the remaining FDIC loss sharing asset.

(dollars in thousands)	2016			2015
Balance at January 1,	$	9,030		$	20,603
Adjustments not reflected in income:
Cash received from the FDIC		(10,000	)		(2,231	)
Other		512			612
Adjustments reflected in income:
(Amortization) accretion		(816	)		(3,830	)
Higher (lower) loan loss expectations		(13	)		109
Impairment/(recovery) of value and net (gain)/loss on sales of other real estate		1,062			1,212
Gain as a result of the early termination agreement with the FDIC, effective June 22, 2016		225			—
Balance at June 30,	$	—		$	16,475

As a result of the termination of the loss share agreements, all future gains and losses associated with covered assets will be recognized entirely by Old National since the FDIC will no longer be sharing in these gains and losses.

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Other Real Estate Owned

6 Months Ended

Jun. 30, 2016

Banking and Thrift [Abstract]

Other Real Estate Owned

NOTE 10 – OTHER REAL ESTATE OWNED

The following table presents activity in other real estate owned for the six months ended June 30, 2016 and 2015:

	Other Real Estate			Other Real Estate
(dollars in thousands)	Owned (1)			Owned, Covered
Six Months Ended June 30, 2016
Balance at January 1, 2016	$	7,594		$	4,904
Additions (2)		20,251			2,093
Sales		(7,060	)		(1,454	)
(Impairment)/recovery of value		(202	)		(1,872	)
Reclassification due to termination of the loss share agreements, effective June 22, 2016		3,671			(3,671	)
Balance at June 30, 2016	$	24,254		$	—
Six Months Ended June 30, 2015
Balance at January 1, 2015	$	7,241		$	9,121
Additions		4,579			429
Sales		(2,153	)		(4,580	)
(Impairment)/recovery of value		(279	)		(217	)
Balance at June 30, 2015	$	9,388		$	4,753

(1) Includes repossessed personal property of $0.2 million at June 30, 2016 and $0.3 million at June 30, 2015.

(2) Includes other real estate owned of $18.2 million acquired from Anchor in May 2016.

At June 30, 2016, foreclosed residential real estate property included in the table above totaled $1.0 million. At June 30, 2016, consumer mortgage loans collateralized by residential real property that were in the process of foreclosure totaled $4.0 million.

Old National entered into an agreement with the FDIC on June 22, 2016 to terminate its loss share agreements. As a result of the termination of the loss share agreements, the remaining other real estate owned that was covered by the loss share arrangements were reclassified to noncovered other real estate owned effective June 22, 2016.

Prior to the termination of the loss share agreements, covered OREO expenses and valuation write-downs were recorded in the noninterest expense section of the consolidated statements of income. Under the loss sharing agreements, the FDIC reimbursed us for 80% of expenses and valuation write-downs related to covered assets up to $275.0 million, losses in excess of $275.0 million up to $467.2 million at 0%, and 80% of losses in excess of $467.2 million. The reimbursable portion of these expenses was recorded in the FDIC indemnification asset. Changes in the FDIC indemnification asset were recorded in the noninterest income section of the consolidated statements of income. As a result of the termination of the loss share agreements, all future gains and losses associated with covered assets will be recognized entirely by Old National since the FDIC will no longer be sharing in these gains and losses.

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Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

NOTE 11 - GOODWILL AND OTHER INTANGIBLE ASSETS

The following table shows the changes in the carrying amount of goodwill for the six months ended June 30, 2016 and 2015:

(dollars in thousands)	2016			2015
Balance at January 1,	$	584,634		$	530,845
Acquisitions		111,852			57,619
Divestitures		(40,963	)		—
Balance at June 30,	$	655,523		$	588,464

Goodwill is reviewed annually for impairment. Old National completed its most recent annual goodwill impairment test as of August 31, 2015 and concluded that, based on current events and circumstances, it is not more likely than not that the carrying value of goodwill exceeds fair value. Additionally, the Company evaluated the impact of the sale of its southern Illinois franchise in August of 2015 and concluded that no impairment charge was necessary. See Note 3 to the consolidated financial statements for detail regarding goodwill associated with this divestiture.

During the six months ended June 30, 2016, Old National recorded $111.9 million of goodwill associated with the acquisition of Anchor. Also during the six months ended June 30, 2016, Old National eliminated $41.0 million of goodwill associated with the sale of its insurance operations. See Note 3 to the consolidated financial statements for detail regarding goodwill recorded in 2015 associated with prior acquisitions.

The gross carrying amount and accumulated amortization of other intangible assets at June 30, 2016 and December 31, 2015 were as follows:

	Gross		Accumulated			Net
	Carrying		Amortization			Carrying
(dollars in thousands)	Amount		and Impairment			Amount
June 30, 2016
Amortized intangible assets:
Core deposit	$	81,663	$	(47,839	)	$	33,824
Customer trust relationships		16,547		(6,769	)		9,778
Customer loan relationships		4,413		(3,778	)		635
Total intangible assets	$	102,623	$	(58,386	)	$	44,237
December 31, 2015
Amortized intangible assets:
Core deposit	$	60,103	$	(43,982	)	$	16,121
Customer business relationships		30,787		(23,341	)		7,446
Customer trust relationships		16,547		(5,286	)		11,261
Customer loan relationships		4,413		(3,933	)		480
Total intangible assets	$	111,850	$	(76,542	)	$	35,308

Other intangible assets consist of core deposit intangibles and customer relationship intangibles and are being amortized primarily on an accelerated basis over their estimated useful lives, generally over a period of 5 to 15 years. During the first quarter of 2016, Old National decreased customer business relationships by $0.2 million. These adjustments related to final contingency payments on acquired insurance books of business that occurred in prior years. During the second quarter of 2016, Old National increased core deposit intangibles by $21.6 million related to the Anchor acquisition. Also during the second quarter of 2016, Old National eliminated $6.5 million of customer business relationships intangibles associated with the sale of its insurance operations.

Old National reviews other intangible assets for possible impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. No impairment charges were recorded during the six months ended June 30, 2016 or 2015. Total amortization expense associated with intangible assets was $6.0 million for the six months ended June 30, 2016 and $6.1 million for the six months ended June 30, 2015.

Estimated amortization expense for future years is as follows:

(dollars in thousands)
2016 remaining	$	6,560
2017		11,015
2018		8,687
2019		6,737
2020		4,883
Thereafter		6,355
Total	$	44,237

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Loan Servicing Rights

6 Months Ended

Jun. 30, 2016

Text Block [Abstract]

Loan Servicing Rights

NOTE 12 – LOAN SERVICING RIGHTS

Loan servicing rights were assumed in Old National’s acquisitions of United and LSB in 2014, Founders in 2015, and Anchor in May, 2016.

At June 30, 2016, loan servicing rights derived from loans sold with servicing retained totaled $25.8 million and were included in other assets in the consolidated balance sheet, compared to $10.5 million at December 31, 2015. Loans serviced for others are not reported as assets. The principal balance of loans serviced for others was $3.483 billion at June 30, 2016, compared to $1.263 billion at December 31, 2015. Approximately 99% of the loans serviced for others at June 30, 2016 were residential mortgage loans. Custodial escrow balances maintained in connection with serviced loans were $32.7 million at June 30, 2016 and $3.0 million at December 31, 2015.

The following table summarizes the carrying values and activity related to loan servicing rights and the related valuation allowance for the six months ended June 30, 2016 and 2015:

(dollars in thousands)	2016			2015
Balance at January 1,	$	10,502		$	9,584
Additions (1)		17,126			1,754
Amortization		(1,866	)		(1,271	)
Balance before valuation allowance at June 30,		25,762			10,067
Valuation allowance:
Balance at January 1,		(34	)		(50	)
(Additions)/recoveries		28			10
Balance at June 30,		(6	)		(40	)
Loan servicing rights, net	$	25,756		$	10,027

(1) In May 2016, the Company assumed $15.3 million of loan servicing rights related to the Anchor acquisition.

At June 30, 2016, the fair value of servicing rights was $28.4 million, which was determined using a discount rate of 8.07% and a weighted average prepayment speed of 210% PSA. At December 31, 2015, the fair value of servicing rights was $11.3 million, which was determined using a discount rate of 11% and a weighted average prepayment speed of 166% PSA.

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Short-Term Borrowings

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Short-Term Borrowings

NOTE 13 – SHORT-TERM BORROWINGS

The following table presents the distribution of Old National’s short-term borrowings and related weighted-average interest rates as of June 30, 2016:

	Federal			Repurchase			Financial
	Funds			Agreements /			Exchange			Revolving
(dollars in thousands)	Purchased			Sweeps			Borrowings (1)			Loan			Total
2016
Outstanding at June 30, 2016	$	263,536		$	304,123		$	—		$	—		$	567,659
Average amount outstanding		141,664			332,441			5,083			8,242			487,430
Maximum amount outstanding at any month-end		263,536			346,695			25,000			50,000
Weighted average interest rate:
During the six months ended June 30, 2016		0.46	%		0.08	%		0.71	%		3.00	%		0.24	%
At June 30, 2016		0.42			0.07			—			—			0.23

(1) In 2015, the Company joined the American Financial Exchange, which is an overnight source of borrowings. No collateral was pledged on these funds.

The following table presents the contractual maturity of our secured borrowings and class of collateral pledged:

	At June 30, 2016
	Remaining Contractual Maturity of the Agreements
	Overnight and		Up to				Greater Than
(dollars in thousands)	Continuous		30 Days		30-90 Days		90 days		Total
Repurchase Agreements:
U.S. Treasury and agency securities	$	304,123	$	—	$	—	$	—	$	304,123
Total	$	304,123	$	—	$	—	$	—	$	304,123

The fair value of securities pledged to secure repurchase agreements may decline. The Company has pledged securities valued at 111% of the gross outstanding balance of repurchase agreements at June 30, 2016 to manage this risk.

REVOLVING LOAN

In May 2016, the Company entered into a $75.0 million revolving line of credit agreement. The 364 day revolving loan has a variable rate of interest priced at the one-month LIBOR plus 200 basis points. As of June 30, 2016, no amount was outstanding on the loan.

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Financing Activities

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Financing Activities

NOTE 14 - FINANCING ACTIVITIES

The following table summarizes Old National’s and its subsidiaries’ other borrowings at June 30, 2016 and December 31, 2015:

	June 30,			December 31,
(dollars in thousands)	2016			2015
Old National Bancorp:
Senior unsecured bank notes (fixed rate 4.125%) maturing August 2024	$	175,000		$	175,000
Unamortized debt issuance costs related to Senior unsecured bank notes		(1,260	)		(1,338	)
Junior subordinated debentures (variable rates of 1.99% to 2.41%) maturing March 2035 to June 2037		45,000			45,000
ASC 815 fair value hedge and other basis adjustments		(4,210	)		(4,442	)
Old National Bank:
Securities sold under agreements to repurchase (fixed rates 2.47% to 2.50%) maturing January 2017 to January 2018		50,000			50,000
Federal Home Loan Bank advances (fixed rates 0.44% to 6.76% and variable rates 0.74% to 0.78%) maturing July 2016 to January 2025		1,097,212			1,022,766
Capital lease obligation		4,126			4,036
ASC 815 fair value hedge and other basis adjustments		2,028			725
Total other borrowings	$	1,367,896		$	1,291,747

Contractual maturities of other borrowings at June 30, 2016 were as follows:

(dollars in thousands)
Due in 2016	$	617,384
Due in 2017		95,806
Due in 2018		195,224
Due in 2019		2,517
Due in 2020		50,091
Thereafter		410,316
ASC 815 fair value hedge, unamortized debt issuance costs, and other basis adjustments		(3,442	)
Total	$	1,367,896

SENIOR NOTES

In August 2014, Old National issued $175.0 million of senior unsecured notes with a 4.125% interest rate. These notes pay interest on February 15 and August 15. The notes mature on August 15, 2024.

FEDERAL HOME LOAN BANK

Federal Home Loan Bank (“FHLB”) advances had weighted-average rates of 0.83% at June 30, 2016 and 0.72% at December 31, 2015. These borrowings are collateralized by investment securities and residential real estate loans up to 140% of outstanding debt.

JUNIOR SUBORDINATED DEBENTURES

Junior subordinated debentures related to trust preferred securities are classified in “other borrowings”. These securities qualify as Tier 1 capital for regulatory purposes, subject to certain limitations.

In 2007, Old National acquired St. Joseph Capital Trust II in conjunction with its acquisition of St. Joseph Capital Corporation. Old National guarantees the payment of distributions on the trust preferred securities issued by St. Joseph Capital Trust II. St. Joseph Capital Trust II issued $5.0 million in preferred securities in March 2005. The preferred securities have a variable rate of interest priced at the three-month London Interbank Offered Rate (“LIBOR”) plus 175 basis points, payable quarterly and maturing on March 17, 2035. Proceeds from the issuance of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by St. Joseph Capital Trust II.

In 2011, Old National acquired Monroe Bancorp Capital Trust I and Monroe Bancorp Statutory Trust II in conjunction with its acquisition of Monroe Bancorp. Old National guarantees the payment of distributions on the trust preferred securities issued by Monroe Bancorp Capital Trust I and Monroe Bancorp Statutory Trust II. Monroe Bancorp Capital Trust I issued $3.0 million in preferred securities in July 2006. The preferred securities have a variable rate of interest priced at the three-month LIBOR plus 160 basis points. Proceeds from the issuance of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by Monroe Bancorp Capital Trust I. Monroe Bancorp Statutory Trust II issued $5.0 million in preferred securities in March 2007. The preferred securities have a variable rate of interest priced at the three-month LIBOR plus 160 basis points. Proceeds from the issuance of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by Monroe Bancorp Statutory Trust II.

In 2012, Old National acquired Home Federal Statutory Trust I in conjunction with its acquisition of Indiana Community Bancorp. Old National guarantees the payment of distributions on the trust preferred securities issued by Home Federal Statutory Trust I. Home Federal Statutory Trust I issued $15.0 million in preferred securities in September 2006. The preferred securities carry a variable rate of interest priced at the three-month LIBOR plus 165 basis points. Proceeds from the issuance of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by Home Federal Statutory Trust I.

On April 25, 2014, Old National acquired Tower Capital Trust 2 and Tower Capital Trust 3 in conjunction with its acquisition of Tower Financial Corporation. Old National guarantees the payment of distributions on the trust preferred securities issued by Tower Capital Trust 2 and Tower Capital Trust 3. Tower Capital Trust 2 issued $8.0 million in preferred securities in December 2005. The preferred securities carry a variable rate of interest priced at the three-month LIBOR plus 134 basis points. Proceeds from the issuance of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by Tower Capital Trust 2. Tower Capital Trust 3 issued $9.0 million in preferred securities in December 2006. The preferred securities carry a variable rate of interest priced at the three-month LIBOR plus 169 basis points. Proceeds from the issuance of these securities were used to purchase junior subordinated debentures with the same financial terms as the securities issued by Tower Capital Trust 3.

Old National, at any time, may redeem the junior subordinated debentures at par and thereby cause a redemption of the trust preferred securities in whole or in part.

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase are secured borrowings. The Company pledges investment securities to secure these borrowings. The fair value of securities pledged to secure repurchase agreements may decline. The Company has pledged securities valued at 118% of the gross outstanding balance of repurchase agreements at June 30, 2016 to manage this risk.

CAPITAL LEASE OBLIGATION

On January 1, 2004, Old National entered into a long-term capital lease obligation for a branch office building in Owensboro, Kentucky, which extends for 25 years with one renewal option for 10 years. The economic substance of this lease is that Old National is financing the acquisition of the building through the lease and accordingly, the building is recorded as an asset and the lease is recorded as a liability. The fair value of the capital lease obligation was estimated using a discounted cash flow analysis based on Old National’s current incremental borrowing rate for similar types of borrowing arrangements.

At June 30, 2016, the future minimum lease payments under the capital lease were as follows:

(dollars in thousands)
2016 remaining	$	267
2017		472
2018		410
2019		430
2020		430
Thereafter		8,406
Total minimum lease payments		10,415
Less amounts representing interest		6,289
Present value of net minimum lease payments	$	4,126

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2016

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans

NOTE 15 - EMPLOYEE BENEFIT PLANS

RETIREMENT PLAN

Old National maintains a funded noncontributory defined benefit plan (the “Retirement Plan”) that was frozen as of December 31, 2005. Retirement benefits are based on years of service and compensation during the highest paid five years of employment. The freezing of the plan provides that future salary increases will not be considered. Old National’s policy is to contribute at least the minimum funding requirement determined by the plan’s actuary. Old National does not expect to contribute cash payments to the Retirement Plan in 2016.

Old National also maintains an unfunded pension restoration plan (the “Restoration Plan”) which provides benefits for eligible employees that are in excess of the limits under Section 415 of the Internal Revenue Code of 1986, as amended, that apply to the Retirement Plan. The Restoration Plan is designed to comply with the requirements of ERISA. The entire cost of the plan, which was also frozen as of December 31, 2005, is supported by contributions from the Company.

Old National contributed $19 thousand to cover benefit payments from the Restoration Plan during the six months ended June 30, 2016. Old National expects to contribute an additional $19 thousand to cover benefit payments from the Restoration Plan during the remainder of 2016.

The net periodic benefit cost and its components were as follows for the three and six months ended June 30:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(dollars in thousands)	2016			2015			2016			2015
Interest cost	$	440		$	415		$	880		$	830
Expected return on plan assets		(442	)		(511	)		(885	)		(1,023	)
Recognized actuarial loss		494			531			988			1,062
Settlement loss		235			196			441			402
Net periodic benefit cost	$	727		$	631		$	1,424		$	1,271

In March 2016, we sent to participants and beneficiaries a Notice of Intent to Terminate the Employee Retirement Plan effective May 15, 2016. The complete distribution of the trust fund during the fourth quarter of 2016 is expected to result in a pre-tax charge of $11 million to $13 million and relieve Old National of all future obligations and expense.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

NOTE 16 - STOCK-BASED COMPENSATION

At June 30, 2016, Old National had 4.9 million shares remaining available for issuance under the Company’s Amended and Restated 2008 Incentive Compensation Plan. The granting of awards to key employees is typically in the form of restricted stock awards or units.

Restricted Stock Awards

The Company granted 172 thousand time-based restricted stock awards to certain key officers and assumed 173 thousand time-based restricted stock awards in conjunction with the acquisition of Anchor during the six months ended June 30, 2016, with shares vesting over a thirty-six month period. Compensation expense is recognized on a straight-line basis over the vesting period. Shares are subject to certain restrictions and risk of forfeiture by the participants. As of June 30, 2016, unrecognized compensation expense was estimated to be $6.0 million for unvested restricted stock awards.

Old National recorded expense of $0.9 million, net of tax, during the six months ended June 30, 2016, compared to $0.5 million, net of tax, during the six months ended June 30, 2015 related to the vesting of restricted stock awards.

Restricted Stock Units

The Company granted 276 thousand shares of performance based restricted stock units to certain key officers during the six months ended June 30, 2016, with shares vesting at the end of a thirty-six month period based on the achievement of certain targets. For certain awards, the level of performance could increase or decrease the percentage of shares earned. Compensation expense is recognized on a straight-line basis over the vesting period. Shares are subject to certain restrictions and risk of forfeiture by the participants. As of June 30, 2016, unrecognized compensation expense was estimated to be $4.4 million.

Old National recorded stock based compensation expense, net of tax, related to restricted stock units of $1.2 million during the six months ended June 30, 2016, compared to $0.8 million during the six months ended June 30, 2015.

Stock Options

Old National has not granted stock options since 2009. However, Old National did acquire stock options through prior year acquisitions. Old National did not record any stock based compensation expense related to these stock options during the six months ended June 30, 2016 or 2015.

Stock Appreciation Rights

Old National has never granted stock appreciation rights. However, Old National did acquire stock appreciation rights through a prior year acquisition. Old National did not record any incremental expense associated with the conversion of these stock appreciation rights during the six months ended June 30, 2016 or 2015. At June 30, 2016, 81 thousand stock appreciation rights remained outstanding.

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Income Taxes

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 17 - INCOME TAXES

Following is a summary of the major items comprising the differences in taxes from continuing operations computed at the federal statutory rate and as recorded in the consolidated statements of income for the three and six months ended June 30:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(dollars in thousands)	2016			2015			2016			2015
Provision at statutory rate of 35%	$	24,477		$	12,290		$	37,304		$	22,836
Tax-exempt income		(4,233	)		(3,930	)		(8,401	)		(7,783	)
State income taxes		2,064			520			2,647			1,796
Interim period effective rate adjustment		(37	)		314			(185	)		1,821
ONB Insurance Group, Inc. nondeductible goodwill		8,305			—			8,305			—
Other, net		236			(235	)		813			(486	)
Income tax expense	$	30,812		$	8,959		$	40,483		$	18,184
Effective tax rate		44.1	%		25.5	%		38.0	%		27.9	%

In accordance with ASC 740-270, Accounting for Interim Reporting, the provision for income taxes was recorded at June 30, 2016 and 2015 based on the current estimate of the effective annual rate.

The higher effective tax rate during the three and six months ended June 30, 2016 when compared to the three and six months ended June 30, 2015 is the result of an increase in pretax book income, primarily due to the sale of ONB Insurance Group, Inc. in May 2016, as well as additional tax expense of $8.3 million to record a deferred tax liability relating to ONB Insurance Group, Inc.’s nondeductible goodwill.

Unrecognized Tax Benefits

The Company and its subsidiaries file a consolidated U.S. federal income tax return, as well as filing various state returns. Unrecognized state income tax benefits are reported net of their related deferred federal income tax benefit.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(dollars in thousands)	2016		2015
Balance at January 1,	$	124	$	77
Additions based on tax positions related to the current year		58		27
Additions based on tax positions related to prior years		584		—
Balance at June 30,	$	766	$	104

If recognized, approximately $0.8 million of unrecognized tax benefits, net of interest, would favorably affect the effective income tax rate in future periods.

Net Deferred Tax Assets

Significant components of net deferred tax assets (liabilities) were as follows at June 30, 2016 and December 31, 2015:

	June 30,			December 31,
(dollars in thousands)	2016			2015
Deferred Tax Assets
Allowance for loan losses, net of recapture	$	17,838		$	17,125
Benefit plan accruals		19,418			18,066
AMT credit		17,152			18,378
Unrealized losses on benefit plans		3,964			4,507
Net operating loss carryforwards		66,923			2,041
Premises and equipment		7,301			12,735
Federal tax credits		35			422
Other-than-temporary impairment		3,620			3,558
Acquired loans		54,000			34,870
Lease exit obligation		2,818			2,626
Unrealized losses on available-for-sale investment securities		—			3,002
Unrealized losses on held-to-maturity investment securities		7,406			7,724
Unrealized losses on hedges		10,532			5,685
Other real estate owned		3,272			—
Other, net		2,550			4,914
Total deferred tax assets		216,829			135,653
Deferred Tax Liabilities
Accretion on investment securities		(649	)		(599	)
Other real estate owned		—			(284	)
Purchase accounting		(18,291	)		(16,615	)
FDIC indemnification asset		—			(2,565	)
Loan servicing rights		(9,674	)		(3,890	)
Unrealized losses on available-for-sale investment securities		(7,052	)		—
Other, net		(1,715	)		(1,716	)
Total deferred tax liabilities		(37,381	)		(25,669	)
Net deferred tax assets	$	179,448		$	109,984

Net deferred tax assets increased $69.5 million since December 31, 2015 primarily due to the acquisition of Anchor. Net deferred tax assets acquired from Anchor totaled $98.2 million, consisting primarily of deferred tax assets related to federal and state net operating loss carryforwards and acquired loans. Offsetting the increases in net deferred tax assets were reversals of $28.8 million since December 31, 2015, comprised primarily of pre-acquisition book and tax differences.

Through the acquisition of Anchor in the second quarter of 2016 and Lafayette Savings Bank in the fourth quarter of 2014, both former thrifts, Old National Bank’s retained earnings at June 30, 2016 include base-year bad debt reserves, created for tax purposes prior to 1988, totaling $52.8 million. Of this total, $50.9 million was acquired from Anchor, and $1.9 million was acquired from Lafayette Savings Bank. Base-year reserves are subject to recapture in the unlikely event that Old National Bank (1) makes distributions in excess of current and accumulated earnings and profits, as calculated for federal income tax purposes, (2) redeems its stock, or (3) liquidates. Old National Bank has no intention of making such a nondividend distribution. Accordingly, under current accounting principles, a related deferred income tax liability of $19.8 million has not been recognized.

No valuation allowance was recorded at June 30, 2016 or 2015 because, based on current expectations, Old National believes it will generate sufficient income in future years to realize deferred tax assets. Old National has federal net operating loss carryforwards totaling $162.9 million at June 30, 2016 and $1.3 million at December 31, 2015. This federal net operating loss was acquired from the acquisitions of IBT in 2012 and Anchor in 2016. If not used, the federal net operating loss carryforwards will begin to expire in 2027. Old National has alternative minimum tax credit carryforwards totaling $17.2 million at June 30, 2016 and $18.4 million at December 31, 2015. The alternative minimum tax credit carryforward does not expire. Old National has state net operating loss carryforwards totaling $206.5 million at June 30, 2016 and $46.3 million at December 31, 2015. If not used, the state net operating loss carryforwards will begin to expire in 2023.

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

NOTE 18 - DERIVATIVE FINANCIAL INSTRUMENTS

As part of our overall interest rate risk management, Old National uses derivative instruments, including interest rate swaps, caps and floors. The notional amount of these derivative instruments was $661.5 million at June 30, 2016 and $761.5 million at December 31, 2015. The June 30, 2016 balances consist of $36.5 million notional amount of receive-fixed, pay-variable interest rate swaps on certain of its FHLB advances and $625.0 million notional amount of pay-fixed, receive-variable interest rate swaps on certain of its FHLB advances. During the first quarter of 2016, $50.0 million notional amount of receive-fixed, pay-variable interest rate swaps on certain commercial loans was terminated resulting in an immaterial gain. During the second quarter of 2016, $100.0 million notional amount of pay-fixed, receive-variable interest rate swaps on certain of its FHLB advances matured. The December 31, 2015 balances consist of consist of $36.5 million notional amount of receive-fixed, pay-variable interest rate swaps on certain of its FHLB advances, $675.0 million notional amount of pay-fixed, receive-variable interest rate swaps on certain of its FHLB advances and $50.0 million notional amount of receive-fixed, pay-variable interest rate swaps on certain of its commercial loans. These hedges were entered into to manage interest rate risk. Derivative instruments are recognized on the balance sheet at their fair value and are not reported on a net basis.

In addition, commitments to fund certain mortgage loans (interest rate lock commitments) and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. At June 30, 2016, the notional amount of the interest rate lock commitments was $106.3 million and forward commitments were $123.6 million. At December 31, 2015, the notional amount of the interest rate lock commitments was $30.4 million and forward commitments were $33.3 million. It is our practice to enter into forward commitments for the future delivery of residential mortgage loans to third party investors when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from our commitment to fund the loans.

Old National also enters into derivative instruments for the benefit of its customers. The notional amounts of these customer derivative instruments and the offsetting counterparty derivative instruments were $569.3 million and $569.3 million, respectively, at June 30, 2016. At December 31, 2015, the notional amounts of the customer derivative instruments and the offsetting counterparty derivative instruments were $428.4 million and $428.4 million, respectively. These derivative contracts do not qualify for hedge accounting. These instruments include interest rate swaps, caps and collars. Commonly, Old National will economically hedge significant exposures related to these derivative contracts entered into for the benefit of customers by entering into offsetting contracts with approved, reputable, independent counterparties with substantially matching terms.

Credit risk arises from the possible inability of counterparties to meet the terms of their contracts. Old National’s exposure is limited to the replacement value of the contracts rather than the notional, principal or contract amounts. There are provisions in our agreements with the counterparties that allow for certain unsecured credit exposure up to an agreed threshold. Exposures in excess of the agreed thresholds are collateralized. In addition, we minimize credit risk through credit approvals, limits, and monitoring procedures.

Amounts reported in AOCI related to cash flow hedges will be reclassified to interest income or interest expense as interest payments are received or paid on the Company’s derivative instruments. During the next 12 months, the Company estimates that $0.3 million will be reclassified to interest income and $8.6 million will be reclassified to interest expense.

On the balance sheet, asset derivatives are included in other assets, and liability derivatives are included in other liabilities. The following table summarizes the fair value of derivative financial instruments utilized by Old National:

	June 30, 2016				December 31, 2015
	Asset		Liability		Asset		Liability
(dollars in thousands)	Derivatives		Derivatives		Derivatives		Derivatives
Derivatives designated as hedging instruments
Interest rate contracts	$	5,134	$	28,540	$	3,794	$	15,554
Total derivatives designated as hedging instruments	$	5,134	$	28,540	$	3,794	$	15,554
Derivatives not designated as hedging instruments
Interest rate contracts	$	28,169	$	28,371	$	11,296	$	11,414
Mortgage contracts		2,906		1,129		835		—
Total derivatives not designated as hedging instruments	$	31,075	$	29,500	$	12,131	$	11,414
Total	$	36,209	$	58,040	$	15,925	$	26,968

The effect of derivative instruments on the consolidated statements of income for the three and six months ended June 30, 2016 and 2015 are as follows:

		Three Months Ended June 30,
(dollars in thousands)		2016			2015
Derivatives in Fair Value Hedging Relationships	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (1)	Interest income / (expense)	$	(1,310	)	$	(212	)
Interest rate contracts (2)	Other income / (expense)		50			23
Total		$	(1,260	)	$	(189	)
Derivatives in Cash Flow Hedging Relationships	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (1)	Interest income / (expense)	$	81		$	167
Total		$	81		$	167
Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (3)	Other income / (expense)	$	(81	)	$	19
Mortgage contracts	Mortgage banking revenue		(35	)		362
Total		$	(116	)	$	381
		Six Months Ended June 30,
(dollars in thousands)		2016			2015
Derivatives in Fair Value Hedging Relationships	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (1)	Interest income / (expense)	$	(2,352	)	$	(189	)
Interest rate contracts (2)	Other income / (expense)		101			82
Total		$	(2,251	)	$	(107	)
Derivatives in Cash Flow Hedging Relationships	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (1)	Interest income / (expense)	$	167		$	333
Total		$	167		$	333
Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (3)	Other income / (expense)	$	(84	)	$	19
Mortgage contracts	Mortgage banking revenue		425			1,150
Total		$	341		$	1,169

(1) Amounts represent the net interest payments as stated in the contractual agreements.

(2) Amounts represent ineffectiveness on derivatives designated as fair value hedges.

(3) Includes the valuation differences between the customer and offsetting counterparty swaps.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 19 - COMMITMENTS AND CONTINGENCIES

LITIGATION

In the normal course of business, Old National Bancorp and its subsidiaries have been named, from time to time, as defendants in various legal actions. Certain of the actual or threatened legal actions may include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages.

Old National contests liability and/or the amount of damages as appropriate in each pending matter. In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases where claimants seek substantial or indeterminate damages or where investigations and proceedings are in the early stages, Old National cannot predict with certainty the loss or range of loss, if any, related to such matters, how or if such matters will be resolved, when they will ultimately be resolved, or what the eventual settlement, or other relief, if any, might be. Subject to the foregoing, Old National believes, based on current knowledge and after consultation with counsel, that the outcome of such pending matters will not have a material adverse effect on the consolidated financial condition of Old National, although the outcome of such matters could be material to Old National’s operating results and cash flows for a particular future period, depending on, among other things, the level of Old National’s revenues or income for such period. Old National will accrue for a loss contingency if (1) it is probable that a future event will occur and confirm the loss and (2) the amount of the loss can be reasonably estimated.

In November 2010, Old National was named in a class action lawsuit in Vanderburgh Circuit Court challenging our checking account practices associated with the assessment of overdraft fees. On April 5, 2016, Old National entered into a settlement agreement with plaintiffs providing for a cash payment from Old National in the amount of $4,750,000 in exchange for a full release and dismissal of plaintiffs’ complaint. By entering into the settlement agreement, Old National did not admit any liability with respect to the lawsuit. The settlement amount was accrued for in the December 31, 2015 financial statements.

On April 14, 2016, the Circuit Court preliminarily approved the settlement agreement, entered an order authorizing notice of the settlement to the class participants. On June 13, 2016, the Circuit Court entered its Final Judgment and Final Order approving the class action settlement and dismissed, in its entirety, the class action lawsuit against Old National with prejudice. No other material litigation is currently pending.

LEASES

Old National rents certain premises and equipment under operating leases, which expire at various dates. Many of these leases require the payment of property taxes, insurance premiums, maintenance, and other costs. In some cases, rentals are subject to increase in relation to a cost-of-living index. The leases have original terms ranging from less than one year to twenty-four years, and Old National has the right, at its option, to extend the terms of certain leases for four additional successive terms of five years. Old National does not have any material sub-lease agreements.

Old National had deferred gains remaining associated with prior sale leaseback transactions totaling $35.8 million as of June 30, 2016 and $40.7 million as of December 31, 2015. The gains are being recognized over the remaining term of the leases. The leases had original terms ranging from five to twenty-four years. New accounting guidance has been issued for leases, and it is probable that this accounting treatment will change in the future.

CREDIT-RELATED FINANCIAL INSTRUMENTS

In the normal course of business, Old National’s banking affiliates have entered into various agreements to extend credit, including loan commitments of $2.251 billion and standby letters of credit of $61.6 million at June 30, 2016. At June 30, 2016, approximately $2.136 billion of the loan commitments had fixed rates and $115.8 million had floating rates, with the floating interest rates ranging from 0% to 25%. At December 31, 2015, loan commitments totaled $1.746 billion and standby letters of credit totaled $62.6 million. These commitments are not reflected in the consolidated financial statements. The allowance for unfunded loan commitments totaled $4.4 million at June 30, 2016 and $3.6 million at December 31, 2015.

Old National had credit extensions with various unaffiliated banks related to letter of credit commitments issued on behalf of Old National’s clients totaling $13.8 million at June 30, 2016 and $14.5 million at December 31, 2015. Old National provided collateral to the unaffiliated banks to secure credit extensions totaling $12.9 million at June 30, 2016 and $13.6 million December 31, 2015. Old National did not provide collateral for the remaining credit extensions.

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Financial Guarantees

6 Months Ended

Jun. 30, 2016

Guarantees [Abstract]

Financial Guarantees

NOTE 20 - FINANCIAL GUARANTEES

Old National holds instruments, in the normal course of business with clients, that are considered financial guarantees in accordance with FASB ASC 460-10 (FIN 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others), which requires the Company to record the instruments at fair value. Standby letters of credit guarantees are issued in connection with agreements made by clients to counterparties. Standby letters of credit are contingent upon failure of the client to perform the terms of the underlying contract. Credit risk associated with standby letters of credit is essentially the same as that associated with extending loans to clients and is subject to normal credit policies. The term of these standby letters of credit is typically one year or less. At June 30, 2016, the notional amount of standby letters of credit was $61.6 million, which represented the maximum amount of future funding requirements, and the carrying value was $0.4 million. At December 31, 2015, the notional amount of standby letters of credit was $62.6 million, which represented the maximum amount of future funding requirements, and the carrying value was $0.4 million.

Old National entered into a risk participation in an interest rate swap during the second quarter of 2007, which had a notional amount of $7.2 million at June 30, 2016. Old National entered into an additional risk participation in an interest rate swap during the third quarter of 2014, which had a notional amount of $10.9 million at June 30, 2016.

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Segment Information

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Information

NOTE 21 – SEGMENT INFORMATION

During the second quarter of 2016, Old National sold its insurance operations, ONB Insurance Group, Inc. During the year ended December 31, 2015, the insurance segment’s net income was $2.1 million and its assets totaled $61.8 million at December 31, 2015. In conjunction with the divestiture, Old National re-evaluated its business segments.

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Old National Bank, Old National’s bank subsidiary, is the only significant subsidiary upon which management makes decisions regarding how to allocate resources and assess performance. Each of the branches of Old National Bank provide a group of similar community banking services, including such products and services as commercial, real estate and consumer loans, time deposits, checking and savings accounts, cash management, brokerage, trust, and investment advisory services. The individual bank branches located throughout our Midwest footprint have similar operating and economic characteristics. While the chief decision maker monitors the revenue streams of the various products, services, and regional locations, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the community banking services and branch locations are considered by management to be aggregated into one reportable operating segment, community banking.

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Fair Value

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value

NOTE 22 – FAIR VALUE

FASB ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair values:

• Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

• Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Old National used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Investment securities: The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Discounted cash flows are calculated using swap and LIBOR curves plus spreads that adjust for loss severities, volatility, credit risk, and optionality. During times when trading is more liquid, broker quotes are used (if available) to validate the model. Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.

Residential loans held for sale: The fair value of loans held for sale is determined using quoted prices for a similar asset, adjusted for specific attributes of that loan (Level 2).

Derivative financial instruments: The fair values of derivative financial instruments are based on derivative valuation models using market data inputs as of the valuation date (Level 2).

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which we have elected the fair value option, are summarized below:

			Fair Value Measurements at June 30, 2016 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Trading securities	$	4,838	$	4,838	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury		12,269		12,269		—		—
U.S. government-sponsored entities and agencies		540,775		—		540,775		—
Mortgage-backed securities - Agency		1,336,605		—		1,336,605		—
States and political subdivisions		417,163		—		417,163		—
Pooled trust preferred securities		6,720		—		—		6,720
Other securities		335,369		32,139		303,230		—
Residential loans held for sale		44,422		—		44,422		—
Derivative assets		36,209		—		36,209		—
Financial Liabilities
Derivative liabilities		58,040		—		58,040		—
			Fair Value Measurements at December 31, 2015 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Trading securities	$	3,941	$	3,941	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury		12,150		12,150		—		—
U.S. government-sponsored entities and agencies		613,550		—		613,550		—
Mortgage-backed securities - Agency		1,066,361		—		1,066,361		—
States and political subdivisions		387,296		—		387,296		—
Pooled trust preferred securities		7,900		—		—		7,900
Other securities		330,964		31,443		299,521		—
Residential loans held for sale		13,810		—		13,810		—
Derivative assets		15,925		—		15,925		—
Financial Liabilities
Derivative liabilities		26,968		—		26,968		—

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2016:

(dollars in thousands)	Pooled Trust Preferred Securities Available-for-Sale
Balance at January 1, 2016	$	7,900
Accretion of discount		9
Sales/payments received		(270	)
Decrease in fair value of securities		(919	)
Balance at June 30, 2016	$	6,720

The accretion of discounts on securities totaling $9 thousand for the six months ended June 30, 2016 is included in interest income. The decrease in fair value is reflected in the balance sheet as a decrease in the fair value of investment securities available-for-sale, a decrease in accumulated other comprehensive income (included in shareholders’ equity), and an increase in other assets related to the tax impact.

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2015:

(dollars in thousands)	Pooled Trust Preferred Securities Available-for-Sale			State and Political Subdivisions
Balance at January 1, 2015	$	6,607		$	325
Accretion of discount		9			—
Sales/payments received		(514	)		—
Matured securities		—			(325	)
Increase in fair value of securities		994			—
Balance at June 30, 2015	$	7,096		$	—

The accretion of discounts on securities totaling $9 thousand for the six months ended June 30, 2015 is included in interest income. The increase in fair value is reflected in the balance sheet as an increase in the fair value of investment securities available-for-sale, an increase in accumulated other comprehensive income (included in shareholders’ equity), and a decrease in other assets related to the tax impact.

The tables below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy as of June 30, 2016 and December 31, 2015:

	Fair Value at		Valuation	Unobservable	Range (Weighted
(dollars in thousands)	June 30, 2016		Techniques	Input	Average)
Pooled trust preferred securities	$	6,720	Discounted cash flow	Constant prepayment rate (a)	0.00%
				Additional asset defaults (b)	3.3% - 4.4%(4.1%)
				Expected asset recoveries (c)	0.0% - 9.8%(2.7%)

(a) Assuming no prepayments.

(b) Each currently performing pool asset is assigned a default probability based on the banking environment, which is adjusted for specific issuer evaluation, of 0%, 50%, or 100%.

(c) Each currently defaulted pool asset is assigned a recovery probability based on specific issuer evaluation of 0%, 25%, or 100%.

	Fair Value at		Valuation	Unobservable	Range (Weighted
(dollars in thousands)	Dec. 31, 2015		Techniques	Input	Average)
Pooled trust preferred securities	$	7,900	Discounted cash flow	Constant prepayment rate (a)	0.00%
				Additional asset defaults (b)	4.1% - 11.5%(8.1%)
				Expected asset recoveries (c)	0.0% - 11.5%(3.1%)

(a) Assuming no prepayments.

(b) Each currently performing pool asset is assigned a default probability based on the banking environment, which is adjusted for specific issuer evaluation, of 0%, 50%, or 100%.

(c) Each currently defaulted pool asset is assigned a recovery probability based on specific issuer evaluation of 0%, 25%, or 100%.

Significant changes in any of the unobservable inputs used in the fair value measurement in isolation would result in a significant change to the fair value measurement. The pooled trust preferred securities Old National owns are subordinate note classes that rely on an ongoing cash flow stream to support their values. The senior note classes receive the benefit of prepayments to the detriment of subordinate note classes since the ongoing interest cash flow stream is reduced by the early redemption. Generally, a change in prepayment rates or additional pool asset defaults has an impact that is directionally opposite from a change in the expected recovery of a defaulted pool asset.

Assets measured at fair value on a non-recurring basis at June 30, 2016 are summarized below:

			Fair Value Measurements at June 30, 2016 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Impaired Loans
Commercial loans	$	11,218	$	—	$	—	$	11,218
Commercial real estate loans		15,064		—		—		15,064
Foreclosed Assets
Commercial real estate		1,263		—		—		1,263
Residential		296		—		—		296

Impaired commercial and commercial real estate loans that are deemed collateral dependent are valued based on the fair value of the underlying collateral. These estimates are based on the most recently available appraisals with certain adjustments made based on the type of property, age of appraisal, current status of the property, and other related factors to estimate the current value of the collateral. These impaired commercial and commercial real estate loans had a principal amount of $37.7 million, with a valuation allowance of $11.4 million at June 30, 2016. Old National recorded provision expense associated with these loans totaling $1.5 million for the three months ended June 30, 2016 and $3.7 million for the six months ended June 30, 2016. Old National recorded provision expense associated with impaired commercial and commercial real estate loans that were deemed collateral dependent totaling $2.8 million for the three months ended June 30, 2015 and $7.6 million for the six months ended June 30, 2015.

Other real estate owned and other repossessed property is measured at fair value less costs to sell and had a net carrying amount of $1.6 million at June 30, 2016. The estimates of fair value are based on the most recently available appraisals with certain adjustments made based on the type of property, age of appraisal, current status of the property, and other related factors to estimate the current value of the collateral. There were write-downs of other real estate owned of $1.8 million for the three months ended June 30, 2016 and $2.2 for the six months ended June 30, 2016. There were write-downs of other real estate owned of $0.4 million for the three months ended June 30, 2015 and $1.5 for the six months ended June 30, 2015.

Assets measured at fair value on a non-recurring basis at December 31, 2015 are summarized below:

			Fair Value Measurements at December 31, 2015 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Impaired Loans
Commercial loans	$	13,332	$	—	$	—	$	13,332
Commercial real estate loans		11,857		—		—		11,857
Foreclosed Assets
Commercial real estate		2,526		—		—		2,526
Residential		203		—		—		203

As of December 31, 2015, impaired commercial and commercial real estate loans had a principal amount of $36.8 million, with a valuation allowance of $11.5 million.

Other real estate owned and other repossessed property is measured at fair value less costs to sell and had a net carrying amount of $2.7 million at December 31, 2015.

The tables below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy:

	Fair Value at		Valuation	Unobservable	Range (Weighted
(dollars in thousands)	June 30, 2016		Techniques	Input	Average)
Collateral Dependent Impaired Loans
Commercial loans	$	11,218	Fair value of collateral	Discount for type of property, age of appraisal, and current status		0% - 98% (47%)
Commercial real estate loans		15,064	Fair value of collateral	Discount for type of property, age of appraisal and current status		10% - 51% (35%)
Foreclosed Assets
Commercial real estate		1,263	Fair value of collateral	Discount for type of property, age of appraisal, and current status		0% - 58% (23%)
Residential		296	Fair value of collateral	Discount for type of property, age of appraisal, and current status		7% - 47% (31%)
	Fair Value at		Valuation	Unobservable	Range (Weighted
(dollars in thousands)	Dec. 31, 2015		Techniques	Input	Average)
Collateral Dependent Impaired Loans
Commercial loans	$	13,332	Fair value of collateral	Discount for type of property, age of appraisal, and current status		0% - 86% (28%)
Commercial real estate loans		11,857	Fair value of collateral	Discount for type of property, age of appraisal, and current status		0% - 61% (33%)
Foreclosed Assets
Commercial real estate		2,526	Fair value of collateral	Discount for type of property, age of appraisal, and current status		3% - 80% (26%)
Residential		203	Fair value of collateral	Discount for type of property, age of appraisal, and current status		7% - 53% (29%)

Financial instruments recorded using fair value option

Under FASB ASC 825-10, we may elect to report most financial instruments and certain other items at fair value on an instrument-by instrument basis with changes in fair value reported in net income. After the initial adoption, the election is made at the acquisition of an eligible financial asset, financial liability or firm commitment or when certain specified reconsideration events occur. The fair value election may not be revoked once an election is made.

We have elected the fair value option for residential loans held for sale. For these loans, interest income is recorded in the consolidated statements of income based on the contractual amount of interest income earned on the financial assets (except any that are on nonaccrual status). None of these loans are 90 days or more past due, nor are any on nonaccrual status. Included in the income statement is interest income for loans held for sale totaling $26 thousand for the three months ended June 30, 2016 and $48 thousand for the six months ended June 30, 2016. Included in the income statement is interest income for loans held for sale totaling $45 thousand for the three months ended June 30, 2015 and $84 thousand for the six months ended June 30, 2015.

Residential loans held for sale

Old National has elected the fair value option for newly originated conforming fixed-rate and adjustable-rate first mortgage loans held for sale. These loans are intended for sale and are hedged with derivative instruments. Old National has elected the fair value option to mitigate accounting mismatches in cases where hedge accounting is complex and to achieve operational simplification. The fair value option was not elected for loans held for investment.

The difference between the aggregate fair value and the aggregate remaining principal balance for loans for which the fair value option has been elected as of June 30, 2016 and December 31, 2015 is as follows:

	Aggregate				Contractual
(dollars in thousands)	Fair Value		Difference		Principal
June 30, 2016
Residential loans held for sale	$	44,422	$	1,453	$	42,969
December 31, 2015
Residential loans held for sale	$	13,810	$	236	$	13,574

Accrued interest at period end is included in the fair value of the instruments.

The following table presents the amount of gains and losses from fair value changes included in income before income taxes for financial assets carried at fair value for the three and six months ended June 30:

(dollars in thousands)	Other Gains and (Losses)			Interest Income		Interest (Expense)		Total Changes in Fair Values Included in Current Period Earnings
Three months ended June 30, 2016
Residential loans held for sale	$	846		$	1	$	—	$	847
Three months ended June 30, 2015
Residential loans held for sale	$	(430	)	$	1	$	—	$	(429	)
Six months ended June 30, 2016
Residential loans held for sale	$	1,218		$	—	$	—	$	1,218
Six months ended June 30, 2015
Residential loans held for sale	$	(213	)	$	1	$	—	$	(212	)

The carrying amounts and estimated fair values of financial instruments, not previously presented in this note, at June 30, 2016 and December 31, 2015 are as follows:

			Fair Value Measurements at June 30, 2016 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash, due from banks, federal funds sold, and money market investments	$	267,920	$	267,920	$	—	$	—
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies		141,220		—		143,148		—
Mortgage-backed securities - Agency		13,200		—		13,723		—
State and political subdivisions		711,537		—		782,984		—
Federal Home Loan Bank/Federal Reserve Bank stock		90,742		N/A		N/A		N/A
Loans, net:
Commercial		1,869,544		—		—		1,978,864
Commercial real estate		2,925,317		—		—		3,215,841
Residential real estate		2,098,311		—		—		2,354,067
Consumer credit		1,885,182		—		—		2,062,010
Accrued interest receivable		79,536		29		23,155		56,352
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits	$	2,883,917	$	2,883,917	$	—	$	—
NOW, savings, and money market deposits		6,088,664		6,088,664		—		—
Time deposits		1,479,021		—		1,484,973		—
Short-term borrowings:
Federal funds purchased		263,536		263,536		—		—
Repurchase agreements		304,123		304,123		—		—
Other borrowings:
Senior unsecured bank notes		173,740		—		186,383		—
Junior subordinated debentures		40,790		—		32,984		—
Repurchase agreements		50,000		—		51,203		—
Federal Home Loan Bank advances		1,099,240		—		—		1,110,405
Capital lease obligation		4,126		—		4,963		—
Accrued interest payable		6		—		6		—
Standby letters of credit		361		—		—		361
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	4,507

N/A = not applicable

			Fair Value Measurements at December 31, 2015 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash, due from banks, federal funds sold, and money market investments	$	219,818	$	219,818	$	—	$	—
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies		142,864		—		145,763		—
Mortgage-backed securities - Agency		16,042		—		16,604		—
State and political subdivisions		713,205		—		767,050		—
Federal Home Loan Bank/Federal Reserve Bank stock		86,146		N/A		N/A		N/A
Loans, net (including covered loans):
Commercial		1,788,593		—		—		1,829,824
Commercial real estate		1,852,979		—		—		1,946,163
Residential real estate		1,659,284		—		—		1,745,248
Consumer credit		1,595,316		—		—		1,587,879
FDIC indemnification asset		9,030		—		—		5,700
Accrued interest receivable		69,098		29		22,821		46,248
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits	$	2,488,855	$	2,488,855	$	—	$	—
NOW, savings, and money market deposits		4,911,938		4,911,938		—		—
Time deposits		1,000,067		—		998,878		—
Short-term borrowings:
Federal funds purchased		241,090		241,090		—		—
Repurchase agreements		337,409		337,409		—		—
Other short-term borrowings		50,000		50,000		—		—
Other borrowings:
Senior unsecured bank notes		173,662		—		162,445		—
Junior subordinated debentures		40,558		—		33,318		—
Repurchase agreements		50,000		—		51,370		—
Federal Home Loan Bank advances		1,023,491		—		—		1,029,779
Capital lease obligation		4,036		—		5,375		—
Accrued interest payable		4,859		—		4,859		—
Standby letters of credit		429		—		—		429
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	2,364

N/A = not applicable

The following methods and assumptions were used to estimate the fair value of each type of financial instrument.

Cash, due from banks, federal funds sold and resell agreements, and money market investments: For these instruments, the carrying amounts approximate fair value (Level 1).

Investment securities: Fair values for investment securities held-to-maturity are based on quoted market prices, if available. For securities where quoted prices are not available, fair values are estimated based on market prices of similar securities (Level 2).

Federal Home Loan Bank and Federal Reserve Bank stock: Old National Bank is a member of the FHLB and the Federal Reserve System. The carrying value is our basis because it is not practical to determine the fair value due to restrictions placed on transferability.

Loans: The fair value of loans is estimated by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities (Level 3). The method utilized to estimate the fair value of loans does not necessarily represent an exit price.

Covered loans: Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting current market rates for new originations of comparable loans adjusted for the risk inherent in the cash flow estimates. Loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques (Level 3).

FDIC indemnification asset: The loss sharing asset was measured separately from the related covered assets as it was not contractually embedded in the assets and was not transferable with the assets should we have chosen to dispose of the assets. Fair value was originally estimated using projected cash flows related to the loss sharing agreement based on the expected reimbursements for losses and the applicable loss sharing percentage and these projected cash flows were updated with the cash flow estimates on covered assets. These cash flows were discounted to reflect the uncertainty of the timing and receipt of the loss sharing reimbursement from the FDIC (Level 3).

Accrued interest receivable and payable: The carrying amount approximates fair value and is aligned with the underlying assets or liabilities (Level 1, Level 2 or Level 3).

Deposits: The fair value of noninterest-bearing demand deposits and savings, NOW, and money market deposits is the amount payable as of the reporting date (Level 1). The fair value of fixed-maturity certificates of deposit is estimated using rates currently offered for deposits with similar remaining maturities (Level 2).

Short-term borrowings: Federal funds purchased and other short-term borrowings generally have an original term to maturity of 30 days or less and, therefore, their carrying amount is a reasonable estimate of fair value (Level 1). The fair value of securities sold under agreements to repurchase is determined using end of day market prices (Level 1).

Other borrowings: The fair value of medium-term notes, subordinated debt, and senior bank notes is determined using market quotes (Level 2). The fair value of FHLB advances is determined using calculated prices for new FHLB advances with similar risk characteristics (Level 3). The fair value of other debt is determined using comparable security market prices or dealer quotes (Level 2).

Standby letters of credit: Fair values for standby letters of credit are based on fees currently charged to enter into similar agreements. The fair value for standby letters of credit was recorded in “Accrued expenses and other liabilities” on the consolidated balance sheet in accordance with FASB ASC 460-10 (FIN 45) (Level 3).

Off-balance sheet financial instruments: Fair values for off-balance sheet credit-related financial instruments are based on fees currently charged to enter into similar agreements (Level 3). For further information regarding the amounts of these financial instruments, see Notes 19 and 20.

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Acquisition and Divestiture Activity (Tables)

6 Months Ended

Jun. 30, 2016

Summary of Unaudited Pro-forma Information

The unaudited pro-forma information below for the periods ended June 30, 2016 and 2015 gives effect to the Anchor acquisition as if it had occurred on January 1, 2015. The pro-forma financial information is not necessarily indicative of the results of operations if the acquisition had been effective as of this date.

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2016		2015		2016		2015
Revenue (1)	$	203,355	$	174,238	$	370,352	$	346,322
Income before income taxes	$	82,343	$	32,437	$	135,958	$	67,354

(1) Net interest income plus noninterest income.

Founders Financial Corporation [Member]

Schedule of Purchase Price Allocation

A summary of the final purchase price allocation is as follows (in thousands):

Cash and cash equivalents	$	3,978
Investment securities		75,383
Federal Home Loan Bank stock		1,810
Loans held for sale		3,473
Loans		339,569
Premises and equipment		3,604
Accrued interest receivable		1,260
Other real estate owned		674
Company-owned life insurance		8,297
Other assets		8,804
Deposits		(376,656	)
Other borrowings		(39,380	)
Accrued expenses and other liabilities		(1,307	)
Net tangible assets acquired		29,509
Definite-lived intangible assets acquired		5,515
Loan servicing rights		664
Goodwill		56,014
Purchase price	$	91,702

Schedule of Components of Estimated Fair Value of Intangible Assets

The components of the estimated fair value of the acquired identifiable intangible assets are in the table below.  

	Estimated Fair Value (in millions)		Estimated Useful Lives (Years)
Core deposit intangible	$	2.9		7
Trust customer relationship intangible	$	2.6		12

Summary of Acquired Loan Data

Acquired loan data for Founders can be found in the table below:

(in thousands)	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
Acquired receivables subject to ASC 310-30	$	6,607	$	11,103	$	2,684
Acquired receivables not subject to ASC 310-30	$	332,962	$	439,031	$	61,113

Anchor BanCorp Wisconsin Inc [Member]

Schedule of Purchase Price Allocation

Based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on assumptions that are subject to change, the purchase price for the Anchor acquisition is allocated as follows (in thousands):

Cash and cash equivalents	$	123,657
Investment securities		235,240
Federal Home Loan Bank stock		4,596
Loans held for sale		9,334
Loans		1,636,605
Premises and equipment		35,721
Accrued interest receivable		7,308
Other real estate owned		18,243
Company-owned life insurance		7,278
Other assets		126,013
Deposits		(1,852,713	)
Other borrowings		(3,255	)
Accrued expenses and other liabilities		(36,958	)
Net tangible assets acquired		311,069
Definite-lived intangible assets acquired		21,559
Loan servicing rights		15,274
Goodwill		111,852
Purchase price	$	459,754

Summary of Acquired Loan Data

Acquired loan data for Anchor can be found in the table below:

(in thousands)	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
Acquired receivables subject to ASC 310-30	$	20,174	$	29,544	$	6,153
Acquired receivables not subject to ASC 310-30	$	1,616,431	$	2,143,532	$	274,155

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Net Income Per Share (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Summary of Table Reconciling Basic and Diluted Net Income Per Share

The following table reconciles basic and diluted net income per share for the three and six months ended June 30, 2016 and 2015:

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars and shares in thousands, except per share data)	2016		2015		2016		2015
Basic Earnings Per Share
Net income	$	39,122	$	26,156	$	66,099	$	47,062
Weighted average common shares outstanding		127,508		115,732		120,753		117,128
Basic Earnings Per Share	$	0.31	$	0.22	$	0.55	$	0.40
Diluted Earnings Per Share
Net income	$	39,122	$	26,156	$	66,099	$	47,062
Weighted average common shares outstanding		127,508		115,732		120,753		117,128
Effect of dilutive securities:
Restricted stock (1)		425		397		480		409
Stock options (2)		40		94		40		97
Weighted average shares outstanding		127,973		116,223		121,273		117,634
Diluted Earnings Per Share	$	0.31	$	0.22	$	0.55	$	0.40

(1) 0.1 million shares of restricted stock and restricted stock units at June 30, 2016 were not included in the computation of net income per diluted share for the three months ended June 30, 2016 because the effect would be antidilutive. 0.2 million shares of restricted stock and restricted stock units at June 30, 2016 were not included in the computation of net income per diluted share for the six months ended June 30, 2016 because the effect would be antidilutive. There were no antidilutive shares excluded from the computation of net income for the three or six months ended June 30, 2015.

(2) Options to purchase 0.8 million shares and 0.9 million shares outstanding at June 30, 2016 and 2015, respectively, were not included in the computation of net income per diluted share for the three months ended June 30, 2016 and 2015, respectively, because the exercise price of these options was greater than the average market price of the common shares and, therefore, the effect would be antidilutive. Options to purchase 0.8 million shares and 0.9 million shares outstanding at June 30, 2016 and 2015, respectively, were not included in the computation of net income per diluted share for the six months ended June 30, 2016 and 2015, respectively, because the exercise price of these options was greater than the average market price of the common shares and, therefore, the effect would be antidilutive.

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Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes within each classification of accumulated other comprehensive income (loss) (“AOCI”) net of tax for the three and six months ended June 30, 2016 and 2015:

(dollars in thousands)	Unrealized Gains and Losses on Available-for-Sale Securities			Unrealized Gains and Losses  on Held-to-Maturity Securities			Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Plans			Total
Three Months Ended June 30, 2016
Balance at April 1, 2016	$	6,777		$	(14,174	)	$	(15,387	)	$	(6,801	)	$	(29,585	)
Other comprehensive income (loss) before reclassifications		8,208			—			(2,780	)		—			5,428
Amounts reclassified from accumulated other comprehensive income (loss) (a)		(1,202	)		307			983			452			540
Net other comprehensive income (loss)		7,006			307			(1,797	)		452			5,968
Balance at June 30, 2016	$	13,783		$	(13,867	)	$	(17,184	)	$	(6,349	)	$	(23,617	)
Three Months Ended June 30, 2015
Balance at April 1, 2015	$	9,079		$	(15,373	)	$	(9,309	)	$	(8,639	)	$	(24,242	)
Other comprehensive income (loss) before reclassifications		(16,704	)		—			2,205			—			(14,499	)
Amounts reclassified from accumulated other comprehensive income (loss) (a)		(326	)		283			272			450			679
Net other comprehensive income (loss)		(17,030	)		283			2,477			450			(13,820	)
Balance at June 30, 2015	$	(7,951	)	$	(15,090	)	$	(6,832	)	$	(8,189	)	$	(38,062	)
Six Months Ended June 30, 2016
Balance at January 1, 2016	$	(3,806	)	$	(14,480	)	$	(9,276	)	$	(7,235	)	$	(34,797	)
Other comprehensive income (loss) before reclassifications		19,490			—			(9,680	)		—			9,810
Amounts reclassified from accumulated other comprehensive income (loss) (a)		(1,901	)		613			1,772			886			1,370
Net other comprehensive income (loss)		17,589			613			(7,908	)		886			11,180
Balance at June 30, 2016	$	13,783		$	(13,867	)	$	(17,184	)	$	(6,349	)	$	(23,617	)
Six Months Ended June 30, 2015
Balance at January 1, 2015	$	(748	)	$	(15,776	)	$	(5,935	)	$	(9,096	)	$	(31,555	)
Other comprehensive income (loss) before reclassifications		(5,189	)		—			(1,284	)		—			(6,473	)
Amounts reclassified from accumulated other comprehensive income (loss) (a)		(2,014	)		686			387			907			(34	)
Net other comprehensive income (loss)		(7,203	)		686			(897	)		907			(6,507	)
Balance at June 30, 2015	$	(7,951	)	$	(15,090	)	$	(6,832	)	$	(8,189	)	$	(38,062	)

(a) See table below for details about reclassifications.

Reclassifications out of Accumulated Other Comprehensive Income (Loss)

The following table summarize the significant amounts reclassified out of each component of AOCI for the three months ended June 30, 2016 and 2015:

Details about AOCI Components	Amount Reclassified from AOCI						Affected Line Item in the Statement of Income
	Three Months Ended June 30,
(dollars in thousands)	2016			2015
Unrealized gains and losses on available-for-sale securities	$	1,856		$	512		Net securities gains
		(654	)		(186	)	Income tax (expense) benefit
	$	1,202		$	326		Net income
Unrealized gains and losses on held-to-maturity securities	$	(466	)	$	(430	)	Interest income/(expense)
		159			147		Income tax (expense) benefit
	$	(307	)	$	(283	)	Net income
Gains and losses on cash flow hedges Interest rate contracts	$	(1,585	)	$	(439	)	Interest income/(expense)
		602			167		Income tax (expense) benefit
	$	(983	)	$	(272	)	Net income
Amortization of defined benefit pension items
Actuarial gains/(losses)	$	(730	)	$	(725	)	Salaries and employee benefits
		278			275		Income tax (expense) benefit
	$	(452	)	$	(450	)	Net income
Total reclassifications for the period	$	(540	)	$	(679	)	Net income

The following table summarize the significant amounts reclassified out of each component of AOCI for the six months ended June 30, 2016 and 2015:

Details about AOCI Components	Amount Reclassified from AOCI						Affected Line Item in the Statement of Income
	Six Months Ended June 30,
(dollars in thousands)	2016			2015
Unrealized gains and losses on available-for-sale securities	$	2,962		$	3,195		Net securities gains
		(1,061	)		(1,181	)	Income tax (expense) benefit
	$	1,901		$	2,014		Net income
Unrealized gains and losses on held-to-maturity securities	$	(931	)	$	(767	)	Interest income/(expense)
		318			81		Income tax (expense) benefit
	$	(613	)	$	(686	)	Net income
Gains and losses on cash flow hedges Interest rate contracts	$	(2,858	)	$	(625	)	Interest income/(expense)
		1,086			238		Income tax (expense) benefit
	$	(1,772	)	$	(387	)	Net income
Amortization of defined benefit pension items
Actuarial gains/(losses)	$	(1,430	)	$	(1,463	)	Salaries and employee benefits
		544			556		Income tax (expense) benefit
	$	(886	)	$	(907	)	Net income
Total reclassifications for the period	$	(1,370	)	$	34		Net income

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Investment Securities (Tables)

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Amortized Cost and Fair Value of Available-for-Sale and Held-to-Maturity Investment Securities Portfolio

The following table summarizes the amortized cost and fair value of the available-for-sale and held-to-maturity investment securities portfolio at June 30, 2016 and December 31, 2015 and the corresponding amounts of unrealized gains and losses therein:

	Amortized		Unrealized		Unrealized			Fair
(dollars in thousands)	Cost		Gains		Losses			Value
June 30, 2016
Available-for-Sale
U.S. Treasury	$	11,963	$	306	$	—		$	12,269
U.S. government-sponsored entities and agencies		537,728		3,264		(217	)		540,775
Mortgage-backed securities - Agency		1,323,606		15,180		(2,181	)		1,336,605
States and political subdivisions		398,727		18,579		(143	)		417,163
Pooled trust preferred securities		17,059		—		(10,339	)		6,720
Other securities		338,094		3,559		(6,284	)		335,369
Total available-for-sale securities	$	2,627,177	$	40,888	$	(19,164	)	$	2,648,901
Held-to-Maturity
U.S. government-sponsored entities and agencies	$	141,220	$	1,928	$	—		$	143,148
Mortgage-backed securities - Agency		13,200		523		—			13,723
States and political subdivisions		711,537		71,447		—			782,984
Total held-to-maturity securities	$	865,957	$	73,898	$	—		$	939,855
December 31, 2015
Available-for-Sale
U.S. Treasury	$	11,968	$	190	$	(8	)	$	12,150
U.S. government-sponsored entities and agencies		615,578		1,495		(3,523	)		613,550
Mortgage-backed securities - Agency		1,065,936		10,970		(10,545	)		1,066,361
States and political subdivisions		375,671		11,960		(335	)		387,296
Pooled trust preferred securities		17,320		—		(9,420	)		7,900
Other securities		337,590		1,151		(7,777	)		330,964
Total available-for-sale securities	$	2,424,063	$	25,766	$	(31,608	)	$	2,418,221
Held-to-Maturity
U.S. government-sponsored entities and agencies	$	142,864	$	2,899	$	—		$	145,763
Mortgage-backed securities - Agency		16,042		562		—			16,604
States and political subdivisions		713,205		53,848		(3	)		767,050
Total held-to-maturity securities	$	872,111	$	57,309	$	(3	)	$	929,417

Schedule of Proceeds from Sales or Calls and Realized Gain and Losses of Available-for-Sale Investment Securities and Other Securities

Proceeds from sales or calls of available-for-sale investment securities, the resulting realized gains and realized losses, and other securities gains or losses were as follows for the three and six months ended June 30, 2016 and 2015:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(dollars in thousands)	2016			2015			2016			2015
Proceeds from sales of available-for-sale securities	$	30,801		$	26,319		$	107,451		$	196,584
Proceeds from calls of available-for-sale securities		239,998			161,408			364,309			213,002
Total	$	270,799		$	187,727		$	471,760		$	409,586
Realized gains on sales of available-for-sale securities	$	1,491		$	316		$	3,151		$	2,797
Realized gains on calls of available-for-sale securities		126			212			370			380
Realized losses on sales of available-for-sale securities		(1	)		(22	)		(447	)		(47	)
Realized losses on calls of available-for-sale securities		(1	)		(12	)		(88	)		(15	)
Other securities gains (losses) (1)		241			18			(24	)		80
Net securities gains	$	1,856		$	512		$	2,962		$	3,195

(1) Other securities gains (losses) includes net realized gains or losses associated with trading securities and mutual funds.

Expected Maturities of Investment Securities Portfolio

Weighted average yield is based on amortized cost.

	At June 30, 2016
(dollars in thousands)					Weighted
	Amortized		Fair		Average
Maturity	Cost		Value		Yield
Available-for-Sale
Within one year	$	36,566	$	36,649		1.54	%
One to five years		400,424		405,665		2.00
Five to ten years		339,108		344,653		2.68
Beyond ten years		1,851,079		1,861,934		2.34
Total	$	2,627,177	$	2,648,901		2.32	%
Held-to-Maturity
Within one year	$	15,011	$	15,075		5.57	%
One to five years		49,934		52,935		4.53
Five to ten years		220,589		231,585		3.79
Beyond ten years		580,423		640,260		5.49
Total	$	865,957	$	939,855		5.00	%

Investment Securities with Unrealized Losses by Aggregated Major Security Type and Length of Time in Continuous Unrealized Loss Position

The following table summarizes the investment securities with unrealized losses at June 30, 2016 and December 31, 2015 by aggregated major security type and length of time in a continuous unrealized loss position:

	Less than 12 months					12 months or longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
June 30, 2016
Available-for-Sale
U.S. government-sponsored entities and agencies	$	91,640	$	(217	)	$	—	$	—		$	91,640	$	(217	)
Mortgage-backed securities - Agency		156,600		(281	)		104,843		(1,900	)		261,443		(2,181	)
States and political subdivisions		1,064		(3	)		5,692		(140	)		6,756		(143	)
Pooled trust preferred securities		—		—			6,720		(10,339	)		6,720		(10,339	)
Other securities		54,406		(877	)		118,291		(5,407	)		172,697		(6,284	)
Total available-for-sale	$	303,710	$	(1,378	)	$	235,546	$	(17,786	)	$	539,256	$	(19,164	)
December 31, 2015
Available-for-Sale
U.S. Treasury	$	6,505	$	(8	)	$	—	$	—		$	6,505	$	(8	)
U.S. government-sponsored entities and agencies		160,751		(1,492	)		122,581		(2,031	)		283,332		(3,523	)
Mortgage-backed securities - Agency		256,359		(3,444	)		239,047		(7,101	)		495,406		(10,545	)
States and political subdivisions		38,373		(161	)		5,137		(174	)		43,510		(335	)
Pooled trust preferred securities		—		—			7,900		(9,420	)		7,900		(9,420	)
Other securities		156,604		(2,717	)		126,661		(5,060	)		283,265		(7,777	)
Total available-for-sale	$	618,592	$	(7,822	)	$	501,326	$	(23,786	)	$	1,119,918	$	(31,608	)
Held-to-Maturity
States and political subdivisions	$	2,026	$	(3	)	$	—	$	—		$	2,026	$	(3	)
Total held-to-maturity	$	2,026	$	(3	)	$	—	$	—		$	2,026	$	(3	)

Trust Preferred Securities

The table below summarizes the relevant characteristics of our pooled trust preferred securities as well as our single issuer trust preferred securities that are included in the “other securities” category in this footnote. Each of the pooled trust preferred securities support a more senior tranche of security holders. All three pooled trust preferred securities have experienced credit defaults. However, two of these securities have excess subordination and are not other-than-temporarily-impaired as a result of their class hierarchy, which provides more loss protection.

																Actual			Expected			Excess
																Deferrals			Defaults as			Subordination
														# of Issuers		and Defaults			a % of			as a % of
Trust preferred securities			Lowest						Unrealized			Realized		Currently		as a % of			Remaining			Current
June 30, 2016			Credit		Amortized		Fair		Gain/			Losses		Performing/		Original			Performing			Performing
(dollars in thousands)	Class		Rating (1)		Cost		Value		(Loss)			2016		Remaining		Collateral			Collateral			Collateral
Pooled trust preferred securities:
Reg Div Funding 2004		B-2		D	$	3,168	$	204	$	(2,964	)	$	—		23/39		33.3	%		7.4	%		0.0	%
Pretsl XXVII LTD		B		B		4,422		2,017		(2,405	)		—		33/43		18.9	%		4.2	%		49.4	%
Trapeza Ser 13A		A2A		BBB		9,469		4,499		(4,970	)		—		50/57		8.9	%		4.9	%		43.1	%
						17,059		6,720		(10,339	)		—
Single Issuer trust preferred securities:
Fleet Cap Tr V (BOA)				BB+		3,393		2,835		(558	)		—
JP Morgan Chase Cap XIII				BBB-		4,762		4,000		(762	)		—
NB-Global				BB+		777		810		33			—
Chase Cap II				BBB-		815		840		25			—
						9,747		8,485		(1,262	)		—
Total					$	26,806	$	15,205	$	(11,601	)	$	—

(1) Lowest rating for the security provided by any nationally recognized credit rating agency.

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Loans and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2016

Text Block [Abstract]

Schedule of Composition of Loans

The composition of loans by lending classification was as follows:

	June 30,			December 31,
(dollars in thousands)	2016			2015
Commercial (1)	$	1,893,700		$	1,804,615
Commercial real estate:
Construction		263,496			185,449
Other		2,680,029			1,662,372
Residential real estate		2,099,770			1,644,614
Consumer credit:
Heloc		473,550			359,954
Auto		1,145,198			1,050,336
Other		274,415			133,478
Covered loans		—			107,587
Total loans		8,830,158			6,948,405
Allowance for loan losses		(51,804	)		(51,296	)
Allowance for loan losses - covered loans		—			(937	)
Net loans	$	8,778,354		$	6,896,172

(1) Includes direct finance leases of $12.7 million at June 30, 2016 and $14.4 million at December 31, 2015.

Schedule of Activity in Allowance for Loan Losses

Old National’s activity in the allowance for loan losses for the three and six months ended June 30, 2016 and 2015 is as follows:

				Commercial
(dollars in thousands)	Commercial			Real Estate			Residential			Consumer			Unallocated		Total
Three Months Ended June 30, 2016
Balance at April 1, 2016	$	25,121		$	15,771		$	1,749		$	8,059		$	—	$	50,700
Charge-offs		(432	)		(783	)		(80	)		(1,382	)		—		(2,677	)
Recoveries		876			547			187			852			—		2,462
Provision		(1,409	)		2,673			(397	)		452			—		1,319
Balance at June 30, 2016	$	24,156		$	18,208		$	1,459		$	7,981		$	—	$	51,804
Three Months Ended June 30, 2015
Balance at April 1, 2015	$	24,703		$	13,807		$	2,919		$	7,449		$	—	$	48,878
Charge-offs		(1,872	)		(514	)		(22	)		(1,494	)		—		(3,902	)
Recoveries		789			1,009			59			1,087			—		2,944
Provision		(186	)		2,023			(375	)		809			—		2,271
Balance at June 30, 2015	$	23,434		$	16,325		$	2,581		$	7,851		$	—	$	50,191
Six Months Ended June 30, 2016
Balance at January 1, 2016	$	26,347		$	15,993		$	2,051		$	7,842		$	—	$	52,233
Charge-offs		(1,959	)		(1,062	)		(220	)		(3,378	)		—		(6,619	)
Recoveries		1,694			1,387			213			1,486			—		4,780
Provision		(1,926	)		1,890			(585	)		2,031			—		1,410
Balance at June 30, 2016	$	24,156		$	18,208		$	1,459		$	7,981		$	—	$	51,804
Six Months Ended June 30, 2015
Balance at January 1, 2015	$	20,670		$	17,348		$	2,962		$	6,869		$	—	$	47,849
Charge-offs		(2,421	)		(101	)		(396	)		(3,098	)		—		(6,016	)
Recoveries		2,564			1,473			87			1,962			—		6,086
Provision		2,621			(2,395	)		(72	)		2,118			—		2,272
Balance at June 30, 2015	$	23,434		$	16,325		$	2,581		$	7,851		$	—	$	50,191

Schedule of Recorded Investment in Financing Receivables

The following table provides Old National’s recorded investment in financing receivables by portfolio segment at June 30, 2016 and December 31, 2015 and other information regarding the allowance:

			Commercial
(dollars in thousands)	Commercial		Real Estate		Residential		Consumer		Unallocated		Total
June 30, 2016
Allowance for loan losses:
Individually evaluated for impairment	$	7,489	$	3,949	$	—	$	—	$	—	$	11,438
Collectively evaluated for impairment		16,374		14,082		1,446		7,781		—		39,683
Loans acquired with deteriorated credit quality		293		177		13		200		—		683
Total allowance for loan losses	$	24,156	$	18,208	$	1,459	$	7,981	$	—	$	51,804
Loans and leases outstanding:
Individually evaluated for impairment	$	52,132	$	60,359	$	—	$	—	$	—	$	112,491
Collectively evaluated for impairment		1,839,760		2,830,350		2,084,652		1,882,832		—		8,637,594
Loans acquired with deteriorated credit quality		1,808		52,816		15,118		10,331		—		80,073
Total loans and leases outstanding	$	1,893,700	$	2,943,525	$	2,099,770	$	1,893,163	$	—	$	8,830,158
December 31, 2015
Allowance for loan losses:
Individually evaluated for impairment	$	7,467	$	4,021	$	—	$	—	$	—	$	11,488
Collectively evaluated for impairment		18,295		11,439		2,038		7,614		—		39,386
Loans acquired with deteriorated credit quality		247		533		13		70		—		863
Covered loans acquired with deteriorated credit quality		338		—		—		158		—		496
Total allowance for loan losses	$	26,347	$	15,993	$	2,051	$	7,842	$	—	$	52,233
Loans and leases outstanding:
Individually evaluated for impairment	$	60,959	$	41,987	$	—	$	—	$	—	$	102,946
Collectively evaluated for impairment		1,750,397		1,779,062		1,644,631		1,590,288		—		6,764,378
Loans acquired with deteriorated credit quality		691		28,499		127		3,925		—		33,242
Covered loans acquired with deteriorated credit quality		2,893		19,424		16,577		8,945		—		47,839
Total loans and leases outstanding	$	1,814,940	$	1,868,972	$	1,661,335	$	1,603,158	$	—	$	6,948,405

Schedule of Risk Category of Commercial and Commercial Real Estate Loans

As of June 30, 2016 and December 31, 2015, the risk category of commercial and commercial real estate loans by class of loans is as follows:

(dollars in thousands)					Commercial				Commercial
					Real Estate -				Real Estate -
Corporate Credit Exposure	Commercial				Construction				Other
Credit Risk Profile by	June 30,		December 31,		June 30,		December 31,		June 30,		December 31,
Internally Assigned Grade	2016		2015 (1)		2016		2015 (1)		2016		2015 (1)
Grade:
Pass	$	1,774,857	$	1,672,672	$	256,427	$	182,701	$	2,484,795	$	1,508,309
Criticized		38,867		55,570		4,014		3,300		64,005		75,477
Classified - substandard		25,422		24,723		1,572		1,857		56,982		49,091
Classified - nonaccrual		52,226		58,469		1,483		830		64,338		39,521
Classified - doubtful		2,328		3,506		—		—		9,909		7,886
Total	$	1,893,700	$	1,814,940	$	263,496	$	188,688	$	2,680,029	$	1,680,284

(1) Includes loans previously covered by loss share agreements with the FDIC.

Schedule of Recorded Investment in Residential and Consumer Loans Based on Payment Activity

 The following table presents the recorded investment in residential and consumer loans based on payment activity as of June 30, 2016 and December 31, 2015:

	Residential		Consumer
(dollars in thousands)			Heloc		Auto		Other
June 30, 2016
Performing	$	2,082,585	$	469,711	$	1,143,932	$	266,649
Nonperforming		17,185		3,839		1,266		7,766
Total	$	2,099,770	$	473,550	$	1,145,198	$	274,415
December 31, 2015 (1)
Performing	$	1,645,293	$	410,243	$	1,048,763	$	138,031
Nonperforming		16,042		3,051		1,573		1,497
Total	$	1,661,335	$	413,294	$	1,050,336	$	139,528

(1) Includes loans previously covered by loss share agreements with the FDIC.

Schedule of Impaired Loans

The following table shows Old National’s impaired loans as of June 30, 2016 and December 31, 2015, respectively. Only purchased loans that have experienced subsequent impairment since the date acquired are included in the table below.

(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
June 30, 2016
With no related allowance recorded:
Commercial	$	36,975	$	34,584	$	—
Commercial Real Estate - Other		41,334		45,139		—
Residential		1,353		1,374		—
Consumer		904		1,041		—
With an allowance recorded:
Commercial		18,903		18,905		7,489
Commercial Real Estate - Other		15,279		15,353		3,949
Residential		1,105		1,105		55
Consumer		2,785		2,785		139
Total	$	118,638	$	120,286	$	11,632
December 31, 2015 (1)
With no related allowance recorded:
Commercial	$	40,414	$	41,212	$	—
Commercial Real Estate - Other		26,998		30,264		—
Residential		1,383		1,422		—
Consumer		1,201		1,305		—
With an allowance recorded:
Commercial		16,377		16,483		7,111
Commercial Real Estate - Construction		237		237		6
Commercial Real Estate - Other		14,752		14,802		4,015
Residential		985		985		49
Consumer		2,525		2,525		126
Total	$	104,872	$	109,235	$	11,307

(1) Does not include $4.2 million of loans that were previously covered by loss share agreements with the FDIC.

Schedule of Average Balance and Interest Income Recognized on Impaired Loans

The average balance of impaired loans and interest income recognized on impaired loans during the three months ended June 30, 2016 and 2015 are included in the table below.

(dollars in thousands)	Average Recorded Investment		Interest Income Recognized (1)
Three Months Ended June 30, 2016
With no related allowance recorded:
Commercial	$	32,951	$	33
Commercial Real Estate - Other		34,344		162
Residential		1,348		2
Consumer		871		1
With an allowance recorded:
Commercial		19,546		79
Commercial Real Estate - Construction		116		—
Commercial Real Estate - Other		12,230		134
Residential		1,060		—
Consumer		2,781		—
Total	$	105,247	$	411
Three Months Ended June 30, 2015 (2)
With no related allowance recorded:
Commercial	$	30,769	$	85
Commercial Real Estate - Construction		2,107		1
Commercial Real Estate - Other		38,758		189
Residential		920		1
Consumer		869		1
With an allowance recorded:
Commercial		25,069		355
Commercial Real Estate - Construction		117		—
Commercial Real Estate - Other		10,274		121
Residential		1,469		2
Consumer		1,518		29
Total	$	111,870	$	784

(1) The Company does not record interest on nonaccrual loans until principal is recovered.

(2) Does not include $4.7 million of loans that were previously covered by loss share agreements with the FDIC.

The average balance of impaired loans and interest income recognized on impaired loans during the six months ended June 30, 2016 and 2015 are included in the table below.

(dollars in thousands)	Average Recorded Investment		Interest Income Recognized (1)
Six Months Ended June 30, 2016
With no related allowance recorded:
Commercial	$	38,029	$	61
Commercial Real Estate - Other		38,197		257
Residential		1,359		2
Consumer		981		2
With an allowance recorded:
Commercial		17,641		92
Commercial Real Estate - Construction		119		—
Commercial Real Estate - Other		15,016		182
Residential		1,035		38
Consumer		2,695		37
Total	$	115,072	$	671
Six Months Ended June 30, 2015 (2)
With no related allowance recorded:
Commercial	$	31,505	$	127
Commercial Real Estate - Construction		2,025		4
Commercial Real Estate - Other		32,402		274
Residential		761		1
Consumer		824		2
With an allowance recorded:
Commercial		21,359		403
Commercial Real Estate - Construction		49		—
Commercial Real Estate - Other		13,980		122
Residential		1,469		64
Consumer		1,568		49
Total	$	105,942	$	1,046

(1) The Company does not record interest on nonaccrual loans until principal is recovered.

(2) Does not include $4.7 million of loans that were previously covered by loss share agreements with the FDIC.

Schedule of Past Due Financing Receivables

Old National’s past due financing receivables as of June 30, 2016 and December 31, 2015 are as follows:

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Recorded Investment > 90 Days and Accruing		Nonaccrual		Total Past Due		Current
June 30, 2016
Commercial	$	496	$	227	$	175	$	54,554	$	55,452	$	1,838,248
Commercial Real Estate:
Construction		—		—		—		1,483		1,483		262,013
Other		1,779		—		—		74,247		76,026		2,604,003
Residential		14,221		1,726		101		17,185		33,233		2,066,537
Consumer:
Heloc		1,286		220		240		3,839		5,585		467,965
Auto		2,962		684		104		1,266		5,016		1,140,182
Other		7,251		3,119		50		7,766		18,186		256,229
Total loans	$	27,995	$	5,976	$	670	$	160,340	$	194,981	$	8,635,177
December 31, 2015
Commercial	$	802	$	100	$	565	$	57,536	$	59,003	$	1,745,612
Commercial Real Estate:
Construction		—		—		—		749		749		184,700
Other		438		135		—		46,601		47,174		1,615,198
Residential		9,300		2,246		114		14,953		26,613		1,618,001
Consumer:
Heloc		283		402		—		2,369		3,054		356,900
Auto		3,804		730		202		1,573		6,309		1,044,027
Other		830		165		25		1,256		2,276		131,202
Covered loans		809		312		10		7,336		8,467		99,120
Total loans	$	16,266	$	4,090	$	916	$	132,373	$	153,645	$	6,794,760

Schedule of Activity in Trouble Debt Restructurings

The following table presents activity in TDRs for the six months ended June 30, 2016 and 2015:

(dollars in thousands)	Commercial			Commercial Real Estate			Residential			Consumer			Total
Six Months Ended June 30, 2016
Balance at January 1, 2016	$	23,354		$	14,602		$	2,693		$	3,602		$	44,251
(Charge-offs)/recoveries		(742	)		108			42			(23	)		(615	)
Payments		(10,819	)		(4,035	)		(462	)		(425	)		(15,741	)
Additions		11,233			10,581			335			385			22,534
Other		1,251			173			—			—			1,424
Balance at June 30, 2016	$	24,277		$	21,429		$	2,608		$	3,539		$	51,853
Six Months Ended June 30, 2015
Balance at January 1, 2015	$	15,205		$	15,226		$	2,063		$	2,459		$	34,953
(Charge-offs)/recoveries		574			648			(15	)		(27	)		1,180
Payments		(3,505	)		(3,135	)		(85	)		(320	)		(7,045	)
Additions		5,573			3,321			419			681			9,994
Balance at June 30, 2015	$	17,847		$	16,060		$	2,382		$	2,793		$	39,082

Schedule of Loans by Class Modified as Troubled Debt Restructuring

The following table presents loans by class modified as TDRs that occurred during the six months ended June 30, 2016 and 2015:

(dollars in thousands)	Number of Loans		Pre-modification Outstanding Recorded Investment		Post-modification Outstanding Recorded Investment
Six Months Ended June 30, 2016
Troubled Debt Restructuring:
Commercial		16	$	11,233	$	10,681
Commercial Real Estate - Other		9		10,581		10,581
Residential		3		335		335
Consumer		8		385		385
Total		36	$	22,534	$	21,982
Six Months Ended June 30, 2015
Troubled Debt Restructuring:
Commercial		18	$	5,573	$	5,573
Commercial Real Estate - Construction		5		1,162		1,162
Commercial Real Estate - Other		14		2,159		2,159
Residential		3		419		419
Consumer		18		681		681
Total		58	$	9,994	$	9,994

Schedule of Activity of Purchased Impaired Loans

 For these loans that meet the criteria of ASC 310-30 treatment, the carrying amount is as follows:

(dollars in thousands)	June 30, 2016			December 31, 2015 (1)
Commercial	$	1,808		$	3,584
Commercial real estate		52,816			47,923
Residential		15,118			16,704
Consumer		10,331			12,870
Carrying amount		80,073			81,081
Allowance for loan losses		(683	)		(1,359	)
Carrying amount, net of allowance	$	79,390		$	79,722

(1) Includes loans previously covered by loss share agreements with the FDIC.

Schedule of Accretable Yield of Purchased Credit Impaired Loans, or Income Expected to be Collected

Accretable yield of purchased credit impaired loans, or income expected to be collected, is as follows:

(dollars in thousands)	Acquisitions Prior to 2015 (1)			Founders (2)			Anchor (2)			Total
Balance at January 1, 2016	$	42,498		$	2,812		$	—		$	45,310
New loans purchased		—			—			3,217			3,217
Accretion of income		(12,137	)		(505	)		(348	)		(12,990	)
Reclassifications from (to) nonaccretable difference		5,191			428			—			5,619
Disposals/other adjustments		487			—			43			530
Balance at June 30, 2016	$	36,039		$	2,735		$	2,912		$	41,686

(1) Includes loans previously covered by loss share agreements with the FDIC.

(2) Old National acquired Founders effective January 1, 2015 and Anchor effective May 1, 2016.

Schedule of Receivables for which Contractually Required Payments would not be Collected

PCI loans purchased during the six months ended June 30, 2016 and 2015 for which it was probable at acquisition that all contractually required payments would not be collected were as follows:

(dollars in thousands)	Founders			Anchor
Contractually required payments	$	11,103		$	29,544
Nonaccretable difference		(2,684	)		(6,153	)
Cash flows expected to be collected at acquisition		8,419			23,391
Accretable yield		(1,812	)		(3,217	)
Fair value of acquired loans at acquisition	$	6,607		$	20,174

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Covered Loans (Tables)

6 Months Ended

Jun. 30, 2016

Text Block [Abstract]

Schedule of Covered Acquired Impaired Loans

The following table is a roll-forward of covered acquired impaired loans accounted for under ASC 310-30 for the six months ended June 30, 2016 and 2015. As a result of the termination of the loss share agreements, the remaining loans that were covered by the loss share arrangements were reclassified to noncovered loans effective June 22, 2016.

(dollars in thousands)	Contractual Cash Flows (1)			Nonaccretable Difference			Accretable Yield			Carrying Amount (2)
Six Months Ended June 30, 2016
Balance at January 1, 2016	$	69,857		$	(4,729	)	$	(17,785	)	$	47,343
Principal reductions and interest payments		(18,195	)		(347	)		—			(18,542	)
Accretion of loan discount		—			—			7,196			7,196
Changes in contractual and expected cash flows due to remeasurement		4,431			631			(4,927	)		135
Removals due to foreclosure or sale		(1,948	)		136			263			(1,549	)
Loans removed from loss share coverage		(54,145	)		4,309			15,253			(34,583	)
Balance at June 30, 2016	$	—		$	—		$	—		$	—
Six Months Ended June 30, 2015
Balance at January 1, 2015	$	124,809		$	(12,014	)	$	(35,742	)	$	77,053
Principal reductions and interest payments		(18,178	)		(814	)		—			(18,992	)
Accretion of loan discount		—			—			7,259			7,259
Changes in contractual and expected cash flows due to remeasurement		(3,633	)		4,412			(733	)		46
Removals due to foreclosure or sale		(506	)		162			(143	)		(487	)
Balance at June 30, 2015	$	102,492		$	(8,254	)	$	(29,359	)	$	64,879

(1) The balance of contractual cash flows includes future contractual interest and is net of amounts charged off and interest collected on nonaccrual loans.

(2) Carrying amount for this table is net of allowance for loan losses.

Summary of FDIC Loss Sharing Asset

The following table shows a detailed analysis of the FDIC loss sharing asset for the six months ended June 30, 2016 and 2015. As a result of the termination of the loss share agreements on June 22, 2016, the table below reflects the write-off of the remaining FDIC loss sharing asset.

(dollars in thousands)	2016			2015
Balance at January 1,	$	9,030		$	20,603
Adjustments not reflected in income:
Cash received from the FDIC		(10,000	)		(2,231	)
Other		512			612
Adjustments reflected in income:
(Amortization) accretion		(816	)		(3,830	)
Higher (lower) loan loss expectations		(13	)		109
Impairment/(recovery) of value and net (gain)/loss on sales of other real estate		1,062			1,212
Gain as a result of the early termination agreement with the FDIC, effective June 22, 2016		225			—
Balance at June 30,	$	—		$	16,475

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Other Real Estate Owned (Tables)

6 Months Ended

Jun. 30, 2016

Banking and Thrift [Abstract]

Activity in Other Real Estate Owned

The following table presents activity in other real estate owned for the six months ended June 30, 2016 and 2015:

	Other Real Estate			Other Real Estate
(dollars in thousands)	Owned (1)			Owned, Covered
Six Months Ended June 30, 2016
Balance at January 1, 2016	$	7,594		$	4,904
Additions (2)		20,251			2,093
Sales		(7,060	)		(1,454	)
(Impairment)/recovery of value		(202	)		(1,872	)
Reclassification due to termination of the loss share agreements, effective June 22, 2016		3,671			(3,671	)
Balance at June 30, 2016	$	24,254		$	—
Six Months Ended June 30, 2015
Balance at January 1, 2015	$	7,241		$	9,121
Additions		4,579			429
Sales		(2,153	)		(4,580	)
(Impairment)/recovery of value		(279	)		(217	)
Balance at June 30, 2015	$	9,388		$	4,753

(1) Includes repossessed personal property of $0.2 million at June 30, 2016 and $0.3 million at June 30, 2015.

(2) Includes other real estate owned of $18.2 million acquired from Anchor in May 2016.

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in Carrying Amount of Goodwill

The following table shows the changes in the carrying amount of goodwill for the six months ended June 30, 2016 and 2015:

(dollars in thousands)	2016			2015
Balance at January 1,	$	584,634		$	530,845
Acquisitions		111,852			57,619
Divestitures		(40,963	)		—
Balance at June 30,	$	655,523		$	588,464

Schedule of Gross Carrying Amount and Accumulated Amortization of Other Intangible Assets

The gross carrying amount and accumulated amortization of other intangible assets at June 30, 2016 and December 31, 2015 were as follows:

	Gross		Accumulated			Net
	Carrying		Amortization			Carrying
(dollars in thousands)	Amount		and Impairment			Amount
June 30, 2016
Amortized intangible assets:
Core deposit	$	81,663	$	(47,839	)	$	33,824
Customer trust relationships		16,547		(6,769	)		9,778
Customer loan relationships		4,413		(3,778	)		635
Total intangible assets	$	102,623	$	(58,386	)	$	44,237
December 31, 2015
Amortized intangible assets:
Core deposit	$	60,103	$	(43,982	)	$	16,121
Customer business relationships		30,787		(23,341	)		7,446
Customer trust relationships		16,547		(5,286	)		11,261
Customer loan relationships		4,413		(3,933	)		480
Total intangible assets	$	111,850	$	(76,542	)	$	35,308

Schedule of Estimated Amortization Expense for Future Years

Estimated amortization expense for future years is as follows:

(dollars in thousands)
2016 remaining	$	6,560
2017		11,015
2018		8,687
2019		6,737
2020		4,883
Thereafter		6,355
Total	$	44,237

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Loan Servicing Rights (Tables)

6 Months Ended

Jun. 30, 2016

Text Block [Abstract]

Components of Loan Servicing Rights and Valuation Allowance

The following table summarizes the carrying values and activity related to loan servicing rights and the related valuation allowance for the six months ended June 30, 2016 and 2015:

(dollars in thousands)	2016			2015
Balance at January 1,	$	10,502		$	9,584
Additions (1)		17,126			1,754
Amortization		(1,866	)		(1,271	)
Balance before valuation allowance at June 30,		25,762			10,067
Valuation allowance:
Balance at January 1,		(34	)		(50	)
(Additions)/recoveries		28			10
Balance at June 30,		(6	)		(40	)
Loan servicing rights, net	$	25,756		$	10,027

(1) In May 2016, the Company assumed $15.3 million of loan servicing rights related to the Anchor acquisition.

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Short-Term Borrowings (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Schedule of Short-Term Borrowings and Weighted-Average Interest Rates

The following table presents the distribution of Old National’s short-term borrowings and related weighted-average interest rates as of June 30, 2016:

	Federal			Repurchase			Financial
	Funds			Agreements /			Exchange			Revolving
(dollars in thousands)	Purchased			Sweeps			Borrowings (1)			Loan			Total
2016
Outstanding at June 30, 2016	$	263,536		$	304,123		$	—		$	—		$	567,659
Average amount outstanding		141,664			332,441			5,083			8,242			487,430
Maximum amount outstanding at any month-end		263,536			346,695			25,000			50,000
Weighted average interest rate:
During the six months ended June 30, 2016		0.46	%		0.08	%		0.71	%		3.00	%		0.24	%
At June 30, 2016		0.42			0.07			—			—			0.23

(1) In 2015, the Company joined the American Financial Exchange, which is an overnight source of borrowings. No collateral was pledged on these funds.

Schedule of Remaining Contractual Maturity of Secured Borrowings and Class of Collateral Pledged Under Repurchase Agreements

The following table presents the contractual maturity of our secured borrowings and class of collateral pledged:

	At June 30, 2016
	Remaining Contractual Maturity of the Agreements
	Overnight and		Up to				Greater Than
(dollars in thousands)	Continuous		30 Days		30-90 Days		90 days		Total
Repurchase Agreements:
U.S. Treasury and agency securities	$	304,123	$	—	$	—	$	—	$	304,123
Total	$	304,123	$	—	$	—	$	—	$	304,123

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Financing Activities (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Other Borrowings

The following table summarizes Old National’s and its subsidiaries’ other borrowings at June 30, 2016 and December 31, 2015:

	June 30,			December 31,
(dollars in thousands)	2016			2015
Old National Bancorp:
Senior unsecured bank notes (fixed rate 4.125%) maturing August 2024	$	175,000		$	175,000
Unamortized debt issuance costs related to Senior unsecured bank notes		(1,260	)		(1,338	)
Junior subordinated debentures (variable rates of 1.99% to 2.41%) maturing March 2035 to June 2037		45,000			45,000
ASC 815 fair value hedge and other basis adjustments		(4,210	)		(4,442	)
Old National Bank:
Securities sold under agreements to repurchase (fixed rates 2.47% to 2.50%) maturing January 2017 to January 2018		50,000			50,000
Federal Home Loan Bank advances (fixed rates 0.44% to 6.76% and variable rates 0.74% to 0.78%) maturing July 2016 to January 2025		1,097,212			1,022,766
Capital lease obligation		4,126			4,036
ASC 815 fair value hedge and other basis adjustments		2,028			725
Total other borrowings	$	1,367,896		$	1,291,747

Contractual Maturities of Long-Term Debt

Contractual maturities of other borrowings at June 30, 2016 were as follows:

(dollars in thousands)
Due in 2016	$	617,384
Due in 2017		95,806
Due in 2018		195,224
Due in 2019		2,517
Due in 2020		50,091
Thereafter		410,316
ASC 815 fair value hedge, unamortized debt issuance costs, and other basis adjustments		(3,442	)
Total	$	1,367,896

Future Minimum Lease Payments under Capital Lease

At June 30, 2016, the future minimum lease payments under the capital lease were as follows:

(dollars in thousands)
2016 remaining	$	267
2017		472
2018		410
2019		430
2020		430
Thereafter		8,406
Total minimum lease payments		10,415
Less amounts representing interest		6,289
Present value of net minimum lease payments	$	4,126

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Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2016

Compensation and Retirement Disclosure [Abstract]

Schedule of Net Periodic Benefit Cost

The net periodic benefit cost and its components were as follows for the three and six months ended June 30:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(dollars in thousands)	2016			2015			2016			2015
Interest cost	$	440		$	415		$	880		$	830
Expected return on plan assets		(442	)		(511	)		(885	)		(1,023	)
Recognized actuarial loss		494			531			988			1,062
Settlement loss		235			196			441			402
Net periodic benefit cost	$	727		$	631		$	1,424		$	1,271

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Summary of Differences in Taxes from Continuing Operations Computed at Statutory Rate

Following is a summary of the major items comprising the differences in taxes from continuing operations computed at the federal statutory rate and as recorded in the consolidated statements of income for the three and six months ended June 30:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(dollars in thousands)	2016			2015			2016			2015
Provision at statutory rate of 35%	$	24,477		$	12,290		$	37,304		$	22,836
Tax-exempt income		(4,233	)		(3,930	)		(8,401	)		(7,783	)
State income taxes		2,064			520			2,647			1,796
Interim period effective rate adjustment		(37	)		314			(185	)		1,821
ONB Insurance Group, Inc. nondeductible goodwill		8,305			—			8,305			—
Other, net		236			(235	)		813			(486	)
Income tax expense	$	30,812		$	8,959		$	40,483		$	18,184
Effective tax rate		44.1	%		25.5	%		38.0	%		27.9	%

Summary of Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(dollars in thousands)	2016		2015
Balance at January 1,	$	124	$	77
Additions based on tax positions related to the current year		58		27
Additions based on tax positions related to prior years		584		—
Balance at June 30,	$	766	$	104

Schedule of Significant Components of Net Deferred Tax Assets (Liabilities)

Significant components of net deferred tax assets (liabilities) were as follows at June 30, 2016 and December 31, 2015:

	June 30,			December 31,
(dollars in thousands)	2016			2015
Deferred Tax Assets
Allowance for loan losses, net of recapture	$	17,838		$	17,125
Benefit plan accruals		19,418			18,066
AMT credit		17,152			18,378
Unrealized losses on benefit plans		3,964			4,507
Net operating loss carryforwards		66,923			2,041
Premises and equipment		7,301			12,735
Federal tax credits		35			422
Other-than-temporary impairment		3,620			3,558
Acquired loans		54,000			34,870
Lease exit obligation		2,818			2,626
Unrealized losses on available-for-sale investment securities		—			3,002
Unrealized losses on held-to-maturity investment securities		7,406			7,724
Unrealized losses on hedges		10,532			5,685
Other real estate owned		3,272			—
Other, net		2,550			4,914
Total deferred tax assets		216,829			135,653
Deferred Tax Liabilities
Accretion on investment securities		(649	)		(599	)
Other real estate owned		—			(284	)
Purchase accounting		(18,291	)		(16,615	)
FDIC indemnification asset		—			(2,565	)
Loan servicing rights		(9,674	)		(3,890	)
Unrealized losses on available-for-sale investment securities		(7,052	)		—
Other, net		(1,715	)		(1,716	)
Total deferred tax liabilities		(37,381	)		(25,669	)
Net deferred tax assets	$	179,448		$	109,984

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Fair Value of Derivative Financial Instruments

On the balance sheet, asset derivatives are included in other assets, and liability derivatives are included in other liabilities. The following table summarizes the fair value of derivative financial instruments utilized by Old National:

	June 30, 2016				December 31, 2015
	Asset		Liability		Asset		Liability
(dollars in thousands)	Derivatives		Derivatives		Derivatives		Derivatives
Derivatives designated as hedging instruments
Interest rate contracts	$	5,134	$	28,540	$	3,794	$	15,554
Total derivatives designated as hedging instruments	$	5,134	$	28,540	$	3,794	$	15,554
Derivatives not designated as hedging instruments
Interest rate contracts	$	28,169	$	28,371	$	11,296	$	11,414
Mortgage contracts		2,906		1,129		835		—
Total derivatives not designated as hedging instruments	$	31,075	$	29,500	$	12,131	$	11,414
Total	$	36,209	$	58,040	$	15,925	$	26,968

Schedule of Effect of Derivative Instruments on the Consolidated Statements of Income

The effect of derivative instruments on the consolidated statements of income for the three and six months ended June 30, 2016 and 2015 are as follows:

		Three Months Ended June 30,
(dollars in thousands)		2016			2015
Derivatives in Fair Value Hedging Relationships	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (1)	Interest income / (expense)	$	(1,310	)	$	(212	)
Interest rate contracts (2)	Other income / (expense)		50			23
Total		$	(1,260	)	$	(189	)
Derivatives in Cash Flow Hedging Relationships	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (1)	Interest income / (expense)	$	81		$	167
Total		$	81		$	167
Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (3)	Other income / (expense)	$	(81	)	$	19
Mortgage contracts	Mortgage banking revenue		(35	)		362
Total		$	(116	)	$	381
		Six Months Ended June 30,
(dollars in thousands)		2016			2015
Derivatives in Fair Value Hedging Relationships	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (1)	Interest income / (expense)	$	(2,352	)	$	(189	)
Interest rate contracts (2)	Other income / (expense)		101			82
Total		$	(2,251	)	$	(107	)
Derivatives in Cash Flow Hedging Relationships	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (1)	Interest income / (expense)	$	167		$	333
Total		$	167		$	333
Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Interest rate contracts (3)	Other income / (expense)	$	(84	)	$	19
Mortgage contracts	Mortgage banking revenue		425			1,150
Total		$	341		$	1,169

(1) Amounts represent the net interest payments as stated in the contractual agreements.

(2) Amounts represent ineffectiveness on derivatives designated as fair value hedges.

(3) Includes the valuation differences between the customer and offsetting counterparty swaps.

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Fair Value (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which we have elected the fair value option, are summarized below:

			Fair Value Measurements at June 30, 2016 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Trading securities	$	4,838	$	4,838	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury		12,269		12,269		—		—
U.S. government-sponsored entities and agencies		540,775		—		540,775		—
Mortgage-backed securities - Agency		1,336,605		—		1,336,605		—
States and political subdivisions		417,163		—		417,163		—
Pooled trust preferred securities		6,720		—		—		6,720
Other securities		335,369		32,139		303,230		—
Residential loans held for sale		44,422		—		44,422		—
Derivative assets		36,209		—		36,209		—
Financial Liabilities
Derivative liabilities		58,040		—		58,040		—
			Fair Value Measurements at December 31, 2015 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Trading securities	$	3,941	$	3,941	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury		12,150		12,150		—		—
U.S. government-sponsored entities and agencies		613,550		—		613,550		—
Mortgage-backed securities - Agency		1,066,361		—		1,066,361		—
States and political subdivisions		387,296		—		387,296		—
Pooled trust preferred securities		7,900		—		—		7,900
Other securities		330,964		31,443		299,521		—
Residential loans held for sale		13,810		—		13,810		—
Derivative assets		15,925		—		15,925		—
Financial Liabilities
Derivative liabilities		26,968		—		26,968		—

Reconciliation of All Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2016:

(dollars in thousands)	Pooled Trust Preferred Securities Available-for-Sale
Balance at January 1, 2016	$	7,900
Accretion of discount		9
Sales/payments received		(270	)
Decrease in fair value of securities		(919	)
Balance at June 30, 2016	$	6,720

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2015:

(dollars in thousands)	Pooled Trust Preferred Securities Available-for-Sale			State and Political Subdivisions
Balance at January 1, 2015	$	6,607		$	325
Accretion of discount		9			—
Sales/payments received		(514	)		—
Matured securities		—			(325	)
Increase in fair value of securities		994			—
Balance at June 30, 2015	$	7,096		$	—

Quantitative Information about Significant Unobservable Inputs Used in Fair Value Measurements

The tables below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy as of June 30, 2016 and December 31, 2015:

	Fair Value at		Valuation	Unobservable	Range (Weighted
(dollars in thousands)	June 30, 2016		Techniques	Input	Average)
Pooled trust preferred securities	$	6,720	Discounted cash flow	Constant prepayment rate (a)	0.00%
				Additional asset defaults (b)	3.3% - 4.4%(4.1%)
				Expected asset recoveries (c)	0.0% - 9.8%(2.7%)

(a) Assuming no prepayments.

(b) Each currently performing pool asset is assigned a default probability based on the banking environment, which is adjusted for specific issuer evaluation, of 0%, 50%, or 100%.

(c) Each currently defaulted pool asset is assigned a recovery probability based on specific issuer evaluation of 0%, 25%, or 100%.

	Fair Value at		Valuation	Unobservable	Range (Weighted
(dollars in thousands)	Dec. 31, 2015		Techniques	Input	Average)
Pooled trust preferred securities	$	7,900	Discounted cash flow	Constant prepayment rate (a)	0.00%
				Additional asset defaults (b)	4.1% - 11.5%(8.1%)
				Expected asset recoveries (c)	0.0% - 11.5%(3.1%)

(a) Assuming no prepayments.

(b) Each currently performing pool asset is assigned a default probability based on the banking environment, which is adjusted for specific issuer evaluation, of 0%, 50%, or 100%.

(c) Each currently defaulted pool asset is assigned a recovery probability based on specific issuer evaluation of 0%, 25%, or 100%.  

The tables below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy:

	Fair Value at		Valuation	Unobservable	Range (Weighted
(dollars in thousands)	June 30, 2016		Techniques	Input	Average)
Collateral Dependent Impaired Loans
Commercial loans	$	11,218	Fair value of collateral	Discount for type of property, age of appraisal, and current status		0% - 98% (47%)
Commercial real estate loans		15,064	Fair value of collateral	Discount for type of property, age of appraisal and current status		10% - 51% (35%)
Foreclosed Assets
Commercial real estate		1,263	Fair value of collateral	Discount for type of property, age of appraisal, and current status		0% - 58% (23%)
Residential		296	Fair value of collateral	Discount for type of property, age of appraisal, and current status		7% - 47% (31%)
	Fair Value at		Valuation	Unobservable	Range (Weighted
(dollars in thousands)	Dec. 31, 2015		Techniques	Input	Average)
Collateral Dependent Impaired Loans
Commercial loans	$	13,332	Fair value of collateral	Discount for type of property, age of appraisal, and current status		0% - 86% (28%)
Commercial real estate loans		11,857	Fair value of collateral	Discount for type of property, age of appraisal, and current status		0% - 61% (33%)
Foreclosed Assets
Commercial real estate		2,526	Fair value of collateral	Discount for type of property, age of appraisal, and current status		3% - 80% (26%)
Residential		203	Fair value of collateral	Discount for type of property, age of appraisal, and current status		7% - 53% (29%)

Assets Measured at Fair Value on a Non-Recurring Basis

Assets measured at fair value on a non-recurring basis at June 30, 2016 are summarized below:

			Fair Value Measurements at June 30, 2016 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Impaired Loans
Commercial loans	$	11,218	$	—	$	—	$	11,218
Commercial real estate loans		15,064		—		—		15,064
Foreclosed Assets
Commercial real estate		1,263		—		—		1,263
Residential		296		—		—		296

Assets measured at fair value on a non-recurring basis at December 31, 2015 are summarized below:

			Fair Value Measurements at December 31, 2015 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Impaired Loans
Commercial loans	$	13,332	$	—	$	—	$	13,332
Commercial real estate loans		11,857		—		—		11,857
Foreclosed Assets
Commercial real estate		2,526		—		—		2,526
Residential		203		—		—		203

Schedule of Difference Between the Aggregate Fair Value and the Aggregate Remaining Principal Balance

The difference between the aggregate fair value and the aggregate remaining principal balance for loans for which the fair value option has been elected as of June 30, 2016 and December 31, 2015 is as follows:

	Aggregate				Contractual
(dollars in thousands)	Fair Value		Difference		Principal
June 30, 2016
Residential loans held for sale	$	44,422	$	1,453	$	42,969
December 31, 2015
Residential loans held for sale	$	13,810	$	236	$	13,574

Accrued interest at period end is included in the fair value of the instruments.

The following table presents the amount of gains and losses from fair value changes included in income before income taxes for financial assets carried at fair value for the three and six months ended June 30:

(dollars in thousands)	Other Gains and (Losses)			Interest Income		Interest (Expense)		Total Changes in Fair Values Included in Current Period Earnings
Three months ended June 30, 2016
Residential loans held for sale	$	846		$	1	$	—	$	847
Three months ended June 30, 2015
Residential loans held for sale	$	(430	)	$	1	$	—	$	(429	)
Six months ended June 30, 2016
Residential loans held for sale	$	1,218		$	—	$	—	$	1,218
Six months ended June 30, 2015
Residential loans held for sale	$	(213	)	$	1	$	—	$	(212	)

Carrying Amounts and Estimated Fair Values of Financial Instruments, Not Previously Presented

The carrying amounts and estimated fair values of financial instruments, not previously presented in this note, at June 30, 2016 and December 31, 2015 are as follows:

			Fair Value Measurements at June 30, 2016 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash, due from banks, federal funds sold, and money market investments	$	267,920	$	267,920	$	—	$	—
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies		141,220		—		143,148		—
Mortgage-backed securities - Agency		13,200		—		13,723		—
State and political subdivisions		711,537		—		782,984		—
Federal Home Loan Bank/Federal Reserve Bank stock		90,742		N/A		N/A		N/A
Loans, net:
Commercial		1,869,544		—		—		1,978,864
Commercial real estate		2,925,317		—		—		3,215,841
Residential real estate		2,098,311		—		—		2,354,067
Consumer credit		1,885,182		—		—		2,062,010
Accrued interest receivable		79,536		29		23,155		56,352
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits	$	2,883,917	$	2,883,917	$	—	$	—
NOW, savings, and money market deposits		6,088,664		6,088,664		—		—
Time deposits		1,479,021		—		1,484,973		—
Short-term borrowings:
Federal funds purchased		263,536		263,536		—		—
Repurchase agreements		304,123		304,123		—		—
Other borrowings:
Senior unsecured bank notes		173,740		—		186,383		—
Junior subordinated debentures		40,790		—		32,984		—
Repurchase agreements		50,000		—		51,203		—
Federal Home Loan Bank advances		1,099,240		—		—		1,110,405
Capital lease obligation		4,126		—		4,963		—
Accrued interest payable		6		—		6		—
Standby letters of credit		361		—		—		361
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	4,507

N/A = not applicable

			Fair Value Measurements at December 31, 2015 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash, due from banks, federal funds sold, and money market investments	$	219,818	$	219,818	$	—	$	—
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies		142,864		—		145,763		—
Mortgage-backed securities - Agency		16,042		—		16,604		—
State and political subdivisions		713,205		—		767,050		—
Federal Home Loan Bank/Federal Reserve Bank stock		86,146		N/A		N/A		N/A
Loans, net (including covered loans):
Commercial		1,788,593		—		—		1,829,824
Commercial real estate		1,852,979		—		—		1,946,163
Residential real estate		1,659,284		—		—		1,745,248
Consumer credit		1,595,316		—		—		1,587,879
FDIC indemnification asset		9,030		—		—		5,700
Accrued interest receivable		69,098		29		22,821		46,248
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits	$	2,488,855	$	2,488,855	$	—	$	—
NOW, savings, and money market deposits		4,911,938		4,911,938		—		—
Time deposits		1,000,067		—		998,878		—
Short-term borrowings:
Federal funds purchased		241,090		241,090		—		—
Repurchase agreements		337,409		337,409		—		—
Other short-term borrowings		50,000		50,000		—		—
Other borrowings:
Senior unsecured bank notes		173,662		—		162,445		—
Junior subordinated debentures		40,558		—		33,318		—
Repurchase agreements		50,000		—		51,370		—
Federal Home Loan Bank advances		1,023,491		—		—		1,029,779
Capital lease obligation		4,036		—		5,375		—
Accrued interest payable		4,859		—		4,859		—
Standby letters of credit		429		—		—		429
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	2,364

N/A = not applicable

XML

Acquisition and Divestiture Activity - Additional Information (Detail) $ / shares in Units, $ in Thousands, shares in Millions					1 Months Ended	3 Months Ended			6 Months Ended		12 Months Ended
	Jan. 12, 2016 BankingCenters $ / shares	Aug. 14, 2015 USD ($) Branches	May 08, 2015 USD ($)	Feb. 01, 2015 USD ($)	May 31, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Mar. 30, 2016 USD ($)	Jun. 30, 2016 USD ($) shares	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($) Branch	May 01, 2016 USD ($)	Jan. 01, 2015 Branch	Dec. 31, 2014 USD ($)
Business Acquisition [Line Items]
Goodwill acquired during the period									$ 111,852	$ 57,619
Purchasers assumed loans		$ 193,600
Other transaction expense related to divestitures		900
Deposits		$ 555,800
Goodwill allocation						$ 655,523			655,523	$ 588,464	$ 584,634			$ 530,845
Number of banking centers consolidated | Branch											23
Cash received in acquisition									91,771
Goodwill and intangible assets eliminated									41,000
ONB Insurance Group, Inc. [Member]
Business Acquisition [Line Items]
Cash received in acquisition					$ 91,800
Gain on sale of assets before tax					41,900
Gain on sale of assets after tax					17,600
Goodwill and intangible assets eliminated					$ 47,500
Southern Illinois [Member]
Business Acquisition [Line Items]
Number of banking centers | Branches		12
Eastern Indiana [Member]
Business Acquisition [Line Items]
Number of banking centers | Branches		4
Ohio [Member]
Business Acquisition [Line Items]
Number of banking centers | Branches		1
Southern Illinois Franchise [Member]
Business Acquisition [Line Items]
Net pre-tax gain		$ 15,600
Deposit premium		19,300
Goodwill allocation		$ 3,800
Founders Financial Corporation [Member]
Business Acquisition [Line Items]
Number of branch locations | Branch													4
Total purchase price of acquisition						91,700			91,700
Purchase price of acquisition, cash									$ 41,000
Issuance of common stock shares for acquisitions of business | shares									3.4
Value of issuance common stock shares						50,600			$ 50,600
Transaction and integration costs associated with the acquisition									$ 4,900
Effective date of acquisition									Jan. 01, 2015
Goodwill allocation											$ 56,014
Founders Financial Corporation [Member] | Core Deposit [Member]
Business Acquisition [Line Items]
Estimated useful life of intangible assets									7 years
Estimated fair value of intangible assets acquired									$ 2,900
Mutual Underwriters [Member]
Business Acquisition [Line Items]
Total purchase price of acquisition				$ 3,700
Mutual Underwriters [Member] | Customer Business Relationships [Member]
Business Acquisition [Line Items]
Estimated useful life of intangible assets									10 years
Mutual Underwriters [Member] | Insurance [Member]
Business Acquisition [Line Items]
Goodwill acquired during the period				1,100
Mutual Underwriters [Member] | Insurance [Member] | Customer Business Relationships [Member]
Business Acquisition [Line Items]
Customer business relationship intangibles acquired				$ 2,600
Insurance Book of Business [Member] | Insurance [Member]
Business Acquisition [Line Items]
Purchase price of acquisition, cash			$ 100
Additional consideration upon operation targets			100
Insurance Book of Business [Member] | Insurance [Member] | Customer Business Relationships [Member]
Business Acquisition [Line Items]
Estimated useful life of intangible assets									10 years
Increase (decrease) in intangible assets			$ 200				$ (200)
Anchor BanCorp Wisconsin Inc [Member]
Business Acquisition [Line Items]
Total purchase price of acquisition						459,800			$ 459,800
Purchase price of acquisition, cash									$ 186,200
Issuance of common stock shares for acquisitions of business | shares									20.4
Value of issuance common stock shares						273,600			$ 273,600
Transaction and integration costs associated with the acquisition								$ 7,200	$ 8,600
Acquisition agreement date									Jan. 12, 2016
Effective date of acquisition									May 01, 2016
Number of banking centers | BankingCenters	46
Portion of share received by merged entity	3.5505
Consideration received in cash by merged entity | $ / shares	$ 48.50
Goodwill acquired during the period									$ 111,900
Goodwill allocation												$ 111,852
Anchor BanCorp Wisconsin Inc [Member] | Maximum [Member]
Business Acquisition [Line Items]
Maximum percentage of purchase price in cash	40.00%
Anchor BanCorp Wisconsin Inc [Member] | Core Deposit [Member]
Business Acquisition [Line Items]
Estimated useful life of intangible assets									7 years
Estimated fair value of intangible assets acquired									$ 21,600
Increase (decrease) in intangible assets						$ 21,600
Anchor BanCorp Wisconsin Inc [Member] | Madison Milwaukee and Fox Valley Triangle [Member]
Business Acquisition [Line Items]
Number of banking centers | BankingCenters	32

XML

Acquisition and Divestiture Activity - Schedule of Purchase Price Allocation (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	May 01, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
Business Acquisition [Line Items]
Deposits	$ (10,451,602)		$ (8,400,860)	$ (8,809,570)
Goodwill	$ 655,523		584,634	$ 588,464	$ 530,845
Founders Financial Corporation [Member]
Business Acquisition [Line Items]
Cash and cash equivalents			3,978
Investment securities			75,383
Federal Home Loan Bank stock			1,810
Loans held for sale			3,473
Loans			339,569
Premises and equipment			3,604
Accrued interest receivable			1,260
Other real estate owned			674
Company-owned life insurance			8,297
Other assets			8,804
Deposits			(376,656)
Other borrowings			(39,380)
Accrued expenses and other liabilities			(1,307)
Net tangible assets acquired			29,509
Definite-lived intangible assets acquired			5,515
Loan servicing rights			664
Goodwill			56,014
Purchase price			$ 91,702
Anchor BanCorp Wisconsin Inc [Member]
Business Acquisition [Line Items]
Cash and cash equivalents		$ 123,657
Investment securities		235,240
Federal Home Loan Bank stock		4,596
Loans held for sale		9,334
Loans		1,636,605
Premises and equipment		35,721
Accrued interest receivable		7,308
Other real estate owned		18,243
Company-owned life insurance		7,278
Other assets		126,013
Deposits		(1,852,713)
Other borrowings		(3,255)
Accrued expenses and other liabilities		(36,958)
Net tangible assets acquired		311,069
Definite-lived intangible assets acquired		21,559
Loan servicing rights		15,274
Goodwill		111,852
Purchase price		$ 459,754

XML

Acquisition and Divestiture Activity - Schedule of Components of Estimated Fair Value of Intangible Assets (Detail) - Founders Financial Corporation [Member] $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($)
Core Deposit [Member]
Business Acquisition [Line Items]
Estimated Fair Value	$ 2.9
Estimated Useful Lives (Years)	7 years
Customer Trust Relationships [Member]
Business Acquisition [Line Items]
Estimated Fair Value	$ 2.6
Estimated Useful Lives (Years)	12 years

XML

Acquisition and Divestiture Activity - Schedule of Acquired Loan Data (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	May 01, 2016	Dec. 31, 2015
Founders Financial Corporation [Member]
Loans at Acquisition Date [Line Items]
Fair Value of Acquired Loans at Acquisition Date			$ 339,569
Founders Financial Corporation [Member] | Acquired Receivables Subject to ASC 310-30 [Member]
Loans at Acquisition Date [Line Items]
Fair Value of Acquired Loans at Acquisition Date	$ 6,607
Gross Contractual Amounts Receivable at Acquisition Date	11,103
Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected	2,684
Founders Financial Corporation [Member] | Acquired Receivables Not Subject to ASC 310-30 [Member]
Loans at Acquisition Date [Line Items]
Fair Value of Acquired Loans at Acquisition Date	332,962
Gross Contractual Amounts Receivable at Acquisition Date	439,031
Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected	61,113
Anchor BanCorp Wisconsin Inc [Member]
Loans at Acquisition Date [Line Items]
Fair Value of Acquired Loans at Acquisition Date		$ 1,636,605
Anchor BanCorp Wisconsin Inc [Member] | Acquired Receivables Subject to ASC 310-30 [Member]
Loans at Acquisition Date [Line Items]
Fair Value of Acquired Loans at Acquisition Date	20,174
Gross Contractual Amounts Receivable at Acquisition Date	29,544
Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected	6,153
Anchor BanCorp Wisconsin Inc [Member] | Acquired Receivables Not Subject to ASC 310-30 [Member]
Loans at Acquisition Date [Line Items]
Fair Value of Acquired Loans at Acquisition Date	1,616,431
Gross Contractual Amounts Receivable at Acquisition Date	2,143,532
Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected	$ 274,155

XML

Acquisition and Divestiture Activity - Summary of Unaudited Pro-forma Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Business Acquisition, Pro Forma Information [Abstract]
Revenue	$ 203,355	$ 174,238	$ 370,352	$ 346,322
Income before income taxes	$ 82,343	$ 32,437	$ 135,958	$ 67,354

XML

Net Income Per Share - Summary of Table Reconciling Basic and Diluted Net Income Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share [Abstract]
Net income	$ 39,122	$ 26,156	$ 66,099	$ 47,062
Basic Earnings Per Share, Weighted average common shares outstanding	127,508	115,732	120,753	117,128
Basic Earnings Per Share	$ 0.31	$ 0.22	$ 0.55	$ 0.40
Net income	$ 39,122	$ 26,156	$ 66,099	$ 47,062
Diluted Earnings Per Share, Weighted average common shares outstanding	127,508	115,732	120,753	117,128
Effect of dilutive securities: Restricted stock	425	397	480	409
Effect of dilutive securities: Stock options	40	94	40	97
Diluted Earnings Per Share, Weighted average shares outstanding	127,973	116,223	121,273	117,634
Diluted Earnings Per Share	$ 0.31	$ 0.22	$ 0.55	$ 0.40

XML

Net Income Per Share - Summary of Table Reconciling Basic and Diluted Net Income Per Share (Parenthetical) (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Restricted Stock Units [Member]
Summary Of Computation Of Basic And Diluted Earnings Per Share [Line Items]
Antidilutive securities not included in the computation of net income per diluted share	100,000	0.0	200,000	0.0
Restricted Stock [Member]
Summary Of Computation Of Basic And Diluted Earnings Per Share [Line Items]
Antidilutive securities not included in the computation of net income per diluted share	100,000	0.0	200,000	0.0
Stock Options [Member]
Summary Of Computation Of Basic And Diluted Earnings Per Share [Line Items]
Antidilutive securities not included in the computation of net income per diluted share	800,000	900,000	800,000	900,000

XML

Accumulated Other Comprehensive Income (Loss) - Schedule of Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	$ (29,585)	$ (24,242)	$ (34,797)	$ (31,555)
Other comprehensive income (loss) before reclassifications	5,428	(14,499)	9,810	(6,473)
Amounts reclassified from accumulated other comprehensive income (loss)	540	679	1,370	(34)
Net other comprehensive income (loss)	5,968	(13,820)	11,180	(6,507)
Ending Balance	(23,617)	(38,062)	(23,617)	(38,062)
Accumulated Unrealized Gains and Losses on Available-for-Sale Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	6,777	9,079	(3,806)	(748)
Other comprehensive income (loss) before reclassifications	8,208	(16,704)	19,490	(5,189)
Amounts reclassified from accumulated other comprehensive income (loss)	(1,202)	(326)	(1,901)	(2,014)
Net other comprehensive income (loss)	7,006	(17,030)	17,589	(7,203)
Ending Balance	13,783	(7,951)	13,783	(7,951)
Accumulated Unrealized Gains and Losses on Held-to-Maturity Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(14,174)	(15,373)	(14,480)	(15,776)
Amounts reclassified from accumulated other comprehensive income (loss)	307	283	613	686
Net other comprehensive income (loss)	307	283	613	686
Ending Balance	(13,867)	(15,090)	(13,867)	(15,090)
Accumulated Gains and Losses on Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(15,387)	(9,309)	(9,276)	(5,935)
Other comprehensive income (loss) before reclassifications	(2,780)	2,205	(9,680)	(1,284)
Amounts reclassified from accumulated other comprehensive income (loss)	983	272	1,772	387
Net other comprehensive income (loss)	(1,797)	2,477	(7,908)	(897)
Ending Balance	(17,184)	(6,832)	(17,184)	(6,832)
Accumulated Defined Benefit Pension Plans [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(6,801)	(8,639)	(7,235)	(9,096)
Amounts reclassified from accumulated other comprehensive income (loss)	452	450	886	907
Net other comprehensive income (loss)	452	450	886	907
Ending Balance	$ (6,349)	$ (8,189)	$ (6,349)	$ (8,189)

XML

Accumulated Other Comprehensive Income (Loss) - Reclassifications out of Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net securities gains	$ 1,856	$ 512	$ 2,962	$ 3,195
Interest income/(expense)	99,340	92,097	184,983	183,090
Salaries and employee benefits, Actuarial gains/(losses)	730	725	1,430	1,463
Income tax (expense) benefit	(30,812)	(8,959)	(40,483)	(18,184)
Net income	39,122	26,156	66,099	47,062
Reclassifications out of Accumulated Other Comprehensive Income (Loss) [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net income	(540)	(679)	(1,370)	34
Reclassifications out of Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Unrealized Gains and Losses on Available-for-Sale Securities [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net securities gains	1,856	512	2,962	3,195
Income tax (expense) benefit	(654)	(186)	(1,061)	(1,181)
Net income	1,202	326	1,901	2,014
Reclassifications out of Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Unrealized Gains and Losses on Held-to-Maturity Securities [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest income/(expense)	(466)	(430)	(931)	(767)
Income tax (expense) benefit	159	147	318	81
Net income	(307)	(283)	(613)	(686)
Reclassifications out of Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Gains and Losses on Cash Flow Hedges [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income tax (expense) benefit	602	167	1,086	238
Net income	(983)	(272)	(1,772)	(387)
Reclassifications out of Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Gains and Losses on Cash Flow Hedges [Member] | Interest Rate Contracts [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest income/(expense)	(1,585)	(439)	(2,858)	(625)
Reclassifications out of Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Defined Benefit Pension Plans [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Salaries and employee benefits, Actuarial gains/(losses)	(730)	(725)	(1,430)	(1,463)
Income tax (expense) benefit	278	275	544	556
Net income	$ (452)	$ (450)	$ (886)	$ (907)

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Investment Securities - Amortized Cost and Fair Value of Available-for-Sale and Held-to-Maturity Investment Securities Portfolio (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	$ 2,627,177	$ 2,424,063
Available-for-Sale, Unrealized Gains	40,888	25,766
Available-for-Sale, Unrealized Losses	(19,164)	(31,608)
Available-for-Sale securities, Fair Value	2,648,901	2,418,221	$ 2,572,521
Held-to-Maturity, Amortized Cost	865,957	872,111	823,255
Held-to-Maturity, Unrealized Gains	73,898	57,309
Held-to-Maturity, Unrealized Losses		(3)
Held-to-Maturity, Fair Value	939,855	929,417	$ 867,345
U.S. Treasury [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	11,963	11,968
Available-for-Sale, Unrealized Gains	306	190
Available-for-Sale, Unrealized Losses		(8)
Available-for-Sale securities, Fair Value	12,269	12,150
U.S. Government-Sponsored Entities and Agencies [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	537,728	615,578
Available-for-Sale, Unrealized Gains	3,264	1,495
Available-for-Sale, Unrealized Losses	(217)	(3,523)
Available-for-Sale securities, Fair Value	540,775	613,550
Held-to-Maturity, Amortized Cost	141,220	142,864
Held-to-Maturity, Unrealized Gains	1,928	2,899
Held-to-Maturity, Fair Value	143,148	145,763
Mortgage-Backed Securities - Agency [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	1,323,606	1,065,936
Available-for-Sale, Unrealized Gains	15,180	10,970
Available-for-Sale, Unrealized Losses	(2,181)	(10,545)
Available-for-Sale securities, Fair Value	1,336,605	1,066,361
Held-to-Maturity, Amortized Cost	13,200	16,042
Held-to-Maturity, Unrealized Gains	523	562
Held-to-Maturity, Fair Value	13,723	16,604
States and Political Subdivisions [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	398,727	375,671
Available-for-Sale, Unrealized Gains	18,579	11,960
Available-for-Sale, Unrealized Losses	(143)	(335)
Available-for-Sale securities, Fair Value	417,163	387,296
Held-to-Maturity, Amortized Cost	711,537	713,205
Held-to-Maturity, Unrealized Gains	71,447	53,848
Held-to-Maturity, Unrealized Losses		(3)
Held-to-Maturity, Fair Value	782,984	767,050
Pooled Trust Preferred Securities [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	17,059	17,320
Available-for-Sale, Unrealized Losses	(10,339)	(9,420)
Available-for-Sale securities, Fair Value	6,720	7,900
Other Securities [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Amortized Cost	338,094	337,590
Available-for-Sale, Unrealized Gains	3,559	1,151
Available-for-Sale, Unrealized Losses	(6,284)	(7,777)
Available-for-Sale securities, Fair Value	$ 335,369	$ 330,964

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Investment Securities - Schedule of Proceeds from Sales or Calls and Realized Gain and Losses of Available-for-sale Investment Securities and Other Securities (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Schedule of Available-for-sale Securities [Line Items]
Proceeds from sales of available-for-sale securities	$ 30,801	$ 26,319	$ 107,451	$ 196,584
Proceeds from calls of available-for-sale securities			721,414	401,579
Total	270,799	187,727	471,760	409,586
Realized gains on sales of available-for-sale securities	1,491	316	3,151	2,797
Realized losses on sales of available-for-sale securities	(1)	(22)	(447)	(47)
Other securities gains (losses)	241	18	(24)	80
Net securities gains	1,856	512	2,962	3,195
Calls [Member]
Schedule of Available-for-sale Securities [Line Items]
Proceeds from calls of available-for-sale securities	239,998	161,408	364,309	213,002
Realized gains on calls of available-for-sale securities	126	212	370	380
Realized losses on calls of available-for-sale securities	$ (1)	$ (12)	$ (88)	$ (15)

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Investment Securities - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($) Security	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) Security Segment	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Investment [Line Items]
Proceeds from sales of investment securities held-to-maturity				$ 855,000
Net securities gains	$ 1,856,000	$ 512,000	$ 2,962,000	3,195,000
Trading securities that consist of mutual funds	$ 4,838,000	$ 3,995,000	$ 4,838,000	3,995,000	$ 3,941,000
Number of segments | Segment			2
Other-than-temporary-impairment losses on securities			$ 0	0
Number of securities in security portfolio | Security	1,758		1,758
Number of securities in unrealized loss position | Security	94		94
Unrealized losses	$ 19,164,000		$ 19,164,000		31,608,000
Municipal Bonds [Member]
Investment [Line Items]
Proceeds from sales of investment securities held-to-maturity				800,000
Net securities gains				52,000
Former Directors and Executives [Member]
Investment [Line Items]
Trading securities that consist of mutual funds	$ 4,800,000		$ 4,800,000		3,900,000
Pooled Trust Preferred Securities, Not Subject to FASB ASC 325-10 [Member]
Investment [Line Items]
Number of trust preferred securities | Security	2		2
Securities portfolio at fair value	$ 6,500,000		$ 6,500,000
Unrealized losses	$ 7,400,000		$ 7,400,000
Pooled Trust Preferred Securities, Subject To FASB ASC 325-10 [Member]
Investment [Line Items]
Number of trust preferred securities | Security	1		1
Securities portfolio at fair value	$ 200,000		$ 200,000
Unrealized losses	$ 3,000,000		$ 3,000,000
Pooled Trust Preferred Securities [Member]
Investment [Line Items]
Number of trust preferred securities | Security	3		3
Securities portfolio at fair value	$ 6,700,000		$ 6,700,000
Unrealized losses			10,300,000
Unrealized losses	$ 10,339,000		10,339,000		$ 9,420,000
Other-than-temporary-impairment losses			$ 0	$ 0

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Investment Securities - Expected Maturities of Investment Securities Portfolio (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Investments, Debt and Equity Securities [Abstract]
Available-for-Sale, Maturity, Within one year, Amortized Cost	$ 36,566
Available-for-Sale, Maturity, One to five years, Amortized Cost	400,424
Available-for-Sale, Maturity, Five to ten years, Amortized Cost	339,108
Available-for-Sale, Maturity, Beyond ten years, Amortized Cost	1,851,079
Available-for-Sale, Amortized Cost	2,627,177	$ 2,424,063
Held-to-Maturity, Maturity, Within one year, Amortized Cost	15,011
Held-to-Maturity, Maturity, One to five years, Amortized Cost	49,934
Held-to-Maturity, Maturity, Five to ten years, Amortized Cost	220,589
Held-to-Maturity, Maturity, Beyond ten years, Amortized Cost	580,423
Held-to-Maturity, Amortized Cost	865,957	872,111	$ 823,255
Available-for-Sale, Maturity, Within one year, Fair Value	36,649
Available-for-Sale, Maturity, One to five years, Fair Value	405,665
Available-for-Sale, Maturity, Five to ten years, Fair Value	344,653
Available-for-Sale, Maturity, Beyond ten years, Fair Value	1,861,934
Available-for-Sale securities, Fair Value	2,648,901	2,418,221	2,572,521
Held-to-Maturity, Maturity, Within one year, Fair Value	15,075
Held-to-Maturity, Maturity, One to five years, Fair Value	52,935
Held-to-Maturity, Maturity, Five to ten years, Fair Value	231,585
Held-to-Maturity, Maturity, Beyond ten years, Fair Value	640,260
Held-to-Maturity, Fair Value	$ 939,855	$ 929,417	$ 867,345
Available-for-Sale, Maturity, Within one year, Weighted Average Yield	1.54%
Available-for-Sale, Maturity, One to five years, Weighted Average Yield	2.00%
Available-for-Sale, Maturity, Five to ten years, Weighted Average Yield	2.68%
Available-for-Sale, Maturity, Beyond ten years, Weighted Average Yield	2.34%
Available-for-Sale, Weighted Average Yield	2.32%
Held-to-Maturity, Maturity, Within one year, Weighted Average Yield	5.57%
Held-to-Maturity, Maturity, One to five years, Weighted Average Yield	4.53%
Held-to-Maturity, Maturity, Five to ten years, Weighted Average Yield	3.79%
Held-to-Maturity, Maturity, Beyond ten years, Weighted Average Yield	5.49%
Held-to-Maturity, Weighted Average Yield	5.00%

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Investment Securities - Investment Securities with Unrealized Losses by Aggregated Major Security Type and Length of Time in Continuous Unrealized Loss Position (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Less than 12 Months, Fair Value	$ 303,710	$ 618,592
Available-for-Sale, Less than 12 Months, Unrealized Losses	(1,378)	(7,822)
Available-for-Sale, 12 months or longer, Fair Value	235,546	501,326
Available-for-Sale, 12 months or longer, Unrealized Losses	(17,786)	(23,786)
Available-for-Sale, Fair Value	539,256	1,119,918
Available-for-Sale, Unrealized Losses	(19,164)	(31,608)
Held-to-Maturity, Less than 12 Months, Fair Value		2,026
Held-to-Maturity, Less than 12 Months, Unrealized Losses		(3)
Held-to-Maturity, 12 months or longer, Fair Value		0
Held-to-Maturity, 12 months or longer, Unrealized Losses		0
Held-to-Maturity, Fair Value		2,026
Held-to-Maturity, Unrealized Losses		(3)
U.S. Treasury [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Less than 12 Months, Fair Value		6,505
Available-for-Sale, Less than 12 Months, Unrealized Losses		(8)
Available-for-Sale, Fair Value		6,505
Available-for-Sale, Unrealized Losses		(8)
U.S. Government-Sponsored Entities and Agencies [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Less than 12 Months, Fair Value	91,640	160,751
Available-for-Sale, Less than 12 Months, Unrealized Losses	(217)	(1,492)
Available-for-Sale, 12 months or longer, Fair Value		122,581
Available-for-Sale, 12 months or longer, Unrealized Losses		(2,031)
Available-for-Sale, Fair Value	91,640	283,332
Available-for-Sale, Unrealized Losses	(217)	(3,523)
Mortgage-Backed Securities - Agency [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Less than 12 Months, Fair Value	156,600	256,359
Available-for-Sale, Less than 12 Months, Unrealized Losses	(281)	(3,444)
Available-for-Sale, 12 months or longer, Fair Value	104,843	239,047
Available-for-Sale, 12 months or longer, Unrealized Losses	(1,900)	(7,101)
Available-for-Sale, Fair Value	261,443	495,406
Available-for-Sale, Unrealized Losses	(2,181)	(10,545)
States and Political Subdivisions [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Less than 12 Months, Fair Value	1,064	38,373
Available-for-Sale, Less than 12 Months, Unrealized Losses	(3)	(161)
Available-for-Sale, 12 months or longer, Fair Value	5,692	5,137
Available-for-Sale, 12 months or longer, Unrealized Losses	(140)	(174)
Available-for-Sale, Fair Value	6,756	43,510
Available-for-Sale, Unrealized Losses	(143)	(335)
Held-to-Maturity, Less than 12 Months, Fair Value		2,026
Held-to-Maturity, Less than 12 Months, Unrealized Losses		(3)
Held-to-Maturity, 12 months or longer, Fair Value		0
Held-to-Maturity, 12 months or longer, Unrealized Losses		0
Held-to-Maturity, Fair Value		2,026
Held-to-Maturity, Unrealized Losses		(3)
Pooled Trust Preferred Securities [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, 12 months or longer, Fair Value	6,720	7,900
Available-for-Sale, 12 months or longer, Unrealized Losses	(10,339)	(9,420)
Available-for-Sale, Fair Value	6,720	7,900
Available-for-Sale, Unrealized Losses	(10,339)	(9,420)
Other Securities [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale, Less than 12 Months, Fair Value	54,406	156,604
Available-for-Sale, Less than 12 Months, Unrealized Losses	(877)	(2,717)
Available-for-Sale, 12 months or longer, Fair Value	118,291	126,661
Available-for-Sale, 12 months or longer, Unrealized Losses	(5,407)	(5,060)
Available-for-Sale, Fair Value	172,697	283,265
Available-for-Sale, Unrealized Losses	$ (6,284)	$ (7,777)

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Investment Securities - Trust Preferred Securities (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($) Item	Dec. 31, 2015 USD ($)	Jun. 30, 2015 USD ($)
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-Sale securities, Fair Value	$ 2,648,901	$ 2,418,221	$ 2,572,521
Pooled Trust Preferred Securities One [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Amortized Cost	17,059
Available-for-Sale securities, Fair Value	6,720
Available-for-Sale, Unrealized Gain/ (Loss)	(10,339)
Realized Losses 2016	$ 0
Pooled Trust Preferred Securities One [Member] | Reg Div Funding 2004 [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Pooled trust preferred securities, Class	B-2
Lowest Credit Rating	D
Amortized Cost	$ 3,168
Available-for-Sale securities, Fair Value	204
Available-for-Sale, Unrealized Gain/ (Loss)	(2,964)
Realized Losses 2016	$ 0
# of Issuers Currently Performing | Item	23
# of Issuers Currently Remaining | Item	39
Actual Deferrals and Defaults as a Percent of Original Collateral	33.30%
Expected Defaults as a % of Remaining Performing Collateral	7.40%
Excess Subordination as a % of Current Performing Collateral	0.00%
Pooled Trust Preferred Securities One [Member] | Pretsl XXVII LTD [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Pooled trust preferred securities, Class	B
Lowest Credit Rating	B
Amortized Cost	$ 4,422
Available-for-Sale securities, Fair Value	2,017
Available-for-Sale, Unrealized Gain/ (Loss)	(2,405)
Realized Losses 2016	$ 0
# of Issuers Currently Performing | Item	33
# of Issuers Currently Remaining | Item	43
Actual Deferrals and Defaults as a Percent of Original Collateral	18.90%
Expected Defaults as a % of Remaining Performing Collateral	4.20%
Excess Subordination as a % of Current Performing Collateral	49.40%
Pooled Trust Preferred Securities One [Member] | Trapeza Ser 13A [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Pooled trust preferred securities, Class	A2A
Lowest Credit Rating	BBB
Amortized Cost	$ 9,469
Available-for-Sale securities, Fair Value	4,499
Available-for-Sale, Unrealized Gain/ (Loss)	(4,970)
Realized Losses 2016	$ 0
# of Issuers Currently Performing | Item	50
# of Issuers Currently Remaining | Item	57
Actual Deferrals and Defaults as a Percent of Original Collateral	8.90%
Expected Defaults as a % of Remaining Performing Collateral	4.90%
Excess Subordination as a % of Current Performing Collateral	43.10%
Single Issuer Trust Preferred Securities [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Amortized Cost	$ 9,747
Available-for-Sale securities, Fair Value	8,485
Available-for-Sale, Unrealized Gain/ (Loss)	(1,262)
Realized Losses 2016	$ 0
Single Issuer Trust Preferred Securities [Member] | Fleet Cap Tr V (BOA) [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Lowest Credit Rating	BB+
Amortized Cost	$ 3,393
Available-for-Sale securities, Fair Value	2,835
Available-for-Sale, Unrealized Gain/ (Loss)	(558)
Realized Losses 2016	$ 0
Single Issuer Trust Preferred Securities [Member] | J P Morgan Chase Cap XIII [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Lowest Credit Rating	BBB-
Amortized Cost	$ 4,762
Available-for-Sale securities, Fair Value	4,000
Available-for-Sale, Unrealized Gain/ (Loss)	(762)
Realized Losses 2016	$ 0
Single Issuer Trust Preferred Securities [Member] | NB-Global [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Lowest Credit Rating	BB+
Amortized Cost	$ 777
Available-for-Sale securities, Fair Value	810
Available-for-Sale, Unrealized Gain/ (Loss)	33
Realized Losses 2016	$ 0
Single Issuer Trust Preferred Securities [Member] | Chase Cap II [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Lowest Credit Rating	BBB-
Amortized Cost	$ 815
Available-for-Sale securities, Fair Value	840
Available-for-Sale, Unrealized Gain/ (Loss)	25
Realized Losses 2016	0
Trust Preferred Securities [Member]
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Amortized Cost	26,806
Available-for-Sale securities, Fair Value	15,205
Available-for-Sale, Unrealized Gain/ (Loss)	(11,601)
Realized Losses 2016	$ 0

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Loans Held for Sale - Additional Information (Detail) - USD ($)	3 Months Ended
	Sep. 30, 2015	Dec. 31, 2014	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Servicing Assets at Fair Value [Line Items]
Loans held for sale sold	$ 193,600,000
Gain loss on loans held for sale	$ 100,000
Loans held for sale under branch divestitures			$ 44,422,000	$ 13,810,000	$ 217,667,000
Southern Illinois Franchise [Member]
Servicing Assets at Fair Value [Line Items]
Loans held for sale under branch divestitures			0
Residential Mortgage Loans [Member]
Servicing Assets at Fair Value [Line Items]
Mortgage loans held for sale			$ 44,400,000	$ 13,800,000
Commercial Real Estate [Member]
Servicing Assets at Fair Value [Line Items]
Loans reclassified from held for investment to held for sale		$ 197,900,000

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Loans and Allowance for Credit Losses - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2016 USD ($) SecurityLoan	Jun. 30, 2015 USD ($) SecurityLoan	Dec. 31, 2015 USD ($)
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	$ 8,830,158,000	$ 6,766,062,000	$ 6,948,405,000
Percentage covered up to $467.2 million	0.00%
Total	$ 1,893,700,000	1,775,954,000	1,804,615,000
Loan placed on nonaccrual when past due, number of days	90 days
Loan participations	$ 392,200,000
Loan participations sold	209,600,000
Loan participations retained	$ 182,600,000
Troubled debt restructuring term	6 months
Minimum number of days for loan charge off to be recorded	120 days
Maximum number of days for loan charge off to be recorded	180 days
Nonaccrual period for loans	90 days
Financing receivable TDR's included with non-accrual loans	$ 38,100,000		30,000,000
Financing receivable troubled debt restructurings specific reserves	5,600,000		2,300,000
Unfunded commitments on TDRs	4,200,000
Increase (decrease) in allowance for loan losses	(1,200,000)
Allowance for loan losses charge-offs	$ 600,000
Number of days for a loan to be considered to be in payment default	90 days
Troubled debt restructurings which was a payment default	$ 800,000	500,000
Outstanding loans including principal, interest, fees and penalties	323,400,000		321,500,000
Accretion recorded as loan interest income	13,000,000	$ 15,500,000
Financing receivable allowance for loan losses related to purchased loans	700,000		1,400,000
Consumer Loan [Member] | Other [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	274,415,000		133,478,000
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	1,893,700,000		1,804,615,000
Total	1,893,700,000		1,814,940,000
Commercial [Member] | Criticized [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	38,867,000		55,570,000
Commercial [Member] | Classified - Substandard [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	25,422,000		24,723,000
Commercial [Member] | Classified - Nonaccrual [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	52,226,000		58,469,000
Anchor BanCorp Wisconsin Inc [Member] | Consumer Loan [Member] | Student Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	83,300,000
Anchor BanCorp Wisconsin Inc [Member] | Commercial [Member] | Other [Member] | Criticized [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	9,400,000
Anchor BanCorp Wisconsin Inc [Member] | Commercial [Member] | Other [Member] | Classified - Substandard [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	3,600,000
Anchor BanCorp Wisconsin Inc [Member] | Commercial [Member] | Other [Member] | Classified - Nonaccrual [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total	24,800,000
Maximum [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Value of small commercial loans on nonaccrual status or 90 days or more delinquent	$ 250,000
Maximum [Member] | Anchor BanCorp Wisconsin Inc [Member] | Consumer Loan [Member] | Student Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loan guarantee percentage	100.00%
Minimum [Member] | Anchor BanCorp Wisconsin Inc [Member] | Consumer Loan [Member] | Student Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loan guarantee percentage	97.00%
Losses up to $275.0 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loss amount covered at 80% up to $467.2 million	80.00%
Loss amount covered at 80% up to $275 million	$ 275,000,000
Losses in Excess of $467.2 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loss amount covered at 80% up to $467.2 million	80.00%
Loss amount covered at 80% up to $275 million	$ 467,200,000
Commercial Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	$ 1,893,700,000		1,814,940,000
Number of loans modified as TDRs | SecurityLoan	10	3
Commercial Loan [Member] | Credit Concentration Risk [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Concentration of commercial or commercial real estate loans in a single industry, maximum	10.00%
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	$ 2,943,525,000		1,868,972,000
Number of loans modified as TDRs | SecurityLoan	3	4
Consumer - Other [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Finance receivable recorded investment, Nonperforming	$ 7,766,000		$ 1,497,000
Consumer - Other [Member] | Anchor BanCorp Wisconsin Inc [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Finance receivable recorded investment, Nonperforming	$ 6,100,000
Consumer - Other [Member] | Maximum [Member] | Anchor BanCorp Wisconsin Inc [Member] | Student Loan [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loan guarantee percentage	100.00%
Consumer - Other [Member] | Minimum [Member] | Anchor BanCorp Wisconsin Inc [Member] | Student Loan [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loan guarantee percentage	97.00%

XML

Loans and Allowance for Credit Losses - Schedule of Composition of Loans (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans by lending classification	$ 8,830,158	$ 6,948,405	$ 6,766,062
Allowance for loan losses	(51,804)	(51,296)	(48,479)
Allowance for loan losses - covered loans		(937)	(1,712)
Net loans	8,778,354	6,896,172	$ 6,715,871
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans by lending classification	1,893,700	1,804,615
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans by lending classification	2,099,770	1,644,614
Consumer Loan [Member] | Consumer Credit - Heloc [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans by lending classification	473,550	359,954
Construction [Member] | Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans by lending classification	263,496	185,449
Other [Member] | Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans by lending classification	2,680,029	1,662,372
Other [Member] | Consumer Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans by lending classification	274,415	133,478
Consumer Credit - Auto [Member] | Consumer Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans by lending classification	$ 1,145,198	1,050,336
Covered Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans by lending classification		$ 107,587

XML

Loans and Allowance for Credit Losses - Schedule of Composition of Loans (Parenthetical) (Detail) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Receivables [Abstract]
Direct finance leases	$ 12.7	$ 14.4

XML

Loans and Allowance for Credit Losses - Schedule of Activity in Allowance for Loan Losses (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	$ 50,700	$ 48,878	$ 52,233	$ 47,849
Charge-offs	(2,677)	(3,902)	(6,619)	(6,016)
Recoveries	2,462	2,944	4,780	6,086
Provision	1,319	2,271	1,410	2,272
Ending balance	51,804	50,191	51,804	50,191
Commercial Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	25,121	24,703	26,347	20,670
Charge-offs	(432)	(1,872)	(1,959)	(2,421)
Recoveries	876	789	1,694	2,564
Provision	(1,409)	(186)	(1,926)	2,621
Ending balance	24,156	23,434	24,156	23,434
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	15,771	13,807	15,993	17,348
Charge-offs	(783)	(514)	(1,062)	(101)
Recoveries	547	1,009	1,387	1,473
Provision	2,673	2,023	1,890	(2,395)
Ending balance	18,208	16,325	18,208	16,325
Residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	1,749	2,919	2,051	2,962
Charge-offs	(80)	(22)	(220)	(396)
Recoveries	187	59	213	87
Provision	(397)	(375)	(585)	(72)
Ending balance	1,459	2,581	1,459	2,581
Consumer Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	8,059	7,449	7,842	6,869
Charge-offs	(1,382)	(1,494)	(3,378)	(3,098)
Recoveries	852	1,087	1,486	1,962
Provision	452	809	2,031	2,118
Ending balance	$ 7,981	$ 7,851	$ 7,981	$ 7,851

XML

Loans and Allowance for Credit Losses - Schedule of Recorded Investment in Financing Receivables (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	$ 11,438	$ 11,488
Allowance for loan losses, Collectively evaluated for impairment	39,683	39,386
Allowance for loan losses, Loans acquired with deteriorated credit quality	683	863
Allowance for loan losses, Covered loans acquired with deteriorated credit quality		496
Total allowance for loan losses	51,804	52,233
Loans and leases outstanding, Individually evaluated for impairment	112,491	102,946
Loans and leases outstanding, Collectively evaluated for impairment	8,637,594	6,764,378
Loans and leases outstanding, Loans acquired with deteriorated credit quality	80,073	33,242
Loans and leases outstanding, Covered loans acquired with deteriorated credit quality		47,839
Total loans	8,830,158	6,948,405	$ 6,766,062
Commercial Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	7,489	7,467
Allowance for loan losses, Collectively evaluated for impairment	16,374	18,295
Allowance for loan losses, Loans acquired with deteriorated credit quality	293	247
Allowance for loan losses, Covered loans acquired with deteriorated credit quality		338
Total allowance for loan losses	24,156	26,347
Loans and leases outstanding, Individually evaluated for impairment	52,132	60,959
Loans and leases outstanding, Collectively evaluated for impairment	1,839,760	1,750,397
Loans and leases outstanding, Loans acquired with deteriorated credit quality	1,808	691
Loans and leases outstanding, Covered loans acquired with deteriorated credit quality		2,893
Total loans	1,893,700	1,814,940
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Individually evaluated for impairment	3,949	4,021
Allowance for loan losses, Collectively evaluated for impairment	14,082	11,439
Allowance for loan losses, Loans acquired with deteriorated credit quality	177	533
Total allowance for loan losses	18,208	15,993
Loans and leases outstanding, Individually evaluated for impairment	60,359	41,987
Loans and leases outstanding, Collectively evaluated for impairment	2,830,350	1,779,062
Loans and leases outstanding, Loans acquired with deteriorated credit quality	52,816	28,499
Loans and leases outstanding, Covered loans acquired with deteriorated credit quality		19,424
Total loans	2,943,525	1,868,972
Residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Collectively evaluated for impairment	1,446	2,038
Allowance for loan losses, Loans acquired with deteriorated credit quality	13	13
Total allowance for loan losses	1,459	2,051
Loans and leases outstanding, Collectively evaluated for impairment	2,084,652	1,644,631
Loans and leases outstanding, Loans acquired with deteriorated credit quality	15,118	127
Loans and leases outstanding, Covered loans acquired with deteriorated credit quality		16,577
Total loans	2,099,770	1,661,335
Consumer Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Collectively evaluated for impairment	7,781	7,614
Allowance for loan losses, Loans acquired with deteriorated credit quality	200	70
Allowance for loan losses, Covered loans acquired with deteriorated credit quality		158
Total allowance for loan losses	7,981	7,842
Loans and leases outstanding, Collectively evaluated for impairment	1,882,832	1,590,288
Loans and leases outstanding, Loans acquired with deteriorated credit quality	10,331	3,925
Loans and leases outstanding, Covered loans acquired with deteriorated credit quality		8,945
Total loans	$ 1,893,163	$ 1,603,158

XML

Loans and Allowance for Credit Losses - Schedule of Risk Category of Commercial and Commercial Real Estate Loans (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Risk Category Of Loans [Line Items]
Total	$ 1,893,700	$ 1,804,615	$ 1,775,954
Commercial [Member]
Risk Category Of Loans [Line Items]
Total	1,893,700	1,814,940
Commercial [Member] | Pass [Member]
Risk Category Of Loans [Line Items]
Total	1,774,857	1,672,672
Commercial [Member] | Criticized [Member]
Risk Category Of Loans [Line Items]
Total	38,867	55,570
Commercial [Member] | Classified - Substandard [Member]
Risk Category Of Loans [Line Items]
Total	25,422	24,723
Commercial [Member] | Classified - Nonaccrual [Member]
Risk Category Of Loans [Line Items]
Total	52,226	58,469
Commercial [Member] | Classified - Doubtful [Member]
Risk Category Of Loans [Line Items]
Total	2,328	3,506
Commercial Real Estate [Member] | Construction [Member]
Risk Category Of Loans [Line Items]
Total	263,496	188,688
Commercial Real Estate [Member] | Other [Member]
Risk Category Of Loans [Line Items]
Total	2,680,029	1,680,284
Commercial Real Estate [Member] | Pass [Member] | Construction [Member]
Risk Category Of Loans [Line Items]
Total	256,427	182,701
Commercial Real Estate [Member] | Pass [Member] | Other [Member]
Risk Category Of Loans [Line Items]
Total	2,484,795	1,508,309
Commercial Real Estate [Member] | Criticized [Member] | Construction [Member]
Risk Category Of Loans [Line Items]
Total	4,014	3,300
Commercial Real Estate [Member] | Criticized [Member] | Other [Member]
Risk Category Of Loans [Line Items]
Total	64,005	75,477
Commercial Real Estate [Member] | Classified - Substandard [Member] | Construction [Member]
Risk Category Of Loans [Line Items]
Total	1,572	1,857
Commercial Real Estate [Member] | Classified - Substandard [Member] | Other [Member]
Risk Category Of Loans [Line Items]
Total	56,982	49,091
Commercial Real Estate [Member] | Classified - Nonaccrual [Member] | Construction [Member]
Risk Category Of Loans [Line Items]
Total	1,483	830
Commercial Real Estate [Member] | Classified - Nonaccrual [Member] | Other [Member]
Risk Category Of Loans [Line Items]
Total	64,338	39,521
Commercial Real Estate [Member] | Classified - Doubtful [Member] | Other [Member]
Risk Category Of Loans [Line Items]
Total	$ 9,909	$ 7,886

XML

Loans and Allowance for Credit Losses - Schedule of Recorded Investment in Residential and Consumer Loans Based on Payment Activity (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment	$ 1,893,163	$ 1,543,768	$ 1,464,541
Residential real estate	2,099,770	1,644,614	$ 1,622,819
Consumer Heloc [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment	473,550	413,294
Consumer Heloc [Member] | Performing Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Performing	469,711	410,243
Consumer Heloc [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Nonperforming	3,839	3,051
Consumer Auto [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment	1,145,198	1,050,336
Consumer Auto [Member] | Performing Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Performing	1,143,932	1,048,763
Consumer Auto [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Nonperforming	1,266	1,573
Consumer - Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment	274,415	139,528
Consumer - Other [Member] | Performing Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Performing	266,649	138,031
Consumer - Other [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Nonperforming	7,766	1,497
Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Residential real estate	2,099,770	1,661,335
Residential [Member] | Performing Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Performing	2,082,585	1,645,293
Residential [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Finance receivable recorded investment, Nonperforming	$ 17,185	$ 16,042

XML

Loans and Allowance for Credit Losses - Schedule of Impaired Loans (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
Recorded Investment, Total	$ 118,638	$ 104,872
Unpaid Principal Balance, Total	120,286	109,235
Related Allowance	11,632	11,307
Commercial Loan [Member]
Financing Receivable, Impaired [Line Items]
Related Allowance	7,489	7,111
Recorded Investment with no related allowance	36,975	40,414
Unpaid Principal Balance with no related allowance	34,584	41,212
Recorded Investment with related allowance	18,903	16,377
Unpaid Principal Balance with related allowance	18,905	16,483
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Related Allowance		6
Recorded Investment with related allowance		237
Unpaid Principal Balance with related allowance		237
Consumer Loan [Member]
Financing Receivable, Impaired [Line Items]
Related Allowance	139	126
Recorded Investment with no related allowance	904	1,201
Unpaid Principal Balance with no related allowance	1,041	1,305
Recorded Investment with related allowance	2,785	2,525
Unpaid Principal Balance with related allowance	2,785	2,525
Commercial Real Estate - Other [Member]
Financing Receivable, Impaired [Line Items]
Related Allowance	3,949	4,015
Recorded Investment with no related allowance	41,334	26,998
Unpaid Principal Balance with no related allowance	45,139	30,264
Recorded Investment with related allowance	15,279	14,752
Unpaid Principal Balance with related allowance	15,353	14,802
Residential [Member]
Financing Receivable, Impaired [Line Items]
Related Allowance	55	49
Recorded Investment with no related allowance	1,353	1,383
Unpaid Principal Balance with no related allowance	1,374	1,422
Recorded Investment with related allowance	1,105	985
Unpaid Principal Balance with related allowance	$ 1,105	$ 985

XML

Loans and Allowance for Credit Losses - Schedule of Impaired Loans (Parenthetical) (Detail) - USD ($) $ in Millions	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Dec. 31, 2015
Receivables [Abstract]
loans that were previously covered by loss share agreements with the FDIC	$ 4.7	$ 4.7	$ 4.2

XML

Loans and Allowance for Credit Losses - Schedule of Average Balance and Interest Income Recognized on Impaired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, Average Recorded Investment, Total	$ 105,247	$ 111,870	$ 115,072	$ 105,942
Interest Income Recognized	411	784	671	1,046
Commercial Loan [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment with no related allowance	32,951	30,769	38,029	31,505
Interest Income Recognized with no related allowance	33	85	61	127
Average Recorded Investment with an allowance recorded	19,546	25,069	17,641	21,359
Interest Income Recognized with an allowance recorded	79	355	92	403
Consumer Loan [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment with no related allowance	871	869	981	824
Interest Income Recognized with no related allowance	1	1	2	2
Average Recorded Investment with an allowance recorded	2,781	1,518	2,695	1,568
Interest Income Recognized with an allowance recorded		29	37	49
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment with no related allowance		2,107		2,025
Interest Income Recognized with no related allowance		1		4
Average Recorded Investment with an allowance recorded	116	117	119	49
Commercial Real Estate - Other [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment with no related allowance	34,344	38,758	38,197	32,402
Interest Income Recognized with no related allowance	162	189	257	274
Average Recorded Investment with an allowance recorded	12,230	10,274	15,016	13,980
Interest Income Recognized with an allowance recorded	134	121	182	122
Residential [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment with no related allowance	1,348	920	1,359	761
Interest Income Recognized with no related allowance	2	1	2	1
Average Recorded Investment with an allowance recorded	$ 1,060	1,469	1,035	1,469
Interest Income Recognized with an allowance recorded		$ 2	$ 38	$ 64

XML

Loans and Allowance for Credit Losses - Schedule of Average Balance and Interest Income Recognized on Impaired Loans (Parenthetical) (Detail) - USD ($) $ in Millions	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Dec. 31, 2015
Receivables [Abstract]
loans that were previously covered by loss share agreements with the FDIC	$ 4.7	$ 4.7	$ 4.2

XML

Loans and Allowance for Credit Losses - Schedule of Past Due Financing Receivables (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded Investment > 90 Days and Accruing	$ 670	$ 916
Nonaccrual	160,340	132,373
Financing Receivables, Past Due	194,981	153,645
Current	8,635,177	6,794,760
30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	27,995	16,266
60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	5,976	4,090
Commercial Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded Investment > 90 Days and Accruing	175	565
Nonaccrual	54,554	57,536
Financing Receivables, Past Due	55,452	59,003
Current	1,838,248	1,745,612
Commercial Loan [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	496	802
Commercial Loan [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	227	100
Construction [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	1,483	749
Financing Receivables, Past Due	1,483	749
Current	262,013	184,700
Other [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	74,247	46,601
Financing Receivables, Past Due	76,026	47,174
Current	2,604,003	1,615,198
Other [Member] | Commercial Real Estate [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	1,779	438
Other [Member] | Commercial Real Estate [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due		135
Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded Investment > 90 Days and Accruing	101	114
Nonaccrual	17,185	14,953
Financing Receivables, Past Due	33,233	26,613
Current	2,066,537	1,618,001
Residential [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	14,221	9,300
Residential [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	1,726	2,246
Consumer Heloc [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded Investment > 90 Days and Accruing	240
Nonaccrual	3,839	2,369
Financing Receivables, Past Due	5,585	3,054
Current	467,965	356,900
Consumer Heloc [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	1,286	283
Consumer Heloc [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	220	402
Consumer Auto [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded Investment > 90 Days and Accruing	104	202
Nonaccrual	1,266	1,573
Financing Receivables, Past Due	5,016	6,309
Current	1,140,182	1,044,027
Consumer Auto [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	2,962	3,804
Consumer Auto [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	684	730
Consumer - Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded Investment > 90 Days and Accruing	50	25
Nonaccrual	7,766	1,256
Financing Receivables, Past Due	18,186	2,276
Current	256,229	131,202
Consumer - Other [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	7,251	830
Consumer - Other [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due	$ 3,119	165
Covered Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Recorded Investment > 90 Days and Accruing		10
Nonaccrual		7,336
Financing Receivables, Past Due		8,467
Current		99,120
Covered Loans [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due		809
Covered Loans [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivables, Past Due		$ 312

XML

Loans and Allowance for Credit Losses - Schedule of Activity in Troubled Debt Restructurings (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Financing Receivable, Impaired [Line Items]
Beginning balance	$ 44,251	$ 34,953
(Charge-offs)/recoveries	(615)	1,180
Payments	(15,741)	(7,045)
Additions	22,534	9,994
Other	1,424
Ending balance	51,853	39,082
Commercial Loan [Member]
Financing Receivable, Impaired [Line Items]
Beginning balance	23,354	15,205
(Charge-offs)/recoveries	(742)	574
Payments	(10,819)	(3,505)
Additions	11,233	5,573
Other	1,251
Ending balance	24,277	17,847
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Beginning balance	14,602	15,226
(Charge-offs)/recoveries	108	648
Payments	(4,035)	(3,135)
Additions	10,581	3,321
Other	173
Ending balance	21,429	16,060
Residential [Member]
Financing Receivable, Impaired [Line Items]
Beginning balance	2,693	2,063
(Charge-offs)/recoveries	42	(15)
Payments	(462)	(85)
Additions	335	419
Ending balance	2,608	2,382
Consumer Loan [Member]
Financing Receivable, Impaired [Line Items]
Beginning balance	3,602	2,459
(Charge-offs)/recoveries	(23)	(27)
Payments	(425)	(320)
Additions	385	681
Ending balance	$ 3,539	$ 2,793

XML

Loans and Allowance for Credit Losses - Schedule of Loans by Class Modified as Troubled Debt Restructuring (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($) SecurityLoan	Jun. 30, 2015 USD ($) SecurityLoan
Financing Receivable, Modifications [Line Items]
Number of Loans | SecurityLoan	36	58
Pre-modification Outstanding Recorded Investment	$ 22,534	$ 9,994
Post-modification Outstanding Recorded Investment	$ 21,982	$ 9,994
Commercial Loan [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | SecurityLoan	16	18
Pre-modification Outstanding Recorded Investment	$ 11,233	$ 5,573
Post-modification Outstanding Recorded Investment	$ 10,681	$ 5,573
Other [Member] | Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | SecurityLoan	9	14
Pre-modification Outstanding Recorded Investment	$ 10,581	$ 2,159
Post-modification Outstanding Recorded Investment	$ 10,581	$ 2,159
Residential [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | SecurityLoan	3	3
Pre-modification Outstanding Recorded Investment	$ 335	$ 419
Post-modification Outstanding Recorded Investment	$ 335	$ 419
Consumer - Other [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | SecurityLoan	8	18
Pre-modification Outstanding Recorded Investment	$ 385	$ 681
Post-modification Outstanding Recorded Investment	$ 385	$ 681
Construction [Member] | Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | SecurityLoan		5
Pre-modification Outstanding Recorded Investment		$ 1,162
Post-modification Outstanding Recorded Investment		$ 1,162

XML

Loans and Allowance for Credit Losses - Schedule of Activity of Purchased Impaired Loans (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
Purchased impaired loans	$ 80,073	$ 81,081
Allowance for loan losses	(683)	(1,359)
Carrying amount, net of allowance	79,390	79,722
Commercial Loan [Member]
Financing Receivable, Impaired [Line Items]
Purchased impaired loans	1,808	3,584
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Purchased impaired loans	52,816	47,923
Residential [Member]
Financing Receivable, Impaired [Line Items]
Purchased impaired loans	15,118	16,704
Consumer Loan [Member]
Financing Receivable, Impaired [Line Items]
Purchased impaired loans	$ 10,331	$ 12,870

XML

Loans and Allowance for Credit Losses - Schedule of Accretable Yield of Noncovered Purchased Credit Impaired Loans, or Income Expected to be Collected (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($)
Non Covered Purchased Credit Impaired Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at January 1	$ 45,310
New loans purchased	3,217
Accretion of income	(12,990)
Reclassifications from (to) nonaccretable difference	5,619
Disposals/other adjustments	530
Balance at June 30	41,686
Acquisitions Prior to Two Thousand Fifteen [Member] | Non Covered Purchased Credit Impaired Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at January 1	42,498
Accretion of income	(12,137)
Reclassifications from (to) nonaccretable difference	5,191
Disposals/other adjustments	487
Balance at June 30	36,039
Founders Financial Corporation [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at June 30	1,812
Founders Financial Corporation [Member] | Non Covered Purchased Credit Impaired Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at January 1	2,812
Accretion of income	(505)
Reclassifications from (to) nonaccretable difference	428
Balance at June 30	2,735
Anchor BanCorp Wisconsin Inc [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at June 30	3,217
Anchor BanCorp Wisconsin Inc [Member] | Non Covered Purchased Credit Impaired Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
New loans purchased	3,217
Accretion of income	(348)
Disposals/other adjustments	43
Balance at June 30	$ 2,912

XML

Loans and Allowance for Credit Losses - Schedule of Accretable Yield of Noncovered Purchased Credit Impaired Loans, or Income Expected to be Collected (Parenthetical) (Detail)	6 Months Ended
	Jun. 30, 2016
Founders Financial Corporation [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Effective date of acquisition	Jan. 01, 2015
Anchor BanCorp Wisconsin Inc [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Effective date of acquisition	May 01, 2016

XML

Loans and Allowance for Credit Losses - Schedule of Receivables for which Contractually Required Payments would not be Collected (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($)
Founders Financial Corporation [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Contractually required payments	$ 11,103
Nonaccretable difference	(2,684)
Cash flows expected to be collected at acquisition	8,419
Accretable yield	(1,812)
Fair value of acquired loans at acquisition	6,607
Anchor BanCorp Wisconsin Inc [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Contractually required payments	29,544
Nonaccretable difference	(6,153)
Cash flows expected to be collected at acquisition	23,391
Accretable yield	(3,217)
Fair value of acquired loans at acquisition	$ 20,174

XML

Covered Loans - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Jun. 30, 2015
Receivables [Abstract]
Cash received from the FDIC as final payment		$ 8,700
Pre-tax gain	$ 200
Covered loans			$ 95,400	$ 107,587	$ 135,407
Percentage of prospective yield adjustments offset	80.00%	80.00%

XML

Covered Loans - Schedule of Covered Acquired Impaired Loans (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Impaired Loans By Type [Line Items]
Beginning balance	$ 47,343	$ 77,053
Principal reductions and interest payments	(18,542)	(18,992)
Accretion of loan discount	7,196	7,259
Changes in contractual and expected cash flows due to remeasurement	135	46
Removals due to foreclosure or sale	(1,549)	(487)
Loans removed from loss share coverage	(34,583)
Ending balance		64,879
Contractual Cash Flows [Member]
Impaired Loans By Type [Line Items]
Beginning balance	69,857	124,809
Principal reductions and interest payments	(18,195)	(18,178)
Changes in contractual and expected cash flows due to remeasurement	4,431	(3,633)
Removals due to foreclosure or sale	(1,948)	(506)
Loans removed from loss share coverage	(54,145)
Ending balance		102,492
Non Accretable Difference [Member]
Impaired Loans By Type [Line Items]
Beginning balance	(4,729)	(12,014)
Principal reductions and interest payments	(347)	(814)
Changes in contractual and expected cash flows due to remeasurement	631	4,412
Removals due to foreclosure or sale	136	162
Loans removed from loss share coverage	4,309
Ending balance		(8,254)
Accretable Yield [Member]
Impaired Loans By Type [Line Items]
Beginning balance	(17,785)	(35,742)
Accretion of loan discount	7,196	7,259
Changes in contractual and expected cash flows due to remeasurement	(4,927)	(733)
Removals due to foreclosure or sale	263	(143)
Loans removed from loss share coverage	$ 15,253
Ending balance		$ (29,359)

XML

Covered Loans - Summary of FDIC Loss Sharing Asset (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Receivables [Abstract]
Beginning balance	$ 9,030	$ 20,603
Adjustments not reflected in income:
Cash received from the FDIC	(10,000)	(2,231)
Other	512	612
Adjustments reflected in income:
(Amortization) accretion	(816)	(3,830)
Higher (lower) loan loss expectations	(13)	109
Impairment/(recovery) of value and net (gain)/loss on sales of other real estate	1,062	1,212
Gain as a result of the early termination agreement with the FDIC, effective June 22, 2016	$ 225
Ending balance		$ 16,475

XML

Other Real Estate Owned - Activity in Other Real Estate Owned (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Real Estate Properties [Line Items]
Beginning Balance	$ 7,594
Ending balance	24,254	$ 9,388
Other Real Estate Owned [Member]
Real Estate Properties [Line Items]
Beginning Balance	7,594	7,241
Additions	20,251	4,579
Sales	(7,060)	(2,153)
(Impairment)/recovery of value	(202)	(279)
Reclassification due to termination of the loss share agreements, effective June 22, 2016	3,671
Ending balance	24,254	9,388
Other Real Estate Owned, Covered [Member]
Real Estate Properties [Line Items]
Beginning Balance	4,904	9,121
Additions	2,093	429
Sales	(1,454)	(4,580)
(Impairment)/recovery of value	(1,872)	(217)
Reclassification due to termination of the loss share agreements, effective June 22, 2016	$ (3,671)
Ending balance		$ 4,753

XML

Other Real Estate Owned - Activity in Other Real Estate Owned (Parenthetical) (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
Real Estate Properties [Line Items]
Repossessed personal property	$ 200		$ 300
Othe real estate	24,254	$ 7,594	9,388
Other Real Estate Owned [Member]
Real Estate Properties [Line Items]
Othe real estate	24,254	$ 7,594	$ 9,388	$ 7,241
Anchor BanCorp Wisconsin Inc [Member] | Other Real Estate Owned [Member]
Real Estate Properties [Line Items]
Othe real estate	$ 18,200

XML

Other Real Estate Owned - Additional Information (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($)
Real Estate Properties [Line Items]
Value of foreclosed residential real estate property	$ 1.0
Value of mortgage loans in process of foreclosure	$ 4.0
Percentage covered up to $467.2 million	0.00%
Losses up to $275.0 [Member]
Real Estate Properties [Line Items]
Loss sharing agreements amount, 80% on assets acquired	$ 275.0
Loss sharing reimbursement threshold	80.00%
Losses in Excess of $275.0 up to $467.2 [Member]
Real Estate Properties [Line Items]
Zero percent for losses on acquisition	$ 467.2
Losses in Excess of $467.2 [Member]
Real Estate Properties [Line Items]
Loss sharing agreements amount, 80% on assets acquired	$ 467.2
Loss sharing reimbursement threshold	80.00%

XML

Goodwill and Other Intangible Assets - Schedule of Changes in Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
Beginning balance	$ 584,634	$ 530,845
Acquisitions	111,852	57,619
Divestitures	(40,963)
Ending balance	$ 655,523	$ 588,464

XML

Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($)		3 Months Ended			6 Months Ended
	May 08, 2015	Jun. 30, 2016	Mar. 31, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Goodwill [Line Items]
Goodwill acquired during the period					$ 111,852,000	$ 57,619,000
Goodwill eliminated due to sale of insurance operations					41,000,000
Amortization expense of other intangible assets		$ 3,365,000		$ 2,977,000	6,012,000	6,058,000
Impairment charges					$ 0	$ 0
Core Deposits and Other Intangible Assets [Member] | Minimum [Member]
Goodwill [Line Items]
Estimated useful lives of core deposits and customer relationships			5 years
Core Deposits and Other Intangible Assets [Member] | Maximum [Member]
Goodwill [Line Items]
Estimated useful lives of core deposits and customer relationships			15 years
Customer Business Relationships [Member]
Goodwill [Line Items]
Intangible asset eliminated due to sale of insurance operations		6,500,000
Insurance Book of Business [Member] | Insurance [Member] | Customer Business Relationships [Member]
Goodwill [Line Items]
Estimated useful lives of core deposits and customer relationships					10 years
Increase (decrease) in intangible assets	$ 200,000		$ (200,000)
Anchor BanCorp Wisconsin Inc [Member]
Goodwill [Line Items]
Goodwill acquired during the period					$ 111,900,000
Anchor BanCorp Wisconsin Inc [Member] | Core Deposit [Member]
Goodwill [Line Items]
Increase (decrease) in intangible assets		$ 21,600,000

XML

Goodwill and Other Intangible Assets - Schedule of Gross Carrying Amount and Accumulated Amortization of Other Intangible Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 102,623	$ 111,850
Accumulated Amortization and Impairment	(58,386)	(76,542)
Net Carrying Amount	44,237	35,308	$ 40,996
Core Deposit [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	81,663	60,103
Accumulated Amortization and Impairment	(47,839)	(43,982)
Net Carrying Amount	33,824	16,121
Customer Business Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount		30,787
Accumulated Amortization and Impairment		(23,341)
Net Carrying Amount		7,446
Customer Trust Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	16,547	16,547
Accumulated Amortization and Impairment	(6,769)	(5,286)
Net Carrying Amount	9,778	11,261
Customer Loan Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	4,413	4,413
Accumulated Amortization and Impairment	(3,778)	(3,933)
Net Carrying Amount	$ 635	$ 480

XML

Goodwill and Other Intangible Assets - Schedule of Estimated Amortization Expense for Future Years (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
2016 remaining	$ 6,560
2017	11,015
2018	8,687
2019	6,737
2020	4,883
Thereafter	6,355
Net Carrying Amount	$ 44,237	$ 35,308	$ 40,996

XML

Loan Servicing Rights - Additional Information (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Transfers and Servicing [Abstract]
Loan servicing rights	$ 25,756	$ 10,468	$ 10,027
Principal balance of loans serviced for others	3,483,000	1,263,000
Funds held in escrow	$ 32,700	3,000
Percentage of mortgage loan	99.00%
Fair value of servicing rights	$ 28,400	$ 11,300
Fair value at discount rate	8.07%	11.00%
Fair value inputs weighted average prepayment speed	210.00%	166.00%

XML

Loan Servicing Rights - Components of Loan Servicing Rights and Valuation Allowance (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Transfers and Servicing [Abstract]
Beginning balance	$ 10,502	$ 9,584
Additions	17,126	1,754
Amortization	(1,866)	(1,271)
Ending balance	25,762	10,067
Valuation allowance:
Beginning balance	(34)	(50)
(Additions)/recoveries	28	10
Ending balance	(6)	(40)
Loan servicing rights, net	$ 25,756	$ 10,027	$ 10,468

XML

Loan Servicing Rights - Components of Loan Servicing Rights and Valuation Allowance (Parenthetical) (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	May 31, 2016	Dec. 31, 2015	Jun. 30, 2015
Servicing Assets And Liabilities At Fair Value [Line Items]
Loan servicing rights	$ 25,756		$ 10,468	$ 10,027
Anchor BanCorp Wisconsin Inc [Member]
Servicing Assets And Liabilities At Fair Value [Line Items]
Loan servicing rights		$ 15,300

XML

Short-Term Borrowings - Schedule of Short-Term Borrowings and Weighted-Average Interest Rates (Detail) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Short-term Debt [Line Items]
Outstanding at end of period	$ 567,659,000	$ 628,499,000	$ 530,377,000
Average amount outstanding	$ 487,430,000
Weighted average interest rate during period	0.24%
Weighted average interest rate at end of period	0.23%
Federal Funds Purchased [Member]
Short-term Debt [Line Items]
Outstanding at end of period	$ 263,536,000
Average amount outstanding	141,664,000
Maximum amount outstanding at any month-end	$ 263,536,000
Weighted average interest rate during period	0.46%
Weighted average interest rate at end of period	0.42%
Repurchase Agreements / Sweeps [Member]
Short-term Debt [Line Items]
Outstanding at end of period	$ 304,123,000
Average amount outstanding	332,441,000
Maximum amount outstanding at any month-end	$ 346,695,000
Weighted average interest rate during period	0.08%
Weighted average interest rate at end of period	0.07%
Financial Exchange Borrowings [Member]
Short-term Debt [Line Items]
Average amount outstanding	$ 5,083,000
Maximum amount outstanding at any month-end	$ 25,000,000
Weighted average interest rate during period	0.71%
Revolving Loan [Member]
Short-term Debt [Line Items]
Average amount outstanding	$ 8,242,000
Maximum amount outstanding at any month-end	$ 50,000,000
Weighted average interest rate during period	3.00%

XML

Short-Term Borrowings - Schedule of Remaining Contractual Maturity of Secured Borrowings and Class of Collateral Pledged Under Repurchase Agreements (Detail) $ in Thousands	Jun. 30, 2016 USD ($)
Assets Sold under Agreements to Repurchase [Line Items]
Secured borrowings and class of collateral pledged under repurchase agreements	$ 304,123
U.S. Treasury [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Secured borrowings and class of collateral pledged under repurchase agreements	304,123
Overnight and Continuous [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Secured borrowings and class of collateral pledged under repurchase agreements	304,123
Overnight and Continuous [Member] | U.S. Treasury [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Secured borrowings and class of collateral pledged under repurchase agreements	$ 304,123

XML

Short-Term Borrowings - Additional Information (Detail) - USD ($)	1 Months Ended	6 Months Ended
	May 31, 2016	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Short-term Debt [Line Items]
Gross outstanding balance of repurchase agreements collateralized by securities percentage		111.00%
Revolving line of credit		$ 567,659,000	$ 628,499,000	$ 530,377,000
Revolving Credit Facility [Member]
Short-term Debt [Line Items]
Revolving line of credit	$ 75,000,000	$ 0
Revolving loan term	364 days
Debt instrument variable rate	2.00%
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Short-term Debt [Line Items]
Debt instrument description		One-month LIBOR plus 200 basis points

XML

Financing Activities - Other Borrowings (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Aug. 31, 2014
Debt Instrument [Line Items]
Securities sold under agreements to repurchase (fixed rates 2.47% to 2.50%) maturing January 2017 to January 2018	$ 304,123
Total other borrowings	1,367,896	$ 1,291,747	$ 1,067,993
Senior Unsecured Notes [Member]
Debt Instrument [Line Items]
Senior unsecured bank notes (fixed rate 4.125%) maturing August 2024				$ 175,000
Old National Bancorp [Member]
Debt Instrument [Line Items]
ASC 815 fair value hedge and other basis adjustments	(4,210)	(4,442)
Old National Bancorp [Member] | Senior Unsecured Notes [Member]
Debt Instrument [Line Items]
Senior unsecured bank notes (fixed rate 4.125%) maturing August 2024	175,000	175,000
Unamortized debt issuance costs related to Senior unsecured bank notes	(1,260)	(1,338)
Old National Bancorp [Member] | Junior Subordinated Debt [Member]
Debt Instrument [Line Items]
Junior subordinated debentures (variable rates of 1.99% to 2.41%) maturing March 2035 to June 2037	45,000	45,000
Old National Bank [Member]
Debt Instrument [Line Items]
Securities sold under agreements to repurchase (fixed rates 2.47% to 2.50%) maturing January 2017 to January 2018	50,000	50,000
Federal Home Loan Bank advances (fixed rates 0.44% to 6.76% and variable rates 0.74% to 0.78%) maturing July 2016 to January 2025	1,097,212	1,022,766
Capital lease obligation	4,126	4,036
ASC 815 fair value hedge and other basis adjustments	$ 2,028	$ 725

XML

Financing Activities - Other Borrowings (Parenthetical) (Detail)	6 Months Ended
	Jun. 30, 2016	Aug. 31, 2014
Senior Unsecured Notes [Member]
Debt Instrument [Line Items]
Fixed rates		4.125%
Maturity date	Aug. 15, 2024
Old National Bancorp [Member] | Senior Unsecured Notes [Member]
Debt Instrument [Line Items]
Fixed rates	4.125%
Maturity date	Aug. 15, 2024
Old National Bank [Member] | Repurchase Agreements / Sweeps [Member]
Debt Instrument [Line Items]
Maturity, Start date	Jan. 01, 2017
Maturity, End date	Jan. 01, 2018
Old National Bank [Member] | Federal Home Loan Bank Advances [Member]
Debt Instrument [Line Items]
Maturity, Start date	Jul. 01, 2016
Maturity, End date	Jan. 01, 2025
Minimum [Member] | Old National Bank [Member] | Repurchase Agreements / Sweeps [Member]
Debt Instrument [Line Items]
Fixed rates	2.47%
Minimum [Member] | Old National Bank [Member] | Federal Home Loan Bank Advances [Member]
Debt Instrument [Line Items]
Fixed rates	0.44%
Variable rates	0.74%
Maximum [Member] | Old National Bank [Member] | Repurchase Agreements / Sweeps [Member]
Debt Instrument [Line Items]
Fixed rates	2.50%
Maximum [Member] | Old National Bank [Member] | Federal Home Loan Bank Advances [Member]
Debt Instrument [Line Items]
Fixed rates	6.76%
Variable rates	0.78%
Trust Preferred Securities [Member] | Old National Bancorp [Member] | Junior Subordinated Debt [Member]
Debt Instrument [Line Items]
Maturity, Start date	Mar. 01, 2035
Maturity, End date	Jun. 01, 2037
Trust Preferred Securities [Member] | Minimum [Member] | Old National Bancorp [Member] | Junior Subordinated Debt [Member]
Debt Instrument [Line Items]
Variable rates	1.99%
Trust Preferred Securities [Member] | Maximum [Member] | Old National Bancorp [Member] | Junior Subordinated Debt [Member]
Debt Instrument [Line Items]
Variable rates	2.41%

XML

Financing Activities - Contractual Maturities of Long-Term Debt (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($)
Debt Disclosure [Abstract]
Due in 2016	$ 617,384
Due in 2017	95,806
Due in 2018	195,224
Due in 2019	2,517
Due in 2020	50,091
Thereafter	410,316
ASC 815 fair value hedge, unamortized debt issuance costs, and other basis adjustments	(3,442)
Total	$ 1,367,896

XML

Financing Activities - Additional Information (Detail) $ in Millions				6 Months Ended
	Dec. 31, 2006 USD ($)	Sep. 30, 2006 USD ($)	Dec. 31, 2005 USD ($)	Jun. 30, 2016 USD ($) Item	Dec. 31, 2015 USD ($)	Jun. 30, 2015 USD ($)	Aug. 31, 2014 USD ($)	Mar. 31, 2007 USD ($)	Jul. 31, 2006 USD ($)	Mar. 31, 2005 USD ($)
Debt Instrument [Line Items]
Weighted-average rates of FHLB advances				0.83%	0.72%
Preferred securities
Gross outstanding balance of long-term repurchase agreements collateralized by securities percentage				118.00%
Long-term capital lease obligation period, in years				25 years
Long-term capital lease obligation renewal period, in years				10 years
Number of renewal option for 10 years period | Item				1
St Joseph Capital Trust II [Member]
Debt Instrument [Line Items]
Preferred securities										$ 5.0
Reference rate of the variable interest rate for preferred securities				Three-month London Interbank Offered Rate ("LIBOR") plus 175 basis points
Home Federal Statutory Trust I [Member]
Debt Instrument [Line Items]
Preferred securities		$ 15.0
Reference rate of the variable interest rate for preferred securities				Three-month LIBOR plus 165 basis points
Tower Capital Trust 2 [Member]
Debt Instrument [Line Items]
Preferred securities			$ 8.0
Reference rate of the variable interest rate for preferred securities				Three-month LIBOR plus 134 basis points
Tower Capital Trust 3 [Member]
Debt Instrument [Line Items]
Preferred securities	$ 9.0
Reference rate of the variable interest rate for preferred securities				Three-month LIBOR plus 169 basis points
Senior Unsecured Notes [Member]
Debt Instrument [Line Items]
Senior unsecured notes							$ 175.0
Fixed rates							4.125%
Maturity date				Aug. 15, 2024
Junior Subordinated Debt [Member] | St Joseph Capital Trust II [Member] | Trust Preferred Securities [Member]
Debt Instrument [Line Items]
Maturity date				Mar. 17, 2035
LIBOR rate				1.75%
Junior Subordinated Debt [Member] | Home Federal Statutory Trust I [Member] | Trust Preferred Securities [Member]
Debt Instrument [Line Items]
LIBOR rate		1.65%
Junior Subordinated Debt [Member] | Tower Capital Trust 2 [Member] | Trust Preferred Securities [Member]
Debt Instrument [Line Items]
LIBOR rate			1.34%
Junior Subordinated Debt [Member] | Tower Capital Trust 3 [Member] | Trust Preferred Securities [Member]
Debt Instrument [Line Items]
LIBOR rate	1.69%
Federal Home Loan Bank Advances [Member]
Debt Instrument [Line Items]
Percentage of borrowings collateralized by investment securities and residential real estate loans				140.00%
Monroe Bancorp Capital Trust I [Member]
Debt Instrument [Line Items]
Preferred securities									$ 3.0
Reference rate of the variable interest rate for preferred securities				Three-month LIBOR plus 160 basis points
Monroe Bancorp Capital Trust I [Member] | Junior Subordinated Debt [Member] | Trust Preferred Securities [Member]
Debt Instrument [Line Items]
LIBOR rate				1.60%
Monroe Bancorp Statutory Trust II [Member]
Debt Instrument [Line Items]
Preferred securities								$ 5.0
Reference rate of the variable interest rate for preferred securities				Three-month LIBOR plus 160 basis points
Monroe Bancorp Statutory Trust II [Member] | Junior Subordinated Debt [Member] | Trust Preferred Securities [Member]
Debt Instrument [Line Items]
LIBOR rate				1.60%

XML

Financing Activities - Future Minimum Lease Payments under Capital Lease (Detail) $ in Thousands	Jun. 30, 2016 USD ($)
Debt Disclosure [Abstract]
2016 remaining	$ 267
2017	472
2018	410
2019	430
2020	430
Thereafter	8,406
Total minimum lease payments	10,415
Less amounts representing interest	6,289
Present value of net minimum lease payments	$ 4,126

XML

Employee Benefit Plans - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Defined Benefit Plan Disclosure [Line Items]
Retirement benefits based on years of service and compensation			5 years
Benefit payments from Restoration Plan			$ 19,000
Defined benefit plan, expected additional contribution during remainder of the year	$ 19,000		19,000
Actuarial (gain) loss	$ (494,000)	$ (531,000)	(988,000)	$ (1,062,000)
Minimum [Member]
Defined Benefit Plan Disclosure [Line Items]
Actuarial (gain) loss			11,000,000
Maximum [Member]
Defined Benefit Plan Disclosure [Line Items]
Actuarial (gain) loss			$ 13,000,000

XML

Employee Benefit Plans - Schedule of Net Periodic Benefit Cost (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Compensation and Retirement Disclosure [Abstract]
Benefit Cost, Interest cost	$ 440	$ 415	$ 880	$ 830
Benefit Cost, Expected return on plan assets	(442)	(511)	(885)	(1,023)
Benefit Cost, Recognized actuarial loss	494	531	988	1,062
Benefit Cost, Settlement loss	235	196	441	402
Net periodic benefit cost	$ 727	$ 631	$ 1,424	$ 1,271

XML

Stock-Based Compensation - Additional Information (Detail) - USD ($) shares in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Remaining shares available for issuance	4,900
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	$ 6,000,000
Shares granted during period	172
Share-based compensation awards, vesting period	36 months
Stock-based compensation expense	$ 900,000	$ 500,000
Restricted Stock [Member] | Anchor BanCorp Wisconsin Inc [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares issuable in conjunction with acquisition	173
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	$ 4,400,000
Shares granted during period	276
Share-based compensation awards, vesting period	36 months
Stock-based compensation expense	$ 1,200,000	800,000
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	0	$ 0
Stock Appreciation Rights (SARs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incremental expense	$ 0
Share appreciation rights outstanding	81

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Income Taxes - Summary of Differences in Taxes from Continuing Operations Computed at Statutory Rate (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Provision at statutory rate of 35%	$ 24,477	$ 12,290	$ 37,304	$ 22,836
Tax-exempt income	(4,233)	(3,930)	(8,401)	(7,783)
State income taxes	2,064	520	2,647	1,796
Interim period effective rate adjustment	(37)	314	(185)	1,821
ONB Insurance Group, Inc. nondeductible goodwill	8,305		8,305
Other, net	236	(235)	813	(486)
Income tax expense	$ 30,812	$ 8,959	$ 40,483	$ 18,184
Effective tax rate	44.10%	25.50%	38.00%	27.90%

XML

Income Taxes - Summary of Differences in Taxes from Continuing Operations Computed at Statutory Rate (Parenthetical) (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Statutory rate	35.00%	35.00%	35.00%	35.00%

XML

Income Taxes - Additional Information (Detail) - USD ($)		1 Months Ended	6 Months Ended
	Jun. 30, 2016	May 31, 2016	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Income Taxes [Line Items]
Unrecognized tax benefits, if recognized, would favorably affect the effective tax rate	$ 800,000		$ 800,000
Net deferred tax assets	179,448,000		179,448,000	$ 109,984,000	$ 127,622,000
Timing reversals			28,800,000
Bad debt reserves, created for tax purposes	52,800,000		52,800,000
Unrecognized deferred income tax liability	19,800,000		19,800,000
Valuation allowance recorded	0		0		$ 0
Operating loss carryforwards, federal	162,900,000		162,900,000	1,300,000
AMT carryforwards	17,152,000		17,152,000	18,378,000
Operating loss carryforwards, state	$ 206,500,000		206,500,000	$ 46,300,000
Operating loss carryforwards, expiration date	2023
ONB Insurance Group, Inc. [Member]
Income Taxes [Line Items]
Additional tax expense to record deferred tax liability		$ 8,300,000
Federal Net Operating Loss [Member]
Income Taxes [Line Items]
Operating loss carryforwards, expiration date	2027
Anchor BanCorp Wisconsin Inc [Member]
Income Taxes [Line Items]
Net increase (decrease) in deferred tax assets			69,500,000
Net deferred tax assets	$ 98,200,000		98,200,000
Bad debt reserves, created for tax purposes	50,900,000		50,900,000
Lafayette Savings Bank [Member]
Income Taxes [Line Items]
Bad debt reserves, created for tax purposes	$ 1,900,000		$ 1,900,000

XML

Income Taxes - Summary of Reconciliation of Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Balance at January 1,	$ 124	$ 77
Additions based on tax positions related to the current year	58	27
Additions based on tax positions related to prior years	584
Balance at June 30,	$ 766	$ 104

XML

Income Taxes - Schedule of Significant Components of Net Deferred Tax Assets (Liabilities) (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Deferred Tax Assets
Allowance for loan losses, net of recapture	$ 17,838	$ 17,125
Benefit plan accruals	19,418	18,066
AMT credit	17,152	18,378
Unrealized losses on benefit plans	3,964	4,507
Net operating loss carryforwards	66,923	2,041
Premises and equipment	7,301	12,735
Federal tax credits	35	422
Other-than-temporary impairment	3,620	3,558
Acquired loans	54,000	34,870
Lease exit obligation	2,818	2,626
Unrealized losses on available-for-sale investment securities		3,002
Unrealized losses on held-to-maturity investment securities	7,406	7,724
Unrealized losses on hedges	10,532	5,685
Other real estate owned	3,272
Other, net	2,550	4,914
Total deferred tax assets	216,829	135,653
Deferred Tax Liabilities
Accretion on investment securities	(649)	(599)
Other real estate owned		(284)
Purchase accounting	(18,291)	(16,615)
FDIC indemnification asset		(2,565)
Loan servicing rights	(9,674)	(3,890)
Unrealized losses on available-for-sale investment securities	(7,052)
Other, net	(1,715)	(1,716)
Total deferred tax liabilities	(37,381)	(25,669)
Net deferred tax assets	$ 179,448	$ 109,984

XML

Derivative Financial Instruments - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Mar. 31, 2016	Dec. 31, 2015
Derivative [Line Items]
Notional amount	$ 661,500,000		$ 661,500,000			$ 761,500,000
Reclassified interest income (expense)	99,340,000	$ 92,097,000	184,983,000	$ 183,090,000
Reclassifications out of Accumulated Other Comprehensive Income (Loss) [Member] | Interest Income [Member]
Derivative [Line Items]
Reclassified interest income (expense)			300,000
Reclassifications out of Accumulated Other Comprehensive Income (Loss) [Member] | Interest Expense [Member]
Derivative [Line Items]
Reclassified interest income (expense)			8,600,000
Fixed Interest Swap [Member]
Derivative [Line Items]
Notional amount	36,500,000		36,500,000			36,500,000
Variable Interest Rate Swap [Member]
Derivative [Line Items]
Notional amount	625,000,000		625,000,000			675,000,000
Receive Fixed Pay Floating Interest Rate Swaps [Member]
Derivative [Line Items]
Notional amount					$ 50,000,000	50,000,000
Interest Rate Lock Commitments [Member]
Derivative [Line Items]
Notional amount	106,300,000		106,300,000			30,400,000
Forward Commitments [Member]
Derivative [Line Items]
Notional amount	123,600,000		123,600,000			33,300,000
Customer Derivative Instrument [Member]
Derivative [Line Items]
Notional amount	569,300,000		569,300,000			428,400,000
Offsetting Counter Party Derivative Instrument [Member]
Derivative [Line Items]
Notional amount	569,300,000		569,300,000			$ 428,400,000
Pay-Fixed, Receive-Variable Interest Rate Swaps [Member]
Derivative [Line Items]
Notional amount	$ 100,000,000		$ 100,000,000

XML

Derivative Financial Instruments - Summary of Fair Value of Derivative Financial Instruments (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Derivative [Line Items]
Total derivative assets	$ 36,209	$ 15,925
Total derivative liabilities	58,040	26,968
Designated as Hedging Instrument [Member]
Derivative [Line Items]
Total derivative assets	5,134	3,794
Total derivative liabilities	28,540	15,554
Designated as Hedging Instrument [Member] | Interest Rate Contracts [Member]
Derivative [Line Items]
Total derivative assets	5,134	3,794
Total derivative liabilities	28,540	15,554
Not Designated as Hedging Instrument [Member]
Derivative [Line Items]
Total derivative assets	31,075	12,131
Total derivative liabilities	29,500	11,414
Not Designated as Hedging Instrument [Member] | Interest Rate Contracts [Member]
Derivative [Line Items]
Total derivative assets	28,169	11,296
Total derivative liabilities	28,371	11,414
Not Designated as Hedging Instrument [Member] | Mortgage Contracts [Member]
Derivative [Line Items]
Total derivative assets	2,906	$ 835
Total derivative liabilities	$ 1,129

XML

Derivative Financial Instruments - Schedule of Effect of Derivative Instruments on the Consolidated Statements of Income (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivative	$ (116)	$ 381	$ 341	$ 1,169
Fair Value Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivative	(1,260)	(189)	(2,251)	(107)
Cash Flow Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivative	81	167	167	333
Interest Rate Contracts [Member] | Interest Income / (Expense) [Member] | Fair Value Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivative	(1,310)	(212)	(2,352)	(189)
Interest Rate Contracts [Member] | Interest Income / (Expense) [Member] | Cash Flow Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivative	81	167	167	333
Interest Rate Contracts [Member] | Other Income / (Expense) [Member] | Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivative	(81)	19	(84)	19
Interest Rate Contracts [Member] | Other Income / (Expense) [Member] | Fair Value Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivative	50	23	101	82
Mortgage Contracts [Member] | Mortgage Banking Revenue [Member] | Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivative	$ (35)	$ 362	$ 425	$ 1,150

XML

Commitments and Contingencies - Additional Information (Detail)		6 Months Ended
	Apr. 05, 2016 USD ($)	Jun. 30, 2016 USD ($) Terms	Dec. 31, 2015 USD ($)
Commitments And Contingencies [Line Items]
Settlement costs	$ 4,750,000
Number of additional successive terms extendable at the option | Terms		4
Period of extendable lease term, in years		5 years
Lease term, description		Less than one year
Sale leaseback transaction, gain recognized over lease term		$ 35,800,000	$ 40,700,000
Loan commitments		2,251,000,000	1,746,000,000
Fixed rate loan commitment		2,136,000,000
Floating rate loan commitment		115,800,000
Standby letters of credit		$ 61,600,000	62,600,000
Loan commitments floating rate, minimum		0.00%
Loan commitments floating rate, maximum		25.00%
Allowance for unfunded loan commitments		$ 4,400,000	3,600,000
Extended credit		13,800,000	14,500,000
Credit extensions with collateral		$ 12,900,000	$ 13,600,000
Minimum [Member]
Commitments And Contingencies [Line Items]
Lease Term		1 year
Minimum [Member] | Prior Sale Leaseback Transactions [Member]
Commitments And Contingencies [Line Items]
Lease Term		5 years
Maximum [Member]
Commitments And Contingencies [Line Items]
Lease Term		24 years
Maximum [Member] | Prior Sale Leaseback Transactions [Member]
Commitments And Contingencies [Line Items]
Lease Term		24 years

XML

Financial Guarantees - Additional Information (Detail) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Financial Guarantees [Line Items]
Term of standby letters of credit, years	1 year
Notional amount of standby letters of credit	$ 61,600,000	$ 62,600,000
Carrying value of letters of credit	400,000	400,000
Notional amount	661,500,000	$ 761,500,000
Interest Rate Swap [Member]
Financial Guarantees [Line Items]
Notional amount	7,200,000
Interest Rate Swap [Member] | Additional Risk Participation [Member]
Financial Guarantees [Line Items]
Notional amount	$ 10,900,000

XML

Segment Information - Additional Information (Detail) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) Segment	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Segment Reporting Information [Line Items]
Net income	$ 39,122	$ 26,156	$ 66,099	$ 47,062
Total assets	$ 14,420,262	$ 12,074,404	$ 14,420,262	$ 12,074,404	$ 11,991,527
Number of reportable operating segment | Segment			2
Community Banking Segment [Member]
Segment Reporting Information [Line Items]
Number of reportable operating segment | Segment			1
Insurance Segments [Member]
Segment Reporting Information [Line Items]
Net income					2,100
Total assets					$ 61,800

XML

Fair Value - Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Trading securities	$ 4,838	$ 3,941	$ 3,995
Investment securities available-for-sale	2,648,901	2,418,221	$ 2,572,521
Derivative assets	36,209	15,925
Derivative liabilities	58,040	26,968
U.S. Treasury [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	12,269	12,150
U.S. Government-Sponsored Entities and Agencies [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	540,775	613,550
Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	1,336,605	1,066,361
States and Political Subdivisions [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	417,163	387,296
Pooled Trust Preferred Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	6,720	7,900
Other Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	335,369	330,964
Estimate of Fair Value Measurement [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Trading securities	4,838	3,941
Estimate of Fair Value Measurement [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Residential loans held for sale	44,422	13,810
Derivative assets	36,209	15,925
Derivative liabilities	58,040	26,968
Estimate of Fair Value Measurement [Member] | U.S. Treasury [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	12,269	12,150
Estimate of Fair Value Measurement [Member] | U.S. Government-Sponsored Entities and Agencies [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	540,775	613,550
Estimate of Fair Value Measurement [Member] | Mortgage-Backed Securities - Agency [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	1,336,605	1,066,361
Estimate of Fair Value Measurement [Member] | States and Political Subdivisions [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	417,163	387,296
Estimate of Fair Value Measurement [Member] | Pooled Trust Preferred Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	6,720	7,900
Estimate of Fair Value Measurement [Member] | Other Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	32,139	31,443
Estimate of Fair Value Measurement [Member] | Other Securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	303,230	299,521
Carrying Value [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Trading securities	4,838	3,941
Residential loans held for sale	44,422	13,810
Derivative assets	36,209	15,925
Derivative liabilities	58,040	26,968
Carrying Value [Member] | U.S. Treasury [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	12,269	12,150
Carrying Value [Member] | U.S. Government-Sponsored Entities and Agencies [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	540,775	613,550
Carrying Value [Member] | Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	1,336,605	1,066,361
Carrying Value [Member] | States and Political Subdivisions [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	417,163	387,296
Carrying Value [Member] | Pooled Trust Preferred Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	6,720	7,900
Carrying Value [Member] | Other Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment securities available-for-sale	$ 335,369	$ 330,964

XML

Fair Value - Reconciliation of All Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3) (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Accretion of discount	$ 9	$ 9
Significant Unobservable Inputs (Level 3) [Member] | Pooled Trust Preferred Securities Available-for-Sale [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance	7,900	6,607
Accretion of discount	9	9
Sales/payments received	(270)	(514)
Decrease in fair value of securities	(919)	994
Ending balance	$ 6,720	7,096
Significant Unobservable Inputs (Level 3) [Member] | States and Political Subdivisions [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance		325
Matured securities		$ (325)

XML

Fair Value - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Accretion of discounts on securities included in interest income			$ 9	$ 9
Net carrying amount other real estate owned and other repossessed property					$ 2,700
Other real estate owned property write-downs	$ 1,800	$ 400	$ 2,200	1,500
Past due period of mortgage loans held for sale, days			90 days
Interest income for residential loans held for sale	26	45	$ 48	84
Valuation Allowance, Real Estate Owned [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Net carrying amount other real estate owned and other repossessed property	1,600		1,600
Impaired Commercial and Commercial Real Estate Loans [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Principal amount of impaired commercial and commercial real estate loans	37,700		37,700		36,800
Valuation allowance	11,400		11,400		$ 11,500
Provision for loan losses expensed	$ 1,500	$ 2,800	$ 3,700	$ 7,600

XML

Fair Value - Quantitative Information about Significant Unobservable Inputs Used in Fair Value Measurements (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for type of property, age of appraisal and current status	8.07%	11.00%
Commercial Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 11,218	$ 13,332
Valuation Techniques	Fair value of collateral
Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 15,064	$ 11,857
Valuation Techniques	Fair value of collateral
Minimum [Member] | Commercial Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for type of property, age of appraisal and current status	0.00%	0.00%
Minimum [Member] | Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for type of property, age of appraisal and current status	10.00%	0.00%
Maximum [Member] | Commercial Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for type of property, age of appraisal and current status	98.00%	86.00%
Maximum [Member] | Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for type of property, age of appraisal and current status	51.00%	61.00%
Weighted Average [Member] | Commercial Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for type of property, age of appraisal and current status	47.00%	28.00%
Weighted Average [Member] | Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for type of property, age of appraisal and current status	35.00%	33.00%
Pooled Trust Preferred Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 6,720	$ 7,900
Valuation Techniques	Discounted cash flow
Pooled Trust Preferred Securities [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Additional asset defaults	3.30%	4.10%
Expected asset recoveries	0.00%	0.00%
Pooled Trust Preferred Securities [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Additional asset defaults	4.40%	11.50%
Expected asset recoveries	9.80%	11.50%
Pooled Trust Preferred Securities [Member] | Weighted Average [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Additional asset defaults	4.10%	8.10%
Expected asset recoveries	2.70%	3.10%
Commercial Real Estate Foreclosed Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 1,263	$ 2,526
Valuation Techniques	Fair value of collateral
Commercial Real Estate Foreclosed Assets [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for type of property, age of appraisal and current status	0.00%	3.00%
Commercial Real Estate Foreclosed Assets [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for type of property, age of appraisal and current status	58.00%	80.00%
Commercial Real Estate Foreclosed Assets [Member] | Weighted Average [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for type of property, age of appraisal and current status	23.00%	26.00%
Residential Foreclosed Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 296	$ 203
Valuation Techniques	Fair value of collateral
Residential Foreclosed Assets [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for type of property, age of appraisal and current status	7.00%	7.00%
Residential Foreclosed Assets [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for type of property, age of appraisal and current status	47.00%	53.00%
Residential Foreclosed Assets [Member] | Weighted Average [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount for type of property, age of appraisal and current status	31.00%	29.00%

XML

Fair Value - Quantitative Information about Significant Unobservable Inputs Used in Fair Value Measurements (Parenthetical) (Detail)	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Percentage of adjusted specific issuer evaluation defaults	100.00%	100.00%
Percentage of adjusted specific issuer evaluation recoveries	100.00%	100.00%
Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Percentage of adjusted specific issuer evaluation defaults	0.00%	0.00%
Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Percentage of adjusted specific issuer evaluation defaults	50.00%	50.00%
Pooled Trust Preferred Securities [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Percentage of adjusted specific issuer evaluation recoveries	0.00%	0.00%
Pooled Trust Preferred Securities [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Percentage of adjusted specific issuer evaluation recoveries	25.00%	25.00%

XML

Fair Value - Assets Measured at Fair Value on a Non-Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Commercial Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 11,218	$ 13,332
Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	15,064	11,857
Commercial Real Estate Foreclosed Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	1,263	2,526
Residential Foreclosed Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	296	203
Significant Unobservable Inputs (Level 3) [Member] | Commercial Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	11,218	13,332
Significant Unobservable Inputs (Level 3) [Member] | Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	15,064	11,857
Significant Unobservable Inputs (Level 3) [Member] | Commercial Real Estate Foreclosed Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	1,263	2,526
Significant Unobservable Inputs (Level 3) [Member] | Residential Foreclosed Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 296	$ 203

XML

Fair Value - Schedule of Difference between the Aggregate Fair Value and the Aggregate Remaining Principal Balance (Detail) - Residential Loans Held for Sale [Member] - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Estimate Not Practicable, Financial Statement Captions [Line Items]
Aggregate Fair Value	$ 44,422	$ 13,810
Difference	1,453	236
Contractual Principal	$ 42,969	$ 13,574

XML

Fair Value - Changes in Fair Value for Items Measured at Fair Value Pursuant to Election of the Fair Value (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Schedule of Trading Securities and Other Trading Assets [Line Items]
Interest (Expense)	$ (10,903)	$ (7,867)	$ (20,589)	$ (15,468)
Residential Loans Held for Sale [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Other Gains and (Losses)	846	(430)	1,218	(213)
Interest Income	1	1		1
Interest (Expense)	0	0	0	0
Total Changes in Fair Values Included in Current Period Earnings	$ 847	$ (429)	$ 1,218	$ (212)

XML

Fair Value - Carrying Amounts and Estimated Fair Values of Financial Instruments, Not Previously Presented (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash, due from banks, federal funds sold, and money market investments	$ 267,920	$ 219,818	$ 195,213	$ 239,963
Investment securities - held-to-maturity	865,957	872,111	823,255
Federal Home Loan Bank/Federal Reserve Bank stock	90,742	86,146	71,669
Commercial	1,893,700	1,804,615	1,775,954
Commercial real estate	2,943,525	1,847,821	1,767,341
Residential real estate	2,099,770	1,644,614	1,622,819
Consumer credit	1,893,163	1,543,768	1,464,541
FDIC indemnification asset		9,030	16,475	$ 20,603
Accrued interest receivable	79,536	69,098	66,605
Noninterest-bearing demand deposits	2,883,917	2,488,855	2,557,665
Time deposits	1,479,021	1,000,067	1,082,840
Repurchase agreements	567,659	628,499	$ 530,377
Repurchase agreements	304,123
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash, due from banks, federal funds sold, and money market investments	267,920	219,818
Accrued interest receivable	29	29
Noninterest-bearing demand deposits	2,883,917	2,488,855
NOW, savings, and money market deposits	6,088,664	4,911,938
Federal funds purchased	263,536	241,090
Repurchase agreements	304,123	337,409
Other short-term borrowings		50,000
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Accrued interest receivable	23,155	22,821
Time deposits	1,484,973	998,878
Senior unsecured bank notes	186,383	162,445
Junior subordinated debentures	32,984	33,318
Repurchase agreements	51,203	51,370
Capital lease obligation	4,963	5,375
Accrued interest payable	6	4,859
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Commercial	1,978,864	1,829,824
Commercial real estate	3,215,841	1,946,163
Residential real estate	2,354,067	1,745,248
Consumer credit	2,062,010	1,587,879
FDIC indemnification asset		5,700
Accrued interest receivable	56,352	46,248
Federal Home Loan Bank advances	1,110,405	1,029,779
Standby letters of credit	361	429
Commitments to extend credit	4,507	2,364
U.S. Government-Sponsored Entities and Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities - held-to-maturity	141,220	142,864
U.S. Government-Sponsored Entities and Agencies [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities - held-to-maturity	143,148	145,763
Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities - held-to-maturity	13,200	16,042
Mortgage-Backed Securities - Agency [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities - held-to-maturity	13,723	16,604
States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities - held-to-maturity	711,537	713,205
States and Political Subdivisions [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities - held-to-maturity	782,984	767,050
Carrying Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash, due from banks, federal funds sold, and money market investments	267,920	219,818
Federal Home Loan Bank/Federal Reserve Bank stock	90,742	86,146
Commercial	1,869,544	1,788,593
Commercial real estate	2,925,317	1,852,979
Residential real estate	2,098,311	1,659,284
Consumer credit	1,885,182	1,595,316
FDIC indemnification asset		9,030
Accrued interest receivable	79,536	69,098
Noninterest-bearing demand deposits	2,883,917	2,488,855
NOW, savings, and money market deposits	6,088,664	4,911,938
Time deposits	1,479,021	1,000,067
Federal funds purchased	263,536	241,090
Repurchase agreements	304,123	337,409
Other short-term borrowings		50,000
Senior unsecured bank notes	173,740	173,662
Junior subordinated debentures	40,790	40,558
Repurchase agreements	50,000	50,000
Federal Home Loan Bank advances	1,099,240	1,023,491
Capital lease obligation	4,126	4,036
Accrued interest payable	6	4,859
Standby letters of credit	361	429
Carrying Value [Member] | U.S. Government-Sponsored Entities and Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities - held-to-maturity	141,220	142,864
Carrying Value [Member] | Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities - held-to-maturity	13,200	16,042
Carrying Value [Member] | States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities - held-to-maturity	$ 711,537	$ 713,205