<PAGE>
SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number 0-10888
OLD NATIONAL BANCORP
(Exact name of Registrant as specified in its charter)
INDIANA 35-1539838
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
420 Main Street
Evansville, Indiana 47708
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code, (812)464-1200
NOT APPLICABLE
____________________________________________________
Former name, former address and former fiscal year,
if changed since last reports.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to the filing
requirements for at least the past 90 days. Yes x No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock. The Registrant has one class of common stock (no par value)
with approximately 22.9 million shares outstanding at June 30, 1995.
<PAGE>
OLD NATIONAL BANCORP
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page No.
Consolidated Balance Sheet --------
June 30, 1995 and 1994, and December 31, 1994. . . . 3
Consolidated Statement of Income
Three and six months ended June 30, 1995 and 1994. . 4
Consolidated Statement of Cash Flows
Six months ended June 30, 1995 and 1994. . . . . . . 5
Notes to the Consolidated Financial Statements. . . 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . 9
PART II. OTHER INFORMATION. . . . . . . . . . . . . . . .. .13
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . 14
INDEX OF EXHIBITS. . . . . . . . . . . . . . . . . . . . . ..15
2
<PAGE>
OLD NATIONAL BANCORP AND AFFILIATES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, June 30, December 31,
($ in thousands) (unaudited) 1995 1994 1994
Assets --------- --------- --------
<S> <C> <C> <C>
Cash and due from banks. . . . . . . . . . $179,590 $160,755 $185,824
Money market investments . . . . . . . . . 5,324 24,443 76,931
Investment Securities:
U.S. Treasury . . . . . . . . . . . . . . 201,437 241,747 208,951
U.S. Government agencies
and corporations. . . . . . . . . . . . 684,880 686,428 649,637
Obligations of states and political
subdivisions. . . . . . . . . . . . . . 407,867 424,281 411,894
Other . . . . . . . . . . . . . . . . . . 24,351 27,272 20,831
--------- --------- ---------
Total Investment Securities . . . . . . 1,318,535 1,379,728 1,291,313
Loans:
Commercial. . . . . . . . . . . . . . . . 812,679 820,413 807,667
Mortgage. . . . . . . . . . . . . . . . . 1,353,462 1,201,552 1,297,829
Consumer credit, net of unearned income . . . . 644,425 560,888 609,998
Financial . . . . . . . . . . . . . . . . 650 220 2,546
--------- --------- ---------
Total Loans . . . . . . . . . . . . . . 2,811,216 2,583,073 2,718,040
Allowance for loan losses . . . . . . . (40,953) (41,829) (39,814)
--------- --------- ---------
Net Loans . . . . . . . . . . . . . . . 2,770,263 2,541,244 2,678,226
Other assets . . . . . . . . . . . . . . . 156,282 143,447 154,545
--------- --------- ---------
Total Assets. . . . . . . . . . . . . . $4,429,994 $4,249,617 $4,386,839
========= ========= =========
Liabilities:
Deposits:
Noninterest bearing demand. . . . . . . . $448,648 $439,616 $464,811
Interest bearing:
Savings, daily interest checking
and money market accounts . . . . . . . 1,368,812 1,379,742 1,362,313
Certificates of deposit of
$100,000 and over . . . . . . . . . . . 233,492 211,176 200,035
Other time. . . . . . . . . . . . . . . 1,544,052 1,404,304 1,443,156
--------- --------- ---------
Total Deposits. . . . . . . . . . . . . 3,595,004 3,434,838 3,470,315
--------- --------- ---------
Short-term borrowings. . . . . . . . . . . 332,114 317,046 418,307
Subordinated debentures. . . . . . . . . . 31,545 39,787 38,049
Medium term notes. . . . . . . . . . . . . 32,000 32,000 32,000
Other liabilities. . . . . . . . . . . . . 44,814 34,812 36,945
--------- --------- ---------
Total Liabilities . . . . . . . . . . . . 4,035,477 3,858,483 3,995,616
--------- --------- ---------
Shareholders' Equity
Common stock. . . . . . . . . . . . . . . 22,890 22,558 23,347
Capital surplus . . . . . . . . . . . . . 209,631 198,219 225,181
Retained earnings . . . . . . . . . . . . 160,778 171,815 149,813
Net unrealized gain (loss) on investment
securities. . . . . . . . . . . . . . . 1,218 (1,458) (7,118)
--------- --------- ---------
Total Shareholders' Equity. . . . . . . . 394,517 391,134 391,223
--------- --------- ---------
Total Liabilities and Shareholders'
Equity. . . . . . . . . . . . . . . . . $4,429,994 $4,249,617 $4,386,839
========= ========= =========
</TABLE>
The accompanying notes are an integral part of this statement.
3
<PAGE>
OLD NATIONAL BANCORP AND AFFILIATES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
($ in thousands except share June 30, June 30,
and per share data) (Unaudited) 1995 1994 1995 1994
Interest income
Loans including fees:
<S> <C> <C> <C> <C>
Taxable . . . . . . . . . $61,786 $51,537 $120,672 $100,786
Non-taxable . . . . . . . 798 654 1,562 1,273
Investment securities:
Taxable . . . . . . . . . 14,379 13,698 28,542 27,906
Non-taxable . . . . . . . 5,610 5,846 11,185 11,620
Federal funds sold and securities
purchased under agreement to resell 386 550 922 1,139
Deposits with banks. . . . 39 75 83 158
------ ------ ------- -------
Total Interest Income . . 82,998 72,360 162,966 142,882
------ ------ ------- -------
Interest Expense
Savings, daily interest checking and
money market accounts . . 10,964 9,011 20,744 17,999
Certificates of deposit of $100,000
and over. . . . . . . . . 2,933 2,020 5,824 3,851
Other time deposits. . . . 20,915 15,454 39,539 31,003
Federal funds purchased. . 552 400 1,693 588
Securities sold under agreements to
repurchase. . . . . . . . 2,442 1,536 4,806 2,896
Other borrowings . . . . . 2,579 1,935 5,162 3,612
------ ------ ------ ------
Total Interest Expense. . 40,385 30,356 77,768 59,949
------ ------ ------ ------
Net Interest Income . . . 42,613 42,004 85,198 82,933
Provision for loan losses. 1,119 1,771 2,183 3,018
------ ------ ------ ------
Net Interest Income After Provision
For Loan Losses . . . . . 41,494 40,233 83,015 79,915
------ ------ ------ ------
Noninterest Income
Trust fees . . . . . . . . 2,395 1,912 4,724 3,808
Service charges on deposit accounts. 3,265 3,066 6,316 5,847
Loan servicing fees. . . . 1,206 1,080 2,451 2,014
Securities gains (losses), net. . 36 8 36 24
Other income . . . . . . . 2,788 2,865 5,342 5,375
------ ------ ------ ------
Total Noninterest Income. 9,690 8,931 18,869 17,068
------ ------ ------ ------
Noninterest Expense
Salaries and employee benefits. . 18,174 17,092 36,257 34,068
Occupancy expense. . . . . 1,986 1,927 3,975 3,911
Equipment expense. . . . . 2,550 2,391 5,233 4,607
FDIC insurance expense . . 1,972 1,993 3,972 3,989
Outside data processing expense . 794 831 1,677 1,612
Other expenses . . . . . . 8,509 8,380 17,133 16,609
------ ------ ------ ------
Total Noninterest Expense 33,985 32,614 68,247 64,796
------ ------ ------ ------
Income before income taxes 17,199 16,550 33,637 32,187
Provision for income taxes 4,841 4,489 9,323 8,553
------ ------ ------ ------
Net Income. . . . . . . . $12,358 $12,061 $24,314 $23,634
====== ====== ====== ======
Net Income Per Common Share
Primary . . . . . . . . . $ 0.54 $ 0.51 $ 1.05 $ 1.00
====== ====== ====== ======
Fully Diluted . . . . . . $ 0.52 $ 0.50 $ 1.02 $ 0.97
====== ====== ====== ======
Weighted average common shares outstanding:
Primary . . . . . . . . . 23,029,708 23,615,573 23,140,212 23,670,633
========== ========== ========== ==========
Fully Diluted . . . . . . 24,370,907 25,307,197 24,481,411 25,362,257
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this statement
4
<PAGE>
Old National Bancorp and Affiliates
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended
June 30,
($ in thousands) (unaudited) 1995 1994
Cash flows from operating activities:
<S> <C> <C>
Net income . . . . . . . . . . . . . . . $ 24,314 $ 23,634
------- -------
Adjustments to reconcile net income to cash provided
from operating activities:
Depreciation. . . . . . . . . . . . . . 3,585 3,437
Amortization of intangible assets . . . 773 944
Net premium amortization (discount accretion) on
investment securities . . . . . . . . 407 3,288
Provision for loan losses . . . . . . . 2,183 3,018
Gain on sale of investment securities . (36) (24)
Gain on sale of assets. . . . . . . . . (245) (41)
Increase in interest receivable . . . . (2,887) (1,065)
(Increase) decrease in other assets . . 1,149 (693)
Increase (decrease) in accrued expenses and
other liabilities. . . . . . . . . . 2,429 (1,174)
------- -------
Total adjustments . . . . . . . . . . 7,358 7,690
------- -------
Net cash flows provided by operating activities. . 31,672 31,324
------- -------
Cash flows from investing activities:
Purchase of investment securities held to maturity. (36,697) (147,707)
Purchase of investment securities available for sale (115,716) (79,110)
Proceeds from maturities and paydowns of investment
securities held to maturity . . . . . . 51,136 153,011
Proceeds from maturities and paydowns of investment
securities available for sale . . . . . 81,693 68,718
Proceeds from sales of investment securities available
for sale. . . . . . . . . . . . . . . . 5,768 21,799
Net principal collected from (loans made to) customers:
Commercial . . . . . . . . . . . . . . (2,612) (49,671)
Mortgage . . . . . . . . . . . . . . . (69,449) (53,067)
Consumer . . . . . . . . . . . . . . . (36,007) (44,123)
Proceeds from sale of mortgage loans . . 13,926 19,105
Proceeds from sale of premises and equipment. . . . 313 243
Purchase of premises and equipment . . . (4,503) (6,226)
------- -------
Net cash flows used in investing activities. . . . (112,148) (117,028)
------- -------
Cash flows from financing activities:
Net increase (decrease) in deposits and short-term borrowings:
Noninterest bearing demand. . . . . . . (16,163) (16,649)
Savings, daily interest checking and
money market deposits. . . . . . . . . . . . 6,499 (25,203)
Certificates of deposit of $100,000 and over . . . 33,457 (2,488)
Other time deposits . . . . . . . . . . . 100,895 (5,114)
Federal funds purchased and securities sold under
agreements to repurchase . . . . . . . . (126,127) 31,663
Other short-term borrowings . . . . . . . 39,934 34,091
Redemption of 10% subordinated debentures. --- (4,502)
Cash dividends paid. . . . . . . . . . . . (10,091) (10,038)
Common stock repurchased . . . . . . . . . (28,826) (9,187)
Common stock reissued, net of shares used to convert
subordinated debentures. . . . . . . . . 3,057 4,067
------- -------
Net cash flows provided by (used in)
financing activities . . . . . . . . . . . . 2,635 (3,360)
------- -------
Net decrease in cash and cash equivalents. (77,841) (89,064)
Cash and cash equivalents at beginning of period. . 262,755 274,262
------- -------
Cash and cash equivalents at end of period $184,914 $185,198
======= =======
Total interest paid . . . . . . . . . . . $74,535 $59,738
====== ======
Total taxes paid. . . . . . . . . . . . . $ 8,264 $10,054
====== ======
</TABLE>
The accompanying notes are an integral part of this statement.
5
<PAGE>
Old National Bancorp
Notes To Consolidated Financial Statements
1. Basis of Presentation
The accompanying consolidated financial statements include the accounts of the
Old National Bancorp and its affiliate entities (ONB). All significant
intercompany transactions and balances have been eliminated. In the opinion
of management, the consolidated financial statements contain all the normal
and recurring adjustments necessary to present fairly the financial position
of ONB as of June 30, 1995 and 1994 and December 31, 1994, and the results of
its operations for the three and six months ended June 30, 1995 and 1994 and
its cash flows for the six months ended June 30, 1995 and 1994.
2. Net Income Per Common Share
Net income per common share computations are based on the weighted average
number of common shares outstanding during the periods presented. A 5% stock
dividend was paid February 10, 1995 to shareholders of record on January 27,
1995. All share and per share data presented herein have been restated for
the effects of this stock dividend.
3. Merger Activities
Completed Mergers
On March 31, 1995, ONB and Oblong Bancshares, Inc., Oblong, Illinois,
consummated a merger in which ONB issued 456,643 common shares in exchange for
all of the shares of Oblong. This transaction was accounted for as a pooling-
of-interests. Net income prior to merger included in these statements for the
three months ended March 31, 1995 was $231 thousand.
On April 30, 1995, ONB and Citizens National Bank Corporation, Tell City,
Indiana, consummated a merger in which ONB issued 992,861 common shares in
exchange for all of the shares of Citizens. This transaction was accounted
for as a pooling-of-interests. Net income prior to merger included in these
statements for the four months ended April 30, 1995 was $664 thousand.
Pending Mergers
On September 30, 1994, ONB and First United Savings Bank (FUSB), Greencastle,
Indiana announced the execution of a letter of intent to merge. They have
subsequently signed a definitive merger agreement. Pursuant to the terms of
this agreement, ONB will issue common shares in exchange for all of the
outstanding common shares of FUSB. The transaction will be accounted for as a
pooling-of-interests. The merger is subject to the the approvals of FUSB's
shareholders and regulatory authorities. As of June 30, 1995, FUSB's
consolidated financial statements reflected $140.6 million in total assets,
net loans of $123.4 million, total deposits of $112.5 million and net loss
for the six months then ended of $22 thousand. This merger is expected to be
consummated in late 1995.
6
<PAGE>
On February 23, 1995, ONB and Shawnee Bancorp, parent company of The Bank of
Harrisburg, Harrisburg, Illinois announced the execution of a letter of intent
to merge. They have subsequently signed a definitive merger agreement.
Pursuant to the terms of this agreement, ONB will issue common shares in
exchange for all of the outstanding common shares of Shawnee Bancorp. The
minority shareholders of the Bank of Harrisburg will receive cash. The
transaction will be accounted for as a pooling-of-interests. The merger is
subject to the approvals of Shawnee Bancorp's shareholders and regulatory
authorities. As of June 30, 1995, Shawnee Bancorp's consolidated financial
statements reflected $29.3 million in total assets, net loans of $13.2 million,
total deposits of $24.1 million and net income for the six months then ended of
$62 thousand. This merger is expected to be consummated in December 1995.
On April 26, 1995, ONB and City National Bancorp, parent company of City
National Bank, Fulton, Kentucky announced the execution of a letter of intent
to merge. They have subsequently signed a definitive merger agreement.
Pursuant to the terms of this agreement, ONB will issue common shares in
exchange for all of the outstanding common shares of City National Bancorp.
The transaction will be accounted for as a pooling-of-interests. The merger
is subject to the approvals of City National Bancorp's shareholders and
regulatory authorities. As of June 30, 1995, City National Bancorp's
consolidated financial statements reflected $103.5 million in total assets,
net loans of $39.1 million, total deposits of $88.3 and net income for the six
months then ended of $501 thousand. This merger is expected to be consummated
in late 1995.
4. Investments
The market value and amortized cost of investment securities as of June 30,
1995 are set forth below ($ in thousands):
Market Value Amortized Cost
Held-to-maturity, at amortized cost $ 882,889 $ 875,664
Available-for-sale, at market value 442,871 440,929
--------- ---------
$ 1,325,760 $ 1,316,593
========= =========
5. Borrowings
ONB has outstanding $31.5 million of 8% convertible subordinated debentures
which are due September 15, 2012, unless previously converted or redeemed.
The debentures are convertible at any time prior to maturity into shares of
common stock of ONB at a conversion rate of 42.517 shares for each one
thousand dollars principal amount of debentures. Interest on the debentures
is payable on March 15 and September 15 of each year. The debentures are
redeemable in whole or in part at the option of ONB at a premium to par value.
Beginning September 15, 1998, debenture holders are entitled to an annual
sinking fund of $2.5 million principal amount of debentures annually less
conversions and redemptions. The debentures are subordinated in right of
payment to all senior indebtedness of ONB. As of June 30, 1995, 1.3 million
7
<PAGE>
authorized and unissued common shares were reserved for conversion of the
debentures.
ONB has registered Series A Medium Term Notes in the principal amount of $50
million. The notes may be issued with maturities ranging from nine months to
thirty years and rates may be either fixed or variable. As of June 30, 1995,
a total of $32 million of the notes were outstanding, with maturities ranging
from one to eight years and fixed interest rates ranging from 5.5% to 7.1%.
On July 5, 1995, ONB issued the remaining $18 million of Series A Medium Term
Notes with an interest rate of 6.94% and a seven-year maturity. Proceeds were
used to reduce outstanding lines of credit.
As of June 30, 1995, ONB has $40 million in unsecured lines of credit with
unaffiliated banks. These lines of credit include various informal
arrangements to maintain compensating balances. The compensating balances are
maintained for the benefit of the parent company by affiliate banks which
normally maintain correspondent balances with unaffiliated banks. As of June
30, 1995, $31.2 million was outstanding under these lines bearing interest
rates that averaged 6.76%.
6. Impact of Accounting Changes
Effective January 1, 1995, ONB adopted the provisions of Statement of
Financial Accounting Standards No. 114 and No. 118, "Accounting for Creditors
for Impairment of a Loan" (SFAS No. 114 and SFAS No. 118).
As of June 30, 1995, the recorded investment in loans for which impairment has
been recognized in accordance with SFAS No. 114 and 118 was $5.7 million with
no related allowance and $56.2 million with $16.3 million of related
allowance.
ONB's policy for recognizing income on impaired loans is to accrue earnings
unless a loan becomes nonaccrual. When loans are classified as nonaccrual,
interest accrued during the current year is reversed against earnings;
interest accrued in the prior year, if any, is charged to the allowance for
loan losses. Cash received while a loan is classified nonaccrual is recorded
to principal.
For the six months ended June 30, 1995, the average balance of impaired loans
was $58.2 million and $2.4 million of interest was recorded.
8
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following management's discussion and analysis is presented to provide
information concerning the financial condition of ONB as of June 30, 1995, as
compared to June 30, 1994 and December 31, 1994, and the results of operations
for the three and six month periods ended June 30, 1995 and 1994.
Financial Condition
ONB's total assets at June 30, 1995 were $4.4 billion, a 4.2% increase over
the prior year and a 1.0% increase from December 31, 1994. Earning assets,
which consist primarily of money market investments, investment securities and
loans, rose 3.7% over the prior year and a 1.2% increase since year-end.
During the past year, the mix of earning assets has changed slightly with
loans growing 8.8% while investment securities and money market investments
combined declined 5.7%. Since year-end, loans increased 3.4% compared to a
3.2% decrease in investment securities and money market investments. The
continued loan growth reflects the generally healthy economies in our tri-state
market areas. The decrease in money market investments and investment
securities was the result of using redemptions and maturities to partially
fund our loan growth.
At June 30, 1995, under-performing assets (defined as loans 90 days or more
past due, nonaccrual and restructured loans and other real estate) increased
to $14.8 million from $13.7 million as of December 31, 1994. As of these
dates, under-performing assets in total were 0.53% and 0.50%, respectively, of
total loans and other real estate.
<TABLE>
<CAPTION>
Past Due Total as %
90 Other of Total Loans
Days Nonaccrual Restructured Real and Other
Or More Loans Loans Estate Total Real Estate
<S> <C> <C> <C> <C> <C> <C>
June 30, 1995 $3,449 $9,568 $1,112 $628 $14,757 0.53%
December 31, 1994 3,338 9,077 633 647 13,695 0.50
</TABLE>
ONB's consolidated loan portfolio is well diversified and contains no
concentrations of credit in any particular industry. A concentration
generally exists when more than 10% of total loans outstanding are to
borrowers of the same industry. ONB has minimal exposure to commercial real
estate, construction lending or leveraged buyouts and no exposure in credits
to foreign or lesser-developed countries.
Total deposits at June 30, 1995, grew $160.2 million or 4.7% from June 30,
1994 and increased $124.7 million or 3.6% since year-end. The mix of deposits
has remained relatively unchanged with a slight shift to small certificates of
deposit (CDs) as deposit interest rates have risen. This deposit growth has
enabled ONB to reduce other borrowing levels.
9
<PAGE>
Capital
Total shareholders' equity increased by 0.8% over year-end 1994 and 0.9% over
June 30, 1994. ONB continues its quarterly cash dividend of $0.23 per share.
In conformity with its stock repurchase program, ONB purchased $13.9 million
and $28.8 million of its capital stock in the second quarter of 1995 and
year-to-date in 1995, respectively.
ONB's consolidated capital position remains strong as evidenced by the
following comparisons of key industry ratios:
<TABLE>
<CAPTION>
Minimum
Regulatory June 30, June 30, December 31,
Ratios 1995 1994 1994
Risk Based Capital:
<S> <C> <C> <C> <C>
Tier 1 Capital to Total Assets 3.00% 8.56% 8.83% 8.71%
(Leverage Ratio)
Tier 1 Capital to Risk Adjusted 4.00% 13.49% 14.25% 13.92%
Total Assets
Total Capital to Risk Adjusted 8.00% 15.79% 16.97% 16.50%
Total Assets
Shareholders' Equity to N/A 8.91% 9.20% 8.92%
Total Assets
</TABLE>
Each of ONB's affiliate banks have capital ratios which exceed regulatory
minimums.
Liquidity and Asset/Liability Management
ONB continually monitors its liquidity and actively manages its
asset/liability position. The purpose of liquidity management is to match the
sources of funds with anticipated customer borrowings and withdrawals and
other obligations. The primary purpose of asset/liability management is to
minimize the effect on net income of changes in interest rates and to maintain
a prudent match within specified time periods of rate-sensitive assets and
rate-sensitive liabilities.
As of June 30, 1995, ONB's rate-sensitive assets were 84% of rate-sensitive
liabilities in the 1-180 day maturity category and 96% in the 181-365 day
category. These figures compared to 87% and 102% on December 31, 1994 and 88%
and 102% on June 30, 1994. These positions are within acceptable ranges as
determined from time-to-time by management. ONB's increased lending activity
combined with the shift in deposits to CDs contributed to the these ratio
changes. ONB's funds management committee meets monthly to closely monitor and
effect changes as needed in the consolidated rate-sensitivity position.
Results of Operations
Net Income
Net income for the six months ended June 30, 1995 was $24.3 million, a 2.9%
increase from the same period 1994. Net income for the second quarter of 1995
was up 2.5% over 1994. Primary net income per common share for the second
quarter of 1995 and for the six months ended June 30, 1995 were $0.54 and
10
<PAGE>
$1.05, respectively. Earnings per common share for both periods in 1995
exceeded the results for the similar periods in 1994 by 5.0% or more.
The company's return on average assets (ROA) for the second quarter of 1995
was 1.13%, the same as 1994. Year-to-date ROA percentages were 1.11% in 1995
compared to 1.12% for 1994. Return on average equity (ROE) for the quarter
and the first six months of 1995 were 12.65% and 12.44%, respectively. These
compare favorably to 1994 ROE results of 12.43% and 12.22% for similar
periods.
Net Interest Income/Net Interest Margin (taxable equivalent basis)
Year-to-date net interest income for 1995 was $91,586, a 2.4% increase over
1994. Net interest income for the second quarter of 1995 was $45,868 compared
to $45,384 in 1994. The net interest margin for the second quarter was 4.45%
and 4.55% for 1995 and 1994, respectively. The year-to-date net interest
margin percentage in 1995 was 4.47% compared to 4.52% in 1994. Higher interest
rates increased ONB's net interest income, though higher deposit rates
experienced so far in 1995 reduced the net interest margin.
Provision and Allowance for Loan Losses
The provision for loan losses was $1.1 million in the second quarter of 1995
compared to $1.7 million in the second quarter of 1994. Year-to-date, the
provision for loan losses of $2.2 million compares to $3.0 million in 1994.
ONB's net charge-offs were 0.09% of average loans for the current quarter,
down from 0.26% in the second quarter of 1994. For the first six months, net
charge-offs were 0.08% in 1995 compared to 0.13% in 1994. These charge-off
figures reflect the continued strength of the loan portfolio and the sound
economies in the communities ONB serves. These historically low levels of
charge-offs may be difficult to sustain in the future.
The allowance for loan losses is continually monitored and evaluated both
within each affiliate bank and at the holding company level to provide
adequate coverage for potential losses. ONB maintains a comprehensive loan
review program to provide independent evaluations of loan administration,
credit quality, loan documentation, and adequacy of the allowance for loan
losses. The allowance for loan losses to end-of-period loans of 1.46% at June
30, 1995 compares to 1.62% in 1994. The loan portfolio's strength enabled ONB
to add loan growth with minimal increase in the allowance. As a result, the
this ratio declined. The allowance for loan losses covers all
under-performing assets by 2.8 times at June 30, 1995 compared to 2.9 times at
December 31, 1994.
Noninterest Income
Excluding securities losses, noninterest income increased 8.2% in the three
months ended June 30, 1995 as compared to the same period in 1994. For the
first six months, this increase was 10.5%. Both increases were fueled by an
increase in trust fees which were up 25.3% in the second quarter versus last
year and 24.1% for the first six months. Most other categories of noninterest
11
<PAGE>
income were slightly ahead of last year except for other income which declined
slightly.
Noninterest Expense
Noninterest expense increased 4.2% in the second quarter of 1995 compared to
1994. For the first six months, this percentage increase was 5.3%. A major
component of this increase is the company's significant investments in data
processing facilities, data processing conversions and consolidation
activities. With twelve affiliate banks already using our in-house data
center, ONB will continue to convert the data processing for each of its
affiliate banks from third party services. This has resulted in higher fixed
equipment, occupancy, and personnel costs in 1995, with benefits anticipated
from lower third party fees as conversions are completed. Salaries and
benefits, together the largest individual component of noninterest expense,
increased 6.3% in the second quarter of 1995 compared to 1994. For the first
six months, this percentage increased 6.4%. Equipment expense is up 6.6%
quarter-to-quarter and 13.6% year-to-year. These increases while above normal
levels because of the conversion and consolidation activities are trending
downward from prior periods. Other categories of noninterest expense
experienced relatively small changes between the years.
Provision for Income Taxes
The provision for income taxes, as a percentage of pre-tax income, remained
relatively unchanged in the second quarter at 28.1% compared to 27.1% in 1994.
For the first six months, this percentage is 27.7% for 1995 and 26.6% in 1994.
Decreased tax exempt income levels in 1995 resulted in higher effective income
tax rates.
12
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings
NONE
ITEM 2. Changes in Securities
NONE
ITEM 3. Defaults Upon Senior Securities
NONE
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
See Note 3 to the consolidated financial statements for discussion of pending
mergers.
ITEM 6. Exhibits and Reports on Form 8-K
(a) NONE
(b) ONB did not file a current report on Form 8-K during the quarter ended
June 30, 1995.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OLD NATIONAL BANCORP
(Registrant)
By: s/s Steve H. Parker
Steve H. Parker
Senior Vice President
Chief Financial Officer
Date: August 11, 1995
14
<PAGE>
INDEX OF EXHIBITS
Regulation S-K
Reference
(Item 601)
11 Statement re Computation of Per Share Earnings
27 Financial Data Schedule
15
<PAGE>
EXHIBIT 11
PAGE 1 OF 2
OLD NATIONAL BANCORP
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
($ IN THOUSANDS EXCEPT PER SHARE)
Three Months Ended Six Months Ended
June 30, 1995 June 30, 1995
Primary Fully Diluted Primary Fully Diluted
Net Income . . . $12,358 $12,358 $24,314 $24,314
Interest expense foregone on
assumed conversion of 8%
convertible subordinated
debentures, net of tax . . -- 381 -- 762
------ ------- ------ ------
Adjusted net income. . . . $12,358 $12,739 $24,314 $25,076
Weighted average common
shares outstanding . . . 22,967,652 22,967,652 23,078,156 23,078,156
Additional shares outstanding
upon assumed conversion of 8%
convertible subordinated
debentures . . . 1,341,199 1,341,199
Additional shares outstanding
upon assumed exercise of stock
options 62,056 62,056 62,056 62,056
---------- ---------- ---------- ---------
Adjusted weighted average
shares outstanding . . . 23,029,708 24,370,907 23,140,212 24,481,411
---------- ---------- ---------- ----------
Earnings per share . $ .54 $ .52 $ 1.05 $ 1.02
========= ========== ======== =========
16
<PAGE>
EXHIBIT 11
PAGE 2 OF 2
OLD NATIONAL BANCORP
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
($ IN THOUSANDS EXCEPT PER SHARE)
Three Months Ended Six Months Ended
June 30, 1994 June 30, 1994
Primary Fully Diluted Primary Fully Diluted
Net Income. . . $12,061 $12,061 $23,634 $23,634
Interest expense foregone on
assumed conversion of 8%
convertible subordinated
debentures, net of tax . . -- 481 -- 961
------- -------- ------- ------
Adjusted net income. . . $12,061 $12,542 $23,634 $24,595
Weighted average common
shares outstanding. . . 23,553,414 23,553,414 23,608,474 23,608,474
Additional shares outstanding
upon assumed conversion of 8%
convertible subordinated
debentures. . . 1,691,624 1,691,624
Additional shares outstanding
upon assumed exercise of stock
options. . . . . . . . . . 62,159 62,159 62,159 62,159
-------- ---------- ---------- ---------
Adjusted weighted average
shares outstanding. . . 23,615,573 25,307,197 23,670,633 25,362,257
---------- ---------- ---------- ----------
Earnings per share . $ .51 $ .50 $ 1.00 $ .97
======== ========== ========= =========
17
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM OLD NATIONAL
BANCORP'S JUNE 30, 1995 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 179,590
<INT-BEARING-DEPOSITS> 1,484
<FED-FUNDS-SOLD> 3,840
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 442,871
<INVESTMENTS-CARRYING> 875,664
<INVESTMENTS-MARKET> 882,889
<LOANS> 2,811,216
<ALLOWANCE> 40,953
<TOTAL-ASSETS> 4,429,994
<DEPOSITS> 3,595,004
<SHORT-TERM> 332,114
<LIABILITIES-OTHER> 44,814
<LONG-TERM> 63,545
<COMMON> 22,890
0
0
<OTHER-SE> 371,627
<TOTAL-LIABILITIES-AND-EQUITY> 4,429,994
<INTEREST-LOAN> 122,234
<INTEREST-INVEST> 39,727
<INTEREST-OTHER> 1,005
<INTEREST-TOTAL> 162,966
<INTEREST-DEPOSIT> 66,107
<INTEREST-EXPENSE> 77,768
<INTEREST-INCOME-NET> 85,198
<LOAN-LOSSES> 2,183
<SECURITIES-GAINS> 36
<EXPENSE-OTHER> 17,133
<INCOME-PRETAX> 33,637
<INCOME-PRE-EXTRAORDINARY> 24,314
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,314
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.02
<YIELD-ACTUAL> 4.47<F1>
<LOANS-NON> 9,568
<LOANS-PAST> 3,449
<LOANS-TROUBLED> 1,112
<LOANS-PROBLEM> 86,540
<ALLOWANCE-OPEN> 39,814
<CHARGE-OFFS> 2,828
<RECOVERIES> 1,784
<ALLOWANCE-CLOSE> 40,953
<ALLOWANCE-DOMESTIC> 40,953
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Percentage is exact, does not require multiplier.
</FN>
</TABLE>
