<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 March 31, 1996
[ ] 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
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 24.8 million shares outstanding at March 31, 1996.
<PAGE>
OLD NATIONAL BANCORP
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page No.
Consolidated Balance Sheet
March 31, 1996 and 1995, and December 31, 1995 . . 3
Consolidated Statement of Income
Three months ended March 31, 1996 and 1995. . 4
Consolidated Statement of Cash Flows
Three months ended March 31, 1996 and 1995. . 5
Notes to Consolidated Financial Statements . 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . 8
PART II OTHER INFORMATION . . . . . . . . . . . . . . . . 12
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . 14
INDEX OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . 15
2
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<TABLE>
<CAPTION>
OLD NATIONAL BANCORP
CONSOLIDATED BALANCE SHEET
March 31, March 31, December 31,
($ in thousands) (unaudited) 1996 1995 1995
Assets
<S> <C> <C> <C>
Cash and due from banks. . . . . . . . . . $141,976 $132,919 $175,116
Money market investments . . . . . . . . . 80,543 58,327 85,961
Investment Securities:
U.S. Treasury . . . . . . . . . . . . . . 180,465 227,838 188,267
U.S. Government agencies
and corporations. . . . . . . . . . . . 730,248 713,339 739,169
Obligations of states and political
subdivisions. . . . . . . . . . . . . . 429,989 421,067 435,905
Other . . . . . . . . . . . . . . . . . . 29,703 31,432 26,839
---------- ---------- ----------
Total Investment Securities . . . . . . 1,370,405 1,393,676 1,390,180
---------- ---------- ----------
Loans
Commercial. . . . . . . . . . . . . . . . 758,645 716,551 765,418
Mortgage. . . . . . . . . . . . . . . . . 1,594,553 1,553,924 1,579,596
Consumer credit, net of unearned income . 680,520 643,548 687,552
Financial . . . . . . . . . . . . . . . . 23,167 2,425 5,167
---------- ---------- ----------
Total Loans . . . . . . . . . . . . . . 3,056,885 2,916,448 3,037,733
Allowance for loan losses . . . . . . . (40,550) (42,007) (39,806)
---------- ---------- ----------
Net Loans . . . . . . . . . . . . . . . 3,016,335 2,874,441 2,997,927
Other assets . . . . . . . . . . . . . . . 176,764 167,384 173,444
---------- ---------- ----------
Total Assets. . . . . . . . . . . . . . $4,786,023 $4,626,747 $4,822,628
========== ========== ==========
Liabilities
Deposits
Noninterest bearing demand. . . . . . . . $444,144 $431,552 $469,208
Interest bearing:
Savings, daily interest checking
and money market accounts . . . . . . . 1,537,044 1,404,218 1,562,320
Certificates of deposit of
$100,000 and over . . . . . . . . . . . 277,449 231,836 276,010
Other time. . . . . . . . . . . . . . . 1,664,413 1,641,609 1,666,137
---------- ---------- ----------
Total Deposits. . . . . . . . . . . . . 3,923,050 3,709,215 3,973,675
---------- ---------- ----------
Short-term borrowings. . . . . . . . . . . 301,026 395,059 280,281
Subordinated debentures. . . . . . . . . . 30,585 36,350 31,515
Medium term notes. . . . . . . . . . . . . 45,000 32,000 50,000
Other liabilities. . . . . . . . . . . . . 60,489 46,296 59,080
---------- ---------- ----------
Total Liabilities . . . . . . . . . . . . 4,360,150 4,218,920 4,394,551
---------- ---------- ----------
Shareholders' Equity
Common stock. . . . . . . . . . . . . . . 24,843 24,264 24,955
Capital surplus . . . . . . . . . . . . . 240,273 223,348 245,420
Retained earnings . . . . . . . . . . . . 155,741 163,227 147,367
Net unrealized gain (loss) on investments
securities. . . . . . . . . . . . . . . 5,016 (3,012) 10,335
---------- ---------- ----------
Total Shareholders' Equity. . . . . . . . 425,873 407,827 428,077
---------- ---------- ----------
Total Liabilities and Shareholders'
Equity. . . . . . . . . . . . . . . . . $4,786,023 $4,626,747 $4,822,628
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
3
<PAGE>
<TABLE>
<CAPTION>
OLD NATIONAL BANCORP
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended
($ in thousands except share March 31,
and per share data) (Unaudited) 1996 1995
Interest income
<S> <C> <C>
Loans including fees:
Taxable . . . . . . . . . . . . . $67,574 $62,233
Non-taxable. . . . . . . . . . . . 896 876
Investment securities:
Taxable. . . . . . . . . . . . . . 14,913 15,219
Non-taxable. . . . . . . . . . . . 5,737 5,796
Federal funds sold and securities
purchased under agreement to resell. 1,490 648
Deposits with banks . . . . . . . . 146 76
------- -------
Total Interest Income . . . . . . 90,756 84,848
------- -------
Interest Expense
Savings, daily interest checking and
money market accounts . . . . . . 11,671 10,390
Certificates of deposit of $100,000
and over . . . . . . . . . . . . . 3,896 2,925
Other time deposits. . . . . . . . . 23,418 20,329
Federal funds purchased. . . . . . . 221 1,153
Securities sold under agreements to
repurchase . . . . . . . . . . . . 2,343 2,432
Other borrowings . . . . . . . . . . 2,602 2,968
------- -------
Total Interest Expense. . . . . . 44,151 40,197
------- -------
Net Interest Income . . . . . . . 46,605 44,651
Provision for loan losses. . . . . . 1,979 1,100
------- -------
Net Interest Income After Provision
For Loan Losses. . . . . . . . . 44,626 43,551
------- -------
Noninterest Income
Trust fees. . . . . . . . . . . . . . 2,503 2,356
Service charges on deposit accounts . 3,614 3,230
Loan servicing fees . . . . . . . . . 1,254 1,379
Securities gains (losses), net. . . . 54 --
Other income. . . . . . . . . . . . . 2,703 2,426
------- -------
Total Noninterest Income. . . . . . 10,128 9,391
------- -------
Noninterest Expense
Salaries and employee benefits. . . . 19,320 18,788
Occupancy expense . . . . . . . . . . 2,240 2,132
Equipment expense . . . . . . . . . . 2,686 2,710
FDIC insurance expense. . . . . . . . 193 2,149
Data processing expense . . . . . . . 1,203 1,463
Other expenses. . . . . . . . . . . . 9,005 8,525
------- -------
Total Noninterest Expense . . . . . 34,647 35,767
------- -------
Income before income taxes. . . . . . 20,107 17,175
Provision for income taxes. . . . . . 6,026 4,698
------- -------
Net Income. . . . . . . . . . . . . $14,081 $12,477
======= =======
Net Income Per Common Share
Primary . . . . . . . . . . . . . . $ 0.56 $ 0.49
======= =======
Fully Diluted . . . . . . . . . . . $ 0.55 $ 0.48
======= =======
Weighted average common shares outstanding:
Primary . . . . . . . . . . . . 24,967,510 25,674,766
========== ==========
Fully Diluted . . . . . . . . . 26,333,141 27,297,539
========== ==========
</TABLE>
The accompanying notes are an integral part of this statement
4
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<TABLE>
<CAPTION>
OLD NATIONAL BANCORP
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended
March 31,
($ in thousands) (unaudited) 1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . $ 14,081 $ 12,477
-------- --------
Adjustments to reconcile net income to cash provided
from operating activities:
Depreciation. . . . . . . . . . . . . . . . . . 2,008 1,946
Amortization of intangible assets . . . . . . . 360 350
Net premium amortization on investment securities. 642 137
Provision for loan losses . . . . . . . . . . . 1,979 1,100
Gain on sale of investment securities . . . . . (54) --
Gain on sale of assets. . . . . . . . . . . . . (12) (273)
Decrease in interest receivable . . . . . . . . 2,201 1,392
Increase in other assets. . . . . . . . . . . . (4,605) (820)
Increase in accrued expenses and
other liabilities . . . . . . . . . . . . . . 4,855 3,620
-------- --------
Total adjustments . . . . . . . . . . . . . . 7,374 7,452
-------- --------
Net cash flows provided by operating activities. 21,455 19,929
-------- --------
Cash flows from investing activities:
Purchase of investment securities held-to-maturity. -- (16,476)
Purchase of investment securities available-for-sale. (84,731) (78,000)
Proceeds from maturities and paydowns of investment
securities held-to-maturity . . . . . . . . . . . -- 34,724
Proceeds from maturities and paydowns of investment
securities available-for-sale . . . . . . . . . . 92,577 36,715
Proceeds from sales of investment securities available-
for-sale. . . . . . . . . . . . . . . . . . . . . 2,576 --
Net principal collected from (loans made to) customers:
Commercial . . . . . . . . . . . . . . . . . . . (11,193) 22,135
Mortgage . . . . . . . . . . . . . . . . . . . . (28,233) (35,498)
Consumer . . . . . . . . . . . . . . . . . . . . 5,822 (18,017)
Proceeds from sale of mortgage loans . . . . . . . 13,290 4,860
Proceeds from sale of premises and equipment . . . 158 229
Purchase of premises and equipment . . . . . . . . (3,503) (2,306)
-------- --------
Net cash flows used in investing activities . . . (13,237) (51,634)
Cash flows from financing activities:
Net increase (decrease) in deposits and short-term borrowings:
Noninterest bearing demand. . . . . . . . . . . . (25,064) (10,673)
Savings, daily interest checking and
money market deposits . . . . . . . . . . . . . (25,276) (57,664)
Certificates of deposit of $100,000 and over. . . 1,439 18,538
Other time deposits . . . . . . . . . . . . . . . (1,724) 89,828
Short-term borrowings . . . . . . . . . . . . . . 20,745 (60,212)
Payment of medium-term notes . . . . . . . . . . . (5,000) --
Cash dividends paid. . . . . . . . . . . . . . . . (5,721) (5,097)
Common stock repurchased . . . . . . . . . . . . . (8,126) (16,590)
Common stock reissued, net of shares used to convert
subordinated debentures. . . . . . . . . . . . . 1,951 1,981
-------- --------
Net cash flows provided by financing activities. (46,776) (39,889)
-------- --------
Net decrease in cash and cash equivalents. . . . . (38,558) (71,594)
Cash and cash equivalents at beginning of period . 261,077 262,840
-------- --------
Cash and cash equivalents at end of period . . . . $222,519 $191,246
======== ========
Total interest paid. . . . . . . . . . . . . . . $ 46,023 $ 38,762
======== ========
Total taxes paid . . . . . . . . . . . . . . . . $ 1,000 $ 800
======== ========
The accompanying notes are an integral part of this statement.
</TABLE>
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 March 31, 1996 and 1995 and December 31, 1995, and the results of
its operations and its cash flows for the three months ended March 31, 1996
and 1995. All prior period information has been restated for the effects of
business combinations accounted for as pooling-of-interests.
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 20, 1996 to shareholders of record on February 5,
1996. All share and per share data presented herein have been restated for
the effects of this stock dividend.
Net income on a fully diluted basis is computed as above and assumes the
conversion of ONB's 8% convertible subordinated debentures (Note 5). For the
fully diluted computation, net income is adjusted for the assumed reduction in
interest expense, net of income tax effect, and an additional 1.4 million
common shares are assumed to be issued in connection with the conversion of
the remaining outstanding debentures.
3. Merger Activities
Pending Mergers
On December 12, 1995, ONB and The National Bank of Carmi (Carmi) of Carmi,
Illinois announced the execution of a letter of intent to merge and
subsequently executed a definitive merger agreement. ONB will issue common
shares in exchange for all of the outstanding common shares of Carmi. The
transaction will be accounted for as a pooling-of-interests. The merger is
subject to the approvals of Carmi's shareholders. As of March 31, 1996,
Carmi's financial statements reflected $66.5 million in total assets, net
loans of $31.2 million, total deposits of $57.9 million and net income for the
three months then ended of $136 thousand. This merger is expected to be
consummated May 31, 1996.
On April 8, 1996, ONB and Workingmens Capital Holdings (Workingmens) of
Bloomington, Indiana announced the execution of a definitive merger agreement.
ONB will issue common shares in exchange for all of the outstanding common
shares of Workingmens. The transaction will be accounted for as a pooling-of-
interests. The merger is subject to the approvals of Workingmen's
shareholders and requlatory authorities. As of March 31, 1996 Workingmens
consolidated financial statements reflected $213.7 million in total assets,
net loans of $183.7 million, total deposits of $154.5 million and net income
6
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for the three months then ended of $459 thousand. This merger is expected to
be consummated in late 1996.
4. Investments
The market value and amortized cost of investment securities as of March 31,
1996 are set forth below ($ in thousands):
Market Value Amortized Cost
Held to Maturity, at amortized cost $ -- $ --
Available for Sale, at market value 1,370,405 1,362,189
---------- ----------
$1,370,405 $1,362,189
========== ==========
5. Borrowings
ONB's has outstanding $30.6 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 44.643 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 March 31, 1996, 1.4 million
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. As of March 31, 1996, a total of $45 million of the notes were
outstanding, with maturities ranging from one to seven years and fixed
interest rates ranging from 5.5% to 7.1%.
As of March 31, 1996, ONB has $45 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 March
31, 1996, there were no outstanding balances under these lines.
6. Impact of Accounting Changes
Effective January 1, 1996, ONB adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No 122, "Accounting for Mortgage
Servicing Rights". This statement modifies the accounting for mortgage
servicing rights to allow the recognition of a servicing asset whether they
are purchased or originated.
Effective January 1, 1996, ONB adopted the provisions of SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of".
The adoption of both above statements did not have a material impact on ONB's
financial condition and its results of operations.
7
<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 March 31, 1996, as
compared to March 31, 1996 and December 31, 1995, and the results of
operations for the three months ended March 31, 1996 and 1995.
Financial Condition
ONB's total assets at March 31, 1996 were $4.786 billion, a 3.4% increase
since March 1995 and a 0.8% decrease since December 1995. Earning assets,
which consist primarily of money market investments, investment securities and
loans, grew 3.2% over the prior year. During the past year, the mix of
earning assets has changed as loans grew 4.8% while money market investments
and investment securities declined 0.1%. The investment portfolio maturities
have helped fund loan growth. Since December 1995, earning assets decreased
slightly (0.1%) with loans growing 0.6% and investment securities and money
market investments declining 1.7%.
At March 31, 1996, underperforming assets (defined as loans 90 days or more
past due, nonaccrual and restructured loans and other real estate) rose to
$15.8 million from $13.0 million as of December 31, 1995. As of these dates,
underperforming assets in total were 0.52% and 0.43%, 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>
March 31, 1996 $4,362 $10,057 $ 868 $532 $15,819 0.52%
December 31,1995 4,781 6,623 1,120 515 13,039 0.43
</TABLE>
As of March 31, 1996, the recorded investment in loans for which impairment
has been recognized in accordance with SFAS No. 114 and 118 was $5.4 million
with no related allowance and $50.6 million with $14.3 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 three months ended March 31, 1996, the average balance of impaired
loans was $54.6 million and $1.0 million of interest was recorded.
ONB's consolidated loan portfolio is well diversified and contains no
concentrations of credit in any particular industry exceeding 10% of its
portfolio. ONB has minimal exposure to commercial real estate, construction
8
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lending or leveraged buyouts and no exposure in credits to foreign or lesser-
developed countries.
Total deposits at March 31, 1996, increased $213.8 million or 5.8% compared to
March 1995 with growth in all deposit categories. Savings, daily interest
checking and money market accounts increased $132.8 million and comprised the
largest dollar growth while certificates of deposit of $100,000 or over had
the largest percentage increase at 19.7%. Higher deposit rates and new
marketing efforts attracted deposits during 1995. Since December 1995, total
deposits decreased $50.6 million or 1.3% with the decline split between
noninterest-bearing demand accounts and savings, daily interest checking and
money market accounts. Seasonality and a strong stock market contributed to
the first quarter deposit decrease.
Deposit growth since March 1995 has allowed ONB to reduce short-term borrowing
comprised of Federal funds purchased, securities sold under agreements to
repurchase and other short-term borrowings by $94.0 million in addition to
funding loan growth. ONB also issued additional medium term notes in 1995 to
provide additional funding. Since December 1995, ONB's short-term borrowings
increased $20.7 million and helped offset the decline in deposits.
Capital
Total shareholders' equity rose by $18.0 million since March 1995 and has
decreased $2.2 million since December 1995. During the first quarter of 1996,
net unrealized gain on investment securities decreased $5.3 million as
interest rates increased and the market value of ONB's investment portfolio
declined. In addition ONB repurchased $8.1 million of common stock and paid a
quarterly cash dividend of $0.23 per share.
ONB's consolidated capital position remains strong as evidenced by the
following comparisons of key industry ratios:
<TABLE>
<CAPTION>
Minimum
Regulatory March 31, March 31, December 31,
Risk Based Capital: Ratios 1996 1995 1995
---------- --------- --------- ------------
<S> <C> <C> <C> <C>
Tier 1 Capital to Total Assets (Leverage Ratio) 3.00% 8.51% 8.54% 8.37%
Tier 1 Capital to Risk Adjusted Total Assets 4.00 13.44 13.60 13.39
Total Capital to Risk Adjusted Total Assets 8.00 15.62 16.03 15.60
Shareholders' Equity to Total Assets N/A 8.89 8.81 8.88
</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
9
<PAGE>
a prudent match within specified time periods of rate-sensitive assets and
rate-sensitive liabilities.
As of March 31, 1996, ONB's rate-sensitive assets were 89% of rate-sensitive
liabilities in the 1-180 day maturity category and 105% in the 181-365 day
category. These figures compared to 80% and 96% on December 31, 1995 and 81%
and 95% on March 31, 1995. During 1995, the rate sensitivity was impacted by
the increased lending in 1995 and changes with the deposit mix and maturities.
These positions are within acceptable ranges as determined from time-to-time
by management. 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 three months ended March 31, 1996 was $14.1 million, a
12.9% increase over the same period in 1995. Primary net income per common
share for the first quarter of 1996 was $0.56, compared to $0.49 for the first
quarter of 1995, a 14.3% increase. ONB's return on average assets (ROA) for
the first quarter of 1996 was 1.18%. This compared to 1.08% for the same
period in 1995. The improvement in ROA is due to improved net interest income,
higher noninterest income and lower noninterest expenses.
Net Interest Income
Net interest income on a taxable equivalent basis for the first quarter of
1996 was 4.2% higher than the same period for the prior year. Higher levels
of earning assets resulted in the net interest income growth. The net
interest margin was 4.41% in the first quarter of 1996 versus 4.42% in 1995's
first quarter.
Provision for Loan Losses
The provision for loan losses was $2.0 million in the first quarter of 1996
compared to $1.1 million in the first quarter of 1995. ONB's net charge offs
were 0.16% of average loans for the quarter versus 0.06% in the first quarter
of 1995. The 1996 provision and net charge-offs are comparable to our results
for the full year of 1995 and do not reflect a significant deterioration of
the loan portfolio or the economies in the communities in which ONB serves.
The allowance for loan losses is continually monitored and evaluated both
within each affiliate bank and at the holding company level so as to provide
adequate coverage for potential losses. The allowance for loan losses to
end-of-period loans of 1.33% at March 31, 1996 compared to 1.31% at year-end
in 1995 and 1.44% at March 31, 1995. The allowance for loan losses covers all
underperforming assets by 2.56 times at March 31, 1996 compared to 3.05 times
at December 31, 1995.
Noninterest Income
Total noninterest income increased 7.8% in the three months ended March 31,
1996 as compared to the same period in 1995. In both years security gains
comprised of an insignificant portion of noninterest income. The increase
resulted from increases in all categories, except for loan servicing fees.
Trust fees increased 6.2%, service charges on deposit accounts grew 11.9% and
10
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other income rose 11.4%. The growth in other income was mainly from brokerage
and annuity sales.
Noninterest Expense
Noninterest expense decreased 3.1% in the first quarter of 1996 over the same
period in 1995. Salaries and benefits, together the largest individual
component of noninterest expense, increased 2.8% in the first quarter of 1996
compared to 1995. Most other categories of noninterest expense experienced
relatively small changes between the years.
FDIC insurance premiums dropped $2.0 million, or 91.0%. Premiums on deposits
dropped from approximately 23 basis points per $100 deposits annually to the
FDIC's minimum charge of $2,000. For deposits insured by the Savings
Association Insurance Fund ("SAIF") the rates did not drop. A one-time
recapitalization proposal is being considered by the U.S. Congress. ONB has
less than 6% of its deposits insured by SAIF and expects if it passes such a
charge to have minimal impact on net income.
Provision for Income Taxes
The provision for income taxes, as a percentage of pre-tax income, increased
in the first quarter to 30.0% compared to 27.3% in 1995. The growth in
earning assets has been primarily in taxable loans with tax exempt securities
remaining level which has raised ONB's effective tax rate.
11
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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
At the April 18, 1996 Annual Meeting of Shareholders, the following matters
were submitted to a vote of the shareholders.
Election of Directors - The following directors were elected for a term of one
year.
Vote Count
For Against Abstained Unvoted
David L. Barning 16,936,042 66,616 -- --
Richard J. Bond 16,937,277 65,373 -- --
Alan W. Braun 16,931,846 72,166 -- --
John J. Daus, Jr. 16,937,262 65,489 -- --
Wayne A. Davidson 16,937,258 65,671 -- --
Larry E. Dunigan 16,937,283 65,456 -- --
David E. Eckerle 16,937,283 65,363 -- --
Thomas B. Florida 16,937,258 65,391 -- --
Phelps L. Lambert 16,937,257 65,401 -- --
Ronald B. Lankford 16,937,236 65,515 -- --
Lucien H. Meis 16,937,262 65,383 -- --
Louis L. Mervis 16,905,547 99,168 -- --
Dan W. Mitchell 16,926,713 76,050 -- --
John N. Royse 16,934,754 68,090 -- --
Marjorie Z. Soyugenc 16,934,754 68,090 -- --
Charles D. Storms 16,937,277 65,943 -- --
Increase authorized shares of common stock from 30,000,000 to 50,000,000.
Votes For - 15,595,686, Votes Against - 903,035, Votes Abstained 569,180.
There were no abstentions or broker non-votes inconnection with increase of
authorized shares
12
<PAGE>
Selection of Independent Public Accountants - Arthur Andersen LLP,
Indianapolis, Indiana Votes For - 16,792,568, Votes Against - 123,534, Votes
Abstained - 138,816, Unvoted - 12,983.
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
March 31, 1996.
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: May 15, 1996
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
March 31, 1996
Primary Fully Diluted
Net Income. . . . . . . . . . . . . . $14,081 $14,081
Interest expense foregone on assumed
conversion of 8% convertible subordinated
debentures, net of tax. . . . . . . . -- 369
------- -------
Adjusted net income . . . . . . . . . $14,081 $14,450
Weighted average common shares
outstanding . . . . . . . . . . . . .24,902,327 24,902,327
Additional shares outstanding upon assumed
conversion of 8% convertible subordinated
debentures. . . . . . . . . . . . . . -- 1,365,406
Additional shares outstanding upon assumed
exercise of stock options . . . . . . 65,183 65,408
---------- ----------
Adjusted weighted average shares
outstanding . . . . . . . . . . . 24,967,510 26,333,141
---------- ----------
Earnings per share . . . . . . . . . $ .56 $ .55
========== ==========
<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
March 31, 1995
Primary Fully Diluted
Net Income . . . . . . . . . . . . . . $12,477 $12,477
Interest expense foregone on assumed
conversion of 8% convertible subordinated
debentures, net of tax . . . . . . . . -- 503
------- -------
Adjusted net income. . . . . . . . . . $12,477 $12,980
Weighted average common shares
outstanding . . . . . . . . . . . . . 25,609,470 25,609,470
Additional shares outstanding upon assumed
conversion of 8% convertible subordinated
debentures . . . . . . . . . . . . . . -- 1,622,773
Additional shares outstanding upon assumed
exercise of stock options. . . . . . . 65,296 65,296
---------- ----------
Adjusted weighted average shares
outstanding. . . . . . . . . . . . . . 25,674,766 27,297,539
---------- ----------
Earnings per share . . . . . . . . . . $ .49 $ .48
========== ==========
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM OLD NATIONAL
BANCORP'S MARCH 31, 1996 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 141,976
<INT-BEARING-DEPOSITS> 8,087
<FED-FUNDS-SOLD> 72,456
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,370,405
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 3,056,885
<ALLOWANCE> 40,550
<TOTAL-ASSETS> 4,786,023
<DEPOSITS> 3,923,050
<SHORT-TERM> 301,026
<LIABILITIES-OTHER> 60,489
<LONG-TERM> 75,585
0
0
<COMMON> 24,843
<OTHER-SE> 401,030
<TOTAL-LIABILITIES-AND-EQUITY> 4,786,023
<INTEREST-LOAN> 68,470
<INTEREST-INVEST> 20,650
<INTEREST-OTHER> 1,636
<INTEREST-TOTAL> 90,756
<INTEREST-DEPOSIT> 38,985
<INTEREST-EXPENSE> 44,151
<INTEREST-INCOME-NET> 46,605
<LOAN-LOSSES> 1,979
<SECURITIES-GAINS> 54
<EXPENSE-OTHER> 9,005
<INCOME-PRETAX> 20,107
<INCOME-PRE-EXTRAORDINARY> 14,081
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,081
<EPS-PRIMARY> .56
<EPS-DILUTED> .55
<YIELD-ACTUAL> 4.41
<LOANS-NON> 10,057
<LOANS-PAST> 4,362
<LOANS-TROUBLED> 868
<LOANS-PROBLEM> 98,862
<ALLOWANCE-OPEN> 39,806
<CHARGE-OFFS> 1,917
<RECOVERIES> 682
<ALLOWANCE-CLOSE> 40,550
<ALLOWANCE-DOMESTIC> 40,550
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
