Press Release Details

First FDIC-assisted acquisition completed during quarter

3^rd Quarter Highlights:

• Quarterly net income up 41.2% over 3^rd quarter 2010, and revenue up 24.7% over 3^rd quarter 2010
• EPS of $.18 includes $6.8 million of acquisition expenses and a $2.0 million litigation reserve
• Results exceed analysts' estimates
• Credit quality remains well controlled and capital position remains strong
• Board of Directors declares cash dividend of $.07 per common share

EVANSVILLE, Ind., Oct. 31, 2011 (GLOBE NEWSWIRE) -- Today Old National Bancorp (NYSE:ONB) reported 3^rd quarter net income of $16.8 million, or $.18 per share – a continuation of the company's strong, consistent 2011 performance. These results, which exceeded analysts' consensus estimates for the quarter, are consistent with the net income of $17.0 million, or $.18 per share, that Old National reported in 2^nd quarter 2011, and reflect a substantial 41.2% increase over 3^rd quarter 2010.

The FDIC-assisted acquisition of Integra Bank was accretive to the 3^rd quarter results after the absorption of $6.8 million in acquisition-related expenses. If you exclude these acquisition expenses, and the $2.0 million litigation reserve, Old National's 3^rd quarter 2011 earnings would have been $22.7 million, or $.24 per share. Refer to Table 1 for Non-GAAP reconciliations.

"The fact that we increased net income by more than 41% over 3^rd quarter 2010, while continuing to grow revenue, manage noninterest expenses and control credit quality illustrates that Old National is operating from a position of strength in spite of continuing economic headwinds," said Bob Jones, Old National Bancorp President and CEO. "These results are even more significant when you consider the nearly $9 million we absorbed in acquisition expenses and the litigation reserve.

"Further, our FDIC-assisted acquisition of Integra Bank continues the positive momentum established by our successful Monroe Bancorp acquisition, which closed in 1^st quarter 2011. While we continue to focus on organic revenue growth, we also will continue to strategically pursue additional merger and acquisition opportunities that align well with our strategic imperatives and enable us to continue our mission as a basic, service-focused community bank."

Old National Bancorp's Board of Directors declared a common stock dividend of $.07 per share on the Company's outstanding shares. This dividend is payable December 15, 2011, to shareholders of record on December 1, 2011. For purposes of broker trading, the ex-date of the cash dividend is November 29, 2011.

FDIC-Assisted Acquisition of Integra Bank

On July 29, 2011, Old National Bancorp acquired certain assets and assumed substantially all deposits and certain liabilities of Integra Bank, N.A. (Integra) from the Federal Deposit Insurance Corporation (FDIC) in an FDIC-assisted transaction.

As part of this transaction, Old National entered into loss sharing agreements with the FDIC that cover approximately $727.3 million in fair value of loans (covered loans) and $34.1 million in fair value of other real estate owned (collectively called "covered assets"). According to the terms of the loss sharing agreements, the FDIC will reimburse Old National for 80% of the losses up to $275.0 million, 0% of losses from $275.0 million up to $467.2 million and 80% of losses in excess of $467.2 million. The loss sharing agreement applicable to single-family residential mortgage loans remains in effect for 10 years. The loss sharing agreement applicable to other covered assets is five years for losses and eight years for recoveries.

Old National recorded an indemnification asset of $167.9 million as of July 29, 2011, which represents the present value of the estimated losses on covered loans to be reimbursed to Old National by the FDIC. 

In accordance with Generally Accepted Accounting Principles (GAAP), Old National accounted for all of the loans acquired from Integra at fair value with no corresponding allowance for loan losses brought forward on these acquired loans.

Through October 2011, Old National has consolidated 13 of the 52 former Integra banking centers it acquired in the transaction, and an additional 20 branches are scheduled for consolidation in 4^th quarter 2011. As outlined in a press release dated October 13, 2011, Old National has announced the intent to sell the deposits of four former Integra branches located in the Chicago area to First Midwest Bank. First Midwest Bank has agreed to pay Old National 50 basis points on the transaction deposits of these four locations, estimated to be approximately $.5 million. This sale is anticipated to close in 4^th quarter 2011. Old National will retain all of the Chicago area loans.

A summary of the fair value of all assets and liabilities assumed:

A portion of the cash and securities acquired were used to pay down acquired borrowings, the FDIC settlement payable, and fund deposit run-off. The decline in deposit balances to $994.4 million at September 30, 2011, was partially due to the re-pricing of the acquired deposit portfolio and was in-line with management's expectations.

Further information on the FDIC-assisted acquisition of Integra Bank can be found in Form 8-K/A filed by Old National Bancorp with the SEC on October 14, 2011.

Committed to our Strategic Imperatives

Old National's strong, consistent 2011 performance can be attributed to our unwavering commitment to the following strategic imperatives:

1.       Strengthen the risk profile.

2.       Enhance management discipline.

3.       Achieve consistent quality earnings.

1. STRENGTHEN THE RISK PROFILE

Credit Quality – Excluding Covered Assets

Old National recorded essentially no provision expense in the 3^rd quarter compared to the $3.2 million recorded in 2^nd quarter 2011 and the $6.4 million recorded in 3^rd quarter 2010. Old National's net charge-offs for the quarter were $4.9 million, a decrease of $.9 million from the $5.8 million reported in 2^nd quarter 2011 and a $1.2 million decrease from the $6.1 million in net charge-offs reported in 3^rd quarter 2010.

Excluding covered loans, Old National's allowance for loan losses at September 30, 2011, was $65.2 million, or 1.58% of total loans, compared to an allowance of $70.2 million, or 1.70% of total loans at June 30, 2011, and $72.1 million, or 1.95% of total loans, at September 30, 2010. Excluding covered loans, the coverage of allowance to non-performing loans stood at 52% at September 30, 2011, compared to 59% at June 30, 2011. 

"Our overall credit metrics, excluding FDIC covered loans but including assets acquired as a part of the Monroe Bank acquisition, remain solid, as evidenced by declines in accruing Problem as well as Special Mention loans during the quarter," stated Chief Credit Officer Daryl Moore. "While Old National is performing better than peers in most credit metrics, our clients continue to face challenges brought forth by this prolonged economic downturn."

The following table presents certain credit quality metrics related to Old National's loan portfolio, excluding covered loans:

*Excludes covered loans and all other acquired loans

2. ENHANCE MANAGEMENT DISCIPLINE

Expense Management

For the 3^rd quarter, Old National reported total noninterest expenses of $95.2 million, compared to 2^nd quarter 2011 noninterest expenses of $79.8 million. Noninterest expenses for 3^rd quarter 2011 included $6.8 million of Integra Bank-related acquisition costs, $3.2 million for incentive accruals and a $2.0 million accrual for the tentative settlement of a longstanding trust case pending against the Company since 2002. In addition, 3^rd quarter 2011 included $6.3 million in operational expenses related to the newly acquired Integra operations.

Capital Management

Old National's capital position remained well above industry requirements at September 30, 2011, with regulatory tier 1 and total risk-based capital ratios of 12.2% and 13.7%, respectively, compared to 13.4% and 14.9% at June 30, 2011, and 15.4% and 17.3% at September 30, 2010. 

The ratio of tangible common equity to tangible assets declined to 8.40% at September 30, 2011, compared to 9.52% at June 30, 2011, and 9.58% at September 30, 2010. Refer to Table 2 for Non-GAAP reconciliations.

3. ACHIEVE CONSISTENT QUALITY EARNINGS

Balance Sheet and Net Interest Margin

As loan demand continues to remain challenging, Old National's balance sheet expansion during the 3^rd quarter was primarily driven by the FDIC-assisted acquisition of Integra Bank. Total loans at September 30, 2011, stood at $4.856 billion compared to $4.123 billion at June 30, 2011, an increase of $732.6 million. Of this increase, $769.5 million is attributable to the FDIC-assisted transaction. On average, total loans were $4.600 billion for 3^rd quarter 2011 compared to $4.157 billion for the 2^nd quarter 2011. 

"While it's true that Old National continues to operate in a very challenging environment for loan growth, we do continue to enjoy organic growth in our residential real estate portfolio, which increased $119.9 million during 3^rd quarter 2011, of which $51.6 million came from the acquisition," said Old National Chief Financial Officer Chris Wolking.

Total investments, including money market accounts, amounted to $2.859 billion at September 30, 2011, a decrease of $130.4 million compared to $2.989 billion at June 30, 2011. Average total investments were $3.027 billion for the 3^rd quarter compared to $2.960 billion in the 2^nd quarter. Securities gains for the 3^rd quarter totaled $2.9 million, compared to 2^nd quarter securities gains (net of $.2 million of other-than-temporary impairment) of $.5 million. 

Total core deposits, including demand and interest-bearing deposits, increased by $888.4 million in the 3^rd quarter to $6.843 billion at September 30, 2011, compared to $5.954 billion at June 30, 2011.  At September 30, 2011, $994.4 million of this increase is attributable to the Integra transaction. The mix of Old National's deposit base continued to improve, with organic growth of $42.1 million in noninterest-bearing demand deposits and $44.2 million in savings accounts and a decline in higher priced other time deposits in the legacy portfolio of $144.9 million.

Old National reported net interest income of $72.6 million for 3^rd quarter 2011 compared to $62.3 million in 2^nd quarter 2011, and $54.2 million for 3^rd quarter 2010. Included in 3^rd quarter 2011 net interest income is $5.5 million associated with the Monroe acquisition, and $7.5 million associated with the Integra acquisition, related to the accretion of the purchase accounting marks. Included in 2^nd quarter 2011 net interest income is $6.6 million associated with the Monroe acquisition and accretion of the purchase accounting marks.

Net interest income on a fully taxable equivalent basis was $75.5 million for 3^rd quarter 2011 and represented a net interest margin on total average earning assets of 3.96%. This compares to net interest income on a fully taxable equivalent basis of $65.2 million and a margin of 3.67% in 2^nd quarter 2011 and net interest income on a fully taxable equivalent basis of $57.3 million and a margin of 3.42% for 3^rd quarter 2010.  Included in 3^rd quarter 2011 net interest margin is 29 basis points associated with the Monroe acquisition, and 39 basis points associated with the Integra acquisition, related to the accretion of purchase accounting marks. Included in 2^nd quarter 2011 net interest margin is 37 basis points associated with the Monroe acquisition and accretion of the purchase accounting marks. Refer to Tables A and B for Non-GAAP taxable equivalent reconciliations. 

Fees, Service Charges and Other Revenue

Total fees, service charges and other revenue were $44.3 million for 3^rd quarter 2011 compared to $42.9 million in 2^nd quarter 2011 and $38.4 million in 3^rd quarter 2010. The Integra acquisition contributed an additional $3.6 million in fees, service charges and other revenue during 3^rd quarter 2011.

About Old National

Old National Bancorp is the largest financial services holding company headquartered in Indiana and, with $8.9 billion in assets, ranks among the top 100 banking companies in the United States. Since its founding in Evansville in 1834, Old National has focused on community banking by building long-term, highly valued partnerships with clients in its primary footprint of Indiana, Illinois and Kentucky.  In addition to providing extensive services in retail and commercial banking, wealth management, investments and brokerage, Old National also owns Old National Insurance which is one of the top 100 largest agencies in the US and the 10th largest bank-owned insurance agency. For more information and financial data, please visit Investor Relations at oldnational.com.

The Old National Bancorp logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=1872

Table 1: Non-GAAP Reconciliation-Adjusted Earnings Per Share

    *Represents $6.8 million of acquisition expenses as well as a $2.0 million litigation reserve

Table 2: Non-GAAP Reconciliation-Tangible Equity to Tangible Assets

(a) Includes $0 and $200, respectively, for other-than-temporary impairment in third quarter 2011 and second quarter 2011.

(b) Assumes conversion of stock options, restricted stock and warrants.

(c) Based on average common shareholders' equity of $1,016,053 and $990,673, respectively, for September 30, 2011 and June 30, 2011.                   

(d) Noninterest expense before amortization of intangibles as a percent of FTE net interest income and noninterest revenues, excluding net gains from securities transactions.

(e) Excludes residential loans held for sale and covered loans.

(f) Includes money market investments and Federal Reserve interest earning accounts.     

N/M = Not meaningful. 

(a) Includes $0 and $39, respectively, for other-than-temporary impairment in third quarter 2011 and

third quarter 2010.

(b) Assumes conversion of stock options, restricted stock and warrants.

(c) Based on average common shareholders' equity of $1,016,053 and $881,044, respectively, for 2011 and 2010.                          

(d) Noninterest expense before amortization of intangibles as a percent of FTE net interest income and noninterest revenues, excluding net gains from securities transactions.

(e) Excludes residential loans held for sale and covered loans.

(f) Includes money market investments and Federal Reserve interest earning accounts.                                   

N/M = Not meaningful.

(a) Includes $499 and $3,308, respectively, for other-than-temporary impairment in 2011 and 2010.

(b) Assumes conversion of stock options, restricted stock and warrants.

(c) Based on average common shareholders' equity of $992,064 and $862,390, respectively, for 2011 and 2010.                         

(d) Noninterest expense before amortization of intangibles as a percent of FTE net interest income and noninterest revenues, excluding net gains from securities transactions.

(e) Excludes residential loans held for sale and covered loans.

(f) Includes money market investments and Federal Reserve interest earning accounts.                                  

N/M = Not meaningful.

CONTACT: Media:
         Kathy A. Schoettlin - (812) 465-7269
         Executive Vice President - Communications

         Financial Community:
         Lynell J. Walton - (812) 464-1366
         Senior Vice President - Investor Relations