-- Completion of common equity raise significantly enhances
    capital ratios
     - Tier 1 capital at 14.1% and total risk-based capital at 16.5%
 -- Credit metrics improve as absolute levels of non-performing,
    problem and special mention loans decline - net charge-offs
    and provision flat
 -- Board of directors declares cash dividend of $.07 per common
    share
 -- Strong, liquid balance sheet poised for future growth

EVANSVILLE, Ind., Oct. 26, 2009 (GLOBE NEWSWIRE) -- Old National Bancorp (NYSE:ONB) today announced third-quarter net income of $4.0 million, or $.06 per common share, down $.09 per share from the $.15 per share earned in the second quarter of the year, and $.20 per share less than the $.26 per share earned in the third quarter of 2008.

In addition, Old National's Board of Directors declared a quarterly cash dividend of $0.07 per share on the Company's outstanding shares. The dividend is payable December 15, 2009, to shareholders of record December 1, 2009. For purposes of broker trading, the ex-date of the cash dividend is November 27, 2009.

"During the third quarter we accomplished our near-term goals of significantly strengthening Old National's capital position with a successful stock offering and controlling credit costs associated with our loan portfolio," commented President and CEO Bob Jones. "We also continue to report positive earnings, and our board of directors declared a quarterly cash dividend of $.07 per share. These events are significant given the current banking and economic climate all banks operate in today.

"However, the economy in our footprint continues to be challenging, as evidenced by soft loan demand and subsequent decrease in our loan portfolio," continued Jones. "We believe the continuation of these industry challenges, coupled with Old National's well-capitalized, strong, liquid balance sheet, will position Old National well for future growth opportunities."

Strategic Imperatives

Old National continues to be guided by three strategic imperatives that are critical to establishing the Company's presence as a high-performing financial institution:

  1. Strengthen the risk profile
  2. Enhance management discipline
  3. Achieve consistent quality earnings

Strengthen the Risk Profile

 
 Old National's key credit quality trends are as follows:
 ---------------------------------------------------------------------
 ($ in
  millions)     2003   2004   2005   2006   2007   2008   2Q09   3Q09
 ---------------------------------------------------------------------
 Non-
  Performing
  Loans        $104.6 $ 54.9 $ 55.6 $ 41.6 $ 40.8 $ 64.0 $ 77.7 $ 73.7
 ---------------------------------------------------------------------
 Problem
  Loans        $343.9 $192.2 $136.6 $153.2 $115.1 $180.1 $191.3 $174.7
 ---------------------------------------------------------------------
 Special
  Mention
  Loans        $215.7 $148.1 $ 83.2 $119.8 $103.2 $124.9 $101.0 $ 94.6
 ---------------------------------------------------------------------
 Net
  Charge-
  Off
  Ratio         1.21%   .61%   .60%   .37%   .44%   .87%  1.18%  1.17%
 ---------------------------------------------------------------------
 Provision
  for Loan
  Losses       $ 85.0 $ 22.4 $ 23.1 $  7.0 $  4.1 $ 51.5 $ 12.0 $ 12.2
 ---------------------------------------------------------------------

The reserve for loan losses was $69.6 million, or 1.72% of total loans at September 30, 2009. This compared to a reserve of $70.1 million, or 1.69% of total loans, and $63.5 million, or 1.36% of total loans, at June 30, 2009, and September 30, 2008, respectively.

"Third quarter results, which reflected improvement in the non-performing, problem and special mention loan categories were very welcomed," stated Chief Credit Officer Daryl Moore. "However, we have seen no appreciable improvement in our clients' financial results, which gives us pause for concern with respect to credit quality trends over the next several quarters."

Enhance Management Discipline

Capital Management

Old National significantly strengthened its capital position during the third quarter with the completion of a public common stock offering. Net proceeds to the Company from the issuance of 20.7 million shares are expected to be approximately $196.4 million. The impact to Old National's capital ratios was significant, as the ratio of tangible common equity to tangible assets rose to 8.53% at September 30, 2009, from 5.51% at June 30, 2009, and 6.06% at September 30, 2008. In addition, at September 30, 2009, regulatory tier 1 and total risk-based capital ratios for Old National were 14.1% and 16.5%, respectively, compared to 10.2% and 12.6% at June 30, 2009, and 11.4% and 14.3% at September 30, 2008. Refer to Table 1 for Non-GAAP reconciliation of the tangible capital ratios.

Expense Management

Total noninterest expenses for the third quarter totaled $84.0 million compared to $86.8 million and $72.5 million reported for the second quarter of 2009 and the third quarter of 2008, respectively. The major difference from the second quarter of 2009 relates to the $4.0 million special assessment by the Federal Deposit Insurance Corporation (FDIC) for the deposit insurance fund that was recorded during that quarter. Primary drivers for the increase from 2008 include salaries and benefits expense and occupancy expense associated with the Charter One branches acquired in 2009, as well as FDIC assessment expense.

Achieve Consistent Quality Earnings

Balance Sheet & Margin

Old National reported total loans at September 30, 2009, of $4.106 billion compared to $4.547 billion at June 30, 2009. Over half of the decrease relates directly to the Company's sale of $258.0 million in leases during the third quarter. The remainder of the decrease was spread across Old National's main loan categories of commercial, commercial real estate, residential real estate and other consumer loans. Average total loans declined $244.7 million in the third quarter compared to the second quarter of 2009.

Total investments were $2.989 billion, up $327.1 million from June 30, 2009. As a percentage of total assets, the investment portfolio increased to 37.5% at September 30, 2009, from 33.2% at June 30, 2009. Net securities gains for the third quarter included a charge for other-than-temporary-impairment of $5.1 million. Average investments in the third quarter totaled $2.631 billion compared to an average of $2.787 billion in the second quarter of 2009.

At September 30, 2009, total core deposits, including demand and interest-bearing deposits, totaled $5.624 billion, a decline of $104.2 million from the $5.729 billion at June 30, 2009. Savings accounts increased during the third quarter by $42.6 million and noninterest-bearing checking accounts remained relatively flat, while NOW and money market accounts as well as time deposits reported declines in the quarter. Average core deposits in the third quarter of 2009 totaled $5.692 billion, down just $24.6 million from $5.717 billion in the second quarter of the year.

Total borrowed funds at September 30, 2009, were $1.135 billion, a $218 million decrease from the $1.353 billion at June 30, 2009.

On a fully tax equivalent basis, net interest income during the third quarter of 2009 was $61.7 million and represented a net interest margin on total average earning assets of 3.53%. This compares to net interest income of $66.3 million and a margin of 3.59% in the second quarter of 2009, and net interest income of $64.5 million and a margin of 3.79% for the third quarter of 2008.

Chris Wolking, Chief Financial Officer, noted, "The decline in loans as a percentage of total assets and the increase in investment securities contributed to the decline in our net interest margin for the quarter. We continue to invest in securities that will provide us liquidity to fund loan growth as the economy improves and loan demand increases."

Fees, Service Charges and Other Revenue

For the third quarter of 2009, total fees, service charges and other revenue were $39.6 million, compared to $42.7 million for the second quarter of 2009 and $39.1 million in the third quarter of 2008. The decline in third quarter 2009 from second quarter 2009 was primarily driven by the $1.4 million loss reported on the sale of leases and a decline in service charges on deposit accounts, both during the third quarter of 2009.

About Old National

Old National Bancorp, celebrating its 175th anniversary in 2009, is the largest financial services holding company headquartered in Indiana and, with $8.0 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 one of the largest independent insurance agencies headquartered in Indiana, offering complete personal and commercial insurance solutions. For more information and financial data, please visit the Company's website at www.oldnational.com.

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

Conference Call

Old National will hold a conference call at 10:00 a.m. Central on Monday, October 26, 2009, to discuss third-quarter 2009 financial results, strategic developments, and the Company's earnings outlook for 2009. The live audio web cast of the call, along with the corresponding presentation slides, will be available on the Company's Investor Relations web page at www.oldnational.com and will be archived there for 12 months. A replay of the call will also be available from 1:00 p.m. Central on October 26 through November 9. To access the replay, dial 1-800-642-1687, conference code 34306905.

Use of Non-GAAP Financial Measures

This earnings release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Old National's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this release or the Quarterly Financial Trends supplement to this earnings release, which can be found on the Investor Relations section of Old National's website at www.oldnational.com.

Forward-Looking Statement

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, descriptions of Old National's financial condition, results of operations, asset and credit quality trends and profitability. Forward-looking statements can be identified by the use of the words "anticipate," "believe," "expect," "intend," "could" and "should," and other words of similar meaning. These forward-looking statements express management's current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties and there are a number of factors that could cause actual results to differ materially from those in such statements.