Old National and the Banking Industry

A letter from President & CEO Bob Jones

As we embark upon a new year and a new decade, we’re beginning to see positive signs within the banking system and within our economy. Unfortunately, however, far too many families and businesses are still struggling to cope with the aftereffects of the late 2008 and early 2009 stock market crash and the damaging recession and rising unemployment that have followed.

Fortunately, the Federal Government introduced a number of programs and initiatives in 2008-09 to aid banks, help stabilize our economy and restore the confidence of consumers and business owners. Most notable was the Emergency Stabilization Act of 2008, which increased FDIC insurance coverage for individual deposits from $100,000 to $250,000 through Dec. 31, 2013. While our nation and our economy have a long way to go to reach full recovery, I’m confident that we are headed in the right direction and that we will emerge from these trying times stronger, wiser and better prepared to confront future challenges.

Old National continues to pass the test

In 2009, Old National’s historic 175^th anniversary year, we made national headlines by being one of the first four banks in the nation to repay TARP funding and end participation in the Capital Purchase Program for healthy financial institutions. We made the decision to participate in December 2008 because we believed it was the right choice for our clients, shareholders and communities. But by early 2009, it had become obvious that the landscape and public perception of TARP had changed and that Old National and other healthy banks that had been encouraged to participate were being tarred with the same brush as troubled financial institutions. And more importantly, the rules had changed in a way that impeded our ability to serve our clients, shareholders and communities with the integrity that is our trademark.

Before deciding to repay TARP, Old National worked with an outside agency to voluntarily conduct a “stress test” on our balance sheet that was more stringent than the stress test the Federal Government conducted on the top 19 U.S. banks. We passed with flying colors, assuring ourselves and convincing government regulators that Old National had more than sufficient capital to repay TARP funding. In the months since conducting this stress test, our capital position has become even stronger.

Our strength and stability have never been more important

The causes of the 2008-09 financial crisis will be analyzed and debated for years. From my perspective, it was largely the result of poor risk management and an inordinate focus on short-term results at the risk of long-term stability. Too many financial companies ventured into areas outside their core capabilities in an effort to increase earnings and failed to manage the inherent risk.

Let me assure you, Old National has never engaged in the type of high-risk lending that led to this crisis. More than five years ago, we established three strategic imperatives that continue to guide us today. At the core of these is a continual focus on improving our risk profile. This consistent, disciplined approach to risk management has helped make us a strong, secure, well-capitalized bank.

During these admittedly trying times, let me reassure you that Old National is there for you:

• We recently celebrated 175 years of serving our clients and communities. Our history and stability remain a powerful legacy and message of assurance.
• The heart of our mission is to serve as YOUR community partner right here, close to you and your business. As we say: We are your bank. For life.
• We are firmly committed to risk management and, as a result, did not participate in sub-prime lending and other activities that led to so much distress in the financial industry.
• We are FDIC-insured. FDIC deposits in participating institutions, including Old National, are covered up to $250,000 per individual per insured bank for money in checking, savings, money market deposit accounts, IRAs and CDs. Since the FDIC was established in 1933, no depositor has ever lost a penny of insured deposits.

At Old National we are here to answer your questions and provide stability in an otherwise turbulent market. That is what a community bank does, and we believe you should find comfort and reassurance in banking with us. Thank you for your trust and your business.

If you would like to speak with me, please don’t hesitate to contact me by phone at 812-464-1280 or submit a question to me online by clicking here.

Sincerely,

Bob Jones
President and CEO, Old National Bancorp