Old National and the Banking Industry

A letter from President & CEO Bob Jones

To our valued clients and friends in the community:

Since fall 2008, the Federal Government has introduced a number of programs and initiatives designed to aid banks, help stabilize our economy and restore the confidence of consumers and business owners. Most notable is the Emergency Stabilization Act of 2008, which increased FDIC insurance coverage for individual deposits from $100,000 to $250,000 through Dec. 31, 2013, and introduced the Troubled Assets Relief Program, or TARP.

Old National and TARP

In March 2009, Old National Bancorp made national headlines by being one of the first four banks in the nation to repay its TARP funding and end participation in the program. To understand the reasons for this decision, it is important to recognize why Old National became a TARP participant in the first place. In late fall 2008, we were one of the first regional banks encouraged to participate in the U.S. Treasury’s then-new Capital Purchase Program for healthy financial institutions. The CPP represented a shift in focus; Treasury would begin to concentrate on injecting capital into strong, healthy financial institutions in hopes of stabilizing the banking system and encouraging lending.

We made the decision to participate in December 2008, after a full month of careful deliberation, because we believed it was the right choice for our clients, shareholders and communities. But by late January, it had become obvious that the landscape – and the public perception of TARP – had changed dramatically. Old National and other healthy banks that had been encouraged to participate in the CPP were being tarred with the same brush as troubled financial institutions. And more importantly, the rules of TARP had changed in a way that impeded our ability to serve our clients, shareholders and communities with the integrity that has been Old National’s trademark for 175 years.

Before deciding to repay TARP funding, we 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 recently 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.

Our strength and stability have never been more important

The causes of the financial crisis will be analyzed and debated for years. From my perspective, it is 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. 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 that is poised to weather the current financial crisis.

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

• We are proudly celebrating 175 years of serving our clients and communities. Our history and stability are 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 are making headlines today.
• 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