Old National Bank experienced “transformational” changes last year that will set the company up for future success, bank president and chief executive officer Bob Jones told shareholders Thursday.
During the bank’s annual shareholders meeting at its Downtown Evansville headquarters, Jones gave a recap of 2014 and a look at things to come.
“2014 was a very, very transformational year for your company — and a lot of changes,” Jones told the group. “We had a lot going on last year.”
Among the most significant of those activities: between April 2014 and January 2015, Old National closed on four acquisitions in Indiana and Michigan. Acquisitions in Fort Wayne and Lafayette, Indiana expanded Old National’s presence in those markets. Acquisitions in Ann Arbor and Grand Rapids, Michigan marked Old National’s entry into those markets.
In a related move, Old National announced in February its intent to sell 17 branch offices — including all 12 of its Southern Illinois offices — and close 19 others.
These activities were part of Old National’s larger strategy of focusing on higher-growth markets while withdrawing from weaker ones.
With last year’s acquisitions, Jones said, Old National doesn’t plan any more acquisitions in the near future.
“We’re in all the markets we want to be,” Jones told the group.
“We’re not going to be active in the merger and acquisition market in 2015.”
Overall, Jones said, Old National had some successes but also some challenges in 2014.
Full-year net income totaled $103.7 million — the company’s strongest earnings since 2002, and a 2.7 increase over 2013.
The bank saw organic loan growth of 7 percent, while maintaining strong credit quality. Net loan charge-offs represented just 0.04 percent of total loans.
Revenue from fee-based businesses — insurance, investments and wealth management — all grew last year.
Despite the bank’s strong performance, Jones said, its stock price lagged.
Old National’s stock closed 2014 at $14.88 per share, a decline of 3.19 percent from its 2013 closing price of $15.37. The bank’s stock has persistently underperformed its banking peers in recent years.
“The performance of our stock has been frustrating,” Jones said.
Another challenge, Jones said, is the overall banking landscape.
Interest rates remain low. This is a problem for banks because a significant part of their income comes from the interest they charge on loans. If interest rates are low they don’t earn as much.
Jones said the industry is also facing increased regulatory oversight; more competition from banks and non-bank entities; rapidly changing technology and evolving cybersecurity threats.
Also at Thursday’s meeting, Old National shareholders re-elected all of the company’s 13 directors. Those directors are Chairman Larry Dunigan, Alan Braun, Niel Ellerbrook, Andre Goebel, Jerome Henry Jr., Jones, Phelps Lambert, Arthur McElwee Jr., James Morris, Randall Shepard, Rebecca Skillman, Kelly Stanley and Linda White.