Interview With The President And CEO: Old National Bancorp (ONB) - Robert G. Jones
February 6, 2012 - The Wall Street Transcript has just published Southeast & Midwestern Banks Report offering a timely review of the sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
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Robert G. Jones is the President and Chief Executive Officer of Old National Bancorp and a Member of its board of directors. He assumed this position in September 2004. Before joining Old National, Mr. Jones served for 25 years at KeyCorp. He serves on the Federal Reserve Bank of St. Louis board of directors, where he is a Member of its executive committee and is Chairman of the audit committee. He has appeared on Fox News, Fox Business News, CNBC and Bloomberg Television as a spokesman for Old National and community banking. He is a graduate of Ashland University with a B.A. in political science and business administration.
TWST: Would you begin with a short introduction to Old National Bancorp?
Mr. Jones: Old National Bancorp (ONB) is the largest bank headquartered in the state of Indiana. We have approximately $9.8 billion in assets, over 200 locations throughout the state of Indiana, western Kentucky and southern Illinois. We just celebrated 177 years of taking care of our clients.
TWST: How vibrant is the Indiana market and those customer spaces today given we are still emerging from an economic downturn?
Mr. Jones: I've always characterized Indiana as a giant amongst midgets, and the reality is while we are clearly in a very slow economic recovery, Indiana has been blessed to actually be a little bit ahead of that recovery as compared to the rest of Midwest. Unemployment numbers are better than our peer states on all sides, and as you know, Indiana continues to have a surplus at the state level. So while it's very slow, we are blessed to be in the state of Indiana.
TWST: It seems as if Old National's growth strategy is to buy assets or to merge with other entities, considering your announcement to buy the Indiana Community Bancorp. When ONB acquires banks, are there certain changes you have to make?
Mr. Jones: If you look at acquiring a bank, first and foremost, you look for cultural compatibility so that you don't have a lot of significant changes from the cultural standpoint. There is obviously going to be some change. And then you look at where you see you can leverage your operating platform. So for us, acquisitions allow us to both grow revenue through either new markets or growing market share in existing markets, but it also allows us to reduce cost and allows us to use our operating platform to drive better shareholder value.
TWST: Do you believe that cash or capital is a limitation as you assess those opportunities?
Mr. Jones: I would tell you that for good performing banks, I think capital will continue to be available. I think while the industry is somewhat out of favor these days, we have found that the ability to raise capital if necessary is clearly still there if you've got a good track record and you've got a good strategic plan you are staying consistent to.
TWST: How sensitive is Old National to this low interest rate environment being pursued by the Fed?
Mr. Jones: Clearly, I think all banks would like to see, especially at the long end of the yield curve, a higher yield in the way they currently enjoy. But I think as long as you understand - and clearly the Fed sent the right signals in saying that they're going to keep both long and short-term rates low for an indefinite period - you have to react and you lower your core deposit rates and you try to get the best yield you can on your loans. The most important thing is not to take inordinate risks in the investment portfolio as you try and drive earnings.
TWST: What is your strategy for 2012 and what chain of events can lead to better-than-expected growth?
Mr. Jones: For us, it's to stay to our basic strategy, which is we are a basic community bank. We focus on raising deposits in our core markets and lending them in those same markets. We are not very sexy, we are not very exotic and we like the spread that comes from that strategy, so we are going to stay to that strategy that we have had for the last seven years. And the best result for us would be an accelerating economic recovery, which would then get stronger GDP growth in all of our markets as well as maybe a little bit of enhancement on the yield curve and the interest rate environment.
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