NOTE 21 - REGULATORY RESTRICTIONS

RESTRICTIONS ON CASH AND DUE FROM BANKS

Old National's affiliate bank is required to maintain reserve balances on hand and with the Federal Reserve Bank which are interest bearing and unavailable for investment purposes. The reserve balances at December 31 were $42.5 million in 2011 and $26.0 million in 2010. In addition, Old National had $1.1 million as of both December 31, 2011 and 2010, respectively, in cash and due from banks which was held as collateral for collateralized swap positions.

RESTRICTIONS ON TRANSFERS FROM AFFILIATE BANK

Regulations limit the amount of dividends an affiliate bank can declare in any year without obtaining prior regulatory approval. Prior regulatory approval is required if dividends to be declared in any year would exceed net earnings of the current year plus retained net profits for the preceding two years. During the first quarter of 2009, Old National Bank received permission to pay a $40 million dividend. Old National used the cash obtained from the dividend to repurchase the $100 million of non-voting preferred shares from the U.S. Treasury. As a result of this special dividend, Old National Bank required approval of regulatory authority for the payment of dividends to Old National during 2010 and 2011. Prior regulatory approval to pay dividends will not be required in 2012.

RESTRICTIONS ON THE PAYMENT OF DIVIDENDS

Old National has traditionally paid a quarterly dividend to common stockholders. The payment of dividends is subject to legal and regulatory restrictions. Any payment of dividends in the future will depend, in large part, on Old National's earnings, capital requirements, financial condition and other factors considered relevant by Old National's Board of Directors.

CAPITAL ADEQUACY

Old National and Old National Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can elicit certain mandatory actions by regulators that, if undertaken, could have a direct material effect on Old National's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Old National and Old National Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies. Quantitative measures established by regulation to ensure capital adequacy require Old National and Old National Bank to maintain minimum amounts and ratios as set forth in the following table.

At December 31, 2011, Old National and Old National Bank exceeded the regulatory minimums and Old National Bank met the regulatory definition of well-capitalized based on the most recent regulatory notification. To be categorized as well-capitalized, Old National Bank must maintain minimum total risk-based, Tier 1 risked-based and Tier 1 leverage ratios. There are no conditions or events since that notification that management believes have changed the institution's category.

The following table summarizes capital ratios for Old National and Old National Bank as of December 31:


						For Capital				For Well
		Actual				Adequacy Purposes				Capitalized Purposes
(dollars in thousands)		Amount	Ratio			Amount	Ratio			Amount	Ratio
2011
Total capital to
risk-weighted assets
Old National Bancorp	$	773,862	14.99	%	$	413,082	8.00	%	$	N/A	N/A %
Old National Bank		683,368	13.40			407,835	8.00			509,794	10.00
Tier 1 capital to
risk-weighted assets
Old National Bancorp		697,534	13.51			206,541	4.00			N/A	N/A
Old National Bank		620,039	12.16			203,917	4.00			305,876	6.00
Tier 1 capital to
average assets
Old National Bancorp		697,534	8.29			336,710	4.00			N/A	N/A
Old National Bank		620,039	7.42			334,068	4.00			417,585	5.00
2010
Total capital to
risk-weighted assets
Old National Bancorp	$	699,871	14.83	%	$	377,669	8.00	%	$	N/A	N/A %
Old National Bank		576,533	12.43			370,968	8.00			463,710	10.00
Tier 1 capital to
risk-weighted assets
Old National Bancorp		640,469	13.57			188,835	4.00			N/A	N/A
Old National Bank		518,165	11.17			185,454	4.00			278,226	6.00
Tier 1 capital to
average assets
Old National Bancorp		640,469	9.01			284,226	4.00			N/A	N/A
Old National Bank		518,165	7.37			281,242	4.00			351,552	5.00