Segment Information

12 Months Ended

Dec. 31, 2011

Segment Information [Abstract]

Segment Information

NOTE 23 - SEGMENT INFORMATION

Old National operates in two operating segments: community banking and treasury. The community banking segment serves customers in both urban and rural markets providing a wide range of financial services including commercial, real estate and consumer loans; lease financing; checking, savings, time deposits and other depository accounts; cash management services; and debit cards and other electronically accessed banking services and Internet banking. Treasury manages investments, wholesale funding, interest rate risk, liquidity and leverage for Old National. Additionally, treasury provides other miscellaneous capital markets products for its corporate banking clients. Other is comprised of the parent company and several smaller business units including insurance, wealth management and brokerage. It includes unallocated corporate overhead and intersegment revenue and expense eliminations.

In order to measure performance for each segment, Old National allocates capital and corporate overhead to each segment. Capital and corporate overhead are allocated to each segment using various methodologies, which are subject to periodic changes by management. Intersegment sales and transfers are not significant.

Old National uses a funds transfer pricing ("FTP") system to eliminate the effect of interest rate risk from net interest income in the community banking segment and from companies included in the "other" column. The FTP system is used to credit or charge each segment for the funds the segments create or use. The net FTP credit or charge is reflected in segment net interest income.

The financial information for each operating segment is reported on the basis used internally by Old National's management to evaluate performance and is not necessarily comparable with similar information for any other financial institution.

Summarized financial information concerning segments is shown in the following table for the years ended December 31.

SEGMENT INFORMATION

		Community
(dollars in thousands)		Banking		Treasury				Other			Total
2011
Net interest income	$	302,285	$	(42,393	)	$		12,981		$	272,873
Provision for loan losses		5,912		0				1,561			7,473
Noninterest income		120,170		13,235				49,478			182,883
Noninterest expense		287,097		747				60,677			348,521
Income (loss) before income taxes		129,446		(29,905	)			221			99,762
Total assets		5,035,431		3,377,568				196,684			8,609,683
2010
Net interest income	$	252,519	$	(30,378	)		$	(3,725	)	$	218,416
Provision for loan losses		30,806		0				(25	)		30,781
Noninterest income		88,037		17,871				64,242			170,150
Noninterest expense		236,642		13,803				63,860			314,305
Income (loss) before income taxes		73,108		(26,310	)			(3,318	)		43,480
Total assets		3,759,529		3,396,189				108,174			7,263,892
2009
Net interest income	$	287,404	$	(47,490	)		$	(8,515	)	$	231,399
Provision for loan losses		63,284		126				(130	)		63,280
Noninterest income		94,132		5,422				63,906			163,460
Noninterest expense		270,249		7,878				60,829			338,956
Income (loss) before income taxes		48,003		(50,072	)			(5,308	)		(7,377	)
Total assets		4,487,007		3,401,958				116,370			8,005,335

Included in net interest income in 2011 in the Community Banking segment are approximately $37.3 million and $24.8 million, respectively, associated with the January 1, 2011 acquisition of Monroe Bancorp and the July 29, 2011 acquisition of Integra Bank. The lower provision for loan losses in 2011 was attributable to the following factors: (1) the loss factors applied to our performing loan portfolio have decreased during 2011 compared to 2010 as charge-offs were substantially lower, (2) apart from those loans acquired in our two acquisitions, which are substantially accounted for at fair value, our total loans decreased $16.2 million from December 31, 2010 to December 31, 2011, and (3) the percentage of our loan portfolio consisting of those loans where higher loss factors are applied (commercial and commercial real estate loans) fell to 48% in 2011 compared to 58% in 2010 while the percentage of our loan portfolio consisting of those loans where lower loss factors are applied (residential loans) increased to 21% in 2011 compared to 18% in 2010. Noninterest expense for 2011 includes $21.2 million and $25.9 million, respectively, of costs associated with the addition of Monroe Bancorp and Integra Bank. Included in income before income taxes for 2011 are $18.4 million and $6.5 million, respectively, associated with the addition of Monroe Bancorp and Integra Bank.