Financial System

“Explain the role of Old National Bank in the financial system. Assess its exposure and performance during the financial crisis of 2007-2012. Did it do well or badly?”

The Bank

Old National Bank is a regional bank with 180 banking centers and 200-plus ATMS operated by Old National Bancorp, which is the largest financial services bank holding company headquartered in Evansville, Indiana.

The bank was established in 1834 and engaged in providing series of banking products and services, including business and personal savings accounts, mortgage-backed securities investment, commercial real estate loans and individual retirement accounts. It also provides its services to supplement banking business through non-bank affiliates, including investment and brokerage services, insurance, and asset management, fiduciary and trust services and other financial services. Old National Bank aims to be recognized in its communities which became a solid support to help the bank pass the financial crisis.

The total assets of Old National Bank rose from $8.0bn at end of 1999 to $9.5bn at end of 2012, oppositely there was a remarkable decrease rate from $7.8bn at the end of 2007 to $7.5bn at the end of 2008, an average fluctuant growth rate of 1% per year (See Appendix I).

Assets and funding

Of its total end-2006 assets of $8.15bn, some $4.7bn were in loans, which approximately half of total assets. $2.1bn were investment securities. The large majority of investment securities were mortgage backed securities, accounting for half of total investment securities ($1.1bn).The total cash and cash equivalents due from banks were $498mn (See Appendix I).

Borrowing from other banks at end of 2006 was $748mn and issue of short term borrowings were $313mn. The amount of deposit was the majority of total liabilities, accounting for $6.3bn. The total liabilities and shareholders' equity was $8.1bn, and the core equity was capital surplus with $565mn i.e. the ratio of assets to...