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Old National Bancorp (ONB) is the largest bank holding company in Indiana, providing a variety of general banking and banking-related services through its 24 affiliates, which comprise nearly 100 branch outlets in southern and central Indiana, western Kentucky, and southern Illinois. The bank holding company was formed in 1983 by ONB's board of directors in anticipation of the impending reform of banking regulations at the state and federal levels in the late 1980s and early 1990s. In 1995, ONB was ranked number one in earnings momentum by banking journal Financial World. Acknowledging ONB's relatively small size among world-class banks, analysts nevertheless expressed admiration for the corporation's financial performance and conservative management; according to Financial World, "relative anonymity is just fine with Old National. Unlike its better-known rivals, it has not been stung by derivatives losses, wrong bets on currency movements, or soured real estate investments."
The company traces its roots to the founding of the Branch Bank at Evansville of the State Bank of Indiana in 1834. Evansville, a city in southwestern Indiana along the Ohio River, was at that time a loose gathering of pioneers who sorely needed a bank to provide capital, security, and cash flow for the local river-based economy. The new bank was granted a 20-year charter and John Mitchell was named the bank's first president; Mitchell would have the unenviable job of transporting the bank's money with him to New York City to make transactions, until rail and telegraph lines were later established. The bank's first cashier, John Douglas, had the combined responsibilities of bookkeeper, teller, and janitor. At the end of its first year in business, the Evansville bank reported total deposits of over $29,000 and gross profits of almost $4,000.
The bank's entrance into major financing was well-intentioned, but rather inauspicious. Specifically, in 1836, it loaned $30,000 toward the completion of the Wabash-Erie Canal, which was to have eventually linked Evansville with Lake Erie, over 400 miles away. Because of high construction and maintenance costs, however, the canal project was abandoned in 1837, and the "loan" was never repaid. One of the reasons for the failure of the canal project was the nationwide financial panic of 1837. Many banks ceased operations during this economic crisis, but the Branch Bank at Evansville remained open. Moreover, the State Bank of Indiana, of which the bank was then a branch, redeemed its notes from the federal government in gold coins, thereby becoming the only bank offering to pay off its debt in hard currency.
In the decades that followed, the bank experienced steady growth, becoming an integral part of Indiana's, and Evansville's, economic development. In 1846, it loaned the state government $10,000 for clothing Indiana's volunteers during the Mexican War, and in 1850, it provided a $20,000 loan to help establish the city's first railroad. Another nationwide financial panic, in 1857, gained national attention for the ONB predecessor, when once again it was able to redeem all notes with cash, while other banks were closing their doors.
In 1855, the bank received a new charter and became known as the Evansville Branch Bank of the State Bank of Indiana, which would be shortened to Evansville National Bank 11 years later. The Civil War was a severe blow to Evansville's economy, since much of the trade that took place there was with river captains of the South. When those states seceded, much of the river trade ceased. In addition, the war caused great hardship on banks because of the unreliability of currency. Most of the "money" in circulation was printed with nothing more backing it than a promise--and sometimes a fairly flimsy promise, at that. By a combination of sound fiscal policy and strong leadership, the Evansville National Bank was not only able to keep operating (although it did hire armed militiamen to keep the deposits safe) but was also able to lend money to the government of the Union to aid in the war effort.
National history had local repercussions once again in 1873 with a Congressional Act that actually had the effect of demonetarizing silver. Adding to the upheaval caused by that controversial act, the closing of a large banking firm in New York City actually set off a "domino effect," which caused yet another nationwide depression. Although many other banks and industries closed permanently, ONB's predecessor never missed a day of operation. By 1884, the bank had been granted its fourth charter and, as was traditional by this time, changed its name once again, this time settling on Old National Bank of Evansville.
By this time, Old National was enjoying a reputation as one of the strongest, most reliable banks in its area of the country. A journalist for Once a Month magazine, published in St. Louis, reported in 1896: "In the proud record accompanying the Old National Bank of Evansville, we find exemplified a model banking history and the highest qualities displayed by those who have formed and now form its directorate and officiary." The turn of the century also marked the reception of Old National's fifth charter and fifth name--Old State National Bank.
In 1913, Congress passed the Federal Reserve Act. The law divided the country into 12 districts, each of which had its own Federal Reserve Bank. Participation was optional, but the incentives to join the Federal Reserve System were great, and Old National naturally joined. Coinciding with Old National's entrance to the Federal Reserve banking system was the election of Henry Reis to the presidency of the bank. Reis's biography, printed in The Bankers Magazine in 1914, characterized Old National as "a direct successor of one of the members of the very best examples of good banking this country has ever afforded.... Students of American banking who wish to find a practical exemplification of sound management, and especially of a sound and safe credit bank note, can find it in the history of the State Bank of Indiana."
Reis, who had begun his career at Old National as a teller in 1872 would see Old National through the boom years of 1914 through 1916, as the wartime economy boosted production everywhere, as well as the hardships of 1917 and 1918, when wartime rationing and sacrificing took their toll on the local economy. In 1922, Old National's sixth and final (permanent) charter was granted, the bank's name officially changed once more to The Old National Bank in Evansville, and a new president, William H. McCurdy, was installed.
At the time the stock market crashed in 1929, there were 11 banks operating in Evansville; by 1935, seven of those banks had been forced to close their doors. Old National was one of the four that continued to operate throughout this most difficult financial time in the history of the United States. Just as the country was headed toward economic recovery, severe flooding in much of the Ohio and Mississippi River valleys in 1937 proved catastrophic for Evansville residents. Most of the city was under water for weeks, including the "skyscraper" which housed Old National. A temporary building was found so that operations could continue.
At about this time, a series of visionary, innovative men would take over the presidency of Old National. The banking industry to this time had been fairly stable, with few innovations either of process or technology. Starting with Robert Mathias in 1940, and extending through William Carson and Walter A. Schlechte, who finished his term as president of the bank in 1966, the presidents of Old National were responsible for changing the way bank business was done in that region of the country.
Mathias's major achievement was a thorough review and reform of the personnel policy of the bank. He told a meeting of the American Bankers Association "creation of sound personnel programs is the number one objective of Indiana banks... We are attempting to prevail upon our banks to rank personnel management as a major function the same as deposit and loan development." Mathias also presided over the establishment of the first Old National "drive-up" teller window in 1941, and he found much favor with employee groups by instituting the first group hospitalization, life insurance, and pension plans for bank employees in 1946.
William Carson's tenure as president lasted only from 1948 to 1953, but he developed and oversaw the beginnings of the branch banking system. Moreover, he set new standards for community philanthropy and service and also recruited to Old National the man who would guide the bank for the next 30 years as president and then chief executive officer: Walter Schlechte.
Schlechte was bank president from 1953-1966, and remained as CEO until 1982. According to one writer for The Evansville Press, "During Schlechte's career in Evansville, Old National Bank grew from a $50 million business into a $460 million institution and along the way became one of the soundest, most profitable banks in the country. In 1976, Old National was sixth highest in return on assets (a standard measure of profitability) among the nation's major banks, according to a national survey." Schlechte also presided over a six-fold growth in number of bank employees, establishment of credit card business (Old National was one of the first three banks in the nation to do so), the addition of three more branch banks to the fold, and the addition of services such as mortgage financing, data processing, and industrial development.
In the 1960s, Old National began to diversify its offerings through a careful acquisitions program. In 1961, the bank purchased the Carter Mortgage Company, and three years later it acquired the Tabco Corp., a data processing operation. (Indeed, the technology and information revolution of the 1960s and 1970s forced banks across the country to move quickly to benefit from the increased possibilities.) In 1969, Old National moved into its new $5 million, 18-story headquarters, the tallest office building in Evansville. At that time, the bank was comprised of several operations, including marketing, auditing, accounting, purchasing, consumer lending, and credit card departments, among others.
By the early 1980s, Old National Bank was still a relatively small banking business, with ten branches in southern Indiana. By 1982, however, management was ready to step up its expansion efforts, announcing the formation of the Old National Bancorp holding company. Anticipating the legalization of interstate banking by the state government, the officers of Old National Bank decided to form a corporation that would allow them to expand operations into other states when the opportunity presented itself. By the end of the year, Old National Bancorp was incorporated, and in 1985, when Indiana began permitting such corporations to go beyond the state's borders, Old National began acquiring other banks in nearby Kentucky and Illinois.
Throughout the late 1980s and early 1990s, Old National experienced rapid growth. ONB steadily expanded its asset base, and in 1994 it was ranked among the Forbes 500 in terms of total assets, which were reported at $4.15 billion. The following year, ONB was ranked 984th on the Business Week 1000, as assets increased an impressive 16 percent to reach $4.82 billion.
This steady growth showed no signs of abating in the mid-1990s. With a favorable banking environment characterized by low interest rates and low inflation, ONB was averaging three mergers per year, acquiring banks as well as affiliates that dealt exclusively with trusts, insurance, and investment services. Nevertheless, the company continued to emphasize its conservatism and stability, valuing safe, long-term gains for shareholders in its 1995 annual report.
Principal Subsidiaries: Old National Bank (Evansville, Ind.); ONB Bank (Bloomington, Ind.); Bank of Western Indiana (Covington, Ind.); First Citizens Bank and Trust Co. (Greencastle, Ind.); Dubois County Bank (Jasper, Ind.); People's Bank & Trust Co. (Mt. Vernon, Ind.); Orange County Bank (Paoli, Ind.); Gibson County Bank (Princeton, Ind.); Palmer-American National Bank (Danville, Ill.); First National Bank (Harrisburg, Ill.); Peoples National Bank (Lawrenceville, Ill.); Security Bank and Trust Co. (Mt. Carmel, Ill.); Citizens National Bank (Tell City, Ind.); Indiana State Bank (Terre Haute, Ind.); Merchants National Bank (Terre Haute, Ind.); First State Bank (Greenville, Ky.); Farmers Bank & Trust Co. (Madisonville, Ky.); Old National Trust Company; Old National Service Corporation; ONB Insurance; Indiana Old National Insurance Co.
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