Filed by Old National Bancorp
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Founders Financial Corporation
SEC Registration Statement No.: 333-198642
The following excerpts relating to Old National Bancorp’s pending acquisition of Founders Financial Corporation are from the slide presentation for a conference call held by executive officers of Old National on October 27, 2014 in connection with Old National’s announcement of its financial results for the quarter ended September 30, 2014, a copy of which has been made available on Old National’s corporate website.
 Third-Quarter 2014 Earnings
October 27, 2014 |
 3
Additional Information for Shareholders of Founders Financial Corporation
The information in this presentation does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of any vote
or approval. In connection with the proposed merger, Old National
Bancorp (“Old National”) has filed with the Securities and Exchange
Commission (“SEC”) a Registration Statement on Form S-4
(Registration Statement No. 333-198642) that includes a Proxy Statement of Founders
Financial Corporation (“Founders”) and a Prospectus of Old National, as
well as other relevant documents concerning the proposed transaction.
The SEC declared the Form S-4 Registration Statement effective on
September 23, 2014. A definitive Proxy Statement/Prospectus was
mailed to Founders shareholders on or
about September 29, 2014.
Founders shareholders are urged to read the Registration Statement and the
definitive Proxy Statement/Prospectus regarding the merger and any other relevant
documents filed with the SEC, as well as any amendments or supplements to
those documents, because they contain important information.
A free copy of the definitive Proxy Statement/Prospectus, as well as other filings
containing information about Old National, may be obtained at the SEC’s
Internet site (http://www.sec.gov). You will
also be able to obtain these documents, free of charge, from Old National at www.oldnational.com under the tab
“Investor Relations”
and then under the heading “Financial Information.”
Old National and Founders and certain of their directors and executive officers may
be deemed to be participants in the solicitation of proxies from the
shareholders of Founders in connection with the proposed merger.
Information about the directors and executive officers of Old National is set forth
in the proxy statement for Old National’s 2014 annual meeting of
shareholders, as filed with the SEC on a Schedule 14A on March 14, 2014.
Additional information regarding the interests of those participants and other persons
who may be deemed participants in the transaction may be obtained by reading the
definitive Proxy Statement/Prospectus regarding the proposed merger.
Free copies of this document may be obtained as
described in the preceding paragraph. |
 4
Forward-Looking Statement
This presentation contains certain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These
statements include, but are not limited to, descriptions of Old National
Bancorp’s (“Old National’s”) financial condition, results of
operations, asset and credit quality trends and profitability and statements
about the expected timing, completion, financial benefits and other effects of Old
National’s pending mergers with LSB Financial Corp. (“LSB”) and
Founders Financial Corporation (“Founders”).
Forward-looking statements can be identified by the use of the words
“anticipate,” “believe,”
“expect,”
“intend,”
“could”
and “should,”
and other words of similar meaning. These forward-looking statements
express management’s current expectations or forecasts of future events
and, by their nature, are subject to risks and uncertainties and there are a
number of factors that could cause actual results to differ materially from
those in such statements. Factors that might cause such a difference
include, but are not limited to: expected cost savings, synergies and other
financial benefits from the pending mergers might not be realized within the
expected timeframes and costs or difficulties relating to integration matters
might be greater than expected; the requisite shareholder and regulatory
approvals for the pending merger with Founders might not be obtained; market,
economic, operational, liquidity, credit and interest rate risks associated with Old National’s business;
competition; government legislation and policies (including the impact of the
Dodd-Frank Wall Street Reform and Consumer Protection Act and its related
regulations); ability of Old National to execute its business plan; changes in
the economy which could materially impact credit quality trends and the ability to generate loans and
gather deposits; failure or circumvention of our internal controls; failure or
disruption of our information systems; significant changes in accounting, tax
or regulatory practices or requirements; new legal obligations or liabilities
or unfavorable resolutions of litigations; other matters discussed in this presentation and other factors
identified in our Annual Report on Form 10-K and other periodic filings with the
SEC. These forward-looking statements are made only as of the date
of this presentation, and Old National does not undertake an obligation to
release revisions to these forward-looking statements to reflect events or conditions after the date of this
presentation. |
 5
Non-GAAP Financial Measures
These slides contain non-GAAP financial measures. For
purposes of Regulation G, a non-GAAP financial measure is a
numerical measure of the registrant's historical or future
financial performance, financial position or cash flows that
excludes amounts, or is subject to adjustments that have the
effect of excluding amounts, that are included in the most
directly comparable measure calculated and presented in
accordance with GAAP in the statement of income, balance
sheet or statement of cash flows (or equivalent statements) of
the registrant; or includes amounts, or is subject to adjustments
that have the effect of including amounts, that are excluded
from the most directly comparable measure so calculated and
presented. In this regard, GAAP refers to generally accepted
accounting principles in the United States. Pursuant to the
requirements of Regulation G, Old National Bancorp has
provided reconciliations within the slides, as necessary, of the
non-GAAP financial measure to the most directly comparable
GAAP financial measure. |
 6
Executing the Plan –
3Q14 Highlights
•
Execution of our M&A strategy of adding higher-growth markets
Ann Arbor, MI –
United Bancorp acquisition closed and fully converted
Lafayette, IN –
Gained regulatory and shareholder approval for LSB Financial
Corp. acquisition
Grand Rapids, MI –
Gained regulatory approval for Founders Financial
Corporation acquisition
Continue to
Grow Core
Revenue
•
Organic loan growth of $86.9 million
1
, or 6.5% annualized, over 2Q14 and
organic growth of $281.2 million
1
, or 5.8%, over 3Q13
•
Core revenue growth
2
of 9.0% from 3Q13
•
Organic growth in Banking, Wealth Management and Insurance
Reduce
Operating
Expenses
Transform
the
Franchise
Into Higher-
Growth
Markets
•
Operational expenses
3
increased $0.6
million from 3Q13
•
Expected Tower cost savings of 35%+ on track as announced –
50% to be
realized in 2014 —
converted April 25, 2014
•
Expected United Bancorp, Inc. cost savings of 32% on track as announced –
25% to be realized in 2014 —
converted August 22, 2014
1
Excluding change in FDIC covered loans and loans acquired in the
Tower and United acquisitions
2
Excluding changes in securities gains, accretion income and amortization of the
indemnification asset 3
Refer to slide 12 for a definition of operational expenses
|
 7
3Q14 Financials
Net income of $29.1 million or $.26 per share
–
44% increase over $.18 per share in 2Q14
–
13% increase over $.23 per share in 3Q13
Included in 3Q14 are the following pre-tax
items
–
$3.6 million in merger and integration charges
–
$19.1 million amortization of the indemnification
asset
–
$34.3 million in accretion income
1
1
Income in excess of contractual interest |
 12
*Other Expenses include:
In 3Q13, $2.7 million for branch closures, $1.2 million in contribution to ONB
Foundation, $.5 million provision for unfunded commitments and $.3 million in
pension adjustments In 2Q14, $.4 million in accelerated retirement expenses
and $.4 million in state tax receivable write-off In 3Q14, $1.0 million
reversal of hospitalization expense, a $0.7 adjustment in incentive of stock-based compensation, $.4
provision for unfunded commitments and a $.3 million impairment on a branch held for
sale $89.7
$88.8
$90.3
$4.7
$0.8
$2.3
$6.3
$3.6
$4.5
$2.2
$2.6
$96.7
$98.1
$100.0
3Q13
2Q14
3Q14
$ in millions
Operational
expenses
=
total
noninterest
expense
less
United
and
Tower
operational
costs,
acquisition
costs
and
other
expenses
Noninterest Expense –
Well Controlled
Reported 3Q14
efficiency ratio of
67.41%
3Q14 efficiency ratio
excluding
acquisition costs of
64.89%¹
Anticipated
acquisition costs in
4Q14 of $3.5 million
to $4.0 million
($1.0)
1
Non-GAAP financial measure which Management believes is useful in evaluating
the financial results of the Company – see Appendix for Non-GAAP
reconciliation |
 27
Forward to 2015
Execution is key
–
Core revenue growth
–
Expenses
–
Prudent use of capital
–
Opportunistic M&A |
 30
Returned to
community
bank model
2004
2005
Sold non-
strategic
market –
Clarksville, TN
–
5 branches
2006
Sold non-
strategic market
–
O’Fallon, IL –
1 branch
2007
2008
2009
2010
2011
2012
2013
Acquired St.
Joseph Capital –
Entry into
Northern IN
market
February, 2007
Acquired 65
Charter One
branches
throughout
Indiana
March, 2009
Acquired Monroe
Bancorp –
Enhanced
Bloomington, IN
presence
January, 2011
Acquired Indiana
Community –
Entry into
Columbus, IN
September, 2012
FDIC-assisted
acquisition of
Integra Bank
July, 2011
Sold non-
strategic
market –
Chicago-area -
4 branches
Consolidation of
21 branches
Acquired 24
MI / IN branches
July, 2013
Consolidation
of 2 branches
Consolidation
of 8 branches
Consolidation
of 1 branch
Consolidation
of 10 branches
Consolidation
of 12 branches
Consolidation
of 44 branches
Consolidation
of 5 branches
Sold 12
branches
Consolidation
of 22 branches
Acquired 200 + 9 pending
Sold 22
Consolidated 129
Acquired Tower
Financial –
Enhancing Ft.
Wayne, IN
presence April,
2014
Transforming Old National’s Landscape
Acquired
United
Bancorp —
Entering Ann
Arbor, MI July,
2014
2014
Consolidation
of 4 branches
Pending
acquisition of
LSB Financial
Corp.–
Enhancing
Lafayette, IN
presence
Pending
acquisition of
Founders
Financial
Corporation–
Entry into Grand
Rapids , MI |
 45
Non-GAAP Reconciliations
3Q13
2Q14
3Q14
Net Interest Income ($ in 000's)
$77,996
$84,482
$108,367
Taxable Equivalent Adjustment
4,362
4,256
4,488
Net Interest Income – Taxable Equivalent
$82,358
$88,738
$112,855
Average Earning Assets
$8,309,417
$8,730,063
$9,444,853
Net Interest Margin
3.75%
3.87%
4.59%
Net Interest Margin – Fully Taxable Equivalent
3.96%
4.07%
4.78%
Efficiency Ratio - As Reported
3Q14
Net Interest Income (FTE) ($ in millions)
$112.9
Noninterest Income Less Security Gains
31.7
Revenue Less Security Gains
144.6
Noninterest Expense
100.0
Intangible Amortization
2.5
Noninterest Expense Less Intangible Amortization
97.4
Efficiency Ratio
67.41%
Efficiency Ratio Excluding Acquisition Costs
3Q14
Net Interest Income (FTE) ($ in millions)
$112.9
Noninterest Income Less Security Gains
31.7
Revenue Less Security Gains
144.6
Noninterest Expense
100.0
Intangible Amortization
2.5
Acquisition Costs
3.6
Noninterest Expense Less Intangible Amortization and Acquisition Costs
93.8
Efficiency Ratio
64.89% |