EXHIBIT 99.1
News Release
BW Account Number: 1079001
Date: April 14, 2004 2:00 P.M., EST
Contact: James L. Saner, Sr., President & CEO
Mainsource Financial Group (812) 663-0157
MAINSOURCE FINANCIAL GROUP-NASDAQ, MSFG -
Announces Earnings for the First Quarter 2004
o Net Income Up 3.7%
o Earnings Per Share Up 3.0%
o Return on Average Equity of 13.60%
o Return on Average Assets of 1.03%
o Net Interest Margin of 3.68%
James L. Saner, Sr., President & CEO of MainSource Financial Group, Inc.
(NASDAQ: MSFG), announced today the unaudited results for the first quarter
ended March 31, 2004. Total net income for the first quarter was $3,635,000
compared to $3,505,000 for the same period in 2003, an increase of 3.7%. The
Company reported earnings per share of $0.34, which represents a 3.0% increase
over the $0.33 per share reported in the first quarter of 2003.
Key measures of the financial performance of the Company are return on average
shareholders' equity and return on average assets. Return on average
shareholders' equity was 13.60% for the first quarter of 2004 and return on
average assets was 1.03%.
Mr. Saner stated, "I am pleased that our net interest margin has stabilized. It
improved four basis points from the fourth quarter of 2003 and seven basis
points compared to the third quarter of last year. I believe we are
well-positioned to benefit as the economic recovery accelerates and loan demand
increases."
NET INTEREST INCOME
Net interest income was $11.5 million for the first quarter of 2004, which
represents an increase of 7.1% versus the first quarter of 2003. Average earning
assets increased 12.7% while net interest margin, on a fully-taxable equivalent
basis, was 3.68% for the first quarter of 2004 compared to 3.90% for the same
period a year ago.
NON-INTEREST INCOME
Non-interest income was $4.8 million for the first quarter of 2004, unchanged
compared to the same period a year ago. The impact of the acquisition of First
Community in the second quarter of 2003 and the implementation of a formalized
overdraft program were offset by decreases in mortgage banking activity and
investment securities gains.
NON-INTEREST EXPENSE
Non-interest expense for the first quarter of 2004 was $11.1 million compared to
$10.3 million for the first quarter of 2003. The increase was due primarily to
the acquisition of First Community, which added approximately $1.5 million in
non-interest expense. Offsetting this increase was a decrease in the
amortization of deferred debt acquisition costs.
In the first quarter of 2003, the Company redeemed a portion of its subordinated
debentures and wrote-off approximately $850,000 in related costs.
ASSET QUALITY
Non-performing assets totaled $16.1 million, or 1.13% of total assets, as of
March 31, 2004 compared to $11.8 million, or 0.94% of total assets, as of the
same period a year ago. This represents a decrease from year-end 2003 of $1.2
million, or 7% of total non-performing assets. With the acquisition of First
Community, the Company added approximately $4.4 million of non-performing
assets. Management believes that adequate allowance allocations have been
provided for these loans as of March 31, 2004.
Mr. Saner stated, "We continue to emphasize the reduction of non-performing
assets. Approximately $9 million, or 56% of total non-performing assets, is
collateralized by residential real estate, which have historically had lower
levels of charge-offs. The remainder of our non-performing assets is made up of
relatively small commercial loans predominantly collateralized by real estate.
Thus, we anticipate no major losses in this category as well. We continually
monitor and analyze our allowance for loan losses and believe it is adequate."
The allowance for loan losses was $11.3 million as of March 31, 2004 and
represented 1.35% of total outstanding loans.
Mr. Saner added, "We are pleased to see other areas of our Company performing
well such as our insurance division where revenues are up almost 20% over last
year and our wealth management and investment services division continues to
grow each quarter."
MAINSOURCE FINANCIAL GROUP
(unaudited)
(Dollars in thousands except per share data)
Income Statement Summary Three months ended March 31,
----------------------------
2004 2003
----------- -----------
Interest Income $ 16,764 $ 16,732
Interest Expense 5,292 6,018
----------- -----------
Net Interest Income 11,472 10,714
Provision for Loan Losses -- 390
Noninterest Income:
Insurance commissions 698 582
Mortgage banking 799 1,353
Service charges on deposit accounts 1,538 953
Gain (loss) on sales of securities 336 793
Other 1,393 1,167
----------- -----------
Total Noninterest Income 4,764 4,848
Noninterest Expense:
Employee 6,441 5,514
Occupancy 758 655
Equipment 932 812
Intangible amortization 234 221
Amortization of deferred debt acquisition costs 5 854
Other 2,711 2,256
----------- -----------
Total Noninterest Expense 11,081 10,312
Earnings Before Income Taxes 5,155 4,860
Provision for Income Taxes 1,520 1,355
----------- -----------
Net Income $ 3,635 $ 3,505
=========== ===========
Three months ended March 31,
----------------------------
Average Balance Sheet Data 2004 2003
----------- -----------
Gross Loans $ 851,525 $ 742,382
Earning Assets 1,282,987 1,138,198
Total Assets 1,417,779 1,241,455
Noninterest Bearing Deposits 116,338 97,617
Interest Bearing Deposits 1,035,485 931,906
Shareholders' Equity 107,213 100,150
Three months ended March 31,
----------------------------
Per Share Data 2004 2003
----------- -----------
Diluted Earnings Per Share $ 0.34 $ 0.33
Cash Dividends Per Share 0.120 0.114
Market Value - High 24.23 16.23
Market Value - Low 21.13 14.29
Average Outstanding Shares 10,587,237 10,677,679
Three months ended March 31,
----------------------------
Key Ratios 2004 2003
----------- -----------
Return on Average Assets 1.03% 1.15%
Return on Average Equity 13.60% 14.19%
Net Interest Margin 3.68% 3.90%
Efficiency Ratio 67.06% 65.25%
Net Overhead to Average Assets 1.79% 1.78%
Balance Sheet Highlights
As of March 31 2004 2003
----------- -----------
Total Loans (Excluding Loans Held for Sale) $ 840,666 $ 736,399
Allowance for Loan Losses 11,333 9,917
Total Securities 421,781 396,728
Goodwill and Intangible Assets 41,160 26,477
Total Assets 1,416,180 1,263,352
Noninterest Bearing Deposits 123,167 108,756
Interest Bearing Deposits 1,024,791 940,840
Other Borrowings 145,460 99,970
Shareholders' Equity 108,563 99,818
Other Balance Sheet Data
As of March 31 2004 2003
----------- -----------
Book Value Per Share $ 10.26 $ 9.36
Loan Loss Reserve to Loans 1.35% 1.35%
Nonperforming Assets to Assets 1.13% 0.94%
Outstanding Shares 10,578,335 10,659,151
Asset Quality
As of March 31 2004 2003
----------- -----------
Loans Past Due 90 Days or More and Still Accruing $ 718 $ 366
Non-accrual Loans 13,388 8,615
Other Real Estate Owned 1,955 2,835
----------- -----------
Total Nonperforming Assets $ 16,061 $ 11,816
MainSource Financial Group, Inc., headquartered in Greensburg, Indiana, is
listed on the NASDAQ Stock Market (trading symbol: MSFG) and is a
community-focused, multi-bank, financial services oriented holding company with
assets of $1.4 billion. Through its four banking subsidiaries, First Community
Bank and Trust, Bargersville, Indiana; MainSource Bank, Greensburg, Indiana;
Regional Bank, New Albany, Indiana; and Capstone Bank, Watseka, Illinois, it
operates 51 offices in 21 Indiana counties and six offices in three Illinois
counties. Through its insurance subsidiary, MainSource Insurance, it operates
five offices in Indiana as well as one in Owensboro, Kentucky.
Forward-Looking Statements
Except for historical information contained herein, the discussion in this press
release may include certain forward-looking statements based upon management
expectations. Factors which could cause future results to differ from these
expectations include the following: general economic conditions; legislative and
regulatory initiatives; monetary and fiscal policies of the federal government;
deposit flows; the costs of funds; general market rates of interest; interest
rates on competing investments; demand for loan products; demand for financial
services; changes in accounting policies or guidelines; and changes in the
quality or composition of the Company's loan and investment portfolios.
The forward-looking statements included in the press release relating to certain
matters involve risks and uncertainties, including anticipated financial
performance, business prospects, and other similar matters, which reflect
management's best judgment based on factors currently known. Actual results and
experience could differ materially from the anticipated results or other
expectations expressed in the Company's forward-looking statements as a result
of a number of factors, including but not limited to, those discussed in the
press release.
* * * * *
MainSource Financial Group, 201 N. Broadway, P.O. Box 87, Greensburg, IN 47240