Exhibit 99.1
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News Release
Contact: N. William White
President and Chief
Executive Officer
(502)753-0500
1st Independence Financial Group, Inc. Announces
Targeted Closing Date of Merger with MainSource Financial Group, Inc.
and Adjustments to Merger Consideration
LOUISVILLE, KENTUCKY (August 28, 2008) - 1st Independence Financial Group, Inc.
("1st Independence") (NASDAQ:FIFG) today announced it expects to close the
merger of 1st Independence with and into MainSource Financial Group, Inc.
("MainSource") (NASDAQ: MSFG) on Friday, August 29, 2008, subject to the
satisfaction of the remaining conditions to closing. As previously announced,
1st Independence, its subsidiary bank, 1st Independence Bank, Inc. ("1st Bank"),
and MainSource entered into an Agreement and Plan of Merger, dated as of
February 26, 2008 (the "Merger Agreement"), which contemplates the merger of 1st
Independence with and into MainSource with 1st Bank becoming a wholly-owned
subsidiary of MainSource. In the proposed merger, 1st Independence's
shareholders were originally to receive $5.475 in cash and 0.881036 shares of
MainSource common stock for each share of 1st Independence's stock owned at the
effective time of the merger, subject to adjustment as provided in the Merger
Agreement and described further below. 1st Independence and MainSource have
targeted Friday, August 29, 2008 as the closing date for the proposed merger,
subject to satisfaction of the conditions to closing set forth in the Merger
Agreement. Assuming the merger closes on that date, both the stock portion and
the cash portion of the merger consideration will be adjusted under the Merger
Agreement as further described below so that shareholders of 1st Independence
will receive $4.418 in cash and 0.7849 shares of MainSource common stock for
each share of 1st Independence stock owned at the effective time of the merger.
If the merger does not close on that date, then there may be different
adjustments to the merger consideration depending on if and when the closing of
the merger occurs.
Adjustment to Stock Portion of the Merger Consideration
Section 8.01(b)(vii) of the Merger Agreement provides that MainSource may
terminate the Merger Agreement if the average closing price of MainSource common
stock (the "Average Closing Price") during a period of twenty trading days prior
to the fifth day preceding the closing date of the merger is more than $16.50,
unless 1st Independence elects within five days of notice of termination from
MainSource to make a compensating adjustment to the exchange ratio for the stock
portion of the merger consideration as described in Section 8.01(b)(vii) of the
Merger Agreement. Based on the anticipated closing date of the merger, the
Average Closing Price of MainSource common stock through Friday, August 22 was
$18.52 per share. On August 26, 2008, MainSource informed 1st Independence that
it was terminating the Merger Agreement pursuant to Section 8.01(b)(vii) of the
Merger Agreement. On August 27, 2008, 1st Independence's Board of Directors
determined to proceed with the proposed merger and informed MainSource that 1st
Independence would accept the adjustment to the exchange ratio contemplated in
Section 8.01(b)(vii). Section 8.01(b)(vii) provides that the exchange ratio will
be adjusted in such circumstances by dividing $16.50 by the Average Closing
Price of $18.52 multiplied by the original exchange ratio for the stock portion
of the merger consideration of 0.881036. As a result, 1st Independence
shareholders will now receive 0.7849 shares of MainSource common stock, plus the
cash portion of the merger consideration described below, for each share of 1st
Independence owned at the effective time of the merger. In accordance with
Section 8.01(b)(vii) of the Merger Agreement, because the 1st Independence
directors voted to proceed with the merger, no termination of the Merger
Agreement has occurred.e 1st Independence directors voted to proceed with the
merger, no termination of the Merger Agreement has occurred.
Adjustment to Cash Portion of the Merger Consideration
The Merger Agreement also provides that the aggregate cash payable in the
merger is subject to adjustment at the effective time of the merger, on a
dollar-for-dollar basis, to the extent 1st Independence's consolidated tangible
shareholders' equity as of the end of the month preceding closing, adjusted as
described in the Merger Agreement, is less than $26,700,000 or greater than
$27,200,000. Assuming a closing date of August 29, 2008, 1st Independence's
consolidated tangible shareholders' equity as of July 31, 2008, as adjusted
under the Merger Agreement, was $24,590,000, after deducting $659,000 after
taxes of legal and other professional fees relating to the proposed merger with
MainSource that 1st Independence recorded through July 31, 2008 as well as
certain costs related to environmental conditions that were identified on
certain of the properties owned by 1st Bank during MainSource's due diligence.
These costs include a reserve after taxes of $33,000 for the estimated cost to
remove an underground storage tank located at 1st Bank's branch in Harrodsburg,
Kentucky as well as a loss after taxes of $99,000 that 1st Bank anticipates it
will incur in connection with the anticipated sale of 1st Bank's Jeffersonville,
Indiana branch. The Jeffersonville property has a book value of $312,577 and is
anticipated to be sold prior to the closing of the merger to Bank Rentals, LLC,
an entity owned by Charles Moore, a director of 1st Independence and 1st Bank,
for approximately $162,577. The sale of the property is being done to facilitate
the closing of the proposed merger. The purchase price for the property is based
on the book value of the property less an estimate of costs that would be
incurred to remediate certain of the environmental conditions existing on the
property. Assuming the sale of the property occurs, 1st Bank expects to enter
into a 5 year lease with Bank Rentals, LLC to lease a portion of the property to
continue to operate a branch at that location. The estimated rent payment from
1st Bank to Bank Rentals, LLC would be $1,500 per month, and either party could
terminate the lease on one years' notice after eighteen months. Bank Rentals,
LLC would also be assigned the existing lease that 1st Bank has with another
tenant on the property. The exact details of the sale of the Jeffersonville
property to Bank Rentals, LLC, and the lease of the property to 1st Bank, are
still being negotiated and could change prior to closing.
As 1st Independence's consolidated tangible shareholders' equity, adjusted in
accordance with the Merger Agreement, as of July 31, 2008 was $24,590,000, the
cash portion of the merger consideration has been reduced from $5.475 per share
to $4.418 per share.
Additional Information About The Merger And Where To Find It
The merger was submitted to and approved by 1st Independence's shareholders at
a special meeting held on Thursday, August 7, 2008, at 5:30 p.m., Eastern
Daylight Time, at 3801 Charlestown Road, New Albany, Indiana. The joint proxy
statement/prospectus for the special meeting was included in the registration
statement filed by MainSource with the SEC with respect to the merger. The joint
proxy statement/prospectus was first mailed to 1st Independence shareholders on
or about July 3, 2008. 1st Independence shareholders are urged to read the
registration statement and the joint proxy statement/prospectus regarding the
merger and any other relevant documents filed by MainSource with the SEC, as
well as any amendments or supplements to those documents, because they contain
important information about the merger. You can obtain a free copy of the joint
proxy statement/prospectus, as well as other filings containing information
about 1st Independence and MainSource, at the SEC's website
(http://www.sec.gov). In addition, documents filed with the SEC by MainSource
will be available free of charge from the Secretary of MainSource at 2105 N.
State Road 3 Bypass, Greensburg, IN 47240, telephone (812) 663-6734, or on
MainSource's website at www.mainsourcefinancial.com. Documents filed with the
SEC by 1st Independence will be available free of charge from the Secretary of
1st Independence at 8620 Biggin Hill Lane, Louisville, Kentucky 40220, telephone
(502) 753-2265. Copies of all recent proxy statements and annual reports are
also available free of charge from the respective companies by contacting the
company secretary.
1st Independence and MainSource and their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies to
approve the merger. Information about the participants is set forth in the joint
proxy statement/prospectus regarding the merger previously mailed to 1st
Independence's shareholders. You may obtain free copies of these documents as
described above.
Forward Looking Statements Safe Harbor
This press release contains comments or information that constitute
forward-looking statements within the context of the safe-harbor provisions of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements involve significant risks and uncertainties. Actual results may
differ materially from the results discussed in the forward-looking statements.
Factors that may cause such a difference include: risks that the merger will not
be consummated on the terms disclosed or at all; risks resulting from the
potential adverse effect on 1st Independence's business and operations of the
covenants 1st Independence made in the Merger Agreement; risks resulting from
the decrease in the amount of time and attention that management can devote to
1st Independence's business while also devoting its attention to completing the
proposed merger; risks associated with the increases in operating costs
resulting from the additional expenses 1st Independence has incurred and will
continue to incur relating to the proposed merger; changes in interest rates and
interest-rate relationships; demand for products and services; the degree of
competition by traditional and non-traditional competitors; changes in banking
regulations; changes in tax laws; changes in prices, levies, and assessments;
the impact of technological advances; governmental and regulatory policy
changes; the outcomes of contingencies; trends in customer behavior and their
ability to repay loans; changes in the national and local economy; and other
factors included in 1st Independence's filings with the SEC, available free
online at the SEC's website (http://www.sec.gov). 1st Independence assumes no
responsibility to update forward-looking statements.
1st Independence Bank is headquartered in Louisville, Kentucky and includes 1st
Independence Mortgage, a division of the Bank. The Bank has eight full service
banking offices located in Harrodsburg, Lawrenceburg and two locations (St.
Matthews branch and Stony Brook branch) in Louisville, Kentucky, and New Albany,
Jeffersonville, Marengo and Clarksville, Indiana. 1st Independence Mortgage
operates in Louisville, Kentucky and southern Indiana.