UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): May 20, 2005
MainSource Financial Group, Inc.
(Exact name of registrant as specified in its charter)
Indiana 0-12422 35-1562245
State or Other Jurisdiction Commission File No. I.R.S. Employer
of Incorporation or Organization Identification Number
201 North Broadway
Greensburg, Indiana 47240
(Address of principal executive offices)
(812) 663-0157
(Registrant's Telephone Number,
Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
|_| Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 7.01. Regulation FD Disclosure
MainSource Financial Group, Inc. (the "Company") is amending its pending
registration statement on Form S-3 relating to its prospective offering of
common stock, and the prospectus summary in that filing includes the following
disclosure:
We are a financial services holding company headquartered in
Greensburg, Indiana. We operate through 60 banking offices, 54 in
south-eastern and south-central Indiana and six in eastern Illinois, and
eight separate insurance agency offices in Indiana. Completion of our
pending acquisition of The Madison Bank & Trust Company and subsequent
anticipated branch closures will give us a total of 62 offices in 23
counties in Indiana. As of March 31, 2005, we had, on a consolidated basis,
total assets of $1.49 billion, total loans (excluding loans held for sale)
of $901 million, total deposits of $1.19 billion and total shareholders'
equity of $121 million.
We operate principally in markets considered non-metropolitan in nature
where we believe our community-banking model gives us an advantage over
larger competitors who may be less inclined to pursue market share in these
often underserved, less urban markets. Many of our offices are on the
outskirts of larger metropolitan areas such as Indianapolis, Cincinnati and
Louisville. We strive to provide our customers with convenient broad-based
products and services typically provided by larger financial organizations,
while at the same time emphasizing local decision-making by our employees
in each market area to better serve our customers. Our lead bank has been
in business for over 125 years, and many of the banks we have acquired have
similar long histories serving their communities. Many of our employees are
long-time residents of the communities in which they work, and we believe
their understanding of the local customers' expectations helps us
effectively market our products and services in these communities and
compete effectively with the larger national and regional banks having
branch operations in our markets. We have decentralized our management
structure to facilitate personalized customer service, local
decision-making and the customization of banking products to particular
communities. By retaining the local character of the banks we acquire, we
believe they can maintain a connection to their markets that will allow us
to compete more effectively with branches of larger national and regional
banks in these markets.
We are also currently consolidating our state charters and
back-office, administrative functions to create increased efficiencies and
allow our local managers to concentrate on customer service. During 2004,
we announced a restructuring plan that will eventually lead to the
consolidation of our Indiana banking charters into our lead bank,
MainSource Bank. We project that this consolidation will be complete by the
end of 2005 and will involve both a consolidation of back-office functions
and a complete restructuring of existing management. The management
structure will include geographical segmentation of the offices and will
provide each defined area with a senior management team led by a regional
president. Each team will provide local decisions and personalized service
to the customers and employees in its markets and should allow for better
coordination among offices and economies of scale in handling
administrative functions.
We have a stable deposit base that provides us with consistent loan and
investment funding while complementing our community banking focus and
offering cross-selling opportunities for our insurance, wealth management
and financial services and planning products. As of March 31, 2005, over
60% of our total deposits consisted of core (non-time) deposits, and only
about 10% of our total deposits consisted of certificates of deposit
greater than $100,000.
In addition to traditional loan and deposit products, we also provide
investment brokerage, mortgage brokerage, mutual funds, wealth management,
insurance and annuity, financial planning and title insurance products and
services to our customers. We understand that the non-metropolitan markets
we target may not have the same growth potential for interest income as
more urban markets. Accordingly, we are focused on increasing our
non-interest income in these markets by providing additional fee-based
products and services in an effort to improve our revenue diversification,
growth prospects and profitability. Our non-interest income as a percentage
of total revenue increased from 10.0% in 2000 to 21.4% in 2004.
The following table shows our growth over the past five years in
several key financial measures.
At and for the Years Ended December 31,
----------------------------------------------------------------------
2004 2003 2002 2001 2000
---------- ----------- ------------- ------------ ------------
(Dollars in thousands, except per share data)
Net income............................. $ 16,793 $ 15,305 $ 14,011 $ 11,177 $ 9,854
Earnings per share (basic and diluted). 1.48 1.37 1.24 0.99 0.88
Book value per share................... 10.68 9.47 8.88 7.78 6.94
Total assets........................... 1,549,379 1,442,729 1,251,760 1,178,392 1,216,936
Loans, excluding held for sale......... 929,005 855,471 740,167 760,785 790,550
Total deposits......................... 1,226,367 1,191,310 1,034,307 1,014,687 1,053,570
Shareholders' equity................... 123,320 105,424 99,771 87,872 78,005
We believe our earnings per share for 2005 will approximate, or be
slightly below, our earnings per share for 2004, and we do not currently
expect the earnings per share trend noted above to continue in 2005. Our
expectations for 2005 earnings per share are based upon, among other
things, our first quarter results and our outlook for the remainder of
2005, significant reductions in gains on sales of securities and mortgage
banking revenue from 2004 to 2005, the increase in our outstanding shares
resulting from this offering, identified 2005 charter consolidation
expenses, conversion and integration expenses related to the Madison
acquisition, and the timing of both our deployment of the offering proceeds
for the Madison acquisition and our ability to timely invest the net cash
received in the Madison acquisition in interest earning assets. We believe
that our performance in 2006 and beyond should be more consistent with our
pre-2005 trends noted above, although we make no assurance nor provide any
specific guidance in that regard.
We are continually presented with and seek out acquisition
opportunities to enhance our banking franchise in the four-state region of
Indiana, Illinois, Kentucky, and Ohio. We believe that there are
potentially attractive acquisition opportunities in our target markets as a
result of regulatory compliance challenges for smaller banks as well as the
focus of larger national and regional banks on more urban markets. Our
ideal acquisition candidate is located in our targeted markets and has a
strong local identity with deep, personal involvement in its communities
and room for improvement in efficiency. Our goal is to improve the
operations of these banks, add to their lending capacity and increase the
variety of their product and service menus while retaining their local
character. During the five-year period from January 1, 2000 to December 31,
2004, we completed acquisitions of the following banks, branches and
insurance agencies:
Acquired Entity Acquisition Total Assets Total Net Loans Total Deposits
---------------
at
Date Consummation at Consummation at Consummation
-------------- --------------- ----------------- ---------------
--------------
(Dollars in thousands)
Peoples Financial Corp. June 2004 $119,214 $81,371 $ 99,717
First Community Bancshares, Inc. June 2003 156,220 114,819 115,481
Branch in Vermillion County, IL February 2003 19,739 6,426 19,653
Branch in Lynn, IN August 2002 12,206 9,680 12,165
Three branches in Vermillion
County, IL July 2002 31,649 9,138 31,530
Branch in Grant Park, IL February 2002 20,509 3,240 20,401
Vollmer & Associates, Inc.
insurance agencies April 2001 1,037 -- --
Two branches in Indianapolis, IN September 2000 43,794 -- 43,524
First Affiliated Bancorp of
Watseka, IL May 2000 131,137 67,921 115,689
The proceeds of this offering will be primarily used to fund our
acquisition of The Madison Bank & Trust Company announced in March 2005.
Although we have no definitive acquisition plans other than Madison as of
the date of this prospectus, we are currently considering several separate
and unrelated acquisition opportunities which are in differing stages of
review and discussion, and we expect to review other opportunities that may
arise in the future. As of the date of this prospectus, we have not made a
binding offer to any of these potential acquisition candidates, and
discussions have not resulted in an agreement in principle or other
definitive terms. Each of these acquisition candidates has total assets of
less than $275 million, is located in one or more of our target markets,
and generally is consistent with our stated acquisition strategy. If our
negotiations are successful, we could announce one or more acquisitions in
the near future and throughout the year. However, it is possible that we
may not acquire any of these candidates or we may otherwise in the future
decide not to pursue one or more of these opportunities.
Forward-Looking Statements
This report contains certain forward-looking statements based upon management
expectations. Factors which would 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 this report 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 this report.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MAINSOURCE FINANCIAL GROUP, INC.
Date: May 20, 2005 By: /s/ James M. Anderson
---------------------------------------
James M. Anderson.
Controller and Principal Accounting Officer