Exhibit 99.1
NEWS RELEASE
Date: July 20, 2005 11:30 a.m. E.S.T.
Contact: James L. Saner, Sr., President and CEO
MainSource Financial Group, Inc. 812-663-0157
[MainSource Financial Group logo]
MAINSOURCE FINANCIAL GROUP - NASDAQ, MSFG -
Announces Earnings for the Second Quarter 2005
+ Net Income of $4.3 million
+ Return on Average Equity of 13.66%
+ Return on Average Assets of 1.15%
+ Net Interest Margin of 4.04%
James L. Saner, Sr., President & CEO of MainSource Financial Group, Inc.
(NASDAQ: MSFG), announced today the unaudited results for the second quarter
ended June 30, 2005. Total net income for the second quarter was $4,326,000
compared to $4,319,000 for the same period in 2004. The Company reported
earnings per share of $0.37, which represents a 2.6% decrease compared to the
$0.38 per share reported in the second quarter of 2004. In June 2005, the
Company completed a public offering of approximately 1.7 million shares of
common stock. As previously announced, the majority of the proceeds from this
offering will be used in the acquisition of The Madison Bank and Trust Company,
which is expected to close in the third quarter of 2005. Excluding the effect of
the additional shares issued in the offering, the Company's earnings per share
would have been $0.38. For the six months ended June 30, 2005, the Company
reported earnings per share of $0.70, which represents a 1.4% decrease over the
$0.71 reported for the same period a year ago.
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 13.66% for the second quarter of 2005 and the return on
average assets was 1.15% for the second quarter of 2005. For the six months
ended June 30, 2005, the Company's return on average shareholders' equity was
12.96% and the return on average assets was 1.08%.
Mr. Saner stated, "We are pleased with our performance in the second quarter
given the fact that we will not be able to fully utilize the proceeds from our
recent stock offering until the third quarter. Although our numbers are down
slightly from the second quarter of 2004, we showed a significant improvement
over the first quarter of this year. On a linked quarter basis, earnings per
share, return on average assets, return on average equity, and net interest
margin all increased substantially."
NET INTEREST INCOME
Net interest income was $13.2 million for the second quarter of 2005, which
represents an increase of 7.3% versus the second quarter of 2004. Average
earning assets increased 4.6% while net interest margin, on a fully-taxable
equivalent basis, was 4.04% for the second quarter of 2005 compared to 3.85% for
the same period a year ago. For the six months ended June 30, 2005, the
Company's net interest margin was 3.95% versus 3.79% a year ago.
NON-INTEREST INCOME
Non-interest income was $4.8 million for the second quarter of 2005 compared to
$5.3 million for the same period a year ago. This decrease was primarily due to
a decrease in mortgage banking income and lower gains on sales of investment
securities. In addition, insurance commission income decreased as the Company
disposed of the Kentucky division of its insurance subsidiary in March 2005. The
Company's Indiana insurance division realized an increase in commission income
of 9% compared to the same period a year ago.
NON-INTEREST EXPENSE
Non-interest expense for the second quarter of 2005 was $11.9 million and was
relatively flat compared to $11.7 million for the second quarter of 2004. The
Company was able to keep expenses flat year over year despite the full quarter
effect of Peoples Trust Company in 2005, which was acquired in mid-June 2004.
The Company is beginning to realize the cost savings anticipated with the
consolidation of its Indiana bank charters.
ASSET QUALITY
As expected, the Company's asset quality improved during the second quarter of
2005. Non-performing assets totaled $14.3 million, or 0.93% of total assets, as
of June 30, 2005. The Company had $17.6 million of non-performing assets, or
1.18% of total assets as of March 31, 2005, and $15.7 million, or 1.02% of total
assets at year-end 2004. The allowance for loan losses was $11.3 million as of
June 30, 2005 which represented 1.23% of total outstanding loans.
Mr. Saner stated, "Our efforts to reduce our non-performing assets have been
successful over the last quarter as we continue to improve the asset quality of
the Company. This continues to be a major focus for our Company in 2005."
MainSource Financial Group, Inc., headquartered in Greensburg, Indiana, is
listed on the NASDAQ National Market (under the symbol: "MSFG") and is a
community-focused, financial holding company with assets of approximately $1.5
billion. The Company operates 54 offices in 22 Indiana counties and six offices
in three Illinois counties through its three banking subsidiaries, MainSource
Bank, Greensburg, Indiana; Peoples Trust Company, Linton, Indiana; and
MainSource Bank of Illinois, Kankakee, Illinois. Through its non-banking
subsidiaries, MainSource Insurance LLC, MainSource Title LLC, and MainSource
Mortgage LLC, the Company and its banking subsidiaries provide various related
financial services.
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 materially 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.
MAINSOURCE FINANCIAL GROUP
(unaudited)
(Dollars in thousands except per share data)
Income Statement Summary Three months ended June 30 Six months ended June 30
2005 2004 2005 2004
------------- -------------- -------------- ---------------
Interest Income $19,533 $17,474 $38,226 $34,238
Interest Expense 6,348 5,190 12,336 10,482
------------- -------------- -------------- ---------------
Net Interest Income
13,185 12,284 25,890 23,756
Provision for Loan Losses 340 60 460 60
Noninterest Income:
Insurance commissions 523 691 1,110 1,389
Mortgage banking 679 919 1,225 1,718
Service charges on deposit accounts 1,805 1,720 3,471 3,258
Gain on sales of securities 213 437 224 773
Other 1,619 1,495 3,388 2,771
------------- -------------- -------------- ---------------
Total Noninterest Income
4,839 5,262 9,418 9,909
Noninterest Expense:
Employee 6,886 6,639 13,762 13,080
Occupancy 824 762 1,723 1,520
Equipment 985 932 2,015 1,864
Intangible amortization 295 232 590 466
Other 2,873 3,131 5,867 5,730
------------- -------------- -------------- ---------------
Total Noninterest Expense
11,863 11,696 23,957 22,660
Earnings Before Income Taxes 5,821 5,790 10,891 10,945
Provision for Income Taxes 1,495 1,471 2,775 2,991
------------- -------------- -------------- ---------------
Net Income $ $ $ $
4,326 4,319 8,116 7,954
============= ============== ============== ===============
Three months ended June 30 Six months ended June 30
Average Balance Sheet Data 2005 2004 2005 2004
------------- -------------- -------------- ---------------
Gross Loans $911,109 $872,244 $915,978 $861,891
Earning Assets 1,370,550 1,310,468 1,367,062 1,295,518
Total Assets 1,519,903 1,450,647 1,516,225 1,434,213
Noninterest Bearing Deposits 140,007 125,800 137,831 121,069
Interest Bearing Deposits 1,062,596 1,051,637 1,064,552 1,043,566
Total Interest Bearing Liabilities 1,241,673 1,204,154 1,241,324 1,193,604
Shareholders' Equity 128,394 109,408 126,290 108,310
Three months ended June 30 Six months ended June 30
Per Share Data 2005 2004 2005 2004
------------- -------------- -------------- ---------------
Diluted Earnings Per Share $0.37 $0.38 $0.70 $0.71
Cash Dividends Per Share 0.130 0.119 0.260 0.233
Market Value - High 21.62 23.96 22.92 23.07
Market Value - Low 17.30 17.30 17.81 17.81
Average Outstanding Shares (diluted) 11,751,831 11,230,427 11,649,538 11,182,721
Three months ended June 30 Six months ended June 30
Key Ratios 2005 2004 2005 2004
------------- -------------- -------------- ---------------
Return on Average Assets 1.15% 1.20% 1.08% 1.12%
Return on Average Equity 13.66% 15.85% 12.96% 14.73%
Net Interest Margin 4.04% 3.85% 3.95% 3.79%
Efficiency Ratio 64.20% 65.74% 66.24% 66.04%
Net Overhead to Average Assets 1.87% 1.78% 1.93% 1.79%
Balance Sheet Highlights
As of June 30 2005 2004
------------- --------------
Total Loans (Excluding Loans Held for Sale) $913,326 $946,204
Allowance for Loan Losses 11,275 12,254
Total Securities 446,400 432,494
Goodwill and Intangible Assets 45,150 47,193
Total Assets 1,540,386 1,552,494
Noninterest Bearing Deposits 146,398 138,509
Interest Bearing Deposits 1,104,036 1,079,488
Other Borrowings 123,308 209,513
Shareholders' Equity 155,047 114,242
Other Balance Sheet Data
As of June 30 2005 2004
------------- --------------
Book Value Per Share $11.74 $9.89
Loan Loss Reserve to Loans 1.23% 1.30%
Nonperforming Assets to Total Assets 0.93% 0.84%
Outstanding Shares 13,210,268 11,551,357
Asset Quality
As of June 30 2005 2004
------------- --------------
Loans Past Due 90 Days or More and Still Accruing $257 $225
Non-accrual Loans 12,894 10,525
Other Real Estate Owned 1,175 2,282
------------- --------------
Total Nonperforming Assets $14,326 $13,032