EXHIBIT 99.1
NEWS RELEASE
DATE: October 19, 2005 11:00 a.m. E.S.T.
CONTACT: James L. Saner, Sr., President and CEO
MainSource Financial Group, Inc. 812-663-0157
[MainSource logo]
MAINSOURCE FINANCIAL GROUP-NASDAQ, MSFG -
Announces Earnings for the Third Quarter 2005
o Net Income of $4.5 million
o Return on Average Assets of 1.13%
o Net Interest Margin of 3.93%
James L. Saner, Sr., President & CEO of MainSource Financial Group, Inc.
(NASDAQ: MSFG), announced today the unaudited results for the third quarter
ended September 30, 2005. Total net income for the third quarter was $4,532,000
compared to $4,606,000 for the same period in 2004. The Company reported
earnings per share of $0.34, which includes the effect of the Company's two
million shares of common stock issued in a public offering in June and July of
2005. The Company was not able to fully utilize the new capital generated from
the offering until the close of its acquisition of The Madison Bank and Trust
Company, which occurred on August 26, 2005. Excluding the effect of the
additional shares issued in the offering and the merger expenses related to the
aforementioned acquisition, the Company's earnings per share would have been
$0.38 for the third quarter of 2005 compared to $0.40 for the same period
a year ago. For the nine months ended September 30, 2005, the Company reported
earnings per share of $1.03, which represents a 7.2% decrease versus the $1.11
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 11.30% for the third quarter of 2005 and the return on
average assets was 1.13% for the same period. For the nine months ended
September 30, 2005, the Company's return on average shareholders' equity was
12.32% and the return on average assets was 1.10%.
Mr. Saner stated, "We are pleased with our performance in the third quarter
given the fact that we were not able to fully utilize the proceeds from our
recent stock offering until the Madison Bank and Trust transaction closed in
late August. Although our numbers are down slightly from last year through the
first nine months, we showed a significant overall improvement during the last
month of the quarter which included the first full month of the new
acquisition."
NET INTEREST INCOME
Net interest income was $13.6 million for the third quarter of 2005, relatively
flat compared to the third quarter of 2004. Average earning assets increased
2.7% while net interest margin, on a fully-taxable equivalent basis, was 3.93%
for the third quarter of 2005 compared to 3.97% for the same period a year ago.
For the nine months ended September 30, 2005, the Company's net interest margin
was 3.93% versus 3.85% a year ago.
NON-INTEREST INCOME
Non-interest income was $4.9 million for the third quarter of 2005 and was
relatively flat compared to the same period a year ago. An increase in mortgage
banking income was offset by a decrease in insurance commission income as the
Company disposed of the Kentucky division of its insurance subsidiary in March
2005.
NON-INTEREST EXPENSE
Non-interest expense for the third quarter of 2005 was $12.1 million, which was
an increase of $0.3 million compared to the third quarter of 2004. The increase
was primarily attributable to the merger costs associated with the acquisition
of Madison, which totaled $0.3 million. Excluding these costs, the Company's
non-interest expense would have been relatively flat. This expense control can
be primarily attributed to the cost savings associated with the consolidation of
the Company's Indiana bank charters.
ASSET QUALITY
The Company's asset quality remained relatively flat during the third quarter of
2005. Non-performing assets totaled $15.4 million, or 0.94% of total assets, as
of September 30, 2005. The Company had $14.3 million of non-performing assets,
or 0.93% of total assets as of June 30, 2005, and $17.6 million, or 1.18% of
total assets at March 31, 2005. The allowance for loan losses was $12.5 million
as of September 30, 2005 which represented 1.28% of total outstanding loans.
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 $1.6
billion. The Company operates 54 offices in 23 Indiana counties and six offices
in three Illinois counties through its two banking subsidiaries, MainSource
Bank, Greensburg, 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 Sept.30 Nine months ended Sept. 30
-------------------------- --------------------------
2005 2004 2005 2004
-------------- --------------- ---------------- ----------
Interest Income $20,598 $18,985 $58,824 $53,206
Interest Expense 6,969 5,485 19,305 15,950
-------------- --------------- ---------------- ----------
Net Interest Income
13,629 13,500 39,519 37,256
Provision for Loan Losses 480 270 940 330
Noninterest Income:
Insurance commissions 435 706 1,545 2,095
Mortgage banking 805 701 2,030 2,419
Service charges on deposit accounts 1,964 1,931 5,435 5,189
Gain on sales of securities 18 44 242 817
Other 1,723 1,522 5,111 4,530
-------------- --------------- ---------------- -----------
Total Noninterest Income
4,945 4,904 14,363 15,050
Noninterest Expense:
Employee 6,835 6,388 20,597 19,468
Occupancy 870 824 2,593 2,344
Equipment 952 1,047 2,967 2,911
Intangible amortization 296 296 886 762
Other 3,120 3,213 8,987 9,180
-------------- --------------- ---------------- -----------
Total Noninterest Expense
12,073 11,768 36,030 34,665
Earnings Before Income Taxes 6,021 6,366 16,912 17,311
Provision for Income Taxes 1,489 1,760 4,264 4,751
-------------- --------------- ---------------- -----------
Net Income $ 4,532 $ 4,606 $ 12,648 $12,560
============== =============== ================ ============
Three months ended Sept.30 Nine months ended Sept. 30
-------------------------- --------------------------
Average Balance Sheet Data 2005 2004 2005 2004
-------------- --------------- ---------------- ------------
Gross Loans $ 943,526 $ 945,768 $ 925,162 $ 889,849
Earning Assets 1,428,672 1,390,772 1,389,780 1,326,834
Total Assets 1,587,399 1,543,682 1,539,949 1,470,715
Noninterest Bearing Deposits 145,475 137,521 140,379 126,553
Interest Bearing Deposits 1,087,366 1,083,475 1,072,158 1,056,865
Total Interest Bearing Liabilities 1,270,129 1,277,393 1,250,927 1,221,530
Shareholders' Equity 159,165 117,599 137,248 111,407
Three months ended Sept.30 Nine months ended Sept. 30
-------------------------- --------------------------
Per Share Data 2005 2004 2005 2004
-------------- --------------- ---------------- ------------
Diluted Earnings Per Share $ 0.34 $0.40 $ 1.03 $ 1.11
Cash Dividends Per Share 0.130 0.119 0.390 0.352
Market Value - High 19.55 20.50 23.96 23.07
Market Value - Low 17.73 16.48 17.30 16.48
Average Outstanding Shares (diluted) 13,443,491 11,559,956 12,254,174 11,309,429
Three months ended Sept.30 Nine months ended Sept. 30
-------------------------- --------------------------
Key Ratios 2005 2004 2005 2004
-------------- --------------- ---------------- ------------
Return on Average Assets 1.13% 1.18% 1.10% 1.14%
Return on Average Equity 11.30% 15.54% 12.32% 15.02%
Net Interest Margin 3.93% 3.97% 3.93% 3.85%
Efficiency Ratio 63.27% 62.52% 65.22% 64.91%
Net Overhead to Average Assets 1.78% 1.76% 1.88% 1.78%
Balance Sheet Highlights
As of September 30 2005 2004
-------------- ---------------
Total Loans (Excluding Loans Held for Sale) $ 977,400 $ 945,519
Allowance for Loan Losses 12,463 11,899
Total Securities 472,363 432,922
Goodwill and Intangible Assets 61,104 46,632
Total Assets 1,639,510 1,556,705
Noninterest Bearing Deposits 166,009 139,082
Interest Bearing Deposits 1,152,822 1,095,218
Other Borrowings 146,409 186,172
Shareholders' Equity 161,533 122,079
Other Balance Sheet Data
As of September 30 2005 2004
-------------- ---------------
Book Value Per Share $11.99 $10.58
Loan Loss Reserve to Loans 1.28% 1.26%
Nonperforming Assets to Total Assets 0.94% 0.83%
Outstanding Shares 13,471,128 11,541,907
Asset Quality
As of September 30 2005 2004
-------------- ---------------
Loans Past Due 90 Days or More and Still Accruing $1,731 $261
Non-accrual Loans 12,616 10,463
Other Real Estate Owned 1,044 2,143
-------------- ---------------
Total Nonperforming Assets $15,391 $12,867