EX-99.1 2 ex99-1.txt EXHIBIT 99.1 News Release BW Account Number: 1079001 Date: October 20, 2004 12:00 P.M., EST Contact: James L. Saner, Sr., President & CEO Mainsource Financial Group (812) 663-0157 MAINSOURCE FINANCIAL GROUP-NASDAQ, MSFG - Announces Record Earnings for the Third Quarter 2004 o Net Income Up 19.7% to $4.6 million o Earnings Per Share Up 16.7% o Return on Average Equity of 15.54% o Return on Average Assets of 1.18% o Net Interest Margin of 3.97% 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, 2004. Total net income for the third quarter was $4,606,000 compared to $3,849,000 for the same period in 2003, an increase of 19.7%. The Company reported earnings per share of $0.42, which represents a 16.7% increase over the $0.36 per share reported in the third quarter of 2003. For the nine months ended September 30, 2004, the Company reported earnings per share of $1.17, which represents a 12.5% increase over the $1.04 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 15.54% for the third quarter of 2004 compared to 15.08% for the same period in 2003. Return on average assets was 1.18% for the third quarter of 2004 versus 1.08% in 2003. For the nine months ended September 30, 2004, the Company's return on average shareholders' equity was 15.02% and the return on average assets was 1.14%. Mr. Saner stated, "MainSource Financial Group continues to provide strong earnings each quarter. In addition, we have responded well to the volatile economic conditions. We have seen significant improvements in our net interest margin as well as our non-performing assets, which is a strong indicator that MainSource Financial Group is well positioned for continued success." NET INTEREST INCOME Net interest income was $13.5 million for the third quarter of 2004, which represents an increase of 19.4% versus the third quarter of 2003. Average earning assets increased 9.0% while net interest margin, on a fully-taxable equivalent basis, was 3.97% for the third quarter of 2004 compared to 3.61% for the same period a year ago. For the nine months ended September 30, 2004, the Company's net interest margin, on a fully-taxable equivalent basis, was 3.85% versus 3.73% a year ago. This was the fourth consecutive quarter the Company realized an increase in its net interest margin. NON-INTEREST INCOME Non-interest income was $4.9 million for the third quarter of 2004 compared to $5.5 million for the same period a year ago. The decrease of $0.6 million was comprised of a decrease in mortgage banking income of $1.1 million and a lower level of securities gains for the quarter. Offsetting these amounts was an increase in service charges on deposit accounts derived from the implementation of a formalized overdraft program and the impact of the Peoples Trust acquisition in June 2004. NON-INTEREST EXPENSE Non-interest expense for the third quarter of 2004 was $11.8 million compared to $10.5 million for the third quarter of 2003. The increase was due primarily to the acquisition of Peoples Trust, which added approximately $0.9 million in non-interest expense. Excluding the effect of Peoples Trust, the Company's non-interest expense would have been 2.8% higher than in the same period in 2003. ASSET QUALITY The Company's asset quality has improved significantly over the past year. Non-performing assets totaled $12.9 million, or 0.83% of total assets, as of September 30, 2004 and included $0.7 million of non-performing assets recently acquired in the Peoples Trust acquisition. This is compared to $17.4 million, or 1.24% of total assets, as of the same period a year ago. The allowance for loan losses was $11.9 million as of September 30, 2004 and represented 1.26% of total outstanding loans. 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 $1.6 billion. Through its four banking subsidiaries, MainSource Bank, Greensburg, Indiana; Regional Bank, New Albany, Indiana; Peoples Trust Company, Linton, Indiana; and Capstone Bank, Watseka, Illinois; it operates 56 offices in 22 Indiana counties and six offices in three Illinois counties. Through its insurance subsidiary, MainSource Insurance, it operates eight 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 (unaudited) (Dollars in thousands except per share data) Income Statement Summary Three months ended Sept. 30, Nine months ended Sept. 30, ---------------------------- --------------------------- 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Interest Income $ 18,968 $ 17,216 $ 53,206 $ 50,472 Interest Expense 5,468 5,912 15,950 17,734 ---------- ---------- ---------- ---------- Net Interest Income 13,500 11,304 37,256 32,738 Provision for Loan Losses 270 815 330 1,550 Noninterest Income: Insurance commissions 706 668 2,095 1,862 Mortgage banking 701 1,811 2,419 4,820 Service charges on deposit accounts 1,931 1,446 5,189 3,480 Gain (loss) on sales of securities 44 466 817 1,301 Other 1,522 1,133 4,530 3,306 ---------- ---------- ---------- ---------- Total Noninterest Income 4,904 5,524 15,050 14,769 Noninterest Expense: Employee 6,388 6,046 19,468 17,052 Occupancy 824 715 2,344 2,034 Equipment 1,047 945 2,911 2,597 Intangible amortization 296 219 762 675 Other 3,213 2,624 9,180 7,908 ---------- ---------- ---------- ---------- Total Noninterest Expense 11,768 10,549 34,665 30,266 Earnings Before Income Taxes 6,366 5,464 17,311 15,691 Provision for Income Taxes 1,760 1,615 4,751 4,603 ---------- ---------- ---------- ---------- Net Income $ 4,606 $ 3,849 $ 12,560 $ 11,088 ========== ========== ========== ========== Three months ended Sept. 30, Nine months ended Sept. 30, ---------------------------- --------------------------- Average Balance Sheet Data 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Gross Loans $ 945,768 $ 849,527 $ 889,849 785,185 Earning Assets 1,390,772 1,275,542 1,326,834 1,203,303 Total Assets 1,543,682 1,413,044 1,470,715 1,315,305 Noninterest Bearing Deposits 137,521 118,780 126,553 107,976 Interest Bearing Deposits 1,083,475 1,050,805 1,056,865 983,978 Total Interest Bearing Liabilities 1,277,393 1,179,450 1,221,530 1,092,534 Shareholders' Equity 117,599 101,261 111,407 100,997 Three months ended Sept. 30, Nine months ended Sept. 30, ---------------------------- --------------------------- Per Share Data 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Diluted Earnings Per Share $ 0.42 $ 0.36 $ 1.17 $ 1.04 Cash Dividends Per Share 0.125 0.114 0.370 0.343 Market Value - High 21.52 17.14 24.23 17.14 Market Value - Low 17.30 15.40 17.30 14.29 Average Outstanding Shares 10,998,181 10,598,578 10,756,306 10,636,058 Three months ended Sept. 30, Nine months ended Sept. 30, ---------------------------- --------------------------- Key Ratios 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Return on Average Assets 1.18% 1.08% 1.14% 1.13% Return on Average Equity 15.54% 15.08% 15.02% 14.70% Net Interest Margin 3.97% 3.61% 3.85% 3.73% Efficiency Ratio 62.52% 61.64% 64.91% 62.71% Net Overhead to Average Assets 1.76% 1.41% 1.78% 1.57% Balance Sheet Highlights As of September 30 2004 2003 ---------- ---------- Total Loans (Excluding Loans Held for Sale) $ 945,519 $ 840,240 Allowance for Loan Losses 11,899 12,165 Total Securities 432,922 400,194 Goodwill and Intangible Assets 46,632 42,061 Total Assets 1,556,705 1,404,064 Noninterest Bearing Deposits 139,082 122,391 Interest Bearing Deposits 1,095,218 1,017,771 Other Borrowings 186,172 149,466 Shareholders' Equity 122,139 101,910 Other Balance Sheet Data As of September 30 2004 2003 ---------- ---------- Book Value Per Share $ 11.11 $ 9.62 Loan Loss Reserve to Loans 1.26% 1.45% Nonperforming Assets to Assets 0.83% 1.24% Outstanding Shares 10,992,292 10,598,578 Asset Quality As of September 30 2004 2003 ---------- ---------- Loans Past Due 90 Days or More and Still Accruing $ 261 $ 309 Non-accrual Loans $ 10,463 13,549 Other Real Estate Owned $ 2,143 3,495 ---------- ---------- Total Nonperforming Assets $ 12,867 $ 17,353