EX-99.1 2 ex99-1.txt EXHIBIT 99.1 News Release BW Account Number: 1079001 Date: January 19, 2005 11:30 A.M., EST Contact: James L. Saner, Sr., President & CEO Mainsource Financial Group (812) 663-0157 MAINSOURCE FINANCIAL GROUP-NASDAQ, MSFG - Announces Earnings for the Fourth Quarter and Full Year 2004 o Stock Price Up 22.7% in 2004 o Full Year Net Income of $16.8 Million, Up 9.7% vs. 2003 o Full Year Operating Earnings Per Share Up 10.2% o Full Year ROE of 14.70% o Full Year ROA of 1.13% o Cash Dividends Increase 9.4% in 2004 Greensburg, Indiana (NASDAQ: MSFG) James L. Saner, Sr., President & Chief Executive Officer of MainSource Financial Group, announced today the unaudited results for the fourth quarter and twelve months ended December 31, 2004. The Company reported fourth quarter earnings per share of $0.37, which represents a 2.6% decrease over the $0.38 per share reported in the fourth quarter of 2003. However, as previously announced in September 2004, during the fourth quarter of 2004, the Company incurred approximately $650,000 of restructuring costs, which equates to $.03 per share after tax, related to the consolidation of its Indiana charters and the name change of its Illinois affiliate. Excluding these costs, earnings per share would have been $0.40 for the fourth quarter of 2004, which would have represented a 5.3% increase over the same quarter a year ago. For the twelve months ended December 31, 2004, the Company reported earnings per share of $1.48 compared to $1.37 for 2003, which represents a 8.0% increase. Excluding the aforementioned restructuring costs, operating earnings per share would have been $1.51, a 10.2% increase over 2003 results. Net income for the twelve months ended December 31, 2004 was $16,793,000, or 9.7% over the $15,305,000 of net income in 2003. During 2004, the Company once again realized significant appreciation in its stock price. After accounting for the five percent stock dividend declared in December 2004, the Company's stock price rose 22.7% from a price of $19.47 at December 31, 2003 to $23.88 at December 31, 2004. For the full year 2004, the Company paid cash dividends of $0.476 per share, which was an increase of 9.4% compared to 2003. Mr. Saner stated, "MainSource Financial continues to achieve consistent increases in earnings. Our return on shareholders' equity of 14.70% and double-digit operating earnings per share growth for the fifth consecutive year represents the predictability our investors have come to expect. Over the past five years, earnings per share increased at a compounded annual rate of 15.4%. We are very proud of our achievements and believe the future to be very bright for our Company to continue its success". Mr. Saner added, "Our primary goal is to reward shareholders while at the same time provide top quality service to our customers. We will remain focused in 2005 on developing and strengthening customer relationships. This continued focus on customer relationships as well as an emphasis on improving credit quality positions us well for continued success in 2005." 4TH QUARTER RESULTS NET INTEREST INCOME Net interest income was $12.7 million for the fourth quarter of 2004, which represents an increase of 10.9% versus the fourth quarter of 2003. The increase was due primarily to the acquisition of Peoples Trust Company in June 2004. Net interest margin, on a fully-taxable equivalent basis, was 3.76% for the fourth quarter of 2004 versus 3.64% for the fourth quarter of 2003. The Company's yield on earnings assets increased by approximately 10 basis points while its cost of funds remained relatively flat. NON-INTEREST INCOME The Company's non-interest income increased to $4.9 million for the fourth quarter of 2004 compared to $4.7 million for the same period in 2003, an increase of 4.3%. The increase was primarily attributable to the acquisition of Peoples Trust. NON-INTEREST EXPENSE The Company's non-interest expense was $11.6 million for the fourth quarter of 2004 compared to $10.2 million for the same period in 2003, an increase of 13.7%. The increase was primarily attributable to the acquisition of Peoples Trust and the aforementioned $650,000 of restructuring costs related to the consolidation of the Company's Indiana charters and the name change of its Illinois affiliate. Under the restructuring plan, which was announced in September 2004, the Company expects to incur a total of $1.2 million in total pre-tax costs with the remainder of these expenses expected to be incurred in the first and third quarters of 2005. FULL YEAR RESULTS ROE AND ROA 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 14.70% for 2004 while return on average assets was 1.13%. NET INTEREST INCOME Net interest income was $50.0 million for the full year 2004, which represents an increase of 13.0% versus 2003. Net interest margin, on a fully-taxable equivalent basis, was 3.83% for 2004 compared to 3.73% for the same period a year ago. NON-INTEREST INCOME Non-interest income was relatively flat at $19.5 million for 2004 compared to $19.4 million for the same period in 2003. The acquisition of Peoples Trust and increased service charge income related to the Company's overdraft program were offset by decreases in mortgage banking activity and lower gains on sales of investment securities. Mortgage banking income was $3.2 million in 2004 versus $5.7 million in 2003, a decrease of 43.9%. As the level of refinancings declined throughout the year, the Company anticipated this decrease in income. NON-INTEREST EXPENSE Non-interest expense for 2004 was $45.9 million and increased by 13.4% compared to 2003. This increase was due primarily to the acquisition of Peoples Trust and the aforementioned restructuring costs. BALANCE SHEET As of December 31, 2004 the Company had total assets of $1.5 billion compared to $1.4 billion as of year-end 2003. Excluding the acquisition of Peoples Trust, the Company's loan portfolio remained relatively flat year over year as the increase in the consumer loan portfolio was primarily offset by the decrease in the Company's commercial and in-house mortgage loan portfolio. As of December 31, 2004, the Company serviced $500 million of residential real estate loans which have been sold to the secondary market. ASSET QUALITY Non-performing assets were $15.7 million as of December 31, 2004 compared to $17.3 million as of December 31, 2003 and represented 1.02% of total assets at December 31, 2004 versus 1.20% one year ago. Net charge-offs for 2004 equaled 0.24% of average outstanding loans compared to 0.18% for 2003. The Company's allowance for loan losses as a percent of total outstanding loans was 1.26% as of December 31, 2004 compared to 1.35% as of December 31, 2003. MAINSOURCE FINANCIAL GROUP (unaudited) (Dollars in thousands except per share data)
Income Statement Summary Three months ended Dec. 31 Twelve months ended Dec. 31 ----------------------------- ----------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Interest Income $ 18,635 $ 17,133 $ 71,841 $ 67,605 Interest Expense 5,889 5,639 21,839 23,373 ------------ ------------ ------------ ------------ Net Interest Income 12,746 11,494 50,002 44,232 Provision for Loan Losses 270 (225) 600 1,325 Noninterest Income: Insurance commissions 548 538 2,643 2,400 Mortgage banking 779 851 3,198 5,671 Service charges on deposit accounts 1,723 1,612 6,912 5,092 Gain (loss) on sales of securities 174 (1) 991 1,300 Other 1,629 1,674 5,800 4,980 ------------ ------------ ------------ ------------ Total Noninterest Income 4,853 4,674 19,544 19,443 Noninterest Expense: Employee 5,943 5,369 25,411 22,421 Occupancy 821 719 3,165 2,753 Equipment 1,038 891 3,949 3,488 Intangible amortization 297 234 1,059 909 Other 3,475 2,969 12,296 10,877 ------------ ------------ ------------ ------------ Total Noninterest Expense 11,574 10,182 45,880 40,448 Earnings Before Income Taxes 5,755 6,211 23,066 21,902 Provision for Income Taxes 1,522 1,994 6,273 6,597 ------------ ------------ ------------ ------------ Net Income $ 4,233 $ 4,217 $ 16,793 $ 15,305 ============ ============ ============ ============ Average Balance Sheet Data Three months ended Dec. 31 Twelve months ended Dec. 31 ----------------------------- ----------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Gross Loans $ 928,424 $ 846,850 $ 899,478 $ 800,580 Earning Assets 1,382,378 1,284,988 1,341,558 1,223,116 Total Assets 1,543,318 1,423,045 1,488,866 1,342,119 Noninterest Bearing Deposits 144,783 121,990 131,110 111,480 Interest Bearing Deposits 1,121,392 1,059,790 1,072,997 1,002,931 Total Interest Bearing Liabilities 1,257,692 1,186,927 1,230,570 1,116,047 Shareholders' Equity 122,640 103,325 114,215 101,579 Per Share Data Three months ended Dec. 31 Twelve months ended Dec. 31 ----------------------------- ----------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Diluted Earnings Per Share $ 0.37 $ 0.38 $ 1.48 $ 1.37 Cash Dividends Per Share 0.124 0.109 0.476 0.435 Market Value - High 26.47 20.17 26.47 20.17 Market Value - Low 19.27 16.17 16.48 13.61 Average Outstanding Shares 11,538,960 11,128,507 11,355,665 11,157,943 Key Ratios Three months ended Dec. 31 Twelve months ended Dec. 31 ----------------------------- ----------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Return on Average Assets 1.09% 1.18% 1.13% 1.14% Return on Average Equity 13.69% 16.19% 14.70% 15.07% Net Interest Margin 3.76% 3.64% 3.83% 3.73% Efficiency Ratio 64.50% 61.87% 64.63% 62.52% Net Overhead to Average Assets 1.73% 1.54% 1.77% 1.56% Balance Sheet Highlights As of December 31 2004 2003 ------------ ------------ Total Loans (Excluding Loans Held for Sale) $ 929,005 $ 855,471 Allowance for Loan Losses 11,698 11,509 Total Securities 428,500 425,542 Goodwill and Intangible Assets 47,071 41,394 Total Assets 1,548,917 1,442,729 Noninterest Bearing Deposits 145,878 127,100 Interest Bearing Deposits 1,080,713 1,064,210 Other Borrowings 186,654 132,657 Shareholders' Equity 123,204 105,424 Other Balance Sheet Data As of December 31 2004 2003 ------------ ------------ Book Value Per Share $ 10.68 $ 9.47 Loan Loss Reserve to Loans 1.26% 1.35% Nonperforming Assets to Total Assets 1.02% 1.20% Outstanding Shares 11,534,377 11,136,000 Asset Quality As of December 31 2004 2003 ------------ ------------ Loans Past Due 90 Days or More and Still Accruing $ 431 $ 196 Non-accrual Loans 13,611 14,626 Other Real Estate Owned 1,690 2,428 ------------ ------------ Total Nonperforming Assets $ 15,732 $ 17,250
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 holding company with assets of $1.5 billion. Through its four banking subsidiaries, MainSource Bank, Greensburg, Indiana; Regional Bank, New Albany, Indiana; Peoples Trust Company, Linton, Indiana; and MainSource Bank of Illinois, Kankakee, 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.