REGULATORY MATTERS

12 Months Ended

Dec. 31, 2013

REGULATORY MATTERS

REGULATORY MATTERS

NOTE 19 — REGULATORY MATTERS

       Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal banking agencies and are assigned to a capital category. The assigned capital category is largely determined by three ratios that are calculated according to the regulations. The ratios are intended to measure capital relative to assets and credit risk associated with those assets and off-balance sheet exposures. The capital category assigned to an entity can also be affected by qualitative judgments made by regulatory agencies about the risk inherent in the entity's activities that are not part of the calculated ratios. Failure to meet capital requirements can initiate regulatory action. Risk adjusted capital levels of the Company's subsidiary bank exceed regulatory definitions of well-capitalized institutions.

       Management believes as of December 31, 2013, the Company and Bank meet all capital adequacy requirements to which they are subject. The holding company is a source of additional financial strength with its $11.7 million in cash and its ability to downstream additional capital to the Bank.

       There are five capital categories defined in the regulations, ranging from well capitalized to critically undercapitalized. Classification in any of the undercapitalized categories can result in actions by regulators that could have a material effect on operations. At December 31, 2013 and 2012, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective actions. There are no conditions or events since that notification that management believes have changed the Bank's category.

       Actual and required capital amounts and ratios are presented below.

	Actual					Required for Adequate Capital					To Be Well Capitalized
December 31, 2013	Amount		Ratio			Amount		Ratio			Amount		Ratio
MainSource Financial Group
Total capital (to risk-weighted assets)	$	302,181		16.7	%	$	145,150		8.0	%		N/A		N/A
Tier 1 capital (to risk-weighted assets)		279,440		15.4			72,575		4.0			N/A		N/A
Tier 1 capital (to average assets)		279,440		10.1			110,428		4.0			N/A		N/A
MainSource Bank
Total capital (to risk-weighted assets)	$	283,653		15.7	%	$	144,147		8.0	%	$	180,184		10.0	%
Tier 1 capital (to risk-weighted assets)		261,069		14.5			72,074		4.0			108,111		6.0
Tier 1 capital (to average assets)		261,069		9.6			109,090		4.0			136,363		5.0

	Actual					Required for Adequate Capital					To Be Well Capitalized
December 31, 2012	Amount		Ratio			Amount		Ratio			Amount		Ratio
MainSource Financial Group
Total capital (to risk-weighted assets)	$	296,714		17.8	%	$	133,549		8.0	%		N/A		N/A
Tier 1 capital (to risk-weighted assets)		275,707		16.5			66,774		4.0			N/A		N/A
Tier 1 capital (to average assets)		275,707		10.4			106,077		4.0			N/A		N/A
MainSource Bank
Total capital (to risk-weighted assets)	$	283,303		17.2	%	$	132,052		8.0	%	$	165,065		10.0	%
Tier 1 capital (to risk-weighted assets)		262,527		15.9			66,026		4.0			99,039		6.0
Tier 1 capital (to average assets)		262,527		9.9			106,077		4.0			132,596		5.0