REGULATORY CAPITAL

3 Months Ended

Mar. 31, 2013

REGULATORY CAPITAL

REGULATORY CAPITAL

NOTE 9 — REGULATORY CAPITAL

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.

Actual and required capital amounts and ratios are presented below:

					Required for
	Actual				Adequate Capital				To Be Well Capitalized
March 31, 2013	Amount		Ratio		Amount		Ratio		Amount	Ratio
MainSource Financial Group
Total capital (to risk-weighted assets)	$	299,513	18.1	%	$	132,669	8.0	%	N/A	N/A
Tier 1 capital (to risk-weighted assets)	278,833		16.8		66,334		4.0		N/A	N/A
Tier 1 capital (to average assets)	278,833		10.4		106,953		4.0		N/A	N/A
MainSource Bank
Total capital (to risk-weighted assets)	278,743		17.0	%	131,469		8.0	%	164,336	10.0	%
Tier 1 capital (to risk-weighted assets)	258,063		15.7		65,734		4.0		98,602	6.0
Tier 1 capital (to average assets)	258,063		9.7		106,153		4.0		132,691	5.0

					Required for				To Comply with
	Actual				Adequate Capital				Regulatory Agreement
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

Management believes as of March 31, 2013, the Company and the Bank met all capital adequacy requirements to which they are subject to be considered well-capitalized. The holding company is a source of additional financial strength to the Bank with its $14,000 in cash and its ability to downstream additional capital to the Bank.