Indiana Banks Announce Merger

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Greensburg-based MainSource Financial Group Inc. (Nasdaq: MSFG) has announced the acquisition of MBT Bancorp in West Harrison. The deal is valued at nearly $34 million and is expected to close in the third quarter. April 8, 2014

News Release

GREENSBURG, Ind. - MainSource Financial Group, Inc. (NASDAQ:MSFG) ("MainSource" or the "Company") announced today that it has entered into a definitive merger agreement to acquire all of the common stock of MBT Bancorp ("MBT") in a cash and stock transaction valued at approximately $33.8 million.

MBT, headquartered in West Harrison, Indiana, is the holding company for The Merchants Bank and Trust Company ("Merchants"), which operates six branches spanning from Dearborn County Indiana to the greater Cincinnati communities of Harrison, Western Hills and Hyde Park. As of December 31, 2013, Merchants had approximately $225.2 million in assets, $180.2 million in loans, $187.9 million in deposits and $23.9 million of total equity. It is anticipated that simultaneous with the merger, The Merchant's Bank and Trust Company, an Indiana chartered commercial bank and a wholly-owned subsidiary of MBT will merge with and into MainSource Bank, an Indiana chartered commercial bank and wholly-owned subsidiary of MainSource, with MainSource Bank as the surviving bank.

"We are thrilled to announce this partnership," commented Archie M. Brown, Jr., President and Chief Executive Officer of MainSource. "It strengthens our footprint in Dearborn County and enhances our growth strategy in Cincinnati, an area where we have already been investing, and presents an opportunity to prudently and accretively deploy our strong capital base."

"Given the similarity in our cultures and community-based approach, MainSource was the ideal choice as MBT's partner," commented Donald Patterson, President and Chief Executive Officer of MBT. "We believe that our employees, customers and community will benefit greatly from this partnership."

Under the terms of the agreement, which was approved by the boards of both companies, shareholders of MBT may elect to receive either 2.055 shares of MainSource common stock (the "Exchange Ratio") or $35.16 in cash for each share of MBT common stock owned, subject to proration provisions specified in the merger agreement that provide for a targeted aggregate split of total consideration of 60 percent common stock and 40 percent cash. Based upon the April 4, 2014 closing price of $16.40 per share of MainSource common stock, the transaction is valued at approximately $33.8 million.

MainSource expects the transaction to be accretive to 2015 diluted earnings per share by approximately $0.09. It is projected to be approximately 4 percent dilutive to tangible book value per share at closing, inclusive of $4.0 million in pre-tax restructuring charges, with an earnback period of approximately four years.

The merger is expected to be completed in the third quarter of 2014, subject to the satisfaction of customary closing conditions, including regulatory approvals and the approval of the shareholders of MBT.

Keefe, Bruyette and Woods, Inc. is serving as financial advisor to MainSource. MainSource's legal advisor is Krieg DeVault LLP.

Boenning and Scattergood, Inc. is serving as financial advisor to MBT. Vorys, Sater, Seymour and Pease LLP is legal advisor to MBT.

About MainSource Financial Group

MainSource Financial Group is listed on the NASDAQ National Market (under the symbol: "MSFG") and is a community-focused, financial holding company with assets of approximately $2.9 billion. MainSource operates 74 full-service offices throughout Indiana, Illinois, Kentucky and Ohio through its banking subsidiary, MainSource Bank, headquartered in Greensburg, Indiana. Through its non-banking subsidiary, MainSource Title LLC, the Company provides various related financial services.

About MBT Bancorp

MBT Bancorp is the holding company of The Merchant's Bank and Trust Company. The Bank was founded in June 1929, four months before Black Tuesday and the stock market crash of 1929. From a single branch in West Harrison, Indiana, MBT has grown into one of Cincinnati’s leading community banks. MBT now operates six branches spanning from the Ohio/Indiana border to the eastern Cincinnati suburb of Hyde Park. MBT offers traditional personal and business banking products and services, including checking, savings, business, and health savings accounts, as well as debit and credit cards, online banking, remote deposit capture and certificates of deposit.

Source: MainSource Financial Group