EX-99.1 2 a07-27388_1ex99d1.htm EX-99.1

Exhibit 99.1

 

NEWS RELEASE

 

DATE:

October 24, 2007                4:30 p.m. E.S.T

CONTACT:

James L. Saner, Sr., President and CEO

 

 

MainSource Financial Group, Inc.   812-663-0157

 

MAINSOURCE FINANCIAL GROUP–NASDAQ, MSFG –

Announces Earnings for the Third Quarter 2007

 

 

 

 

 

 

Greensburg, Indiana (NASDAQ: MSFG) James L. Saner, Sr., President & Chief Executive Officer of MainSource Financial Group, announced today the unaudited results for the quarter ended September 30, 2007.  Net income was $5.6 million in the third quarter of 2007, which equates to $0.30 per share, compared to $5.9 million for the same period a year ago, or $0.31 for the same period a year ago.  During the third quarter, the Company incurred approximately $600,000 of pre-tax expenses primarily related to the data processing system conversion of its Crawfordsville, Indiana affiliate.  Excluding these expenses, earnings per share would have been $0.32 for the quarter.  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 8.77% for the third quarter of 2007 while return on average assets was 0.91% for the same period. 

 

Mr. Saner stated, “We are pleased with our third quarter operating performance given the environment of fierce competition for deposit and loan growth.  While our net interest margin decreased 17 basis points from the previous quarter, our loans have increased more than 5% from a year ago despite a decrease of approximately $50 million in residential real estate mortgages.  In terms of deposit growth, we have experienced a very solid increase of more than 3% over the same period a year ago.  In addition, our non-interest income continues to grow significantly, increasing more than 22% from a year ago.”

 

Mr. Saner continued, “Our credit quality has also remained very solid with decreases in non-performing assets, delinquencies, and net charge-offs as a percent of average loans when compared to the same period a year ago.  While our efficiency ratio has increased slightly from last year, I am optimistic that this ratio will improve as we were negatively impacted in the quarter by the conversion costs related to our Crawfordsville affiliate.  We now have all of the Company’s affiliates on the same core operating system which should decrease our ongoing overhead costs and improve the efficiency of the Company.  Overall, our third quarter was very solid and we believe that we have formed a strong basis for our continued success.”   

 

NET INTEREST INCOME

Net interest income was $18.2 million for the third quarter of 2007, which represents a decrease of 3.1% versus the third quarter of 2006.  Net interest margin, on a fully-taxable equivalent basis, was 3.48% for the third quarter of 2007, down seventeen basis points on a linked quarter basis.  The Company’s cost of funds increased during the quarter by ten basis points while the yield on earning assets was negatively impacted by a decrease in loan fees and the reversal of interest income related to a loan moved to non-accrual status during the quarter as well as the decrease in the prime rate.   

 

NON-INTEREST INCOME

The Company’s non-interest income increased to $7.5 million for the third quarter of 2007 compared to $6.4 million for the same period in 2006.  Service charges on deposit accounts increased $900 thousand as the Company was able to expand its products and services through the newly-acquired geographic areas of the recent acquisitions. 

 

NON-INTEREST EXPENSE

The Company’s non-interest expense was $17.3 million for the third quarter of 2007 compared to $16.7 million for the same period in 2006, an increase of 3.6%.  The main area of increase was in employee costs and is primarily related to normal merit increases.  The aforementioned conversion costs of $600,000 also contributed to the overall increase in non-interest expense.  Excluding these costs, total non-interest expense would have been flat year over year. 

 


 

ASSET QUALITY

Although credit quality declined slightly during the third quarter of 2007, the Company’s non-performing assets remain lower than the beginning of the year.  Non-performing assets were $19.2 million as of September 30, 2007, an increase of $2.0 million on a linked quarter basis, but down $1.8 million from December 31, 2006.  Non-performing assets represented 0.76% of total assets as of September 30, 2007 compared to 0.70% as of June 30, 2007 and 0.87% as of December 31, 2006.  Annualized net charge-offs for the first nine months of 2007 equaled 0.20% of average outstanding loans.  The Company’s allowance for loan losses as a percent of total outstanding loans was 0.79% as of September 30, 2007.

 

MAINSOURCE FINANCIAL GROUP

(unaudited)

(Dollars in thousands except per share data)

 

 

 

Three months ended September 30

 

Nine months ended September 30

 

Income Statement Summary

 

2007

 

2006

 

2007

 

2006

 

Interest Income

 

$

36,783

 

$

34,431

 

$

107,944

 

$

85,668

 

Interest Expense

 

18,537

 

15,606

 

52,341

 

36,201

 

Net Interest Income

 

18,246

 

18,825

 

55,603

 

49,467

 

Provision for Loan Losses

 

1,184

 

570

 

2,779

 

1,293

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

Insurance commissions

 

474

 

455

 

1,405

 

1,396

 

Trust and investment product fees

 

472

 

312

 

1,287

 

901

 

Mortgage banking

 

761

 

577

 

2,125

 

1,721

 

Service charges on deposit accounts

 

3,606

 

2,732

 

9,682

 

6,886

 

Gain/(losses) on sales of securities

 

-

 

(10

)

229

 

51

 

Interchange income

 

783

 

747

 

2,370

 

1,883

 

Other

 

1,439

 

1,629

 

3,995

 

4,398

 

Total Noninterest Income

 

7,535

 

6,442

 

21,093

 

17,236

 

Noninterest Expense:

 

 

 

 

 

 

 

 

 

Employee

 

9,621

 

9,173

 

28,785

 

24,887

 

Occupancy

 

1,308

 

1,258

 

4,046

 

3,480

 

Equipment

 

1,399

 

1,369

 

4,382

 

3,748

 

Intangible amortization

 

666

 

664

 

1,999

 

1,554

 

Telecommunications

 

452

 

528

 

1,464

 

1,415

 

Stationary, printing, and supplies

 

382

 

468

 

1,144

 

992

 

Other

 

3,465

 

3,246

 

9,440

 

7,633

 

Total Noninterest Expense

 

17,293

 

16,706

 

51,260

 

43,709

 

Earnings Before Income Taxes

 

7,304

 

7,991

 

22,657

 

21,701

 

Provision for Income Taxes

 

1,701

 

2,057

 

5,636

 

5,499

 

Net Income

 

$

5,603

 

$

5,934

 

$

17,021

 

$

16,202

 

 


 

 

 

Three months ended September 30

 

Nine months ended September 30

 

Average Balance Sheet Data

 

2007

 

2006

 

2007

 

2006

 

Gross Loans

 

$

1,639,410

 

$

1,564,755

 

$

1,597,886

 

$

1,279,904

 

Earning Assets

 

2,172,394

 

2,085,270

 

2,129,514

 

1,789,212

 

Total Assets

 

2,465,673

 

2,362,697

 

2,423,109

 

2,007,523

 

Noninterest Bearing Deposits

 

190,263

 

189,735

 

188,409

 

168,477

 

Interest Bearing Deposits

 

1,637,352

 

1,566,593

 

1,630,086

 

1,381,820

 

Total Interest Bearing Liabilities

 

1,996,270

 

1,909,253

 

1,954,716

 

1,620,752

 

Shareholders' Equity

 

255,425

 

243,383

 

256,206

 

201,788

 

 

 

 

Three months ended September 30

 

Nine months ended September 30

 

Per Share Data

 

2007

 

2006

 

2007

 

2006

 

Diluted Earnings Per Share

 

$

0.30

 

$

0.31

 

$

0.91

 

$

0.97

 

Cash Dividends Per Share

 

0.140

 

0.133

 

0.415

 

0.395

 

Market Value - High

 

19.01

 

16.93

 

19.01

 

18.52

 

Market Value - Low

 

15.03

 

15.30

 

15.03

 

15.30

 

Average Outstanding Shares (diluted)

 

18,688,359

 

18,868,966

 

18,731,780

 

16,638,341

 

 

 

 

Three months ended September 30

 

Nine months ended September 30

 

Key Ratios

 

2007

 

2006

 

2007

 

2006

 

Return on Average Assets

 

0.91

%

1.00

%

0.94

%

1.08

%

Return on Average Equity

 

8.77

%

9.67

%

8.88

%

10.73

%

Net Interest Margin

 

3.48

%

3.74

%

3.61

%

3.83

%

Efficiency Ratio

 

65.04

%

64.06

%

64.81

%

63.77

%

Net Overhead to Average Assets

 

1.58

%

1.72

%

1.66

%

1.77

%

 

Balance Sheet Highlights

 

 

 

 

 

As of September 30

 

2007

 

2006

 

Total Loans (Excluding Loans Held for Sale)

 

$

1,665,661

 

1,580,074

 

Allowance for Loan Losses

 

13,169

 

13,855

 

Total Securities

 

502,900

 

481,622

 

Goodwill and Intangible Assets

 

135,991

 

133,037

 

Total Assets

 

2,513,930

 

2,389,125

 

Noninterest Bearing Deposits

 

196,570

 

189,098

 

Interest Bearing Deposits (excluding Public Funds)

 

1,414,008

 

1,413,302

 

Public Fund Deposits

 

230,633

 

175,722

 

Repurchase Agreements

 

29,506

 

17,101

 

Other Borrowings

 

359,010

 

323,119

 

Shareholders' Equity

 

258,847

 

249,577

 

 


 

Other Balance Sheet Data

 

 

 

 

 

As of September 30

 

2007

 

2006

 

Book Value Per Share

 

$

13.89

 

$

13.25

 

Loan Loss Reserve to Loans

 

0.79

%

0.88

%

Nonperforming Assets to Total Assets

 

0.76

%

0.90

%

Outstanding Shares

 

18,636,429

 

18,840,997

 

 

Asset Quality

 

 

 

 

 

As of September 30

 

2007

 

2006

 

Loans Past Due 90 Days or More and Still Accruing

 

$

1,708

 

$

1,483

 

Non-accrual Loans

 

15,867

 

15,455

 

Other Real Estate Owned

 

1,618

 

4,541

 

Total Nonperforming Assets

 

$

19,193

 

$

21,479

 

 

 

 

 

 

 

Net Charge-offs - YTD

 

$

2,402

 

$

2,216

 

Net Charge-offs as a % of average loans

 

0.20

%

0.23

%

 

 

MainSource Financial Group, Inc., headquartered in Greensburg, Indiana is listed on the NASDAQ National Market (under the symbol: "MSFG") and is a community-focused, financial holding company with assets of approximately $2.5 billion. The Company operates 68 offices in 30 Indiana counties, six offices in three Illinois counties, and six offices in two Ohio counties through its three banking subsidiaries, MainSource Bank, Greensburg, Indiana, MainSource Bank of Illinois, Kankakee, Illinois, and MainSource Bank - Ohio, Troy, Ohio. Through its non-banking subsidiaries, MainSource Insurance LLC, and MainSource Title LLC, the Company and its banking subsidiaries provide various related financial services.

 

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. Actual results and experience could differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements.  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; changes in the quality or composition of the Company's loan and investment portfolios; the Company’s ability to integrate acquisitions; the impact of our continuing acquisition strategy; and other factors, including various “risk factors” as set forth in our most recent Annual Report on Form 10-K and in other reports we file from time to time with the Securities and Exchange Commission.  These reports are available publicly on the SEC website, www.sec.gov, and on the Company’s website, www.mainsourcefinancial.com.

 

* * * * *

 

MainSource Financial Group, Inc. 201 N. Broadway, P.O. Box 87, Greensburg, IN  47240