EX-99.1 2 a08-19843_1ex99d1.htm EX-99.1

Exhibit 99.1

 

NEWS RELEASE

 

DATE:

July 23, 2008     8:30 a.m. E.S.T

CONTACT:

Robert E. Hoptry, Chairman, President and CEO

 

 

MainSource Financial Group, Inc.  812-663-6734

 

 

 

MAINSOURCE FINANCIAL GROUP–NASDAQ, MSFG –
Announces Earnings for the Second Quarter 2008

 

Greensburg, Indiana (NASDAQ: MSFG) Robert E. Hoptry, Chairman, President & Chief Executive Officer of MainSource Financial Group, Inc., announced today the unaudited results for the quarter ended June 30, 2008.  Net income was $6.2 million in the second quarter of 2008, which equates to $0.33 per share, compared to $6.0 million for the same period a year ago, or $0.32 per share.

 

Mr. Hoptry stated, “We are pleased with the solid growth in net interest margin, commercial loan balances, and fee income in the second quarter of 2008.  Net loan losses remained in check and we believe the increase in our loan loss provision expense responsibly balanced the increase in non-performing loans.  Overall, our results were very positive in this challenging environment.”

 

NET INTEREST INCOME

 

Net interest income was $21.2 million for the second quarter of 2008, which represents an increase of 13.3% from the second quarter of 2007.  Net interest margin, on a fully-taxable equivalent basis, was 3.92% for the second quarter of 2008, an increase of 28 basis points on a linked quarter basis.  This increase was primarily due to the rate cuts that occurred during the fourth quarter of 2007 and the first quarter of 2008 which caused the Company’s cost of funds to decrease at a faster rate than the yield on earning assets.

 

NON-INTEREST INCOME

 

The Company’s non-interest income increased to $7.7 million for the second quarter of 2008 compared to $7.5 million for the same period in 2007.  An increase in mortgage banking income of $466 thousand was the primary driver for this increase.

 

NON-INTEREST EXPENSE

 

The Company’s non-interest expense was $17.3 million for the second quarter of 2008 compared to $17.1 million for the same period in 2007, which represents an increase of approximately 1% over the same period a year ago.  The Company’s efficiency ratio was 58.32% for the second quarter of 2008, which was a significant reduction compared to an efficiency ratio of 63.90% for the same period a year ago.

 

ASSET QUALITY

 

Non-performing assets were $29.9 million as of June 30, 2008, which was an increase of approximately $6.7 million on a linked-quarter basis.  This increase was primarily due to two commercial credits that were classified as non-accrual in the second quarter of 2008.  These two credits had previously been identified by the Company as problem credits and specific reserves had been allocated for the potential loss exposure.  However, these credits experienced further deterioration during the second quarter and were downgraded to non-accrual status.  Non-performing assets represented 1.18% of total assets as of June 30, 2008.  Annualized net charge-offs for the second quarter of 2008 equaled 0.30% of average loans which is a slight increase from the first quarter’s charge-off level of 0.26% of average loans.  The Company’s allowance for loan losses as a percent of total outstanding loans was 1.04% as of June 30, 2008 compared to 0.85% as of December 31, 2007 and 0.81% a year ago.  Total loan loss provision expense was $3.5 million in the second quarter of 2008 compared to $899 thousand for the same period a year ago.  The additional provision expense was primarily due to the increase in the level of non-performing loans, an increase in specific allocations related to certain commercial real estate loans which exhibited credit deterioration during the second quarter, and the continued weakening in the real estate markets.

 


 

MAINSOURCE FINANCIAL GROUP

(unaudited)

(Dollars in thousands except per share data)

 

 

 

Three months ended June 30

 

Six months ended June 30

 

Income Statement Summary

 

2008

 

2007

 

2008

 

2007

 

Interest Income

 

$

34,839

 

$

36,061

 

$

70,894

 

$

71,161

 

Interest Expense

 

13,595

 

17,311

 

29,975

 

33,804

 

Net Interest Income

 

21,244

 

18,750

 

40,919

 

37,357

 

Provision for Loan Losses

 

3,471

 

899

 

5,667

 

1,595

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

Insurance commissions

 

562

 

512

 

1,074

 

931

 

Trust and investment product fees

 

403

 

447

 

820

 

815

 

Mortgage banking

 

1,215

 

749

 

2,182

 

1,364

 

Service charges on deposit accounts

 

3,522

 

3,406

 

6,763

 

6,076

 

Gain on sales of securities

 

87

 

190

 

429

 

229

 

Interchange income

 

927

 

846

 

1,737

 

1,587

 

Other

 

1,030

 

1,317

 

2,584

 

2,556

 

Total Noninterest Income

 

7,746

 

7,467

 

15,589

 

13,558

 

Noninterest Expense:

 

 

 

 

 

 

 

 

 

Employee

 

9,984

 

9,475

 

20,656

 

19,164

 

Occupancy

 

1,382

 

1,312

 

2,885

 

2,738

 

Equipment

 

1,499

 

1,525

 

2,980

 

2,983

 

Intangible amortization

 

634

 

667

 

1,269

 

1,333

 

Telecommunications

 

457

 

520

 

888

 

1,012

 

Stationary, printing, and supplies

 

319

 

379

 

629

 

762

 

Other

 

3,001

 

3,219

 

5,780

 

5,975

 

Total Noninterest Expense

 

17,276

 

17,097

 

35,087

 

33,967

 

Earnings Before Income Taxes

 

8,243

 

8,221

 

15,754

 

15,353

 

Provision for Income Taxes

 

2,069

 

2,218

 

3,329

 

3,935

 

Net Income

 

$

6,174

 

$

6,003

 

$

12,425

 

$

11,418

 

 

 

 

Three months ended June 30

 

Six months ended June 30

 

Average Balance Sheet Data

 

2008

 

2007

 

2008

 

2007

 

Gross Loans

 

$

1,693,710

 

$

1,584,554

 

$

1,695,932

 

$

1,577,108

 

Earning Assets

 

2,225,786

 

2,121,908

 

2,221,213

 

2,107,781

 

Total Assets

 

2,522,944

 

2,414,111

 

2,519,026

 

2,401,734

 

Noninterest Bearing Deposits

 

199,324

 

191,940

 

195,219

 

187,483

 

Interest Bearing Deposits

 

1,701,958

 

1,625,573

 

1,689,615

 

1,626,453

 

Total Interest Bearing Liabilities

 

2,024,516

 

1,938,576

 

2,027,950

 

1,933,940

 

Shareholders’ Equity

 

274,083

 

259,610

 

271,572

 

256,519

 

 

 

 

Three months ended June 30

 

Six months ended June 30

 

Per Share Data

 

2008

 

2007

 

2008

 

2007

 

Diluted Earnings Per Share

 

$

0.33

 

$

0.32

 

$

0.67

 

$

0.61

 

Cash Dividends Per Share

 

0.145

 

0.140

 

0.285

 

0.275

 

Market Value - High

 

17.59

 

17.50

 

17.59

 

17.53

 

Market Value - Low

 

13.45

 

16.15

 

12.15

 

15.42

 

Average Outstanding Shares (diluted)

 

18,577,832

 

18,750,172

 

18,575,515

 

18,753,555

 

 

 

 

Three months ended June 30

 

Six months ended June 30

 

Key Ratios

 

2008

 

2007

 

2008

 

2007

 

Return on Average Assets

 

0.98

%

0.98

%

0.99

%

0.96

%

Return on Average Equity

 

9.06

%

9.14

%

9.20

%

8.97

%

Net Interest Margin

 

3.92

%

3.65

%

3.78

%

3.68

%

Efficiency Ratio

 

58.32

%

63.90

%

60.79

%

65.33

%

Net Overhead to Average Assets

 

1.52

%

1.60

%

1.56

%

1.71

%

 


 

Balance Sheet Highlights
As of June 30

 

2008

 

2007

 

Total Loans (Excluding Loans Held for Sale)

 

$

 1,700,532

 

$

 1,612,204

 

Allowance for Loan Losses

 

17,611

 

13,112

 

Total Securities

 

500,293

 

489,805

 

Goodwill and Intangible Assets

 

134,055

 

136,657

 

Total Assets

 

2,538,736

 

2,452,571

 

Noninterest Bearing Deposits

 

218,756

 

203,638

 

Interest Bearing Deposits (excluding Public Funds)

 

1,480,818

 

1,429,836

 

Public Fund Deposits

 

221,227

 

206,738

 

Repurchase Agreements

 

33,586

 

43,086

 

Other Borrowings

 

293,121

 

290,599

 

Shareholders’ Equity

 

268,075

 

252,626

 

 

 

Other Balance Sheet Data
As of June 30

 

2008

 

2007

 

Book Value Per Share

 

$

14.43

 

$

13.49

 

Loan Loss Reserve to Loans

 

1.04

%

0.81

%

Nonperforming Assets to Total Assets

 

1.18

%

0.70

%

Outstanding Shares

 

18,573,885

 

18,732,395

 

 

 

Asset Quality
As of June 30

 

2008

 

2007

 

Loans Past Due 90 Days or More and Still Accruing

 

$

1,977

 

$

1,425

 

Non-accrual Loans

 

24,895

 

14,432

 

Other Real Estate Owned

 

3,053

 

1,312

 

Total Nonperforming Assets

 

$

29,925

 

$

17,169

 

 

 

 

 

 

 

Net Charge-offs - YTD

 

$

2,387

 

$

1,275

 

Net Charge-offs as a % of average loans

 

0.28

%

0.16

%

 

MainSource Financial Group, Inc. is a community-focused, financial services holding company with assets exceeding $2.5 billion.  The Company operates 77 banking offices through its three banking subsidiaries, MainSource Bank, Greensburg, Indiana, MainSource Bank of Illinois, Kankakee, Illinois, and MainSource Bank-Ohio, Troy, Ohio.  The Company’s non-banking subsidiaries, MainSource Insurance, LLC and MainSource Title, LLC, provide 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. 2105 N. State Road 3 Bypass, Greensburg, IN  47240