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