Exhibit 99.1
NEWS RELEASE
DATE: | April 22, 2008 | 4:00 p.m. E.S.T |
CONTACT: | Robert E. Hoptry, Chairman, President and CEO |
| MainSource Financial Group, Inc. 812-663-6734 | |
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MAINSOURCE FINANCIAL GROUP–NASDAQ, MSFG – |
Announces Earnings for the First Quarter 2008 | 
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Greensburg, Indiana (NASDAQ: MSFG) Robert E. Hoptry, Chairman, President & Chief Executive Officer of MainSource Financial Group, announced today the unaudited results for the quarter ended March 31, 2008. Net income was $6.3 million in the first quarter of 2008, which equates to $0.34 per share, compared to $5.4 million for the same period a year ago, or $0.29 per share. During the first quarter, the Company reversed a tax reserve in the amount of $595,000 due to developments resulting from a recent favorable ruling in a tax court case. This reversal was partially offset by a $600,000 pre-tax severance accrual related to the departure of the Company’s former Chief Executive Officer in February.
Mr. Hoptry stated, “We are very pleased with our performance in the first quarter of 2008 as earnings exceeded expectations. While we saw significant improvements in our net interest margin and non-interest income, credit quality remained in check and our core non-interest expense items saw only marginal increases.”
NET INTEREST INCOME
Net interest income was $19.7 million for the first quarter of 2008, which represents an increase of 5.7% from the first quarter of 2007. Net interest margin, on a fully-taxable equivalent basis, was 3.64% for the first quarter of 2008, an increase of fifteen 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 as the Company’s cost of funds decreased at a faster rate than the yield on earning assets.
NON-INTEREST INCOME
The Company’s non-interest income increased to $7.8 million for the first quarter of 2008 compared to $6.1 million for the same period in 2007. Increases were realized across the board with service charges on deposit accounts increasing $0.6 million and mortgage banking income increasing $0.4 million.
NON-INTEREST EXPENSE
The Company’s non-interest expense was $17.8 million for the first quarter of 2008 compared to $16.9 million for the same period in 2007. Excluding the aforementioned severance costs, the Company’s non-interest expense would have been $17.2 million, an increase of approximately 2% over the same period a year ago. The Company’s efficiency ratio was 63.8% for the first quarter of 2008, which was relatively flat compared to the same period a year ago.
ASSET QUALITY
Non-performing assets were $23.3 million as of March 31, 2008, which was flat compared to December 31, 2007. Non-performing assets represented 0.92% of total assets as of March 31, 2008. Annualized net charge-offs for the first quarter of 2008 equaled 0.26% which is consistent with the level of charge-offs for all of 2007. The Company’s allowance for loan losses as a percent of total outstanding loans was 0.92% as of March 31, 2008 compared to 0.85% as of December 31, 2007. Total loan loss provision expense was $2.2 million in the first quarter of 2008 compared to $700 thousand for the same period a year ago. The additional provision expense was primarily due to an increase in specific allocations related to certain commercial real estate loans which exhibited credit deterioration during the first quarter due to the continued weakening in the real estate markets.
MAINSOURCE FINANCIAL GROUP
(unaudited)
(Dollars in thousands except per share data)
Income Statement Summary
| | Three months ended March 31 | |
| | 2008 | | 2007 | |
Interest Income | | $ | 36,055 | | $ | 35,100 | |
Interest Expense | | 16,380 | | 16,493 | |
Net Interest Income | | 19,675 | | 18,607 | |
Provision for Loan Losses | | 2,196 | | 696 | |
Noninterest Income: | | | | | |
Insurance commissions | | 512 | | 419 | |
Trust and investment product fees | | 417 | | 368 | |
Mortgage banking | | 967 | | 615 | |
Service charges on deposit accounts | | 3,241 | | 2,670 | |
Gain/(losses) on sales of securities | | 342 | | 39 | |
Interchange income | | 810 | | 741 | |
Other | | 1,554 | | 1,239 | |
Total Noninterest Income | | 7,843 | | 6,091 | |
| | | | | |
Noninterest Expense: | | | | | |
Employee | | 10,672 | | 9,689 | |
Occupancy | | 1,503 | | 1,426 | |
Equipment | | 1,481 | | 1,458 | |
Intangible amortization | | 635 | | 666 | |
Telecommunications | | 431 | | 492 | |
Stationary, printing, and supplies | | 310 | | 383 | |
Other | | 2,779 | | 2,756 | |
Total Noninterest Expense | | 17,811 | | 16,870 | |
| | | | | |
Earnings Before Income Taxes | | 7,511 | | 7,132 | |
Provision for Income Taxes | | 1,260 | | 1,717 | |
Net Income | | $ | 6,251 | | $ | 5,415 | |
Average Balance Sheet Data
| | Three months ended March 31 | |
| | 2008 | | 2007 | |
Gross Loans | | $ | 1,698,154 | | $ | 1,569,694 | |
Earning Assets | | 2,216,640 | | 2,093,755 | |
Total Assets | | 2,515,109 | | 2,389,542 | |
Noninterest Bearing Deposits | | 191,114 | | 183,025 | |
Interest Bearing Deposits | | 1,677,269 | | 1,627,333 | |
Total Interest Bearing Liabilities | | 2,031,382 | | 1,929,304 | |
Shareholders’ Equity | | 269,062 | | 253,583 | |
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Per Share Data
| | Three months ended March 31 | |
| | 2008 | | 2007 | |
Diluted Earnings Per Share | | $ | 0.34 | | $ | 0.29 | |
Cash Dividends Per Share | | 0.140 | | 0.135 | |
Market Value - High | | 16.51 | | 17.53 | |
Market Value - Low | | 12.15 | | 15.42 | |
Average Outstanding Shares (diluted) | | 18,573,123 | | 18,767,360 | |
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Key Ratios
| | Three months ended March 31 | |
| | 2008 | | 2007 | |
Return on Average Assets | | 1.00 | % | 0.92 | % |
Return on Average Equity | | 9.35 | % | 8.66 | % |
Net Interest Margin | | 3.64 | % | 3.70 | % |
Efficiency Ratio | | 63.83 | % | 63.92 | % |
Net Overhead to Average Assets | | 1.61 | % | 1.81 | % |
Balance Sheet Highlights
| | 2008 | | 2007 | |
As of March 31 | | | | | |
Total Loans (Excluding Loans Held for Sale) | | $ | 1,681,920 | | $ | 1,566,305 | |
Allowance for Loan Losses | | 15,423 | | 13,119 | |
Total Securities | | 506,930 | | 489,690 | |
Goodwill and Intangible Assets | | 134,689 | | 136,971 | |
Total Assets | | 2,528,343 | | 2,410,081 | |
Noninterest Bearing Deposits | | 201,711 | | 192,131 | |
Interest Bearing Deposits (excluding Public Funds) | | 1,450,808 | | 1,426,674 | |
Public Fund Deposits | | 251,637 | | 206,315 | |
Repurchase Agreements | | 30,471 | | 37,728 | |
Other Borrowings | | 295,118 | | 264,788 | |
Shareholders’ Equity | | 273,757 | | 255,872 | |
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Other Balance Sheet Data
| | 2008 | | 2007 | |
As of March 31 | | | | | |
Book Value Per Share | | $ | 14.74 | | $ | 13.66 | |
Loan Loss Reserve to Loans | | 0.92 | % | 0.84 | % |
Nonperforming Assets to Total Assets | | 0.92 | % | 0.76 | % |
Outstanding Shares | | 18,570,071 | | 18,726,532 | |
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Asset Quality
| | 2008 | | 2007 | |
As of March 31 | | | | | |
Loans Past Due 90 Days or More and Still Accruing | | $ | 1,046 | | $ | 1,081 | |
Non-accrual Loans | | 19,150 | | 15,685 | |
Other Real Estate Owned | | 3,055 | | 1,585 | |
Total Nonperforming Assets | | $ | 23,251 | | $ | 18,351 | |
| | | | | |
Net Charge-offs - YTD | | $ | 1,104 | | $ | 369 | |
Net Charge-offs as a % of average loans | | 0.26 | % | 0.10 | % |
MainSource Financial Group, Inc., headquartered in Greensburg, Indiana, is listed on the NASDAQ Global Select Market (under the symbol: “MSFG”) and is a community-focused, financial holding company with assets of approximately $2.5 billion. The Company operates 65 offices in 30 Indiana counties, six offices in three Illinois counties, and five offices in two Ohio counties through its three banking subsidiaries, MainSource Bank, Greensburg, Indiana, MainSource Bank - 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. 2105 N. State Road 3 Bypass, Greensburg, IN 47240
