EXHIBIT 99.1
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NEWS RELEASE
DATE: April 19, 2006 4:30 p.m. E.S.T.
CONTACT: James L. Saner, Sr., President and CEO
MainSource Fnancial Group, Inc. 812-663-0157
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MAINSOURCE FINANCIAL GROUP-NASDAQ, MSFG -
Announces Earnings for the First Quarter 2006
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 March 31, 2006. The Company reported diluted
earnings per share of $0.35, which represents a 6.1% increase from the $0.33 per
share reported in the first quarter of 2005. Net income was $4.8 million in the
first quarter of 2006 compared to $3.8 million for the same period a year ago.
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 11.83% for the first quarter of 2006 while return on
average assets was 1.17% for the same period. The Company consummated its
acquisition of Union Community Bancorp in March 2006. This acquisition added
approximately $272 million in assets, $218 million in loans and $179 million in
deposits. The $56 million purchase price consisted of a combination of
approximately $27 million of cash and $29 million of MainSource stock.
Mr. Saner stated, "Our first quarter demonstrated many positives. Our net
interest margin actually improved several basis points over the fourth quarter
of 2005 and increased 14 basis points over the same period last year. This is
very positive for the Company. Non-interest income continued to increase and our
overall efficiency ratio improved considerably over the same period of a year
ago. While our non-performing assets as a percentage of total assets are down
more than 10% from a year ago, the $17.4 million is still too high.
Unfortunately, our newest acquisition, Union Community Bancorp, had more than $3
million of non-performing assets which increased the overall amount considerably
in the last couple of weeks of the quarter. The good news, however, is that
charge-offs are still very low and very comparable to last year."
Mr. Saner added, "While our merger and acquisition strategy continues to improve
our numbers and our earnings, we continue to struggle with organic growth. When
you compare our total loans year over year including the various acquisitions,
the Company is maintaining but not growing as we had hoped. We will continue to
emphasize organic growth and we believe we will see the benefits of our
increased sales efforts during the rest of the year. All in all our first
quarter was good. The earnings were very solid and have laid the foundation for
improvement for the rest of the year."
NET INTEREST INCOME
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Net interest income was $14.2 million for the first quarter of 2006, which
represents an increase of 12.0% versus the first quarter of 2005. The increase
was due primarily to the acquisition of The Madison Bank and Trust Company,
which occurred in the third quarter of 2005, and an increase in the Company's
net interest margin. Net interest margin, on a fully-taxable equivalent basis,
was 4.04% for the first quarter of 2006 versus 4.00% for the fourth quarter of
2005 and 3.90% for the first quarter of 2005.
NON-INTEREST INCOME
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The Company's non-interest income increased to $4.9 million for the first
quarter of 2006 compared to $4.6 million for the same period in 2005. Service
charge income increased due primarily to the acquisition of Madison. Offsetting
this increase was a decrease in insurance commissions due to the sale of the
Kentucky division of the Company's insurance subsidiary in March 2005.
NON-INTEREST EXPENSE
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The Company's non-interest expense was $12.4 million for the first quarter of
2006 compared to $12.1 million for the same period in 2005, an increase of 2.5%.
Increases in employee costs, occupancy expenses, equipment expenses, and
intangibles amortization were primarily attributable to the acquisition of
Madison and Union. These increases were partially offset by a decrease in other
expenses due primarily to the cost savings derived from the consolidation of the
Company's Indiana banking charters. The Company's efficiency ratio was 63.0% for
the first quarter of 2006 compared to 68.4% for the same period a year ago.
ASSET QUALITY
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Non-performing assets were $17.4 million as of March 31, 2006 compared to $16.6
million as of March 31, 2005 and represented 0.93% of total assets at March 31,
2006 versus 1.11% one year ago. Net charge-offs for the first quarter of 2006
equaled 0.16% of average outstanding loans compared to 0.14% for the first
quarter of 2005. The Company's allowance for loan losses as a percent of total
outstanding loans was 1.01% as of March 31, 2006 compared to 1.09% as of
December 31, 2005 and 1.28% as of March 31, 2005.
MAINSOURCE FINANCIAL GROUP
(unaudited)
(Dollars in thousands except per share data)
Income Statement Summary Three months ended Mar.31
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2006 2005
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Interest Income $22,655 $18,693
Interest Expense 8,421 5,988
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Net Interest Income 14,234 12,705
Provision for Loan Losses 360 120
Noninterest Income:
Insurance commissions 420 587
Mortgage banking 580 546
Service charges on deposit accounts 1,851 1,666
Gain/(losses) on sales of securities 61 11
Other 1,987 1,769
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Total Noninterest Income 4,899 4,579
Noninterest Expense:
Employee 7,405 6,876
Occupancy 1,058 899
Equipment 1,134 1,030
Intangible amortization 421 295
Other 2,383 2,994
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Total Noninterest Expense 12,401 12,094
Earnings Before Income Taxes 6,372 5,070
Provision for Income Taxes 1,586 1,280
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Net Income $ 4,786 $ 3,790
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Average Balance Sheet Data Three months ended Mar.31
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2006 2005
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Gross Loans $990,602 $920,849
Earning Assets 1,484,692 1,363,575
Total Assets 1,654,013 1,512,547
Noninterest Bearing Deposits 153,493 135,655
Interest Bearing Deposits 1,174,357 1,066,509
Total Interest Bearing Liabilities 1,477,551 1,240,976
Shareholders' Equity 164,046 124,185
Three months ended Mar.31
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Per Share Data 2006 2005
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Diluted Earnings Per Share $0.35 $0.33
Cash Dividends Per Share 0.135 0.130
Market Value - High 19.50 23.96
Market Value - Low 17.55 20.96
Average Outstanding Shares (diluted) 13,728,971 11,527,575
Three months ended Mar.31
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Key Ratios 2006 2005
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Return on Average Assets 1.17% 1.02%
Return on Average Equity 11.83% 12.38%
Net Interest Margin 4.04% 3.90%
Efficiency Ratio 62.97% 68.39%
Net Overhead to Average Assets 1.84% 2.01%
Balance Sheet Highlights
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As of March 31 2006 2005
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Total Loans (Excluding Loans Held for Sale) $1,169,961 $901,312
Allowance for Loan Losses 11,804 11,505
Total Securities 464,016 428,831
Goodwill and Intangible Assets 85,583 45,445
Total Assets 1,878,259 1,488,804
Noninterest Bearing Deposits 159,542 147,181
Interest Bearing Deposits 1,305,201 1,044,832
Other Borrowings 206,950 164,446
Shareholders' Equity 191,661 121,295
Other Balance Sheet Data
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As of March 31 2006 2005
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Book Value Per Share $12.74 $10.57
Loan Loss Reserve to Loans 1.01% 1.28%
Nonperforming Assets to Total Assets 0.93% 1.11%
Outstanding Shares 15,049,838 11,471,128
Asset Quality
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As of March 31 2006 2005
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Loans Past Due 90 Days or More and Still Accruing $1,226 $2,425
Non-accrual Loans 11,851 13,129
Other Real Estate Owned 4,356 1,008
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Total Nonperforming Assets $17,433 $16,562
Net Charge-offs $407 $313
Net Charge-offs as a % of average loans 0.16% 0.14%
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 $1.9
billion. The Company operates 60 offices in 27 Indiana counties and six offices
in three Illinois counties through its three banking subsidiaries, MainSource
Bank, Greensburg, Indiana, MainSource Bank of Illinois, Kankakee, Illinois, and
MainSource Bank - Crawfordsville, Crawfordsville, Indiana. Through its
non-banking subsidiaries, MainSource Insurance LLC, MainSource Title LLC, and
MainSource Mortgage 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. Factors which could cause future
results to differ materially 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; and the impact of our continuing
acquisition strategy.