SOURCE: MainSource Financial Group

April 22, 2008 16:00 ET

MainSource Financial Group - NASDAQ, MSFG - Announces Earnings for the First Quarter 2008

GREENSBURG, IN--(Marketwire - April 22, 2008) - Robert E. Hoptry, Chairman, President & Chief Executive Officer of MainSource Financial Group, Inc. (NASDAQ: MSFG), 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)



                                                     Three months ended
Income Statement Summary                                   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
    Stationery, 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
                                                   ==========   ==========



                                                     Three months ended
                                                           March 31
                                                   -----------------------
Average Balance Sheet Data                            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



                                                     Three months ended
                                                           March 31
                                                   -----------------------
Per Share Data                                        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



                                                     Three months ended
                                                           March 31
                                                   -----------------------
Key Ratios                                            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

As of March 31                                        2008         2007
                                                   ----------   ----------

  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

Other Balance Sheet Data

As of March 31                                        2008         2007
                                                   ----------   ----------

  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

Asset Quality

As of March 31                                        2008         2007
                                                   ----------   ----------

  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 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.

Contact Information

  • CONTACT:
    Robert E. Hoptry
    Chairman, President and CEO
    MainSource Financial Group, Inc.
    812-663-6734

    MainSource Financial Group, Inc.
    2105 N. State Road 3 Bypass
    Greensburg, IN 47240