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.
Table here
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.
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%
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
