UPDATE: D.A. Davidson & Co. Reiterates on MainSource Financial Group on Solid Fundamentals
In a report published Friday, D.A. Davidson & Co. analyst Stephen Geyen reiterated a Buy rating on MainSource Financial Group (NASDAQ: MSFG), and raised the price target from $17.50 to $20.00.
In the report, D.A. Davidson & Co. noted, “MainSource Financial reported 3Q EPS of $0.36, $0.03 above our estimate and the consensus estimate. In sum, new management that joined a few years ago are hitting their stride and driving substantial improvement in fundamental performance. The ROA increased to 1.07% and ROTE was 12.7%. Net interest income was $0.01 per share above forecast due to a NIM that was unchanged from 2Q vs. the 3bp decline we had forecast. Compared to 2Q, the NIM benefited from lower prepayments on MBS held at a premium and a favorable mix change in earning assets into higher yielding loans. We are forecasting some ongoing pressure on the NIM of 3-4bp per quarter over the next year. Loan growth was fairly solid, increasing at a 7% annualized pace from 2Q. Management did not provide a specific breakdown in category loan growth but noted growth was across commercial, agriculture, and consumer with contributions from the bank's major markets of Indianapolis, Columbus, Louisville and Cincinnati. MainSource is seeing an increase in the pipeline from the recently added commercial banking group in Bloomington, IN, and believes the newly created equipment finance group in Cincinnati is likely to add to loan growth in 1H14.”
MainSource Financial Group closed on Thursday at $16.46.
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