MidSouth Bancorp, Inc. Reports Second Quarter 2014 Results and Declares Quarterly Dividends Quarterly Highlights

- Diluted operating EPS $0.35 versus $0.29 for 2Q 2013

- Period end loan growth of $40.0 million or 13.5% annualized - Average loan growth of $58.9 million or 20.6% annualized

- Operating noninterest expense declined sequentially by $444,000 or 2.5%

- Operating return on average tangible common equity of 14.63%

- Core FTE NIM on linked quarter basis of 4.39% versus 4.33%

LAFAYETTE, La., July 28, 2014 /PRNewswire/ -- MidSouth Bancorp, Inc. ("MidSouth") (NYSE: MSL) today reported quarterly net earnings available to common shareholders of $3.9 million for the second quarter of 2014, compared to net earnings available to common shareholders of $3.3 million reported for the second quarter of 2013 and $6.7 million in net earnings available to common shareholders for the first quarter of 2014.  Diluted earnings for the second quarter of 2014 were $0.34 per common share, compared to $0.29 per common share reported for the second quarter of 2013 and $0.57 per common share reported for the first quarter of 2014.  The first quarter of 2014 included $3.0 million of executive officer life insurance proceeds recorded in noninterest income following the unexpected passing of former Vice Chairman and Chief Operating Officer Jerry Reaux and after-tax related noninterest expenses of $160,000.  The first and second quarters of 2014 also included efficiency consultant expenses of $53,000 and $107,000, respectively.  Excluding these non-operating income and expenses, operating earnings per share for the first and second quarter of 2014 was $0.33 and $0.35, respectively. 

C. R. Cloutier, President and CEO, commenting on second quarter earnings remarked, "We are pleased to report another strong quarter of loan growth and improvements in efficiency and operating earnings in our second quarter results.  I am very proud of our team and the excellent execution of our plan to improve earnings for our shareholders.  We have improved operating diluted earnings per share by 11 cents or 19% in the first six months of this year compared to last year.   This was despite of the loss of over 13 cents per diluted share of income from purchase accounting adjustments over this period and no new merger transactions to replace any of this lost income.  Having to replace this much lost income and still grow operating earnings 19% through old-fashioned organic growth and cost savings has been challenging and I am proud of what our team has accomplished.  However, our work is not done and our focus will continue to be improvement in earnings for our shareholders – every day, every week, every month."

During the second quarter, MidSouth suffered a tremendous loss with the passing of Dr. Joe B. Hargroder, a founding board member.  Dr. Hargroder served as Vice Chairman of the Board from 1990 to 2012, having relinquished the role in May 2012 due to declining health.  In recognition of his lifetime of service to Jefferson Davis Parish and the vital role he played in the founding of MidSouth, the Board of Directors established the Dr. Joe Hargroder Scholarship in 2005 through the McNeese Foundation for students from Jefferson Davis Parish.

Balance Sheet

Consolidated assets and total deposits remained constant at $1.9 billion and $1.5 billion for the quarters ended June 30, 2014 and March 31, 2014, respectively.  Our stable core deposit base, which excludes time deposits, declined $14.1 million for the quarter ended June 30, 2014 and accounted for 85.5% of deposits compared to 85.1% of deposits at March 31, 2014.  Net loans totaled $1.2 billion at June 30, 2014 and March 31, 2014, compared to $1.1 billion at December 31, 2013.  Total loans grew $40.0 million, or 3.4% for the quarter and $86.6 million for the six months ended June 30, 2014.  The majority of the loan growth was in the commercial loan portfolio, along with solid growth in the commercial real estate and consumer loan portfolios over the three and six months ended June 30, 2014.

MidSouth's Tier 1 leverage capital ratio was 9.81% at June 30, 2014 compared to 9.71% at March 31, 2014.  Tier 1 risk-based capital and total risk-based capital ratios were 13.34% and 14.03% at June 30, 2014, compared to 13.49% and 14.18% at March 31, 2014, respectively.  Tier 1 common equity to total risk-weighted assets at June 30, 2014 was 8.12%.  Tangible common equity totaled $111.4 million at June 30, 2014, compared to $107.3 million at March 31, 2014.  Tangible book value per share at June 30, 2014 was $9.86 versus $9.51 at March 31, 2014.

Asset Quality

Nonperforming assets totaled $13.5 million at June 30, 2014, an increase of $654,000 over the $12.9 million reported at March 31, 2014.  The increase resulted from an $888,000 increase in nonaccrual loans.  Allowance coverage for nonperforming loans decreased to 127.53% at June 30, 2014 compared to 139.66% at March 31, 2014.  The ALL/total loans ratio was 0.74% at June 30, 2014 and March 31, 2014.  Including valuation accounting adjustments on acquired loans, the total valuation accounting adjustment plus ALL was 1.29% of loans at June 30, 2014.  The ratio of annualized net charge-offs to total loans was 0.29% for the three months ended June 30, 2014 compared to 0.19% for the three months ended March 31, 2014. 

Total nonperforming assets to total loans plus ORE and other assets repossessed was 1.10% at June 30, 2014 compared to 1.08% at March 31, 2014.  Loans classified as troubled debt restructurings ("TDRs") totaled $417,000 at June 30, 2014, a decrease of $1.2 million from the $1.6 million reported at March 31, 2014.  The decrease in TDRs resulted from the payoff of a loan relationship totaling $1.2 million that was previously placed on TDR status during the first quarter of 2014.  Classified assets, including ORE, increased $1.6 million, or 5.1%, to $33.1 million compared to $31.5 million at March 31, 2014.

Second Quarter 2014 vs. Second Quarter 2013 Earnings Comparison

Second quarter 2014 net earnings available to common shareholders totaled $3.9 million compared to $3.3 million for the second quarter of 2013.  Revenues from consolidated operations decreased $372,000 in quarterly comparison.  Interest income decreased $761,000 in quarterly comparison, as a $1.2 million decrease in loan valuation income was partially offset by an increase in interest income earned on a higher volume of loans.  Noninterest income increased $257,000 in quarterly comparison, from $5.0 million for the three months ended June 30, 2013 to $5.3 million for the three months ended June 30, 2014.  Increases in noninterest income consisted primarily of $177,000 in service charges on deposit accounts, $128,000 in gain on sales of securities and $215,000 in ATM/debit card income, which were partially offset by decreases of $145,000 in fees earned from credit-related products and $89,000 in mortgage banking fees. 

Excluding the $107,000 of efficiency consultant expenses recorded in the second quarter of 2014, noninterest expenses decreased $1.3 million for the second quarter 2014 compared to second quarter 2013 and consisted primarily of decreases of $351,000 in expenses on ORE and other repossessed assets, $155,000 in marketing expenses, $209,000 in legal and professional fees, $122,000 in corporate development expense, $124,000 in courier expense and $155,000 in the cost of printing and supplies.  The decreased costs were partially offset by a $119,000 increase in salaries and benefits costs and a $110,000 increase in ATM/debit card expense.  The increase in salaries and benefits costs was driven by an increase in group health insurance expense of $248,000 due to a higher volume of claims.  Net of the increase in group health insurance, salary and benefit costs declined $129,000.  The provision for loan losses decreased $50,000, and income tax expense increased $369,000 in quarterly comparison.

Dividends paid on the Series B Preferred Stock issued to the Treasury as a result of our participation in the Small Business Lending Fund ("SBLF") totaled $80,000 for the second quarter of 2014 based on a dividend rate of 1.00%.  The dividend rate is set at 1.00% through February 25, 2016.  The Series C Preferred Stock issued with the December 28, 2012 acquisition of PSB Financial Corporation ("PSB") paid dividends totaling $90,000 for the three months ended June 30, 2014. 

Fully taxable-equivalent ("FTE") net interest income totaled $19.5 million and $20.1 million for the quarters ended June 30, 2014 and 2013, respectively.  The FTE net interest income decreased $620,000 in prior year quarterly comparison primarily due to a reduction in purchase accounting adjustments on acquired loans.  The average volume of loans increased $125.6 million in quarterly comparison, and the average yield on loans decreased 85 basis points, from 6.76% to 5.91%.  The purchase accounting adjustments added 23 basis points to the average yield on loans for the second quarter of 2014 and 75 basis points to the average yield on loans for the second quarter of 2013.  Net of the impact of the purchase accounting adjustments, average loan yields declined 33 basis points in prior year quarterly comparison, from 6.01% to 5.68%.  Loan yields have declined primarily as the result of a sustained low interest rate environment.

Investment securities totaled $450.0 million, or 23.7% of total assets at June 30, 2014, versus $530.9 million, or 28.5% of total assets at June 30, 2013.  The investment portfolio had an effective duration of 3.9 years and an unrealized gain of $4.2 million at June 30, 2014.  The average volume of investment securities decreased $72.4 million in prior year quarterly comparison.  The average tax equivalent yield on investment securities increased 11 basis points, from 2.52% to 2.63%.  The $72.4 million decrease in investment securities combined with a $23.7 million increase in short-term FHLB advances over the past twelve months primarily funded the increase in loans during the same period.

The average yield on all earning assets decreased 33 basis points in prior year quarterly comparison, from 5.26% for the second quarter of 2013 to 4.93% for the second quarter of 2014.  Net of the impact of purchase accounting adjustments, the average yield on total earning assets decreased 1 basis point, from 4.78% to 4.77% for the three month periods ended June 30, 2013 and 2014, respectively.

The impact to interest expense of a $43.3 million increase in the average volume of interest bearing liabilities was offset by a 5 basis point decrease in the average rate paid on interest bearing liabilities, from 0.51% at June 30, 2013 to 0.46% at June 30, 2014.  Net of purchase accounting adjustments on acquired certificates of deposit and FHLB borrowings, the average rate paid on interest bearing liabilities was 0.60% for the second quarter of 2013 and declined to 0.51% for the second quarter of 2014.

As a result of these changes in volume and yield on earning assets and interest bearing liabilities, the FTE net interest margin decreased 29 basis points, from 4.87% for the second quarter of 2013 to 4.58% for the second quarter of 2014.  Net of purchase accounting adjustments on loans, deposits and FHLB borrowings, the FTE margin increased 6 basis points, from 4.33% for the second quarter of 2013 to 4.39% for the second quarter of 2014.

Second Quarter 2014 vs. First Quarter 2014 Earnings Comparison

In sequential-quarter comparison, net earnings available to common shareholders decreased $2.7 million primarily due to the $3.0 million of life insurance proceeds recorded as noninterest income in the first quarter of 2014.  Additionally, the decrease in net earnings available to common shareholders resulted from a $650,000 increase in the provision for loan losses and a $233,000 increase in income tax expense, which were offset by an increase of $218,000 in net interest income and a decrease of $579,000 in noninterest expense.  Excluding the $3.0 million of life insurance income recorded in the first quarter of 2014, noninterest income increased $344,000 in sequential-quarter comparison.  The increase resulted primarily from a $128,000 gain on sale of securities, a $139,000 increase in ATM/debit card income and a $68,000 increase in service charge income on deposits.

Noninterest expenses in the first and second quarter of 2014 included efficiency consultant expenses of $53,000 and $107,000, respectively.  Additionally, noninterest expenses in the first quarter of 2014 included $189,000 of non-operating expenses primarily associated with incentive compensation plans for Mr. Reaux.  Excluding these non-operating expenses, noninterest expense decreased $444,000 and primarily included decreases of $186,000 in salaries and benefits costs, $102,000 in occupancy expenses and $72,000 in courier expense. 

FTE net interest income increased $198,000 in sequential-quarter comparison primarily due to an increase of $58.9 million in the average volume of loans.  The average yield on loans decreased 27 basis points, from 6.18% for the first quarter of 2014 to 5.91% for the second quarter of 2014, primarily due to a reduction in purchase accounting adjustments on acquired loans.  The average yield on total earning assets decreased 9 basis points for the same period, from 5.02% to 4.93%, respectively.  An average increase of $15.8 million in interest bearing liabilities was primarily due to an average increase of $13.9 million in overnight repurchase agreements.  As a result of these changes in volume and yield on earning assets and interest bearing liabilities, the FTE net interest margin decreased 8 basis points, from 4.66% to 4.58%.  Net of purchase accounting adjustments, the FTE net interest margin increased 6 basis points, from 4.33% for the quarter ended March 31, 2014 to 4.39% for the quarter ended June 30, 2014.

Year-Over-Year Earnings Comparison

In year-over-year comparison, net earnings available to common shareholders increased $4.2 million and included $3.0 million of executive life insurance proceeds recorded in noninterest income and related noninterest expenses of $189,000 in the first quarter of 2014.  The first quarter of 2013 included $214,000 of net merger and conversion related expenses associated with the PSB acquisition, and the first six months of 2014 included efficiency consultant expenses of $160,000.  Excluding these non-operating income and expenses, operating earnings increased $1.4 million in year-to-date comparison and included a $743,000 increase in noninterest income and a $1.0 million decrease in non-interest expense. 

Excluding the $3.0 million of life insurance income, increases in noninterest income consisted primarily of $386,000 in service charges on deposit accounts and $573,000 in ATM and debit card income.  Excluding the non-operating expenses in 2014 and 2013, decreases in noninterest expense included $321,000 in marketing expenses, $303,000 in legal and professional fees, $250,000 in the cost of printing and supplies, $159,000 in courier expense, $112,000 in fraud losses and $312,000 in expenses on ORE and repossessed assets.  The decrease was partially offset by a $401,000 increase in salaries and benefits costs (primarily increased group health insurance costs) and a $366,000 increase in ATM/debit card expense.

A reduction in the dividend rate paid on the Series B preferred stock issued in connection with SBLF resulted in a $334,000 decrease in dividends on preferred stock in year-over-year comparison. 

In year-to-date comparison, FTE net interest income decreased $132,000 primarily due to a decrease in purchase accounting adjustments that resulted in a decrease in the average yield on loans, from 6.70% at June 30, 2013 to 6.04% at June 30, 2014.  The average yield on earning assets decreased in year-to-date comparison, from 5.14% at June 30, 2013 to 4.98% at June 30, 2014.  The purchase accounting adjustments added 77 basis points to the average yield on loans for the first six months of 2013 and 32 basis points for the first six months of 2014.  Net of purchase accounting adjustments, the average yield on earning assets increased 9 basis points, from 4.66% at June 30, 2013 to 4.75% at June 30, 2014.

Interest expense decreased in year-over-year comparison primarily due to a decrease in the average rate paid on interest bearing liabilities.  The average rate paid on interest-bearing liabilities decreased 7 basis points, from 0.54% at June 30, 2013 to 0.47% at June 30, 2014.  Net of purchase accounting adjustments, the average rate paid on interest-bearing liabilities decreased 11 basis points, from 0.63% at June 30, 2013 to 0.52% at June 30, 2014.  The FTE net interest margin decreased 12 basis points, from 4.74% for the six months ended June 30, 2013 to 4.62% for the six months ended June 30, 2014.  Net of purchase accounting adjustments, the FTE net interest margin increased 18 basis points, from 4.18% to 4.36% for the six months ended June 30, 2013 and 2014, respectively.

Third Quarter Events

MidSouth is reporting today a number of earnings impacts that have occurred or are expected to occur in the third quarter of 2014.

In July 2014, MidSouth closed on the sale of commercial property held as ORE which resulted in a $1.1 million gain on sale of ORE and reduced ORE owned from the $6.3 million held at June 30, 2014 to $4.9 million, or 22.2%.  The $1.1 million gain recorded will have an estimated after tax effect on diluted earnings per share of $0.06 for the third quarter of 2014.

On August 22, 2014, MidSouth will redeem in full its $7.2 million Statutory Trust 1 and Capital Securities (TRUPS) at a redemption price of 103.57% to par.  The redemption has been approved by federal banking regulators and will result in an after tax charge to third quarter earnings of approximately $167,000, or $0.01 on diluted earnings per share.  The resulting improvement in earnings from the reduction in interest expense on the TRUPS, net of the impact of the cost of funds used to pay off the TRUPS and the reduction in dividend income earned on the Capital Securities is estimated to be approximately $113,000 per quarter after tax or $0.01.  As of June 30, 2014, proforma ratios reflecting the payoff of the Statutory Trust 1 result in a 40 basis point decrease in the Tier 1 leverage ratio, from 9.81% to 9.41%.  Proforma Tier 1 risk-based capital ratio and total risk based capital ratios decrease 52 basis points, to 12.82% and 13.51%, respectively.

Third quarter 2014 earnings will also be impacted by approximately $200,000 in FIS consulting costs associated with a process improvement initiative and $330,000 in costs associated with the demolition and rebuilding of a banking center.  The process improvement initiative began in the second quarter of 2014 and will be on-going through year-end.  The current banking center in Sulphur, Louisiana will be demolished and a new banking center constructed to service expected growth in that market from multiple oilfield related expansion projects slated in the area.  The after tax effect of the $550,000 in nonoperating costs expected in the third quarter is estimated to be $0.03 on diluted earnings per share. 

Dividends

MidSouth's Board of Directors announced a cash dividend was declared in the amount of $0.09 per share to be paid on its common stock on November 3, 2014 to shareholders of record as of the close of business on October 15, 2014.  Additionally, a quarterly cash dividend of 1.00% per preferred share on its 4.00% Non-Cumulative Perpetual Convertible Preferred Stock, Series C was declared payable on October 15, 2014 to shareholders of record as of the close of business on October 1, 2014.  MidSouth's Series C Preferred Stock is quoted on the OTC Bulletin Board ("OTCBB") under the ticker symbol MSLXP.

About MidSouth Bancorp, Inc.

MidSouth Bancorp, Inc. is a financial holding company headquartered in Lafayette, Louisiana, with assets of $1.9 billion as of June 30, 2014. MidSouth Bancorp, Inc. trades on the NYSE under the symbol "MSL." MidSouth's Series C Preferred Stock is quoted on the OTC Bulletin Board ("OTCBB") under the ticker symbol MSLXP.  Through its wholly owned subsidiary, MidSouth Bank, N.A., MidSouth offers a full range of banking services to commercial and retail customers in Louisiana and Texas. MidSouth Bank currently has 60 locations in Louisiana and Texas and is connected to a worldwide ATM network that provides customers with access to more than 55,000 surcharge-free ATMs. Additional corporate information is available at www.midsouthbank.com.

Forward-Looking Statements

Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties.  These statements include, among others, the expected impacts of future expansion plans and future operating results.  Actual results may differ materially from the results anticipated in these forward-looking statements.  Factors that might cause such a difference include, among other matters, changes in interest rates and market prices that could affect the net interest margin, asset valuation, and expense levels; changes in local economic and business conditions, including, without limitation, changes related to the oil and gas industries, that could adversely affect customers and their ability to repay borrowings under agreed upon terms, adversely affect the value of the underlying collateral related to their borrowings, and reduce demand for loans; the timing and ability to reach any agreement to restructure nonaccrual loans;  increased competition for deposits and loans which could affect compositions, rates and terms; the timing and impact of future acquisitions, the success or failure of integrating operations, and the ability to capitalize on growth opportunities upon entering new markets; loss of critical personnel and the challenge of hiring qualified personnel at reasonable compensation levels; legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and their application by our regulators, changes in the scope and cost of FDIC insurance and other coverage; and other factors discussed under the heading "Risk Factors" in MidSouth's Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC on March 14, 2014 and in its other filings with the SEC.  MidSouth does not undertake any obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or otherwise, except as required by law.

 

MIDSOUTH BANCORP, INC. and SUBSIDIARIES          

Condensed Consolidated Financial Information (unaudited)          

(in thousands except per share data)               









Quarter


Quarter


Quarter


Quarter


Quarter



Ended


Ended


Ended


Ended


Ended

EARNINGS DATA


6/30/2014


3/31/2014


12/31/2013


9/30/2013


6/30/2013

     Total interest income


$     20,595


$     20,399


$      21,014


$     20,704


$     21,356

     Total interest expense


1,482


1,504


1,575


1,633


1,614

          Net interest income


19,113


18,895


19,439


19,071


19,742

     FTE net interest income


19,459


19,261


19,834


19,486


20,079

     Provision for loan losses


1,200


550


800


450


1,250

     Non-interest income


5,261


7,917


4,896


4,988


5,004

     Non-interest expense


17,123


17,702


18,427


18,481


18,267

          Earnings before income taxes


6,051


8,560


5,108


5,128


5,229

     Income tax expense


1,935


1,702


1,563


1,588


1,566

          Net earnings


4,116


6,858


3,545


3,540


3,663

     Dividends on preferred stock


170


180


180


468


392

          Net earnings available to common shareholders


$       3,946


$       6,678


$        3,365


$       3,072


$       3,271












PER COMMON SHARE DATA











     Basic earnings per share


$         0.35


$         0.59


$          0.30


$         0.27


$         0.29

     Diluted earnings per share


0.34


0.57


0.29


0.27


0.29

     Diluted earnings per share, operating (Non-GAAP)(*)


0.35


0.33


0.29


0.27


0.29

     Quarterly dividends per share


0.09


0.08


0.08


0.08


0.08

     Book value at end of period


14.25


13.92


13.21


13.12


12.92

     Tangible book value at period end (Non-GAAP)(*)


9.86


9.51


8.76


8.61


8.39

     Market price at end of period


19.89


16.83


17.86


15.50


15.53

     Shares outstanding at period end 


11,296,147


11,281,647


11,256,712


11,253,216


11,253,216

     Weighted average shares outstanding











        Basic


11,288,045


11,258,374


11,255,670


11,253,216


11,238,945

        Diluted


11,922,525


11,878,660


11,886,433


11,868,851


11,838,862












AVERAGE BALANCE SHEET DATA











     Total assets


$1,887,726


$1,859,212


$ 1,862,962


$1,863,090


$1,850,483

     Loans and leases


1,205,930


1,147,010


1,141,829


1,123,086


1,080,295

     Total deposits


1,532,910


1,527,353


1,515,673


1,521,146


1,538,320

     Total common equity


159,766


153,012


149,489


146,182


150,287

     Total tangible common equity (Non-GAAP)(*)


110,075


103,036


98,941


95,363


98,996

     Total equity 


201,257


194,980


191,486


188,179


192,284












SELECTED RATIOS











     Annualized return on average assets, operating (Non-GAAP)(*)


0.85%


0.84%


0.72%


0.65%


0.71%

     Annualized return on average common equity, operating (Non-GAAP)(*)


10.08%


10.26%


8.93%


8.34%


8.73%

     Annualized return on average tangible common equity, operating (Non-GAAP)(*)


14.63%


15.24%


13.49%


12.78%


13.25%

     Average loans to average deposits


78.67%


75.10%


75.33%


73.83%


70.23%

     Taxable-equivalent net interest margin


4.58%


4.66%


4.69%


4.60%


4.87%

     Tier 1 leverage capital ratio


9.81%


9.71%


9.35%


9.17%


9.14%












CREDIT QUALITY











     Allowance for loan losses (ALLL) as a % of total loans


0.74%


0.74%


0.77%


0.76%


0.76%

     Nonperforming assets to tangible equity + ALLL


8.34%


8.16%


8.02%


8.94%


9.51%

     Nonperforming assets to total loans, other real estate owned and other repossessed assets












1.10%


1.08%


1.05%


1.15%


1.23%

     Annualized QTD net charge-offs to total loans


0.29%


0.19%


0.24%


0.11%


0.06%












(*) See reconciliation of Non-GAAP financial measures on page 6.

 

 

MIDSOUTH BANCORP, INC. and SUBSIDIARIES          

Condensed Consolidated Financial Information (unaudited)       

(in thousands)               



















BALANCE SHEET


June 30,


March 31,


December 31,


September 30,


June 30,



2014


2014


2013


2013


2013

Assets











Cash and cash equivalents


$     63,935


$     64,503


$         59,731


$          43,434


$     59,578

Securities available-for-sale


301,028


331,488


341,665


358,675


367,299

Securities held-to-maturity


148,927


152,162


155,523


159,141


163,610

     Total investment securities


449,955


483,650


497,188


517,816


530,909

Other investments


12,090


11,530


11,526


10,951


10,951

Total loans


1,224,182


1,184,189


1,137,554


1,145,023


1,118,572

Allowance for loan losses


(9,075)


(8,765)


(8,779)


(8,667)


(8,531)

     Loans, net


1,215,107


1,175,424


1,128,775


1,136,356


1,110,041

Premises and equipment


71,787


72,500


72,343


70,147


67,881

Goodwill and other intangibles


49,559


49,835


50,112


50,703


50,980

Other assets


33,845


31,483


31,485


33,400


33,436

     Total assets


$1,896,278


$1,888,925


$    1,851,160


$     1,862,807


$1,863,776























Liabilities and Shareholders' Equity











Non-interest bearing deposits


$   389,734


$   379,576


$       383,257


$        380,048


$   395,341

Interest-bearing deposits


1,135,688


1,168,354


1,135,546


1,126,078


1,140,453

   Total deposits


1,525,422


1,547,930


1,518,803


1,506,126


1,535,794

Securities sold under agreements to repurchase and other short term borrowings






















67,574


51,995


53,916


77,809


51,710

Short-term FHLB advances


35,000


25,000


25,000


25,000


25,000

Other borrowings


26,990


27,347


27,703


28,059


28,416

Junior subordinated debentures


29,384


29,384


29,384


29,384


29,384

Other liabilities


9,492


8,632


5,605


6,800


6,039

     Total liabilities


1,693,862


1,690,288


1,660,411


1,673,178


1,676,343

Total shareholders' equity


202,416


198,637


190,749


189,629


187,433

     Total liabilities and shareholders' equity


$1,896,278


$1,888,925


$    1,851,160


$     1,862,807


$1,863,776

 

 

MIDSOUTH BANCORP, INC. and SUBSIDIARIES             

Condensed Consolidated Financial Information (unaudited)          

(in thousands except per share data)                



















EARNINGS STATEMENT


Three Months Ended



6/30/2014


3/31/2014


12/31/2013


9/30/2013


6/30/2013












Interest income:











   Loans, including fees


$ 17,183


$ 16,395


$   16,727


$ 16,707


$ 16,370

   Investment securities


2,725


2,829


2,876


2,956


3,063

   Accretion of purchase accounting adjustments


586


1,088


1,323


945


1,827

   Other interest income


101


87


88


96


96

   Total interest income


20,595


20,399


21,014


20,704


21,356












Interest expense:











   Deposits


926


950


1,017


1,114


1,166

   Borrowings


395


377


411


414


380

   Junior subordinated debentures


320


347


339


335


336

   Accretion of purchase accounting adjustments


(159)


(170)


(192)


(230)


(268)

   Total interest expense


1,482


1,504


1,575


1,633


1,614












Net interest income


19,113


18,895


19,439


19,071


19,742

Provision for loan losses


1,200


550


800


450


1,250

Net interest income after provision for loan losses


17,913


18,345


18,639


18,621


18,492












Noninterest income:











Service charges on deposit accounts


2,448


2,380


2,431


2,352


2,271

ATM and debit card income


1,853


1,714


1,687


1,719


1,638

Gain on securities, net


128


-


5


25


-

Mortgage lending


49


49


82


109


138

Executive officer life insurance proceeds (non-operating)(*)


-


3,000


-


-


-

Other charges and fees


783


774


691


783


957

   Total non-interest income


5,261


7,917


4,896


4,988


5,004












Noninterest expense:











Salaries and employee benefits


8,488


8,674


8,781


8,640


8,369

Occupancy expense


3,689


3,791


3,916


3,874


3,725

ATM and debit card


707


690


707


661


597

Legal and professional fees


326


288


506


303


535

FDIC premiums


251


262


282


265


244

Marketing


366


303


545


739


521

Corporate development


331


366


347


349


453

Data processing


483


492


473


482


409

Printing and supplies


275


280


304


321


430

Expenses on ORE and other assets repossessed


172


228


201


288


523

Amortization of core deposit intangibles


276


277


276


277


276

Efficiency consultant expenses (non-operating)(*)


107


53


-


-


-

Expenses related to death of executive officer (non-operating)(*)


-


189


-


-


-

Other non-interest expense


1,652


1,809


2,089


2,282


2,185

   Total non-interest expense


17,123


17,702


18,427


18,481


18,267

   Earnings before income taxes


6,051


8,560


5,108


5,128


5,229

Income tax expense


1,935


1,702


1,563


1,588


1,566

   Net earnings


4,116


6,858


3,545


3,540


3,663

Dividends on preferred stock


170


180


180


468


392

   Net earnings available to common shareholders


$   3,946


$   6,678


$     3,365


$   3,072


$   3,271












Earnings per common share, diluted


$     0.34


$     0.57


$       0.29


$     0.27


$     0.29












Operating earnings per common share, diluted (Non-GAAP)(*)


$     0.35


$     0.33


$       0.29


$     0.27


$     0.29












(*) See reconciliation of Non-GAAP financial measures on page 6.

 

 


MIDSOUTH BANCORP, INC. and SUBSIDIARIES          

Condensed Consolidated Financial Information (unaudited)       

(in thousands)               





COMPOSITION OF LOANS


June 30,


Percent


March 31, 


December 31,


September 30,


June 30,


Percent


2014


of Total


2014


2013


2013


2013


of Total

Commercial, financial, and agricultural


$   454,310


37.11%


$   435,523


$       403,976


$       423,073


$   391,241


34.98%

Lease financing receivable


4,750


0.39%


5,102


5,542


5,340


5,656


0.51%

Real estate - construction


86,238


7.04%


78,988


82,691


76,213


82,851


7.41%

Real estate - commercial


413,565


33.78%


408,546


397,135


401,080


404,543


36.17%

Real estate - residential


153,082


12.50%


150,551


146,841


142,431


141,689


12.67%

Installment loans to individuals


108,581


8.87%


101,869


97,459


94,722


90,571


8.10%

Other


3,656


0.30%


3,610


3,910


2,164


2,021


0.18%
















Total loans


$1,224,182




$1,184,189


$    1,137,554


$    1,145,023


$1,118,572


















COMPOSITION OF DEPOSITS
















June 30,


Percent


March 31, 


December 31,


September 30,


June 30,


Percent



2014


of Total


2014


2013


2013


2013


of Total

Noninterest bearing


$   389,734


25.55%


$   379,576


$       383,257


$       380,048


$   395,341


25.74%

NOW & Other


443,287


29.06%


456,127


429,279


412,873


431,596


28.10%

Money Market/Savings


470,731


30.86%


482,143


465,748


463,621


453,729


29.54%

Time Deposits of less than $100,000


104,423


6.85%


108,306


112,782


116,118


119,299


7.77%

Time Deposits of $100,000 or more


117,247


7.69%


121,778


127,737


133,466


135,829


8.84%
















Total deposits


$1,525,422




$1,547,930


$    1,518,803


$    1,506,126


$1,535,794


















ASSET QUALITY DATA
















June 30,




March 31, 


December 31,


September 30,


June 30,





2014




2014


2013


2013


2013



Nonaccrual loans


$       6,913




$       6,025


$           5,099


$           5,760


$       6,388



Loans past due 90 days and over


203




251


178


744


117



Total nonperforming loans


7,116




6,276


5,277


6,504


6,505



Other real estate


6,314




6,525


6,687


6,672


6,900



Other repossessed assets


81




56


20


18


-



Total nonperforming assets


$     13,511




$     12,857


$         11,984


$         13,194


$     13,405


















Troubled debt restructurings


$          417




$       1,579


$              412


$              419


$          405

































Nonperforming assets to total assets


0.71%




0.68%


0.65%


0.71%


0.72%



Nonperforming assets to total loans +      















   ORE + other repossessed assets


1.10%




1.08%


1.05%


1.15%


1.19%



ALLL to nonperforming loans


127.53%




139.66%


166.36%


133.26%


131.15%



ALLL to total loans


0.74%




0.74%


0.77%


0.76%


0.76%


















Quarter-to-date charge-offs


$          990




$          688


$              740


$              375


$          267



Quarter-to-date recoveries


100




124


53


61


91



Quarter-to-date net charge-offs


$          890




$          564


$              687


$              314


$          176



Annualized QTD net charge-offs to total loans


0.29%




0.19%


0.24%


0.11%


0.06%



 

 

MIDSOUTH BANCORP, INC. and SUBSIDIARIES             

Condensed Consolidated Financial Information (unaudited)   



















(in thousands)    






























YIELD ANALYSIS


Three Months Ended


Three Months Ended  


Three Months Ended  


Three Months Ended  


Three Months Ended  


June 30, 2014


March 31, 2014


December 31, 2013


September 30, 2013


June 30, 2013


























Tax






Tax






Tax






Tax






Tax





Average


Equivalent


Yield/


Average


Equivalent


Yield/


Average


Equivalent


Yield/


Average


Equivalent


Yield/


Average


Equivalent


Yield/



Balance


Interest


Rate


Balance


Interest


Rate


Balance


Interest


Rate


Balance


Interest


Rate


Balance


Interest


Rate
































Taxable securities


$     379,124


$       2,064


2.18%


$     397,642


$       2,136


2.15%


$     409,561


$      2,128


2.08%


$     418,964


$      2,171


2.07%


$     434,730


$      2,251


2.07%

Tax-exempt securities


87,964


1,007


4.58%


91,792


1,059


4.61%


98,648


1,143


4.63%


101,226


1,200


4.74%


104,747


1,149


4.39%

   Total investment securities


467,088


3,071


2.63%


489,434


3,195


2.61%


508,209


3,271


2.57%


520,190


3,371


2.59%


539,477


3,400


2.52%

Federal funds sold


2,260


1


0.18%


2,921


1


0.14%


2,535


1


0.15%


2,180


1


0.18%


1,593


1


0.25%

Time and interest bearing deposits in other banks
































16,789


11


0.26%


25,891


16


0.25%


14,546


9


0.24%


22,519


15


0.26%


23,346


17


0.29%

Other investments


11,679


89


3.05%


11,527


70


2.43%


11,263


78


2.77%


10,948


80


2.92%


10,056


78


3.10%

Loans 


1,205,930


17,769


5.91%


1,147,010


17,483


6.18%


1,141,829


18,050


6.27%


1,123,086


17,652


6.24%


1,080,295


18,197


6.76%

   Total interest earning assets


1,703,746


20,941


4.93%


1,676,783


20,765


5.02%


1,678,382


21,409


5.06%


1,678,923


21,119


4.99%


1,654,767


21,693


5.26%

Non-interest earning assets


183,980






182,429






184,580






184,167






195,716





   Total assets


$  1,887,726






$  1,859,212






$  1,862,962






$  1,863,090






$  1,850,483




































Interest-bearing liabilities:































   Deposits


$  1,156,638


$          858


0.30%


$  1,155,011


$          871


0.31%


$  1,126,742


$         917


0.32%


$  1,133,126


$         976


0.34%


$  1,149,285


$         990


0.35%

   Repurchase agreements


62,322


199


1.28%


48,413


180


1.51%


67,022


207


1.23%


64,274


204


1.26%


47,667


182


1.53%

   Federal funds purchased


679


1


0.58%


168


-


0.00%


747


1


0.52%


354


-


0.00%


1,466


3


0.81%

   Short-term borrowings


25,110


9


0.14%


25,000


10


0.16%


23,913


9


0.15%


25,000


11


0.17%


1,374


-


0.00%

   Notes payable


27,218


95


1.38%


27,577


96


1.39%


27,922


101


1.42%


28,301


107


1.48%


28,885


103


1.41%

   Junior subordinated debentures


29,384


320


4.31%


29,384


347


4.72%


29,384


339


4.51%


29,384


335


4.46%


29,384


336


4.52%

   Total interest bearing liabilities


1,301,351


1,482


0.46%


1,285,553


1,504


0.47%


1,275,730


1,575


0.49%


1,280,439


1,633


0.51%


1,258,061


1,614


0.51%

Non-interest bearing liabilities


385,118






378,679






395,746






394,472






400,138





Shareholders' equity


201,257






194,980






191,486






188,179






192,284





   Total liabilities and  shareholders' equity
































$  1,887,726






$  1,859,212






$  1,862,962






$  1,863,090






$  1,850,483




































Net interest income (TE) and spread




$     19,459


4.47%




$     19,261


4.55%




$    19,834


4.57%




$    19,486


4.48%




$    20,079


4.75%
































Net interest margin






4.58%






4.66%






4.69%






4.60%






4.87%
































Core net interest margin (Non-GAAP)(*)






4.39%






4.33%






4.31%






4.30%






4.33%































































(*) See reconciliation of Non-GAAP financial measures on page 6.




















 

 


MIDSOUTH BANCORP, INC. and SUBSIDIARIES             

Reconciliation of Non-GAAP Financial Measures (unaudited)

(in thousands except per share data)    














Three Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,

Per Common Share Data


2014


2014


2013


2013


2013












Book value per common share


$        14.25


$        13.92


$           13.21


$            13.12


$        12.92

Effect of intangible assets per share


4.39


4.41


4.45


4.51


4.53

   Tangible book value per common share


$          9.86


$          9.51


$             8.76


$              8.61


$          8.39












Diluted earnings per share


$          0.34


$          0.57


$             0.29


$              0.27


$          0.29

Effect of efficiency consultant expenses, after-tax


0.01


-


-


-


-

Executive officer life insurance proceeds, net of related expenses, after-tax


-


(0.24)


-


-


-

   Diluted earnings per share, operating


$          0.35


$          0.33


$             0.29


$              0.27


$          0.29














Three Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,



2014


2014


2013


2013


2013

Average Balance Sheet Data






















Total average assets

A

$ 1,887,726


$ 1,859,212


$    1,862,962


$     1,863,090


$ 1,850,483












Total equity


$    201,257


$    194,980


$       191,486


$        188,179


$    192,284

Less preferred equity


41,491


41,968


41,997


41,997


41,997

   Total common equity

B

$    159,766


$    153,012


$       149,489


$        146,182


$    150,287

Less intangible assets


49,691


49,976


50,548


50,819


51,291

   Tangible common equity

C

$    110,075


$    103,036


$         98,941


$          95,363


$      98,996

























Three Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,

Core Net Interest Margin


2014


2014


2013


2013


2013












Net interest income (TE)


$      19,459


$      19,261


$         19,834


$          19,486


$      20,079

Less purchase accounting adjustments


(745)


(1,258)


(1,515)


(1,175)


(2,095)

   Net interest income, net of purchase accounting adjustments

D

$      18,714


$      18,003


$         18,319


$          18,311


$      17,984












Total average earnings assets


$ 1,703,746


$ 1,676,783


$    1,678,382


$     1,678,923


$ 1,654,767

Add average balance of loan valuation discount


7,013


7,915


9,347


10,323


12,019

   Average earnings assets, excluding loan valuation discount

E

$ 1,710,759


$ 1,684,698


$    1,687,729


$     1,689,246


$ 1,666,786












Core net interest margin

D/E

4.39%


4.33%


4.31%


4.30%


4.33%

























Three Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,

Return Ratios


2014


2014


2013


2013


2013












Net earnings available to common shareholders


$        3,946


$        6,678


$           3,365


$            3,072


$        3,271

Efficiency consultant expenses, after-tax


70


34


-


-


-

Executive officer life insurance proceeds, net of related expenses, after-tax


-


(2,840)


-


-


-

Net earnings available to common shareholders, operating

F

$        4,016


$        3,872


$           3,365


$            3,072


$        3,271












Annualized return on average assets, operating

F/A

0.85%


0.84%


0.72%


0.65%


0.71%

Annualized return on average common equity, operating

F/B

10.08%


10.26%


8.93%


8.34%


8.73%

Annualized return on average tangible common equity, operating

F/C

14.63%


15.24%


13.49%


12.78%


13.25%













Certain financial information included in the earnings release and the associated Condensed Consolidated Financial Information (unaudited) is determined by methods other than in accordance with GAAP.  The non-GAAP financial measure above is calculated by using "tangible common equity," which is defined as total common equity reduced by intangible assets.  "Tangible book value per common share" is defined as tangible common equity divided by total common shares outstanding.  "Diluted earnings per share, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by diluted weighted-average shares.  "Core net interest margin" is defined as reported net interest margin less purchase accounting adjustments.  "Annualized return on average assets, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by average assets.  "Annualized return on average common equity, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by average common equity.  "Annualized return on average tangible common equity, operating" is defined as net earnings available to common shareholders adjusted for specified one-time items divided by average tangible common equity.


We use non-GAAP measures because we believe they are useful for evaluating our financial condition and performance over periods of time, as well as in managing and evaluating our business and in discussions about our performance.  We also believe these non-GAAP financial measures provide users of our financial information with a meaningful measure for assessing our financial condition as well as comparison to financial results for prior periods.  These results should not be viewed as a substitute for results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP performance measures that other companies may use.

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SOURCE MidSouth Bancorp, Inc.



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