MidSouth Bancorp, Inc. Reports Second Quarter 2015 Results and Declares Quarterly Dividends

- Diluted operating EPS $0.35 versus $0.11 for 1Q2015 and $0.34 for 2Q2014

- Linked quarter loans declined at 5% annualized rate on increased paydowns

- Loan loss reserve to total loans of 1.24% with $1.1 million provision

- Limited energy related credit downgrades in 2Q2015; one moved to TDR status

- Operating noninterest expenses flat at $17.0 million versus 2Q2014 and decreasing $1.2 million versus YTD 2014

Jul 27, 2015, 16:45 ET from MidSouth Bancorp, Inc.

LAFAYETTE, La., July 27, 2015 /PRNewswire/ -- MidSouth Bancorp, Inc. ("MidSouth") (NYSE: MSL) today reported quarterly net earnings available to common shareholders of $4.9 million for the second quarter of 2015, compared to net earnings available to common shareholders of $3.9 million reported for the second quarter of 2014 and $1.3 million in net earnings available to common shareholders for the first quarter of 2015.  Diluted earnings for the second quarter of 2015 were $0.42 per common share, compared to $0.34 per common share reported for the second quarter of 2014 and $0.12 per common share reported for the first quarter of 2015.  MidSouth also announced today that its Board of Directors approved the renewal of its $75 million Universal Shelf Registration which was set to expire in August 2015.

The second quarter of 2015 included a gain on sale of securities of $1.1 million and $160,000 of income recognized from a death benefit on bank owned life insurance.  The first quarter of 2015 and the second quarter of 2014 included net gains on sales of securities of $115,000 and $128,000, respectively.  The second quarter of 2014 also included efficiency consultant expenses of $107,000.  Excluding these non-operating income and expenses, operating earnings per share for the second quarter of 2015, the first quarter of 2015 and the second quarter of 2014 was $0.35, $0.11 and $0.34, respectively.

First quarter 2015 net earnings were impacted by a loan loss provision of $6.0 million, of which approximately $4.0 million was reserved for energy related credit downgrades on five relationships and $500,000 was added to the reserve for potential yet unidentified losses in the energy related portfolio.  One energy related relationship totaling $21.4 million was classified as a troubled debt restructuring during the second quarter of 2015 by conversion of the loans to interest only for a limited amount of time.

C. R. Cloutier, President and CEO, commenting on second quarter earnings remarked, "We continue to be proactive in working the energy related credit relationships downgraded in the first quarter of 2015 and identified two new energy related credits in the second quarter of 2015 requiring downgrading.

"As part of our ongoing active management of the entire loan portfolio, we also identified weaknesses in three commercial real estate credit relationships acquired through the merger with PSB Financial Corporation in 2012.  We continue to work closely with our loan customers through these challenging market conditions."

Balance Sheet

Total consolidated assets at June 30, 2015 were $1.9 billion, compared to $2.0 billion at March 31, 2015 and $1.9 billion at June 30, 2014.  Our stable core deposit base, which excludes time deposits, totaled $1.3 billion at June 30, 2015 and $1.4 billion at March 31, 2015 and accounted for 84.8% of deposits compared to 84.5% of deposits, respectively.  Net loans totaled $1.3 billion at June 30, 2015 and March 31, 2015, compared to $1.2 billion at June 30, 2014.  Total loans on a linked quarter basis decreased $16.5 million, or 1.3% for the quarter ended June 30, 2015. The second quarter of 2015 included a decrease of $21.2 million in outstanding energy related loans and $3.7 million of paydowns on the indirect auto loan program, which the Bank exited at the end of 2014.  Net of the decreases in the energy related loan portfolio and the indirect auto loan portfolio, net loans increased $8.4 million, or 2.6% annualized, for the quarter ended June 30, 2015.

MidSouth's Tier 1 leverage capital ratio was 9.79% at June 30, 2015 compared to 9.63% at March 31, 2015.  Tier 1 risk-based capital and total risk-based capital ratios were 12.68% and 13.77% at June 30, 2015, compared to 12.30% and 13.38% at March 31, 2015, respectively.  Tier 1 common equity to total risk-weighted assets at June 30, 2015 was 8.47%.  Tangible common equity totaled $122.4 million at June 30, 2015, compared to $120.6 million at March 31, 2015.  Tangible book value per share at June 30, 2015 was $10.78 versus $10.63 at March 31, 2015.

Asset Quality

Nonperforming assets totaled $29.1 million at June 30, 2015, an increase of $11.5 million compared to $17.6 million reported at March 31, 2015.  The increase resulted primarily from the addition of a $10.1 million commercial real estate (CRE) relationship unrelated to energy that was placed on nonaccrual status during the quarter.  Allowance coverage for nonperforming loans decreased to 65.55% at June 30, 2015, compared to 124.17% at March 31, 2015.  The ALLL/total loans ratio was 1.24 % at June 30, 2015 and 1.23% at March 31, 2015.  Including valuation accounting adjustments on acquired loans, the total valuation accounting adjustment plus ALLL was 1.59% of loans at June 30, 2015.  The ratio of annualized net charge-offs to total loans was 0.34% for the three months ended June 30, 2015 compared to 0.36% for the three months ended March 31, 2015.

Total nonperforming assets to total loans plus ORE and other assets repossessed was 2.24% at June 30, 2015 compared to 1.34% at March 31, 2015.  Loans classified as troubled debt restructurings ("TDRs") totaled $21.8 million at June 30, 2015 compared to $407,000 at March 31, 2015.  The $21.4 million of loans restructured during the second quarter of 2015 represented a single, energy-related relationship.  The relationship was identified as a TDR by conversion of the loans to interest only for a limited amount of time and was still accruing interest at June 30, 2015.  Classified assets, including ORE, increased $0.9 million, or 1.2%, to $75.6 million at June 30, 2015 compared to $74.7 million at March 31, 2015.

MidSouth's energy related loan portfolio at June 30, 2015 totaled $266 million, or 20.6% of total loans, including a $20 million CD secured loan, down from $288 million at March 31, 2015.  The majority of MidSouth's energy lending is focused on oil field service companies.  Of the 441 total relationships in our energy related loan portfolio, 14 relationships totaling $30.5 million were classified, with $0.7 million on nonaccrual status at June 30, 2015.  A total of $1.15 million is reserved for potential yet unidentified losses in the energy related portfolio.

More information on our energy loan portfolio can be found on our website at MidSouthBank.com under Investor Relations/Presentations.

Second Quarter 2015 vs. Second Quarter 2014 Earnings Comparison

Second quarter 2015 net earnings available to common shareholders totaled $4.9 million compared to $3.9 million for the second quarter of 2014.  The second quarter of 2015 included $1.1 million of gain on sales of securities and $160,000 of income from a death benefit on bank owned life insurance, and the second quarter of 2014 included $128,000 of gain on sales of securities.  Excluding these non-operating revenues, revenues from consolidated operations totaled $24.3 million for the second quarter of 2015, unchanged from the $24.2 million reported for the second quarter of 2014.  Net interest income increased $268,000 in quarterly comparison primarily due to a $499,000 increase in interest income earned on a higher volume of loans which was partially offset by a $313,000 decrease in interest income on investment securities which declined in volume.  Additionally, a $169,000 decrease in interest expense on junior subordinated debentures was partially offset by a $106,000 increase in interest expense on deposits and repurchase agreements.  Excluding non-operating income of $1.3 million and $128,000 for the second quarters of 2015 and 2014, respectively, noninterest income decreased $255,000 in quarterly comparison, from $5.1 million for the three months ended June 30, 2014 to $4.9 million for the three months ended June 30, 2015.  The decrease in noninterest income resulted primarily from a $311,000 reduction in service charges on deposit accounts, including NSF fees.

Excluding the $107,000 of efficiency consultant expenses in the second quarter of 2014, noninterest expenses totaled $17.0 million for both three month periods ending June 30, 2015 and 2014.  A decrease of $291,000 in salaries and benefits costs was offset by an increase of $176,000 in occupancy expenses as well as smaller increases in several other noninterest expense categories.  The provision for loan losses decreased $100,000 in quarterly comparison.  Income tax expense increased $408,000 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 2015 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 $92,000 for the three months ended June 30, 2015.

Fully taxable-equivalent ("FTE") net interest income totaled $19.7 million and $19.5 million for the quarters ended June 30, 2015 and 2014, respectively.  The FTE net interest income increased $217,000 in prior year quarterly comparison primarily due to a $499,000 increase in interest income on loans.  The increased interest income on loans resulted from a $106.4 million increase in the average volume of loans in quarterly comparison. The average yield on loans decreased 33 basis points, from 5.91% to 5.58%.  The purchase accounting adjustments added 19 basis points to the average yield on loans for the second quarter of 2015 and 23 basis points to the average yield on loans for the second quarter of 2014.  Net of the impact of the purchase accounting adjustments, average loan yields declined 29 basis points in prior year quarterly comparison, from 5.68% to 5.39%.  Loan yields have declined primarily as the result of a sustained low interest rate environment.

Investment securities totaled $426.9 million, or 21.9% of total assets at June 30, 2015, versus $450.0 million, or 23.7% of total assets at June 30, 2014.  The investment portfolio had an effective duration of 3.9 years and a net unrealized gain of $1.9 million at June 30, 2015.  The average volume of investment securities decreased $45.5 million in prior year quarterly comparison.  The average tax equivalent yield on investment securities decreased 6 basis points, from 2.63% to 2.57%.  The $45.5 million decrease in the average volume of investment securities was used to fund loan growth during the same period.

The average yield on all earning assets decreased 24 basis points in prior year quarterly comparison, from 4.93% for the second quarter of 2014 to 4.69% for the second quarter of 2015.  Net of the impact of purchase accounting adjustments, the average yield on total earning assets decreased 22 basis points, from 4.77% to 4.55% for the three month periods ended June 30, 2014 and 2015, respectively, due to a decline in the average rate earned on loans.

The impact to interest expense of a $43.5 million increase in the average volume of interest- bearing liabilities was offset by a 4 basis point decrease in the average rate paid on interest- bearing liabilities, from 0.46% at June 30, 2014 to 0.42% at June 30, 2015.  Net of purchase accounting adjustments on acquired certificates of deposit and FHLB borrowings, the average rate paid on interest-bearing liabilities was 0.51% for the second quarter of 2014 and declined to 0.46% for the second quarter of 2015.

As a result of these changes in volume and yield on earning assets and interest-bearing liabilities, the FTE net interest margin decreased 20 basis points, from 4.58% for the second quarter of 2014 to 4.38% for the second quarter of 2015.  Net of purchase accounting adjustments on loans, deposits and FHLB borrowings, the FTE margin decreased 18 basis points, from 4.39% for the second quarter of 2014 to 4.21% for the second quarter of 2015.

Second Quarter 2015 vs. First Quarter 2015 Earnings Comparison

In sequential-quarter comparison, net earnings available to common shareholders increased $3.6 million primarily due to a $4.9 million decrease in the provision for loan losses.  Net interest income increased $124,000 in sequential-quarter comparison.  Second quarter noninterest income included gain on sale of securities of $1.1 million and income from a death benefit on bank owned life insurance of $160,000.  First quarter included gain on sales of securities of $115,000.  Excluding these non-operating revenues, noninterest income totaled $4.9 million for the three month periods ended June 30, 2015 and March 31, 2015.

Noninterest expense increased $718,000 in sequential-quarter comparison and consisted primarily of increases of $255,000 in salaries and benefits costs (including a $237,000 increase in group health costs), $130,000 in marketing expenses, $180,000 in occupancy expenses and $67,000 in corporate development expense.

FTE net interest income increased $111,000 in sequential-quarter comparison primarily due to a $214,000 increase in interest income on loans, which included a $223,000 increase in purchase accounting adjustments on acquired loans.  The average yield on loans decreased 6 basis points, from 5.64% for the first quarter of 2015 to 5.58% for the second quarter of 2015.  Net of purchase accounting adjustments, the loan yield declined 12 basis points, from 5.51% to 5.39% during the same period.  The average yield on total earning assets decreased 8 basis points for the same period, from 4.77% to 4.69%, respectively.  As a result of these changes in volume and yield on earning assets, the FTE net interest margin decreased 6 basis points, from 4.44% to 4.38%.  Net of purchase accounting adjustments, the FTE net interest margin decreased 11 basis points, from 4.32% for the first quarter of 2015 to 4.21% for the second quarter of 2015.

Year-Over-Year Earnings Comparison

In year-over-year comparison, net earnings available to common shareholders decreased $4.4 million, from $10.6 million at June 30, 2014 to $6.2 million at June 30, 2015.  The decrease resulted primarily from the $3.0 million of life insurance proceeds recorded as noninterest income in the first quarter of 2014.  The first six months of 2014 also included $128,000 in gain on sales of securities, $160,000 of efficiency consultant expenses and $189,000 of expenses related to the loss of an executive officer.  The first six months of 2015 included $1.2 million in gain on sales of securities and $160,000 of income from a death benefit on bank owned life insurance.  Excluding these non-operating revenues and expenses, net earnings available to common shareholders decreased $2.5 million in year-over-year comparison.  The $2.5 million decrease in operating earnings in year-over-year comparison resulted primarily from a $5.4 million increase in the provision for loan losses.  A decrease of $320,000 in noninterest income also contributed to the decrease in operating earnings.  The increase in the provision for loan losses and the decrease in noninterest income were partially offset by a $630,000 increase in net interest income, a $1.2 million decrease in noninterest expenses and a $1.3 million decrease in income tax expense.

Excluding non-operating income, decreases in noninterest income consisted primarily of $571,000 in service charges on deposit accounts (primarily NSF fees) and $72,000 in income on ORE, which was partially offset by a $139,000 increase in ATM and debit card income and a $200,000 increase in mortgage banking fees.  Excluding the non-operating expenses in 2014, decreases in noninterest expense primarily included $1.0 million in salaries and benefits costs, $115,000 in expenses on ORE and other repossessed assets and $120,000 in postage and freight.  The decreased expenses were partially offset by a $114,000 increase in legal and professional fees.

In year-to-date comparison, FTE net interest income increased $521,000 primarily due to a $376,000 decrease in interest income.  Interest income on loans increased $1.1 million despite a $778,000 reduction in purchase accounting adjustments on acquired loans.  The average volume of loans increased $128.7 million in year-over-year comparison, and the average yield on loans decreased 43 basis points, from 6.04% to 5.61%.  The increase in interest income on loans was offset by a $742,000 reduction in interest income on investment securities.  The average volume of investment securities decreased $60.0 million in year-over-year comparison.  The average yield on earning assets decreased in year-over-year comparison, from 4.98% at June 30, 2014 to 4.73% at June 30, 2015.  The purchase accounting adjustments added 32 basis points to the average yield on loans for the six months ended June 30, 2014 and 16 basis points for the six months ended June 30, 2015.  Net of purchase accounting adjustments, the average yield on earning assets decreased 14 basis points, from 4.75% at June 30, 2014 to 4.61% at June 30, 2015.

Interest expense decreased $145,000 in year-over-year comparison primarily due to a 4 basis point decrease in the average rate paid on interest-bearing liabilities, from 0.47% at June 30, 2014 to 0.43% at June 30, 2015.  Net of purchase accounting adjustments, the average rate paid on interest-bearing liabilities decreased 6 basis points, from 0.52% at June 30, 2014 to 0.46% at June 30, 2015.  The FTE net interest margin decreased 21 basis points, from 4.62% for the six months ended June 30, 2014 to 4.41% for the six months ended June 30, 2015.  Net of purchase accounting adjustments, the FTE net interest margin decreased 9 basis points, from 4.36% to 4.27% for the six months ended June 30, 2014 and 2015, respectively, primarily due to a decline in the average rate earned on loans.

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 October 1, 2015 to shareholders of record as of the close of business on September 15, 2015.  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, 2015 to shareholders of record as of the close of business on October 1, 2015.  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, 2015. MidSouth Bancorp, Inc. trades on the NYSE under the symbol "MSL." 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 58 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 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 loan loss provision 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, 2014 filed with the SEC on March 13, 2015 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

6/30/2015

3/31/2015

12/31/2014

9/30/2014

6/30/2014

     Total interest income

$    20,798

$     20,681

$      21,477

$     21,016

$     20,595

     Total interest expense

1,417

1,424

1,317

1,504

1,482

          Net interest income

19,381

19,257

20,160

19,512

19,113

     FTE net interest income

19,676

19,565

20,496

19,856

19,459

     Provision for loan losses

1,100

6,000

2,700

1,175

1,200

     Non-interest income

6,166

4,967

5,050

6,194

5,261

     Non-interest expense

17,005

16,287

17,327

17,857

17,123

          Earnings before income taxes

7,442

1,937

5,183

6,674

6,051

     Income tax expense

2,343

446

1,519

2,202

1,935

          Net earnings

5,099

1,491

3,664

4,472

4,116

     Dividends on preferred stock

172

173

174

174

170

          Net earnings available to common shareholders

$      4,927

$       1,318

$        3,490

$       4,298

$       3,946

PER COMMON SHARE DATA

     Basic earnings per share

$        0.43

$         0.12

$          0.31

$         0.38

$         0.35

     Diluted earnings per share

0.42

0.12

0.30

0.37

0.34

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

0.35

0.11

0.31

0.36

0.34

     Quarterly dividends per share

0.09

0.09

0.09

0.09

0.09

     Book value at end of period

15.04

14.92

14.78

14.52

14.25

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

10.78

10.63

10.46

10.17

9.86

     Market price at end of period

15.26

14.75

17.34

18.70

19.89

     Shares outstanding at period end 

11,359,396

11,349,285

11,340,736

11,336,594

11,296,147

     Weighted average shares outstanding

        Basic

11,323,506

11,317,667

11,314,690

11,313,879

11,288,045

        Diluted

11,849,683

11,351,239

11,933,388

11,954,811

11,922,525

AVERAGE BALANCE SHEET DATA

     Total assets

$1,976,574

$1,966,752

$ 1,929,750

$1,892,609

$1,887,726

     Loans and leases

1,312,359

1,298,317

1,264,011

1,232,196

1,205,930

     Total deposits

1,593,318

1,592,153

1,563,006

1,525,059

1,532,910

     Total common equity

170,885

170,638

167,430

163,855

159,766

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

122,299

121,778

118,291

114,438

110,075

     Total equity 

212,112

211,985

208,816

205,291

201,257

SELECTED RATIOS

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

0.82%

0.27%

0.74%

0.87%

0.85%

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

9.47%

3.13%

8.51%

10.05%

10.08%

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

13.23%

4.39%

12.04%

14.39%

14.63%

     Pre-tax, pre-provision annualized return on average assets, operating (Non-GAAP)(*)

1.47%

1.64%

1.65%

1.60%

1.56%

     Efficiency ratio, operating (Non-GAAP)(*)

70.08%

67.48%

67.81%

69.05%

70.19%

     Average loans to average deposits

82.37%

81.54%

80.87%

80.80%

78.67%

     Taxable-equivalent net interest margin

4.38%

4.44%

4.65%

4.61%

4.58%

     Tier 1 leverage capital ratio

9.79%

9.63%

9.52%

9.56%

9.81%

CREDIT QUALITY

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

1.24%

1.23%

0.87%

0.75%

0.74%

     Nonperforming assets to tangible equity + ALLL

16.18%

9.87%

8.83%

7.50%

8.34%

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

2.24%

1.34%

1.17%

0.99%

1.10%

     Annualized QTD net charge-offs to total loans

0.34%

0.36%

0.28%

0.26%

0.29%

(*)See reconciliation of Non-GAAP financial measures on pages 6-8.

 

MIDSOUTH BANCORP, INC. and SUBSIDIARIES          

Condensed Consolidated Financial Information (unaudited)       

(in thousands)               

BALANCE SHEET

June 30,

March 31,

December 31,

September 30,

June 30,

2015

2015

2014

2014

2014

Assets

Cash and cash equivalents

$     82,636

$   104,402

$         86,872

$          54,215

$     63,935

Securities available-for-sale

300,335

299,690

276,984

288,397

301,028

Securities held-to-maturity

126,529

137,592

141,201

145,030

148,927

     Total investment securities

426,864

437,282

418,185

433,427

449,955

Other investments

10,598

9,644

9,990

12,091

12,090

Total loans

1,294,392

1,310,929

1,284,431

1,248,373

1,224,182

Allowance for loan losses

(16,048)

(16,060)

(11,226)

(9,425)

(9,075)

     Loans, net

1,278,344

1,294,869

1,273,205

1,238,948

1,215,107

Premises and equipment

69,263

69,762

69,958

71,115

71,787

Goodwill and other intangibles

48,452

48,729

49,005

49,282

49,559

Other assets

32,627

30,570

29,525

32,682

33,845

     Total assets

$1,948,784

$1,995,258

$    1,936,740

$     1,891,760

$1,896,278

Liabilities and Shareholders' Equity

Non-interest bearing deposits

$   408,742

$   421,897

$       390,863

$        396,263

$   389,734

Interest-bearing deposits

1,149,508

1,194,201

1,194,371

1,124,581

1,135,688

   Total deposits

1,558,250

1,616,098

1,585,234

1,520,844

1,525,422

Securities sold under agreements to repurchase and other short term borrowings

84,547

87,346

62,098

70,964

67,574

Short-term FHLB advances

40,000

25,000

25,000

35,000

35,000

Other borrowings

26,064

26,171

26,277

26,384

26,990

Junior subordinated debentures

22,167

22,167

22,167

22,167

29,384

Other liabilities

5,720

7,820

6,952

10,387

9,492

     Total liabilities

1,736,748

1,784,602

1,727,728

1,685,746

1,693,862

Total shareholders' equity

212,036

210,656

209,012

206,014

202,416

     Total liabilities and shareholders' equity

$1,948,784

$1,995,258

$    1,936,740

$     1,891,760

$1,896,278

 

MIDSOUTH BANCORP, INC. and SUBSIDIARIES             

Condensed Consolidated Financial Information (unaudited)          

(in thousands except per share data)                

EARNINGS STATEMENT

Three Months Ended

6/30/2015

3/31/2015

12/31/2014

9/30/2014

6/30/2014

Interest income:

Loans, including fees

$ 17,709

$ 17,717

$   18,045

$ 17,670

$ 17,183

Investment securities

2,412

2,509

2,566

2,617

2,725

Accretion of purchase accounting adjustments

559

337

757

603

586

Other interest income

118

118

109

126

101

Total interest income

20,798

20,681

21,477

21,016

20,595

Interest expense:

Deposits

949

984

973

915

926

Borrowings

436

418

401

409

395

Junior subordinated debentures

151

150

80

327

320

Accretion of purchase accounting adjustments

(119)

(128)

(137)

(147)

(159)

Total interest expense

1,417

1,424

1,317

1,504

1,482

Net interest income

19,381

19,257

20,160

19,512

19,113

Provision for loan losses

1,100

6,000

2,700

1,175

1,200

Net interest income after provision for loan losses

18,281

13,257

17,460

18,337

17,913

Noninterest income:

Service charges on deposit accounts

2,137

2,120

2,395

2,556

2,448

ATM and debit card income

1,865

1,841

1,834

1,808

1,853

Gain on securities, net  (non-operating)(*)

1,128

115

-

-

128

Gain on sale of ORE (non-operating)(*)

-

-

-

1,079

-

Mortgage lending

145

153

151

161

49

Income from death benefit on bank owned life insurance (non-operating)(*)

160

-

-

-

-

Other charges and fees

731

738

670

590

783

Total non-interest income

6,166

4,967

5,050

6,194

5,261

Noninterest expense:

Salaries and employee benefits

8,197

7,942

8,259

8,287

8,488

Occupancy expense

3,865

3,685

3,750

3,834

3,689

ATM and debit card

693

663

699

793

707

Legal and professional fees

382

345

330

342

326

FDIC premiums

331

281

268

269

251

Marketing

417

287

543

396

366

Corporate development

387

320

381

342

331

Data processing

467

457

462

503

483

Printing and supplies

255

225

280

279

275

Expenses on ORE and other assets repossessed

133

153

169

122

172

Amortization of core deposit intangibles

276

277

276

277

276

Loss on disposal of fixed assets (non-operating)(*)

-

-

-

394

-

Loss on redemption of Trust Preferred Securities (non-operating)(*)

-

-

-

258

-

Efficiency consultant expenses (non-operating)(*)

-

-

156

200

107

Other non-interest expense

1,602

1,652

1,754

1,561

1,652

Total non-interest expense

17,005

16,287

17,327

17,857

17,123

Earnings before income taxes

7,442

1,937

5,183

6,674

6,051

Income tax expense

2,343

446

1,519

2,202

1,935

Net earnings

5,099

1,491

3,664

4,472

4,116

Dividends on preferred stock

172

173

174

174

170

Net earnings available to common shareholders

$   4,927

$   1,318

$     3,490

$   4,298

$   3,946

Earnings per common share, diluted

$     0.42

$     0.12

$       0.30

$     0.37

$     0.34

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

$     0.35

$     0.11

$       0.31

$     0.36

$     0.34

(*)See reconciliation of Non-GAAP financial measures on page 6-8.

 

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

2015

of Total

2015

2014

2014

2014

of Total

Commercial, financial, and agricultural

$    471,397

36.42%

$   484,508

$       467,147

$       452,065

$   454,310

37.11%

Lease financing receivable

5,561

0.43%

6,350

4,857

5,285

4,750

0.39%

Real estate - construction

79,176

6.12%

76,964

68,577

86,315

86,238

7.04%

Real estate - commercial

469,022

36.23%

471,737

467,172

430,930

413,565

33.78%

Real estate - residential

153,820

11.88%

153,647

154,602

153,915

153,082

12.50%

Installment loans to individuals

113,626

8.78%

115,284

119,328

116,340

108,581

8.87%

Other

1,790

0.14%

2,439

2,748

3,523

3,656

0.30%

Total loans

$ 1,294,392

$1,310,929

$    1,284,431

$    1,248,373

$1,224,182

COMPOSITION OF DEPOSITS

June 30,

Percent

March 31,

December 31,

September 30,

June 30,

Percent

2015

of Total

2015

2014

2014

2014

of Total

Noninterest bearing

$    408,742

26.23%

$   421,897

$       390,863

$       396,263

$   389,734

25.55%

NOW & Other

458,338

29.41%

480,454

469,627

447,403

443,287

29.06%

Money Market/Savings

453,902

29.13%

463,625

473,290

460,100

470,731

30.86%

Time Deposits of less than $100,000

90,348

5.80%

94,730

96,577

101,373

104,423

6.85%

Time Deposits of $100,000 or more

146,920

9.43%

155,392

154,877

115,705

117,247

7.69%

Total deposits

$ 1,558,250

$1,616,098

$    1,585,234

$    1,520,844

$1,525,422

ASSET QUALITY DATA

June 30,

March 31,

December 31,

September 30,

June 30,

2015

2015

2014

2014

2014

Nonaccrual loans

$      23,873

$     12,894

$         10,701

$           7,750

$       6,913

Loans past due 90 days and over

609

40

187

23

203

Total nonperforming loans

24,482

12,934

10,888

7,773

7,116

Other real estate

4,542

4,589

4,234

4,663

6,314

Other repossessed assets

38

43

-

19

81

Total nonperforming assets

$      29,062

$     17,566

$         15,122

$         12,455

$     13,511

Troubled debt restructurings

$      21,763

$          407

$              410

$              416

$          417

Nonperforming assets to total assets

1.49%

0.88%

0.78%

0.66%

0.71%

Nonperforming assets to total loans + ORE + other repossessed assets

2.24%

1.34%

1.17%

0.99%

1.10%

ALLL to nonperforming loans

65.55%

124.17%

103.10%

121.25%

127.53%

ALLL to total loans

1.24%

1.23%

0.87%

0.75%

0.74%

Quarter-to-date charge-offs

$        1,151

$       1,332

$              985

$           1,253

$          990

Quarter-to-date recoveries

39

166

86

428

100

Quarter-to-date net charge-offs

$        1,112

$       1,166

$              899

$              825

$          890

Annualized QTD net charge-offs to total loans

0.34%

0.36%

0.28%

0.26%

0.29%

 

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, 2015

March 31, 2015

December 31, 2014

September 30, 2014

June 30, 2014

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

$   345,108

$     1,853

2.15%

$   336,337

$     1,925

2.29%

$   339,536

$     1,936

2.28%

$   351,645

$     1,965

2.24%

$   379,124

$     2,064

2.18%

Tax-exempt securities

76,433

854

4.47%

78,948

892

4.52%

83,612

966

4.62%

86,528

996

4.60%

87,964

1,007

4.58%

Total investment securities

421,541

2,707

2.57%

415,285

2,817

2.71%

423,148

2,902

2.74%

438,173

2,961

2.70%

467,088

3,071

2.63%

Federal funds sold

3,228

2

0.25%

3,816

2

0.21%

3,792

2

0.21%

3,143

2

0.25%

2,260

1

0.18%

Time and interest bearing deposits in

other banks

56,110

35

0.25%

59,225

37

0.25%

44,841

28

0.24%

22,922

15

0.26%

16,789

11

0.26%

Other investments

10,057

81

3.22%

9,754

79

3.24%

11,063

79

2.86%

12,090

109

3.61%

11,679

89

3.05%

Loans 

1,312,359

18,268

5.58%

1,298,317

18,054

5.64%

1,264,011

18,802

5.90%

1,232,196

18,273

5.88%

1,205,930

17,769

5.91%

Total interest earning assets

1,803,295

21,093

4.69%

1,786,397

20,989

4.77%

1,746,855

21,813

4.95%

1,708,524

21,360

4.96%

1,703,746

20,941

4.93%

Non-interest earning assets

173,279

180,355

182,895

184,085

183,980

Total assets

$1,976,574

$1,966,752

$1,929,750

$1,892,609

$1,887,726

Interest-bearing liabilities:

Deposits

$1,181,381

$        921

0.31%

$1,192,086

$        947

0.32%

$1,158,317

$        927

0.32%

$1,132,132

$        859

0.30%

$1,156,638

$        858

0.30%

Repurchase agreements

84,545

242

1.15%

79,630

230

1.17%

69,735

207

1.18%

70,587

210

1.18%

62,322

199

1.28%

Federal funds purchased

-

-

0.00%

-

-

0.00%

-

-

0.00%

70

-

0.00%

679

1

0.58%

Short-term borrowings

30,604

13

0.17%

25,000

8

0.13%

28,696

12

0.16%

28,913

13

0.18%

25,110

9

0.14%

Notes payable

26,114

90

1.36%

26,219

89

1.36%

26,326

91

1.35%

26,640

95

1.40%

27,218

95

1.38%

Junior subordinated debentures

22,167

151

2.69%

22,167

150

2.71%

22,167

80

1.41%

26,247

327

4.88%

29,384

320

4.31%

Total interest bearing liabilities

1,344,811

1,417

0.42%

1,345,102

1,424

0.43%

1,305,241

1,317

0.40%

1,284,589

1,504

0.46%

1,301,351

1,482

0.46%

Non-interest bearing liabilities

419,651

409,665

415,693

402,729

385,118

Shareholders' equity

212,112

211,985

208,816

205,291

201,257

Total liabilities and  shareholders'

equity

$1,976,574

$1,966,752

$1,929,750

$1,892,609

$1,887,726

Net interest income (TE) and spread

$   19,676

4.27%

$   19,565

4.34%

$   20,496

4.55%

$   19,856

4.50%

$   19,459

4.47%

Net interest margin

4.38%

4.44%

4.65%

4.61%

4.58%

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

4.21%

4.32%

4.44%

4.42%

4.39%

(*) See reconciliation of Non-GAAP financial measures on page 6-8.

 

MIDSOUTH BANCORP, INC. and SUBSIDIARIES             

Reconciliation of Non-GAAP Financial Measures (unaudited)

(in thousands except per share data)    

     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.  We are providing disclosure of the reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures.  "Tangible common equity" is defined as total common equity reduced by intangible assets.  "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.  "Pre-tax, pre-provision annualized return on average assets, operating" is defined as pre-tax, pre-provision earnings adjusted for specified one-time items divided by average 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.  The GAAP-based efficiency ratio is measured as noninterest expense as a percentage of net interest income plus noninterest income.  The non-GAAP efficiency ratio excludes specified one-time items in addition to securities gains and losses and gains and losses on the sale/valuation of other real estate owned and other assets repossessed.

     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.

Three Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

2015

2015

2014

2014

2014

Average Balance Sheet Data

Total average assets

A

$ 1,976,574

$ 1,966,752

$    1,929,750

$     1,892,609

$ 1,887,726

Total equity

$    212,112

$    211,985

$       208,816

$        205,291

$    201,257

Less preferred equity

41,226

41,347

41,386

41,436

41,491

Total common equity

B

$    170,886

$    170,638

$       167,430

$        163,855

$    159,766

Less intangible assets

48,587

48,860

49,139

49,417

49,691

Tangible common equity

C

$    122,299

$    121,778

$       118,291

$        114,438

$    110,075

 

MIDSOUTH BANCORP, INC. and SUBSIDIARIES             

Reconciliation of Non-GAAP Financial Measures (unaudited) (continued)

(in thousands except per share data)    

Three Months Ended

Core Net Interest Margin

June 30,

2015

March 31,

2015

December 31,

2014

September 30,

2014

June 30,

2014

Net interest income (TE)

$      19,676

$      19,565

$         20,496

$          19,856

$      19,459

Less purchase accounting adjustments

(678)

(465)

(894)

(750)

(745)

Net interest income, net of purchase accounting adjustments

D

$      18,998

$      19,100

$         19,602

$          19,106

$      18,714

Total average earnings assets

$ 1,803,295

$ 1,786,397

$    1,746,855

$     1,708,524

$ 1,703,746

Add average balance of loan valuation discount

4,888

5,179

5,764

6,498

7,013

Average earnings assets, excluding loan valuation discount

E

$ 1,808,183

$ 1,791,576

$    1,752,619

$     1,715,022

$ 1,710,759

Core net interest margin

D/E

4.21%

4.32%

4.44%

4.42%

4.39%

Three Months Ended

Return Ratios

June 30, 2015

March 31, 2015

December 31, 2014

September 30, 2014

June 30, 2014

Net earnings available to common shareholders

$        4,927

$        1,318

$           3,490

$            4,298

$        3,946

Net gain on sale of securities, after-tax

(733)

(75)

-

-

(83)

Efficiency consultant expenses, after-tax

-

-

101

130

70

Loss on disposal of fixed assets, after-tax

-

-

-

256

-

Loss on redemption of Trust Preferred Securities, after-tax

-

-

-

168

-

Gain on sale of other real estate owned, after-tax

-

-

-

(700)

-

Income from death benefit on bank owned life insurance

(160)

-

-

-

-

   Net earnings available to common shareholders, operating

F

$        4,034

$        1,243

$           3,591

$            4,152

$        3,933

Earnings before income taxes

$        7,442

$        1,937

$           5,183

$            6,674

$        6,051

Net gain on sale of securities

(1,128)

(115)

-

-

(128)

Efficiency consultant expenses

-

-

156

200

107

Loss on disposal of fixed assets

-

-

-

394

-

Loss on redemption of Trust Preferred Securities

-

-

-

258

-

Gain on sale of other real estate owned

-

-

-

(1,079)

-

Income from death benefit on bank owned life insurance

(160)

-

-

-

-

Provision for loan losses

1,100

6,000

2,700

1,175

1,200

   Pre-tax, pre-provision earnings, operating

G

$        7,254

$        7,822

$           8,039

$            7,622

$        7,230

Annualized return on average assets, operating

F/A

0.82%

0.27%

0.74%

0.87%

0.85%

Annualized return on average common equity, operating

F/B

9.47%

3.13%

8.51%

10.05%

10.08%

Annualized return on average tangible common equity, operating

F/C

13.23%

4.39%

12.04%

14.39%

14.63%

Pre-tax, pre-provision annualized return on average assets, operating

G/A

1.47%

1.64%

1.65%

1.60%

1.56%

 

MIDSOUTH BANCORP, INC. and SUBSIDIARIES             

Reconciliation of Non-GAAP Financial Measures (unaudited) (continued)

(in thousands except per share data)    

Three Months Ended

Per Common Share Data

June 30,

2015

March 31,

2015

December 31,

2014

September 30,

2014

June 30,

2014

Book value per common share

$   15.04

$    14.92

$           14.78

$            14.52

$   14.25

Effect of intangible assets per share

4.26

4.29

4.32

4.35

4.39

Tangible book value per common share

$   10.78

$    10.63

$           10.46

$            10.17

$     9.86

Diluted earnings per share

$     0.42

$      0.12

$             0.30

$              0.37

$     0.34

Effect of net gain on sale of securities, after-tax

(0.06)

(0.01)

-

-

(0.01)

Effect of efficiency consultant expenses, after-tax

-

-

0.01

0.01

0.01

Effect of loss on disposal of fixed assets, after-tax

-

-

-

0.02

-

Effect of loss on redemption of Trust Preferred Securities, after-tax

-

-

-

0.02

-

Effect of gain on sale of other real estate, after-tax

-

-

-

(0.06)

-

Effect of income from death benefit on bank owned life insurance

(0.01)

-

-

-

-

Diluted earnings per share, operating

$     0.35

$      0.11

$             0.31

$              0.36

$     0.34

Three Months Ended

Efficiency Ratio

June 30,

2015

March 31,

2015

December 31,

2014

September 30,

2014

June 30,

2014

Net interest income

$ 19,381

$  19,257

$         20,160

$          19,512

$ 19,113

Noninterest income

6,166

4,967

5,050

6,194

5,261

Income from death benefit on bank owned life insurance

(160)

-

-

-

-

Net gain on sale of securities

(1,128)

(115)

-

-

(128)

Net gain on sale/valuation of other real estate owned and other assets repossessed

-

(19)

-

(1,079)

(3)

   Noninterest income (non-GAAP)

$   4,878

$    4,833

$           5,050

$            5,115

$   5,130

Total revenue

H

$ 25,547

$  24,224

$         25,210

$          25,706

$ 24,374

Total revenue (non-GAAP)

I

$ 24,259

$  24,090

$         25,210

$          24,627

$ 24,243

Noninterest expense

J

$ 17,005

$  16,287

$         17,327

$          17,857

$ 17,123

Efficiency consultant expenses

-

-

(156)

(200)

(107)

Loss on disposal of fixed assets

-

-

-

(394)

-

Loss on redemption of Trust Preferred Securities

-

-

-

(258)

-

Net loss on sale/valuation of other real estate owned

(5)

(31)

(77)

-

-

   Noninterest expense (non-GAAP)

K

$ 17,000

$  16,256

$         17,094

$          17,005

$ 17,016

Efficiency ratio (GAAP)

J/H

66.56%

67.23%

68.73%

69.47%

70.25%

Efficiency ratio (non-GAAP)

K/I

70.08%

67.48%

67.81%

69.05%

70.19%

 

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SOURCE MidSouth Bancorp, Inc.