Market Overview

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

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Quarterly Highlights

- Diluted operating EPS $0.21 versus $0.35 for 2Q2015 and $0.36 for 3Q2014

- Linked quarter loans increased at 2% annualized rate

- Tangible capital and regulatory ratios improved during 3Q15

- Loan loss reserve to total loans of 1.46% with $3.8 million provision

- No energy-related charge-offs during 3Q; YTD energy charge-offs $557,000

- Operating noninterest expense $16.6 million versus $17.0 million for 2Q2015

LAFAYETTE, La., Oct. 27, 2015 /PRNewswire/ -- MidSouth Bancorp, Inc. ("MidSouth") (NYSE: MSL) today reported quarterly net earnings available to common shareholders of $2.4 million for the third quarter of 2015, compared to net earnings available to common shareholders of $4.3 million reported for the third quarter of 2014 and $4.9 million in net earnings available to common shareholders for the second quarter of 2015.  Diluted earnings for the third quarter of 2015 were $0.21 per common share, compared to $0.37 per common share reported for the third quarter of 2014 and $0.42 per common share reported for the second quarter of 2015.

MidSouth Bancorp, Inc. Logo.

Operating earnings for 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 third quarter of 2014 included a $1.1 million gain on the sale of a commercial property held as other real estate ("ORE"), a $258,000 charge on the redemption of the Company's Statutory Trust 1 and Capital Securities (TRUPS), and a $394,000 loss on disposal of fixed assets incurred in the quarter.  The third quarter of 2014 also included efficiency consultant expenses of $200,000.  Excluding these non-operating income and expenses, operating earnings per share for the second quarter of 2015 and the third quarter of 2014 was $0.35 and $0.36, respectively.

C. R. Cloutier, President and CEO, commenting on third quarter earnings remarked, "Despite the elevated level of nonperforming assets added during the quarter, we continue to produce strong pre-provision pre-tax earnings that were almost double our loan loss provision and as a result build capital levels. Moreover, our year to date loan loss provision is over 3 times our year to date net charge-offs."

Energy Lending Update

  • Energy loans increased $29.2 million during the quarter to $295.6 million at September 30, 2015
  • As of the date of this release, energy loans declined to $259.8 million, or $35.8 million during the month of October due to substantial paydown activity
  • No energy-related charge-offs during 3Q15; YTD energy charge-offs $557,000
  • There was only one energy-related impairment during the quarter of $1.1 million
  • Energy reserve stands at 2.4% of energy loans at September 30, 2015
  • One energy loan relationship of $21.1 million moved from accruing Troubled Debt Restructure (TDR) to non-accruing TDR during 3Q15
  • Eight energy loan relationships had rating changes during the quarter
    • Three loan relationships totaling $9.2 million were downgraded to Special Mention
    • Four loan relationships totaling $13.7 million were downgraded to Substandard
    • One loan relationship totaling $2.5 million was upgraded to Special Mention during the quarter

Cloutier, commenting on the energy business and energy portfolio, noted, "Slowed activity in the energy industry and the continued low price of oil and gas contributed to the addition of $28.4 million energy-related credits to loans on nonaccrual status during the quarter as well as some additional rating downgrades.  Despite the continued slowdown in the energy business and the need for us to prudently manage our risk exposure, we continue to see opportunities to lend to some very high quality energy borrowers.  We firmly believe the energy lending business is a great long-term business for our company, despite some of the current challenges it presents."

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

Balance Sheet

Total consolidated assets at September 30, 2015 were $2.0 billion, compared to $1.9 billion at June 30, 2015 and June 30, 2014.  Our stable core deposit base, which excludes time deposits, totaled $1.3 billion at September 30, 2015 and June 30, 2015 and accounted for 84.8% of deposits for both respective dates.  Net loans totaled $1.3 billion at September 30, 2015 and June 30, 2015, compared to $1.2 billion at September 30, 2014.  Total loans on a linked quarter basis increased $7.1 million, or 0.5% for the quarter ended September 30, 2015.

MidSouth's Tier 1 leverage capital ratio was 9.98% at September 30, 2015 compared to 9.79% at June 30, 2015.  Tier 1 risk-based capital and total risk-based capital ratios were 12.86% and 14.11% at September 30, 2015, compared to 12.68% and 13.77% at June 30, 2015, respectively.  Tier 1 common equity to total risk-weighted assets at September 30, 2015 was 8.62%.  Tangible common equity totaled $124.7 million at September 30, 2015, compared to $122.4 million at June 30, 2015.  Tangible book value per share at September 30, 2015 was $10.97 versus $10.78 at June 30, 2015.

Asset Quality

Nonperforming assets totaled $56.4 million at September 30, 2015, an increase of $27.3 million compared to $29.1 million reported at June 30, 2015.  The increase resulted primarily from the addition of five energy-related credit relationships totaling $28.4 million that were placed on nonaccrual status during the quarter, $21.1 million of which was classified as a TDR at June 30, 2015.  Allowance coverage for nonperforming loans decreased to 36.63% at September 30, 2015, compared to 65.55% at June 30, 2015.  The ALLL/total loans ratio was 1.46% at September 30, 2015 and 1.24% at June 30, 2015.  Including valuation accounting adjustments on acquired loans, the total valuation accounting adjustment plus ALLL was 1.76% of loans at September 30, 2015.  The ratio of annualized net charge-offs to total loans was 0.28% for the three months ended September 30, 2015 compared to 0.34% for the three months ended June 30, 2015.

Total nonperforming assets to total loans plus ORE and other assets repossessed was 4.32% at September 30, 2015 compared to 2.24% at June 30, 2015.  Loans classified as troubled debt restructurings, accruing ("TDRs, accruing") decreased to $168,000 at September 30, 2015 compared to $21.5 million at June 30, 2015 as a result of one $21.1 million energy-related credit relationship transferred to nonaccrual status during the third quarter.  Classified assets, including ORE, increased $10.2 million, or 13.5%, to $85.8 million at September 30, 2015 compared to $75.6 million at June 30, 2015.  The increase in classified assets during the quarter ended September 30, 2015 is primarily due to downgrades of four energy-related credits totaling $14.0 million.

Third Quarter 2015 vs. Third Quarter 2014 Earnings Comparison

Third quarter 2015 net earnings available to common shareholders totaled $2.4 million compared to $4.3 million for the third quarter of 2014.  The third quarter of 2014 included a $1.1 million gain on the sale of a commercial property held as ORE.  Excluding this non-operating revenue, revenues from consolidated operations decreased $646,000 in quarterly comparison, from $24.6 million for the three months ended September 30, 2015 to $24.0 million for the three months ended September 30, 2014.  Net interest income decreased $371,000 in quarterly comparison primarily due to a $281,000 decrease in interest income earned on loans and a $231,000 decrease in interest income on investment securities which declined in volume.  The decrease in interest income on loans and investments securities was partially offset by a $177,000 decrease in interest expense on junior subordinated debentures.  Excluding non-operating income of $1.1 million for the third quarter of 2014, noninterest income decreased $275,000 in quarterly comparison, from $5.1 million for the three months ended September 30, 2014 to $4.8 million for the three months ended September 30, 2015.  The decrease in noninterest income resulted primarily from a $325,000 reduction in service charges on deposit accounts, including NSF fees.

Excluding non-operating expenses of $852,000 in the third quarter of 2014, noninterest expenses decreased $441,000 in quarterly comparison.  A decrease of $634,000 in salaries and benefits costs was partially offset by increases of $122,000 in FDIC premiums and $73,000 in expenses on ORE and other repossessed assets.  The provision for loan losses increased $2.6 million in quarterly comparison primarily due to increases in classified assets and specific reserves on impaired loans.  Income tax expense decreased $1.2 million 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 third 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 September 30, 2015.

Fully taxable-equivalent ("FTE") net interest income totaled $19.4 million and $19.9 million for the quarters ended September 30, 2015 and 2014, respectively.  The FTE net interest income decreased $433,000 in prior year quarterly comparison primarily due to a $281,000 decrease in interest income on loans.  Despite a $53.8 million increase in the average volume on loans, interest income on loans decreased due to a decrease in the average yield on loans of 33 basis points, from 5.88% to 5.55%.  The purchase accounting adjustments added 20 basis points to the average yield on loans for the third quarter of 2015 and 22 basis points to the average yield on loans for the third quarter of 2014.  Excluding the impact of the purchase accounting adjustments, average loan yields declined 31 basis points in prior year quarterly comparison, from 5.66% to 5.35%.  Loan yields have declined primarily as the result of a sustained low interest rate environment.

Investment securities totaled $406.5 million, or 20.6% of total assets at September 30, 2015, versus $433.4 million, or 22.9% of total assets at September 30, 2014.  The investment portfolio had an effective duration of 3.5 years and a net unrealized gain of $3.6 million at September 30, 2015.  The average volume of investment securities decreased $23.5 million in prior year quarterly comparison.  The average tax equivalent yield on investment securities decreased 13 basis points, from 2.70% to 2.57%.  The $23.5 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 31 basis points in prior year quarterly comparison, from 4.96% for the third quarter of 2014 to 4.65% for the third quarter of 2015.  Excluding the impact of purchase accounting adjustments, the average yield on total earning assets decreased 29 basis points, from 4.80% to 4.51% for the three month periods ended September 30, 2014 and 2015, respectively, primarily due to the decline in the average rate earned on loans and investment securities.

The impact to interest expense of a $34.0 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 September 30, 2014 to 0.42% at September 30, 2015.  Excluding purchase accounting adjustments on acquired certificates of deposit and FHLB borrowings, the average rate paid on interest-bearing liabilities was 0.51% for the third quarter of 2014 and declined to 0.45% for the third 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 27 basis points, from 4.61% for the third quarter of 2014 to 4.34% for the third quarter of 2015.  Excluding purchase accounting adjustments on loans, deposits and FHLB borrowings, the FTE margin decreased 25 basis points, from 4.42% for the third quarter of 2014 to 4.17% for the third quarter of 2015.

Third Quarter 2015 vs. Second Quarter 2015 Earnings Comparison

In sequential-quarter comparison, net earnings available to common shareholders decreased $2.5 million primarily due to a $2.7 million increase in the provision for loan losses.  Net interest income decreased $240,000 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.  Excluding these non-operating revenues, noninterest income decreased $38,000 in sequential-quarter comparison, from $4.9 million for the three months ended June 30, 2015 to $4.8 million for the three months ended September 30, 2015.

Noninterest expense decreased $441,000 in sequential-quarter comparison and consisted primarily of a decrease of $544,000 in salaries and benefits costs that offset increases primarily consisting of $77,000 in ATM and debit card processing fees and $62,000 in expenses on ORE and other repossessed assets.

FTE net interest income decreased $253,000 in sequential-quarter comparison primarily due to a $276,000 decrease in interest income on loans.  The average volume of loans decreased $26.4 million and the average yield on loans decreased 3 basis points, from 5.58% for the second quarter of 2015 to 5.55% for the third quarter of 2015.  Excluding purchase accounting adjustments, the loan yield declined 4 basis points, from 5.39% to 5.35% during the same period.  The average yield on total earning assets decreased 4 basis points for the same period, from 4.69% to 4.65%, respectively.  As a result of these changes in volume and yield on earning assets, the FTE net interest margin decreased 4 basis points, from 4.38% to 4.34%.  Excluding purchase accounting adjustments, the FTE net interest margin decreased 4 basis points, from 4.21% for the second quarter of 2015 to 4.17% for the third quarter of 2015.

Year-Over-Year Earnings Comparison

In year-over-year comparison, net earnings available to common shareholders decreased $6.3 million, from $14.9 million at September 30, 2014 to $8.7 million at September 30, 2015.  The decrease resulted primarily from an $8.0 million increase in the provision for loan losses.  The first nine months of 2014 included $3.0 million of executive officer life insurance proceeds, $1.1 million in gain on sale of ORE, $128,000 in gain on sales of securities, $360,000 of efficiency consultant expenses, $189,000 of expenses related to the loss of an executive officer, $394,000 in losses on disposal of fixed assets and a $258,000 loss on redemption of Trust Preferred Securities.  The first nine 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 $4.3 million in year-over-year comparison.  In addition to the increase in loan loss provision, a decrease of $595,000 in noninterest income 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 $259,000 increase in net interest income, a $1.6 million decrease in operating noninterest expenses and a $2.3 million decrease in income tax expense.

Excluding non-operating income, decreases in noninterest income consisted primarily of $897,000 in service charges on deposit accounts (primarily NSF fees), which was partially offset by a $154,000 increase in ATM and debit card income and a $235,000 increase in mortgage banking fees.  Excluding the non-operating expenses in 2014, decreases in noninterest expense primarily included $1.7 million in salaries and benefits costs, $173,000 in credit reporting expense and $126,000 in the cost of printing and supplies.  The decreased expenses were partially offset by a $156,000 increase in legal and professional fees and a $221,000 increase in FDIC premiums.

In year-to-date comparison, FTE net interest income increased $89,000.  Interest income on loans increased $789,000 despite an $803,000 reduction in purchase accounting adjustments on acquired loans.  The average volume of loans increased $103.5 million in year-over-year comparison, and the average yield on loans decreased 40 basis points, from 5.99% to 5.59%.  The increase in interest income on loans was offset by a $1.0 reduction in interest income on investment securities.  The average volume of investment securities decreased $47.5 million in year-over-year comparison.  The average yield on total earning assets decreased in year-over-year comparison, from 4.97% at September 30, 2014 to 4.70% at September 30, 2015.  The purchase accounting adjustments added 29 basis points to the average yield on loans for the nine months ended September 30, 2014 and 17 basis points for the nine months ended September 30, 2015.  Excluding purchase accounting adjustments, the average yield on earning assets decreased 19 basis points, from 4.77% at September 30, 2014 to 4.58% at September 30, 2015.

Interest expense decreased $258,000 in year-over-year comparison primarily due to a 5 basis point decrease in the average rate paid on interest-bearing liabilities, from 0.47% at September 30, 2014 to 0.42% at September 30, 2015.  Excluding purchase accounting adjustments, the average rate paid on interest-bearing liabilities decreased 6 basis points, from 0.52% at September 30, 2014 to 0.46% at September 30, 2015.  The FTE net interest margin decreased 24 basis points, from 4.62% for the nine months ended September 30, 2014 to 4.38% for the nine months ended September 30, 2015.  Excluding purchase accounting adjustments, the FTE net interest margin decreased 14 basis points, from 4.38% to 4.24% for the nine months ended September 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 January 4, 2016 to shareholders of record as of the close of business on December 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 January 15, 2016 to shareholders of record as of the close of business on January 4, 2016.

About MidSouth Bancorp, Inc.

MidSouth Bancorp, Inc. is a financial holding company headquartered in Lafayette, Louisiana, with assets of $2.0 billion as of September 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


9/30/2015


6/30/2015


3/31/2015


12/31/2014


9/30/2014

     Total interest income


$     20,532


$     20,798


$     20,681


$      21,477


$     21,016

     Total interest expense


1,391


1,417


1,424


1,317


1,504

          Net interest income


19,141


19,381


19,257


20,160


19,512

     FTE net interest income


19,423


19,676


19,565


20,496


19,856

     Provision for loan losses


3,800


1,100


6,000


2,700


1,175

     Non-interest income


4,840


6,166


4,967


5,050


6,194

     Non-interest expense


16,564


17,005


16,287


17,327


17,857

          Earnings before income taxes


3,617


7,442


1,937


5,183


6,674

     Income tax expense


1,028


2,343


446


1,519


2,202

          Net earnings


2,589


5,099


1,491


3,664


4,472

     Dividends on preferred stock


172


172


173


174


174

          Net earnings available to common shareholders


$       2,417


$       4,927


$       1,318


$        3,490


$       4,298












PER COMMON SHARE DATA











     Basic earnings per share


$         0.22


$         0.43


$         0.12


$          0.31


$         0.38

     Diluted earnings per share


0.21


0.42


0.12


0.30


0.37

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


0.21


0.35


0.11


0.31


0.36

     Quarterly dividends per share


0.09


0.09


0.09


0.09


0.09

     Book value at end of period


15.21


15.04


14.92


14.78


14.52

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


10.97


10.78


10.63


10.46


10.17

     Market price at end of period


11.70


15.26


14.75


17.34


18.70

     Shares outstanding at period end 


11,361,839


11,359,396


11,349,285


11,340,736


11,336,594

     Weighted average shares outstanding











        Basic


11,311,841


11,323,506


11,317,667


11,314,690


11,313,879

        Diluted


11,830,540


11,849,683


11,351,239


11,933,388


11,954,811












AVERAGE BALANCE SHEET DATA











     Total assets


$1,949,352


$1,976,574


$1,966,752


$ 1,929,750


$1,892,609

     Loans and leases


1,285,991


1,312,359


1,298,317


1,264,011


1,232,196

     Total deposits


1,559,308


1,593,318


1,592,153


1,563,006


1,525,059

     Total common equity


173,466


170,885


170,638


167,430


163,855

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


125,156


122,299


121,778


118,291


114,438

     Total equity 


214,623


212,112


211,985


208,816


205,291












SELECTED RATIOS











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


0.49%


0.82%


0.27%


0.74%


0.87%

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


5.53%


9.47%


3.13%


8.51%


10.05%

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


7.66%


13.23%


4.39%


12.04%


14.39%

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


1.51%


1.47%


1.64%


1.65%


1.60%

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


68.72%


70.08%


67.48%


67.81%


69.05%

     Average loans to average deposits


82.47%


82.37%


81.54%


80.87%


80.80%

     Taxable-equivalent net interest margin


4.34%


4.38%


4.44%


4.65%


4.61%

     Tier 1 leverage capital ratio


9.98%


9.79%


9.63%


9.52%


9.56%












CREDIT QUALITY











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


1.46%


1.24%


1.23%


0.87%


0.75%

     Nonperforming assets to tangible equity + ALLL


30.51%


16.18%


9.87%


8.83%


7.50%

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


4.32%


2.24%


1.34%


1.17%


0.99%

     Annualized QTD net charge-offs to total loans


0.28%


0.34%


0.36%


0.28%


0.26%












(*)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


September 30,


June 30,


March 31,


December 31,


September 30,



2015


2015


2015


2014


2014

Assets











Cash and cash equivalents


$        125,437


$     82,636


$   104,402


$         86,872


$          54,215

Securities available-for-sale


285,485


300,335


299,690


276,984


288,397

Securities held-to-maturity


121,043


126,529


137,592


141,201


145,030

     Total investment securities


406,528


426,864


437,282


418,185


433,427

Other investments


12,063


10,598


9,644


9,990


12,091

Total loans


1,301,452


1,294,392


1,310,929


1,284,431


1,248,373

Allowance for loan losses


(18,939)


(16,048)


(16,060)


(11,226)


(9,425)

     Loans, net


1,282,513


1,278,344


1,294,869


1,273,205


1,238,948

Premises and equipment


68,718


69,263


69,762


69,958


71,115

Goodwill and other intangibles


48,175


48,452


48,729


49,005


49,282

Other assets


30,874


32,627


30,570


29,525


32,682

     Total assets


$     1,974,308


$1,948,784


$1,995,258


$    1,936,740


$     1,891,760























Liabilities and Shareholders' Equity











Non-interest bearing deposits


$        406,118


$   408,742


$   421,897


$       390,863


$        396,263

Interest-bearing deposits


1,137,303


1,149,508


1,194,201


1,194,371


1,124,581

   Total deposits


1,543,421


1,558,250


1,616,098


1,585,234


1,520,844

Securities sold under agreements to repurchase and other short term borrowings


92,085


84,547


87,346


62,098


70,964

Short-term FHLB advances


70,000


40,000


25,000


25,000


35,000

Other borrowings


25,958


26,064


26,171


26,277


26,384

Junior subordinated debentures


22,167


22,167


22,167


22,167


22,167

Other liabilities


6,713


5,720


7,820


6,952


10,387

     Total liabilities


1,760,344


1,736,748


1,784,602


1,727,728


1,685,746

Total shareholders' equity


213,964


212,036


210,656


209,012


206,014

     Total liabilities and shareholders' equity


$     1,974,308


$1,948,784


$1,995,258


$    1,936,740


$     1,891,760

 

MIDSOUTH BANCORP, INC. and SUBSIDIARIES             

Condensed Consolidated Financial Information (unaudited)          

(in thousands except per share data)                



















EARNINGS STATEMENT


Three Months Ended



9/30/2015


6/30/2015


3/31/2015


12/31/2014


9/30/2014












Interest income:











Loans, including fees


$ 17,413


$ 17,709


$ 17,717


$   18,045


$ 17,670

Investment securities


2,386


2,412


2,509


2,566


2,617

Accretion of purchase accounting adjustments


579


559


337


757


603

Other interest income


154


118


118


109


126

Total interest income


20,532


20,798


20,681


21,477


21,016












Interest expense:











Deposits


903


949


984


973


915

Borrowings


448


436


418


401


409

Junior subordinated debentures


150


151


150


80


327

Accretion of purchase accounting adjustments


(110)


(119)


(128)


(137)


(147)

Total interest expense


1,391


1,417


1,424


1,317


1,504












Net interest income


19,141


19,381


19,257


20,160


19,512

Provision for loan losses


3,800


1,100


6,000


2,700


1,175

Net interest income after provision for loan losses


15,341


18,281


13,257


17,460


18,337












Noninterest income:











Service charges on deposit accounts


2,231


2,137


2,120


2,395


2,556

ATM and debit card income


1,823


1,865


1,841


1,834


1,808

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


-


1,128


115


-


-

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


-


-


-


-


1,079

Mortgage lending


197


145


153


151


161

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


-


160


-


-


-

Other charges and fees


589


731


738


670


590

Total non-interest income


4,840


6,166


4,967


5,050


6,194












Noninterest expense:











Salaries and employee benefits


7,653


8,197


7,942


8,259


8,287

Occupancy expense


3,815


3,865


3,685


3,750


3,834

ATM and debit card


770


693


663


699


793

Legal and professional fees


385


382


345


330


342

FDIC premiums


391


331


281


268


269

Marketing


408


417


287


543


396

Corporate development


371


387


320


381


342

Data processing


476


467


457


462


503

Printing and supplies


228


255


225


280


279

Expenses on ORE and other assets repossessed


195


133


153


169


122

Amortization of core deposit intangibles


277


276


277


276


277

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

Other non-interest expense


1,595


1,602


1,652


1,754


1,561

Total non-interest expense


16,564


17,005


16,287


17,327


17,857

Earnings before income taxes


3,617


7,442


1,937


5,183


6,674

Income tax expense


1,028


2,343


446


1,519


2,202

Net earnings


2,589


5,099


1,491


3,664


4,472

Dividends on preferred stock


172


172


173


174


174

Net earnings available to common shareholders


$   2,417


$   4,927


$   1,318


$     3,490


$   4,298












Earnings per common share, diluted


$     0.21


$     0.42


$     0.12


$       0.30


$     0.37












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


$     0.21


$     0.35


$     0.11


$       0.31


$     0.36












(*)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


September 30,


Percent


June 30,


March 31,


December 31,


September 30,


Percent



2015


of Total


2015


2015


2014


2014


of Total


Commercial, financial, and agricultural


$       482,452


37.07%


$   471,397


$   484,508


$       467,147


$        452,065


36.21%


Lease financing receivable


4,790


0.37%


5,561


6,350


4,857


5,285


0.42%


Real estate - construction


74,279


5.71%


79,176


76,964


68,577


86,315


6.91%


Real estate - commercial


473,319


36.37%


469,022


471,737


467,172


430,930


34.52%


Real estate - residential


151,667


11.65%


153,820


153,647


154,602


153,915


12.33%


Installment loans to individuals


113,199


8.70%


113,626


115,284


119,328


116,340


9.32%


Other


1,746


0.13%


1,790


2,439


2,748


3,523


0.28%


















Total loans


$    1,301,452




$1,294,392


$1,310,929


$    1,284,431


$     1,248,373




















COMPOSITION OF DEPOSITS

















September 30,


Percent


June 30,


March 31,


December 31,


September 30,


Percent




2015


of Total


2015


2015


2014


2014


of Total


Noninterest bearing


$       406,118


26.31%


$   408,742


$   421,897


$       390,863


$        396,263


26.06%


NOW & Other


448,938


29.09%


458,338


480,454


469,627


447,403


29.42%


Money Market/Savings


468,297


30.34%


453,902


463,625


473,290


460,100


30.25%


Time Deposits of less than $100,000


85,589


5.55%


90,348


94,730


96,577


101,373


6.67%


Time Deposits of $100,000 or more


134,479


8.71%


146,920


155,392


154,877


115,705


7.61%


















Total deposits


$    1,543,421




$1,558,250


$1,616,098


$    1,585,234


$     1,520,844




















ASSET QUALITY DATA

















September 30,




June 30,


March 31,


December 31,


September 30,






2015




2015


2015


2014


2014




Nonaccrual loans


$         51,616




$     23,873


$     12,894


$         10,701


$            7,750




Loans past due 90 days and over


82




609


40


187


23




Total nonperforming loans


51,698




24,482


12,934


10,888


7,773




Other real estate


4,661




4,542


4,589


4,234


4,663




Other repossessed assets


-




38


43


-


19




Total nonperforming assets


$         56,359




$     29,062


$     17,566


$         15,122


$          12,455




















Troubled debt restructurings, accruing


$              168




$     21,529


$          173


$              176


$               180




































Nonperforming assets to total assets


2.85%




1.49%


0.88%


0.78%


0.66%




Nonperforming assets to total loans + ORE + other repossessed assets


4.32%




2.24%


1.34%


1.17%


0.99%




ALLL to nonperforming loans


36.63%




65.55%


124.17%


103.10%


121.25%




ALLL to total loans


1.46%




1.24%


1.23%


0.87%


0.75%




















Quarter-to-date charge-offs


$           1,000




$       1,151


$       1,332


$              985


$            1,253




Quarter-to-date recoveries


91




39


166


86


428




Quarter-to-date net charge-offs


$              909




$       1,112


$       1,166


$              899


$               825




Annualized QTD net charge-offs to total loans


0.28%




0.34%


0.36%


0.28%


0.26%




 

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  


September 30, 2015


June 30, 2015


March 31, 2015


December 31, 2014


September 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


$     341,192


$       1,850


2.17%


$     345,108


$       1,853


2.15%


$     336,337


$      1,925


2.29%


$     339,536


$      1,936


2.28%


$     351,645


$      1,965


2.24%

Tax-exempt securities


73,523


818


4.45%


76,433


854


4.47%


78,948


892


4.52%


83,612


966


4.62%


86,528


996


4.60%

Total investment securities


414,715


2,668


2.57%


421,541


2,707


2.57%


415,285


2,817


2.71%


423,148


2,902


2.74%


438,173


2,961


2.70%

Federal funds sold


3,349


1


0.12%


3,228


2


0.25%


3,816


2


0.21%


3,792


2


0.21%


3,143


2


0.25%

Time and interest bearing deposits in other banks


62,086


40


0.25%


56,110


35


0.25%


59,225


37


0.25%


44,841


28


0.24%


22,922


15


0.26%

Other investments


10,508


113


4.30%


10,057


81


3.22%


9,754


79


3.24%


11,063


79


2.86%


12,090


109


3.61%

Loans 


1,285,991


17,992


5.55%


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%

Total interest earning assets


1,776,649


20,814


4.65%


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%

Non-interest earning assets


172,703






173,279






180,355






182,895






184,085





Total assets


$  1,949,352






$  1,976,574






$  1,966,752






$  1,929,750






$  1,892,609




































Interest-bearing liabilities:































Deposits


$  1,150,190


$          883


0.30%


$  1,181,381


$          921


0.31%


$  1,192,086


$         947


0.32%


$  1,158,317


$         927


0.32%


$  1,132,132


$         859


0.30%

Repurchase agreements


89,025


249


1.11%


84,545


242


1.15%


79,630


230


1.17%


69,735


207


1.18%


70,587


210


1.18%

Federal funds purchased


-


-


0.00%


-


-


0.00%


-


-


0.00%


-


-


0.00%


70


-


0.00%

Short-term borrowings


31,196


16


0.20%


30,604


13


0.17%


25,000


8


0.13%


28,696


12


0.16%


28,913


13


0.18%

Notes payable


26,007


93


1.40%


26,114


90


1.36%


26,219


89


1.36%


26,326


91


1.35%


26,640


95


1.40%

Junior subordinated debentures


22,167


150


2.65%


22,167


151


2.69%


22,167


150


2.71%


22,167


80


1.41%


26,247


327


4.88%

Total interest bearing liabilities


1,318,585


1,391


0.42%


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%

Non-interest bearing liabilities


416,144






419,651






409,665






415,693






402,729





Shareholders' equity


214,623






212,112






211,985






208,816






205,291





Total liabilities and  shareholders' equity


$  1,949,352






$  1,976,574






$  1,966,752






$  1,929,750






$  1,892,609




































Net interest income (TE) and spread


$     19,423


4.23%




$     19,676


4.27%




$    19,565


4.34%




$    20,496


4.55%




$    19,856


4.50%
































Net interest margin




4.34%






4.38%






4.44%






4.65%






4.61%
































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






4.17%






4.21%






4.32%






4.44%






4.42%

 

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



September 30,


June 30,


March 31,


December 31,


September 30,



2015


2015


2015


2014


2014

Average Balance Sheet Data






















Total average assets

A

$       1,949,352


$  1,976,574


$  1,966,752


$   1,929,750


$   1,892,609












Total equity


$          214,623


$     212,112


$     211,985


$      208,816


$      205,291

Less preferred equity


41,157


41,226


41,347


41,386


41,436

Total common equity

B

$          173,466


$     170,886


$     170,638


$      167,430


$      163,855

Less intangible assets


48,310


48,587


48,860


49,139


49,417

Tangible common equity

C

$          125,156


$     122,299


$     121,778


$      118,291


$      114,438

 

MIDSOUTH BANCORP, INC. and SUBSIDIARIES             

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

(in thousands except per share data)    














Three Months Ended



September 30,


June 30,


March 31,


December 31,


September 30,

Core Net Interest Margin


2015


2015


2015


2014


2014












Net interest income (TE)


$        19,423


$        19,676


$        19,565


$        20,496


$        19,856

Less purchase accounting adjustments


(689)


(678)


(465)


(894)


(750)

Net interest income, net of purchase accounting adjustments

D

$        18,734


$        18,998


$        19,100


$        19,602


$        19,106












Total average earnings assets


$   1,776,649


$   1,803,295


$   1,786,397


$   1,746,855


$   1,708,524

Add average balance of loan valuation discount


4,269


4,888


5,179


5,764


6,498

Average earnings assets, excluding loan valuation discount

E

$   1,780,918


$   1,808,183


$   1,791,576


$   1,752,619


$   1,715,022












Core net interest margin

D/E

4.17%


4.21%


4.32%


4.44%


4.42%














Three Months Ended



September 30,


June 30,


March 31,


December 31,


September 30,

Return Ratios


2015


2015


2015


2014


2014












Net earnings available to common shareholders


$          2,417


$          4,927


$          1,318


$          3,490


$          4,298

Net gain on sale of securities, after-tax


-


(733)


(75)


-


-

Efficiency consultant expenses, after-tax


-


-


-


101


130

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

$          2,417


$          4,034


$          1,243


$          3,591


$          4,152












Earnings before income taxes


$          3,617


$          7,442


$          1,937


$          5,183


$          6,674

Net gain on sale of securities


-


(1,128)


(115)


-


-

Efficiency consultant expenses


-


-


-


156


200

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


3,800


1,100


6,000


2,700


1,175

   Pre-tax, pre-provision earnings, operating

G

$          7,417


$          7,254


$          7,822


$          8,039


$          7,622












Annualized return on average assets, operating

F/A

0.49%


0.82%


0.26%


0.74%


0.87%

Annualized return on average common equity, operating

F/B

5.53%


9.47%


2.95%


8.51%


10.05%

Annualized return on average tangible common equity, operating

F/C

7.66%


13.23%


4.14%


12.04%


14.39%

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

G/A

1.51%


1.47%


1.61%


1.65%


1.60%

 

MIDSOUTH BANCORP, INC. and SUBSIDIARIES             

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

(in thousands except per share data)    














Three Months Ended



September 30,


June 30,


March 31,


December 31,


September 30,

Per Common Share Data


2015


2015


2015


2014


2014












Book value per common share


$            15.21


$          15.04


$          14.92


$         14.78


$        14.52

Effect of intangible assets per share


4.24


4.26


4.29


4.32


4.35

Tangible book value per common share


$            10.97


$          10.78


$          10.63


$         10.46


$        10.17












Diluted earnings per share


$              0.21


$            0.42


$            0.12


$           0.30


$          0.37

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


-


(0.06)


(0.01)


-


-

Effect of efficiency consultant expenses, after-tax


-


-


-


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


$              0.21


$            0.35


$            0.11


$           0.31


$          0.36














Three Months Ended



September 30,


June 30,


March 31,


December 31,


September 30,

Efficiency Ratio


2015


2015


2015


2014


2014












Net interest income


$          19,141


$        19,381


$        19,257


$       20,160


$      19,512












Noninterest income


4,840


6,166


4,967


5,050


6,194

Income from death benefit on bank owned life insurance


-


(160)


-


-


-

Net gain on sale of securities


-


(1,128)


(115)


-


-

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


(3)


-


(19)


-


(1,079)

   Noninterest income (non-GAAP)


$            4,837


$          4,878


$          4,833


$         5,050


$        5,115












Total revenue

H

$          23,981


$        25,547


$        24,224


$       25,210


$      25,706

Total revenue (non-GAAP)

I

$          23,978


$        24,259


$        24,090


$       25,210


$      24,627












Noninterest expense

J

$          16,564


$        17,005


$        16,287


$       17,327


$      17,857

Efficiency consultant expenses


-


-


-


(156)


(200)

Loss on disposal of fixed assets


-


-


-


-


(394)

Loss on redemption of Trust Preferred Securities


-


-


-


-


(258)

Net loss on valuation of other real estate owned


(86)


(5)


(31)


(77)


-

   Noninterest expense (non-GAAP)

K

$          16,478


$        17,000


$        16,256


$       17,094


$      17,005












Efficiency ratio (GAAP)

J/H

69.07%


66.56%


67.23%


68.73%


69.47%












Efficiency ratio (non-GAAP)

K/I

68.72%


70.08%


67.48%


67.81%


69.05%

 

Logo - http://photos.prnewswire.com/prnh/20100125/MIDSOUTHLOGO

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/midsouth-bancorp-inc-reports-third-quarter-2015-results-and-declares-quarterly-dividends-300167179.html

SOURCE MidSouth Bancorp, Inc.

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