Market Overview

MidSouth Bancorp, Inc. Reports Second Quarter Results

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Quarterly Highlights

  • Diluted operating EPS for Q2 2018 was $0.16 versus $0.21 for Q1 2018
  • Reported EPS for Q2 2018 was a loss of $0.09 versus a loss of $0.03
    for Q1 2018
  • Bank level classified assets to capital declined sequentially to
    53% from 54%
  • FTE net interest margin decreased 19 bps sequentially to 3.98% on
    lower loan yields due to loan paydowns
  • Core deposits were stable at 88.5% of $1.5 billion total deposits
    and funding costs remain low at 45 bps. Cost of deposits increased 6
    bps sequentially for a 15% Deposit Beta for the quarter
  • Tangible common equity to tangible assets declined 11 bps
    sequentially to 8.96%

MidSouth Bancorp, Inc. ("MidSouth") (NYSE:MSL) today reported a
quarterly net loss available to common shareholders of $1.5 million for
the second quarter of 2018, compared to net loss available to common
shareholders of $6.2 million reported for the second quarter of 2017 and
a $450,000 net loss available to common shareholders for the first
quarter of 2018. The second quarter of 2018 included an after-tax charge
of $4.2 million for regulatory remediation costs, and an after-tax
charge of $15,000 for costs associated with the bulk loan sale. For
comparison purposes, the first quarter of 2018 included an after-tax
charge of $761,000 resulting from costs associated with the bulk loan
sale, an after-tax charge of $3.1 million for regulatory remediation
costs, and an after-tax charge of $115,000 related to the branch
closures during the quarter. Excluding these non-operating expenses,
diluted earnings for the second quarter of 2018 were $0.16 per common
share, compared to $0.21 per diluted share for the first quarter of
2018, and a loss of $0.38 per diluted share for the second quarter of
2017.

Commenting on the quarter, Jim McLemore, President and CEO, noted, "As
indicated in our fourth quarter 2017 earnings release, we expected 2018
to be a heavy year for costs to remediate issues resulting from our 2017
Written Agreement with the OCC. This continues to be the case as we
incurred over $5 million of expenses in the second quarter. As a result
of these costs, we reported a loss for the quarter of $1.5 million.
Excluding these expenses, the after-tax operating earnings of the Bank
would have been $2.6 million."

Mr. McLemore, commenting on MidSouth Bank's ongoing transformation,
remarked, "It's been roughly a year since we began our transformation
and we are making good progress in our efforts to significantly improve
franchise value. Our path to increasing franchise value means reducing
risk, becoming more efficient and becoming a more focused commercial
banking franchise. In the second quarter, we completed the build out of
our senior management team and believe we have put an extremely talented
management team in place. Our new talent additions come to us from
larger institutions where they bring us insights and experience from a
process maturity standpoint that will greatly aid in our transformation
efforts. At the same time, these individuals understand the competitive
strengths an institution our size has to offer our customers and will
help us capitalize on these strengths."

"On the credit transformation, we continue to meaningfully reduce credit
risk while we make good progress improving the Bank's credit culture.
Credit costs were muted again this quarter at only $440,000. We have
reduced our level of classified assets from a high of 80% of capital in
the second quarter of 2017 down to 53% of capital at the end of the
second quarter of 2018."

"We have rationalized our branch network and reduced our number of
branches by 25% over the last year, reflecting the reduction in branch
traffic most banks are experiencing. We reallocated $2 million of annual
operating costs from these branches to remediation investments to
improve the long-term value of the Bank. Despite the closure of these
branches, the loss of deposits from these branches has been
significantly less than what we estimated. Overall, our deposit
franchise continues to perform very well, with steady balances and our
cost of funds increasing only 14bps over the second quarter of 2017."

Remediation Update

Mr. McLemore continued, "In the third quarter of 2017, we began a
process of a top-to-bottom review to identify opportunities to
strengthen the Bank. Some of the areas we identified for review directly
resulted from remediation issues identified in the OCC Written
Agreement. At mid-year 2018, expenses in 5 of the 6 major areas are
almost complete. In the second quarter, we substantially completed the
evaluation phase of the last of these major areas to strengthen our
BSA/AML/OFAC program. As a result, we are increasing our total estimated
remediation costs for 2018 to $18-$20 million from our previous estimate
of $10-$12 million. We recognize there is a significant cost to these
remediation efforts but we believe these investments will pay off many
times over in terms of increasing the value of the franchise through the
reduction of risk and through more efficient and effective processes. We
are focused on doing the right things and doing them well."

Balance Sheet

Consolidated assets remained constant at $1.9 billion for the quarters
ended June 30, 2018 and 2017 and March 31, 2018. Our stable core deposit
base, which excludes time deposits, totaled $1.3 billion at June 30,
2018 and March 31, 2018 and accounted for 88.5% and 88.3% of deposits at
June 30, 2018 and March 30, 2018, respectively. Net loans totaled $1.0
billion at June 30, 2018, compared to $1.1 billion at March 31, 2018 and
$1.2 billion at June 30, 2017.

MidSouth's Tier 1 leverage capital ratio was 12.71% at June 30, 2018,
compared to 12.80% at March 31, 2018. Tier 1 risk-based capital and
total risk-based capital ratios were 18.07% and 19.33% at June 30, 2018,
compared to 17.08% and 18.34% at March 31, 2018, respectively. Tier 1
common equity to total risk-weighted assets at June 30, 2018 was 13.20%,
compared to 12.50% at March 31, 2018. Tangible common equity totaled
$162.6 million at June 30, 2018, compared to $164.4 million at March 31,
2018. Tangible book value per share at June 30, 2018 was $9.78 versus
$9.89 at March 31, 2018.

Asset Quality

Nonperforming assets totaled $74.9 million at June 30, 2018, a decrease
of $10.2 million compared to $85.1 million reported at March 31, 2018.
The decrease in non-performing assets was primarily attributable to
customer payoffs/ paydowns of $17 million of non-accrual loans in the
second quarter. These decreases were partially offset by $8.6 million of
loans placed on non-accrual during the quarter. Allowance coverage for
nonperforming loans increased to 31.97% at June 30, 2018, compared to
30.84% at March 31, 2018. The ALLL/total loans ratio was 2.22% at June
30, 2018 and 2.23% at March 31, 2018. Including valuation accounting
adjustments on acquired loans, the total valuation accounting adjustment
plus ALLL was 2.30% of loans at June 30, 2018. The ratio of annualized
net charge-offs to total loans increased to 0.87% for the three months
ended June 30, 2018 compared to 0.54% for the three months ended March
31, 2018.

Total nonperforming assets to total loans plus ORE and other assets
repossessed was 7.07% at June 30, 2018 compared to 7.47% at March 31,
2018. Loans classified as troubled debt restructurings, accruing ("TDRs,
accruing") totaled $1.0 million at June 30, 2018 compared to $1.2
million at March 31, 2018. Also included in nonperforming assets were
nonperforming loans transferred to held for sale that totaled $808,000
at March 31, 2018; no loans were transferred to held for sale in the
second quarter of 2018. Total classified assets, including ORE, were
$105.8 million at June 30, 2018 compared to $113.7 million at March 30,
2018. The classified to capital ratio at MidSouth Bank was 52.9% at June
30, 2018 versus 54.3% at March 31, 2018.

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

Mr. McLemore noted, "The second quarter's credit costs continue to be
muted, with the provision for loan losses totaling $440,000 this
quarter. This follows a $0 loan loss provision in the first quarter. As
we've cautioned before, credit costs could very well be choppy and
should be evaluated over a longer-term horizon. We did see a reduction
in NPA's this quarter of $10 million and our classified/capital ratio
came down to 53%. Overall, we are seeing good progress on asset quality
so far in 2018, but also understand the nature of our credit
transformation could be uneven in terms of downgrades of credit and
charge-off content. Since the Bank's turnaround began in the second
quarter of 2017, credit costs have been $28 million versus an initial
estimate of $31-$50 million."

Second Quarter 2018 vs. First Quarter 2018
Earnings Comparison

MidSouth reported a net loss available to common shareholders of $1.5
million for the three months ended June 30, 2018, compared to a net loss
available to common shareholders of $450,000 for the three months ended
March 31, 2018. Revenues from consolidated operations decreased $341,000
in sequential-quarter comparison, not including the loss on mutual fund
of $51,000. Net interest income decreased $445,000 in sequential-quarter
comparison, resulting from a $258,000 decrease in interest income and a
$187,000 increase in interest expense. Operating noninterest income
decreased $53,000 in sequential-quarter comparison.

The second quarter of 2018 included non-operating expenses totaling $5.3
million which consisted of $5.3 million of regulatory remediation costs
compared to $3.9 million of regulatory remediation costs for the three
months ended March 31, 2017. Excluding these non-operating expenses,
noninterest expense increased $91,000 in sequential-quarter comparison
and consisted primarily of a $663,000 increase in noninterest expense,
and offset by a $587,000 decrease in legal expense. The provision for
loan losses increased $440,000 in sequential-quarter comparison. We
recorded an income tax benefit of $237,000 for the second quarter of
2018 compared to an income tax benefit of $34,000 in the first quarter
of 2018.

Dividends on the Series B Preferred Stock issued to the U.S. Treasury as
a result of our participation in the Small Business Lending Fund totaled
$720,000 for the second quarter of 2018 based on a dividend rate of 9%,
unchanged from $720,000 for the first quarter of 2018. Dividends on the
Series C Preferred Stock issued with the December 28, 2012 acquisition
of PSB Financial Corporation totaled $90,000 for the three months ended
June 30, 2018 and March 31, 2018.

Fully taxable-equivalent ("FTE") net interest income decreased $455,000
in sequential-quarter comparison, primarily due to a decrease of
$671,000 in interest income on loans, a $171,000 increase in interest
expense on deposits, offset primarily by a $403,000 increase in other
interest income. Interest income on loans decreased in
sequential-quarter comparison due to a decrease in the average yield on
loans of 5 bps from 5.60% to 5.55%, as well as a $50.3 million decrease
in the average balance of loans. There was no change in the average
yield on investment securities in sequential quarters and remained at
2.54%, and the average balance of investment securities decreased $1.0
million. The average yield on total earning assets decreased 16 bps for
the same period, from 4.56% to 4.40%, respectively. The FTE net interest
margin decreased 19 bps in sequential-quarter comparison, from 4.17% for
the first quarter of 2018 to 3.98% for the second quarter of 2018.
Excluding purchase accounting adjustments, the FTE net interest margin
decreased 19 bps, from 4.14% for the first quarter of 2018 to 3.95% for
the second quarter of 2018.

Second Quarter 2018 vs. Second Quarter 2017
Earnings Comparison

MidSouth reported a net loss available to common shareholders of $1.5
million for the three months ended June 30, 2018, compared to net loss
available to common shareholders of $6.2 million for the three months
ended June 30, 2017. Revenues from consolidated operations decreased
$1.6 million in quarterly comparison, from $23.5 million for the three
months ended June 30, 2017 to $21.8 million for the three months ended
June 30, 2018. Net interest income decreased $1.3 million in quarterly
comparison, resulting from a $1.0 million decrease in interest income
and a $302,000 increase in interest expense. Noninterest income
decreased $341,000 in quarterly comparison.

Excluding non-operating expenses of $5.3 million for the second quarter
of 2018 and $2.4 million for the second quarter of 2017, noninterest
expenses decreased $298,000 in quarterly comparison and consisted
primarily of a $194,000 decrease in salaries and employee benefits costs
and a $235,000 decrease in occupancy expense, which were partially
offset by a $164,000 increase in legal and professional fees. The
provision for loan losses decreased $12.1 million in quarterly
comparison. The provision decrease is primarily due to payoffs and
charge offs of large energy nonaccrual loans and a release of general
energy reserves. A $237,000 income tax benefit was reported for the
second quarter of 2018, compared to a $3.2 million income tax benefit
that was reported in the second quarter of 2017.

Dividends on preferred stock totaled $810,000 for the three months ended
June 30, 2018 and $811,000 for the three months ended June 30, 2017.
Dividends on the Series B Preferred Stock were $720,000 for the second
quarter of 2018, unchanged from $720,000 for the second quarter of 2017.
Dividends on the Series C Preferred Stock totaled $90,000 for the three
months ended June 30, 2018 and $91,000 for the three months ended June
30, 2017.

FTE net interest income decreased $1.4 million in prior year quarterly
comparison. Interest income on loans decreased $1.4 million due to a
decrease in the average balance of loans of $145.0 million in prior year
quarterly comparison. The average yield on loans increased 20 bps in
prior year quarterly comparison, from 5.35% to 5.55%.

Investment securities totaled $376.7 million, or 20.3% of total assets
at June 30, 2018, versus $436.0 million, or 22.4% of total assets at
June 30, 2017. The investment portfolio had an effective duration of
3.53 years and a net unrealized loss of $9.3 million at June 30, 2018.
FTE interest income on investments decreased $544,000 in prior year
quarterly comparison. The average volume of investment securities
decreased $60.1 million in prior year quarterly comparison, and the
average tax equivalent yield on investment securities decreased 15 bps,
from 2.69% to 2.54%.

The average yield on all earning assets decreased 12 bps in prior year
quarterly comparison, from 4.52% for the second quarter of 2017 to 4.40%
for the second quarter of 2018.

Interest expense increased $302,000 in prior year quarterly comparison.
Increases in interest expense included a $437,000 increase in interest
expense on deposits and a $29,000 increase in interest expense on FHLB
advances, which were partially offset by a $211,000 decrease in interest
expense on repurchase agreements. Excluding purchase accounting
adjustments on acquired certificates of deposit and FHLB borrowings, the
average rate paid on interest-bearing liabilities was 0.63% for the
three months ended June 30, 2018 and 0.51% for the three months ended
June 30, 2017.

As a result of these changes in volume and yield on earning assets and
interest-bearing liabilities, the FTE net interest margin decreased 20
bps, from 4.18% for the second quarter of 2017 to 3.98% for the second
quarter of 2018. Excluding purchase accounting adjustments on loans,
deposits and FHLB borrowings, the FTE margin decreased 14 bps, from
4.09% for the second quarter of 2017 to 3.95% for the second quarter of
2018.

Year-To-Date Earnings Comparison

MidSouth reported a net loss available to common shareholders of $1.9
million for the six months ended June 30, 2018, compared to net loss
available to common shareholders of $4.5 million for the six months
ended June 30, 2017. Revenues from consolidated operations decreased
$2.6 million in year-over-year comparison, from $46.6 million for the
six months ended June 30, 2017 to $44.0 million for the six months ended
June 30, 2018. Net interest income decreased $2.0 million in
year-over-year comparison, resulting from a $1.6 million decrease in
interest income and a $464,000 increase in interest expense. Noninterest
income decreased $556,000 in year-over-year comparison and consisted
primarily of a $605,000 decrease in service charges on deposits accounts
with an offset of a $192,000 increase in ATM/debit card income.

Excluding non-operating expenses of $10.4 million for the six months
ended June 30, 2018 and $2.4 million for the six months ended June 30,
2017, noninterest expenses decreased $690,000 in year-over-year
comparison and consisted primarily of a $1.2 million decrease in
salaries and benefits costs, a $814,000 decrease in occupancy expense,
and a $211,000 decrease in ATM/debit card expense, which were partially
offset by increases of $1.5 million in legal and professional fees and
$110,000 in FDIC premiums. The provision for loan losses decreased $14.9
million in year-over-year comparison, from $15.3 million for the six
months ended June 30, 2017 to $440,000 for the six months ended June 30,
2018. A $271,000 income tax benefit was reported for the first six
months of 2018, compared to an income tax benefit of $2.6 million for
the first six months of 2017.

In year-to-date comparison, FTE net interest income decreased $2.3
million primarily due to a $2.0 million decrease in interest income from
total loans as a result of lower average balances of loans of $130,000
for the period as problem loans have been sold or reduced and exposure
to energy credits has been limited. This more than offset the 24bps
increase in average loan yields from 5.33% to 5.57%. The average volume
of investment securities decreased $60.0 million in year-over-year
comparison, and the average yield on investment securities decreased
from 2.68% to 2.58% for the same period primarily as a result of recent
tax law changes that have reduced yield on tax-exempt municipal bonds.
The average yield on earning assets decreased from 4.53% at June 30,
2017 to 4.48% at June 30, 2018. The purchase accounting adjustments
added 4 bps to the average yield on loans for the six months ended June
30, 2018 and 18 bps for the six months ended June 30, 2017. Net of
purchase accounting adjustments, the average yield on earning assets
decreased 11 bps, from 4.18% at June 30, 2017 to 4.07% at June 30, 2018.

Interest expense increased $464,000 in year-over-year comparison.
Increases in interest expense included a $739,000 increase in interest
expense on deposits. This increase was partially offset by a $502,000
decrease in interest expense on repurchase agreements and short-term
FHLB advances. The average rate paid on interest-bearing liabilities was
0.59% for the six months ended June 30, 2018, compared to 0.47% for the
six months ended June 30, 2017. Net of purchase accounting adjustments,
the average rate paid on interest-bearing liabilities increased 9 bps,
from 0.50% for the six months ended June 30, 2017 to 0.59% for the six
months ended June 30, 2018. The FTE net interest margin decreased from
4.19% for the six months ended June 30, 2017 to 4.07% for the six months
ended June 30, 2018. Net of purchase accounting adjustments, the FTE net
interest margin decreased from 4.11% to 4.05% for the six months ended
June 30, 2017 and 2018, respectively.

About MidSouth Bancorp, Inc.

MidSouth Bancorp, Inc. is a bank holding company headquartered in
Lafayette, Louisiana, with total assets of $1.9 billion as of June 30,
2018. 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 42
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, statements regarding expected future
financial results, the strength of the Company's balance sheet and its
positioning to address problem assets and achieve operating efficiencies
and the implementation of the provisions of the formal agreement with
the OCC.
The words "anticipate," "believe," "estimate,"
"expect," "intend," "may," "plan," "will," "would," "could," "should,"
"guidance," "potential," "continue," "project," "forecast," "confident,"
and similar expressions are typically used to identify forward-looking
statements.

These statements are based on assumptions and assessments made by
management in light of their experience and their perception of
historical trends, current conditions, expected future developments and
other factors they believe to be appropriate.
Any
forward-looking statements are not guarantees of our future performance
and are subject to risks and uncertainties and may be affected by
various factors that may cause actual results, developments and business
decisions to differ materially from those in the 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 in the
markets we serve, 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; increases in competitive pressure in the
banking and financial services industries; increased competition for
deposits and loans which could affect compositions, rates and terms;
changes in the levels of prepayments received on loans and investment
securities that adversely affect the yield and value of the earning
assets; our ability to successfully implement and manage our recently
announced strategic initiatives; costs and expenses associated with our
strategic initiatives and possible changes in the size and components of
the expected costs and charges associated with our strategic
initiatives; our ability to realize the anticipated benefits and cost
savings from our strategic initiatives within the anticipated time
frame, if at all; the ability of the Company to comply with the terms of
the formal agreement with the Office of the Comptroller of the Currency;
credit losses due to loan concentration, particularly our energy lending
and commercial real estate portfolios; a deviation in actual experience
from the underlying assumptions used to determine and establish our
allowance for loan losses ("ALLL"), which could result in greater than
expected loan losses; the adequacy of the level of our ALLL and the
amount of loan loss provisions required in future periods including the
impact of implementation of the new CECL (current expected credit loss)
methodology; future examinations by our regulatory authorities,
including the possibility that the regulatory authorities may, among
other things, impose conditions on our operations or require us to
increase our allowance for loan losses or write-down assets; changes in
the availability of funds resulting from reduced liquidity or increased
costs; the timing and impact of future acquisitions or divestitures, the
success or failure of integrating acquired operations, and the ability
to capitalize on growth opportunities upon entering new markets; the
ability to acquire, operate, and maintain effective and efficient
operating systems; increased asset levels and changes in the composition
of assets that would impact capital levels and regulatory capital
ratios; loss of critical personnel and the challenge of hiring qualified
personnel at reasonable compensation levels; legislative and regulatory
changes, including the impact of regulations under the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010 and other 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; regulations and restrictions resulting from our
participation in government-sponsored programs such as the U.S.
Treasury's Small Business Lending Fund, including potential retroactive
changes in such programs; changes in accounting principles, policies,
and guidelines applicable to financial holding companies and banking;
increases in cybersecurity risk, including potential business
disruptions or financial losses; acts of war, terrorism, cyber
intrusion, weather, or other catastrophic events beyond our control; and
other factors discussed under the heading "Risk Factors" in MidSouth's
Annual Report on Form 10-K for the year ended December 31, 2017 filed
with the SEC on March 16, 2018 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 6/30/2018 3/31/2018 12/31/2017 9/30/2017 6/30/2017
Total interest income $ 18,739 $ 18,997 $ 20,955 $ 20,379 $ 19,758
Total interest expense 1,814   1,627   1,483   1,566   1,512  
Net interest income 16,925   17,370   19,472   18,813   18,246  
FTE net interest income 16,996   17,451   19,658   19,003   18,442  
Provision for loan losses 440     10,600   4,300   12,500  
Non-interest income 4,882 4,829 6,028 5,486 5,223
Non-interest expense 22,273   21,873   25,944   17,759   19,604  
Earnings (loss) before income taxes (906 ) 326 (11,044 ) 2,240 (8,635 )
Income tax (benefit) expense (237 ) (34 ) (540 ) 574   (3,221 )
Net earnings (loss) (669 ) 360 (10,504 ) 1,666 (5,414 )
Dividends on preferred stock 810   810   810   810   811  
Net (loss) earnings available to common shareholders $ (1,479 ) $ (450 ) $ (11,314 ) $ 856   $ (6,225 )
 
PER COMMON SHARE DATA
Basic (loss) earnings per share (0.09 ) (0.03 ) (0.69 ) 0.05 (0.51 )
Diluted (loss) earnings per share (0.09 ) (0.03 ) (0.69 ) 0.05 (0.51 )
Diluted earnings (loss) per share, operating (Non-GAAP)(*) 0.16 0.21 (0.15 ) 0.10 (0.38 )
Quarterly dividends per share 0.01 0.01 0.01 0.01 0.09
Book value at end of period 12.50 12.62 12.87 13.70 13.76
Tangible book value at period end (Non-GAAP)(*) 9.78 9.89 10.11 10.92 10.87
Market price at end of period 13.25 12.65 13.25 12.05 11.75
Shares outstanding at period end 16,619,894 16,621,811 16,548,829 16,548,829 16,026,355
Weighted average shares outstanding
Basic 16,525,571 16,495,438 16,460,124 16,395,317 12,227,456
Diluted 16,529,128 16,500,230 16,462,550 16,395,740 12,237,299
 
AVERAGE BALANCE SHEET DATA
Total assets $ 1,860,906 $ 1,860,070 $ 1,907,735 $ 1,954,343 $ 1,926,408
Loans and leases 1,109,371 1,159,671 1,238,846 1,254,885 1,254,402
Total deposits 1,514,321 1,495,907 1,513,156 1,546,837 1,551,498
Total common equity 210,291 214,183 228,385 227,948 187,762
Total tangible common equity (Non-GAAP)(*) 165,024 168,629 182,567 181,851 141,389
Total equity 251,278 255,170 269,373 269,035 228,871
 
SELECTED RATIOS
Annualized return on average assets, operating (Non-GAAP)(*) 0.60 % 0.77 % (0.52 )% 0.36 % (0.97 )%
Annualized return on average common equity, operating (Non-GAAP)(*) 5.30 % 6.68 % (4.36 )% 3.10 % (10.00 )%
Annualized return on average tangible common equity, operating
(Non-GAAP)(*)
6.76 % 8.48 % (5.45 )% 3.88 % (13.28 )%
Pre-tax, pre-provision annualized return on average assets,
operating (Non-GAAP)(*)
1.06 % 1.17 % 1.58 % 1.62 % 1.30 %
Efficiency ratio, operating (Non-GAAP)(*) 77.00 % 75.64 % 68.05 % 66.85 % 73.11 %
Average loans to average deposits 73.26 % 77.52 % 81.87 % 81.13 % 80.85 %
Taxable-equivalent net interest margin 3.98 % 4.17 % 4.45 % 4.20 % 4.18 %
Tier 1 leverage capital ratio 12.71 % 12.80 % 12.53 % 12.84 % 12.66 %
 
CREDIT QUALITY
Allowance for loan and lease losses (ALLL) as a % of total loans 2.22 % 2.23 % 2.27 % 2.03 % 1.99 %
Nonperforming assets to tangible equity + ALLL 32.99 % 36.86 % 24.35 % 21.83 % 23.50 %
Nonperforming assets to total loans, other real estate owned and
other repossessed assets
7.07 % 7.47 % 4.83 % 4.35 % 4.54 %
Annualized QTD net charge-offs to total loans 0.87 % 0.54 % 2.94 % 1.26 % 4.01 %
 
(*) See reconciliation of Non-GAAP financial measures on pages 17-19.
 
 
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Balance Sheets (unaudited)
(in thousands)
         
 
BALANCE SHEET June 30, March 31, December 31, September 30, June 30,
2018 2018 2017 2017 2017
Assets
Cash and cash equivalents $ 278,776   $ 211,486   $ 152,964   $ 163,123   $ 131,437  
Securities available-for-sale 308,937 293,970 309,191 326,222 348,580
Securities held-to-maturity 67,777   73,255   81,052   83,739   87,462  
Total investment securities 376,714   367,225   390,243   409,961   436,042  
Other investments 14,927 12,896 12,214 12,200 11,666
Loans held for sale 1,117 15,737
Total loans 1,057,963 1,137,255 1,183,426 1,235,969 1,240,253
Allowance for loan losses (23,514 ) (25,371 ) (26,888 ) (25,053 ) (24,674 )
Loans, net 1,034,449   1,111,884   1,156,538   1,210,916   1,215,579  
Premises and equipment 56,834 57,848 59,057 64,969 65,739
Goodwill and other intangibles 45,133 45,409 45,686 45,963 46,239
Other assets 52,084   49,890   48,713   39,934   38,867  
Total assets $ 1,858,917   $ 1,857,755   $ 1,881,152   $ 1,947,066   $ 1,945,569  
 
 
Liabilities and Shareholders' Equity
Non-interest bearing deposits $ 419,517 $ 427,504 $ 416,547 $ 428,183 $ 428,419
Interest-bearing deposits 1,103,503   1,076,433   1,063,142   1,127,752   1,107,801  
Total deposits 1,523,020 1,503,937 1,479,689 1,555,935 1,536,220
 
Securities sold under agreements to repurchase 14,886 33,026 67,133 54,875 90,799
Short-term FHLB advances 27,500 27,500 40,000 12,500
Long-term FHLB advances 10,011 10,016 10,021 25,110 25,211
Junior subordinated debentures 22,167 22,167 22,167 22,167 22,167
Other liabilities 12,661   10,272   8,127   8,836   9,602  
Total liabilities 1,610,245   1,606,918   1,627,137   1,679,423   1,683,999  
Total shareholders' equity $ 248,672   $ 250,837   $ 254,015   $ 267,643   $ 261,570  
Total liabilities and shareholders' equity $ 1,858,917   $ 1,857,755   $ 1,881,152   $ 1,947,066   $ 1,945,569  
 
 
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Income Statements (unaudited)
(in thousands except per share data)
               
Percent Change
EARNINGS STATEMENT Three Months Ended

2Q18 vs.

1Q18

2Q18 vs.

2Q17

Six Months Ended Percent
6/30/2018 3/31/2018 6/30/2017 6/30/2018 6/30/2017 Change
 
Interest income:
Loans, including fees $ 15,251 $ 15,905 $ 16,440 (4.1 )% (7.2 )% $ 31,156 $ 32,877 (5.2 )%
Investment securities 2,370 2,363 2,790 0.3 % (15.1 )% 4,733 5,524 (14.3 )%
Accretion of purchase accounting adjustments 93 110 291 (15.5 )% (68.0 )% 203 476 (57.4 )%
Other interest income 1,025   619   237   65.6 % 332.5 % 1,644   412   299.0 %
Total interest income 18,739   18,997   19,758   (1.4 )% (5.2 )% 37,736   39,289   (4.0 )%
 
Interest expense:
Deposits 1,410 1,238 973 13.9 % 44.9 % 2,647 1,908 38.7 %
Borrowings 150 174 416 (13.8 )% (63.9 )% 325 827 (60.7 )%
Junior subordinated debentures 259 220 212 17.7 % 22.2 % 479 420 14.0 %
Accretion of purchase accounting adjustments (5 ) (5 ) (89 ) % (94.4 )% (10 ) (178 ) (94.4 )%
Total interest expense 1,814   1,627   1,512   11.5 % 20.0 % 3,441   2,977   15.6 %
 
Net interest income 16,925 17,370 18,246 (2.6 )% (7.2 )% 34,295 36,312 (5.6 )%
Provision for loan losses 440     12,500   % (96.5 )% 440   15,300   (97.1 )%
Net interest income after provision for loan losses 16,485   17,370   5,746   (5.1 )% 186.9 % 33,855   21,012   61.1 %
 
Noninterest income:
Service charges on deposit accounts 2,065 2,206 2,396 (6.4 )% (13.8 )% 4,271 4,876 (12.4 )%
ATM and debit card income 1,877 1,784 1,766 5.2 % 6.3 % 3,661 3,469 5.5 %
Mortgage Lending 66 92 167 (28.3 )% (60.5 )% 158 310 (49.0 )%
Gain on securities, net (non-operating)(*) 3 % (100.0 )% 9 (100.0 )%
Gain/(loss) on equity securities not trading, net (51 ) % % (51 ) %
Gain on sale of branches (non-operating)(*) % % %
Other charges and fees 925   747   891   23.8 % 3.8 % 1,672   1,603   4.3 %
Total non-interest income 4,882   4,829   5,223   1.1 % (6.5 )% 9,711   10,267   (5.4 )%
 
Noninterest expense:
Salaries and employee benefits 7,916 7,719 8,110 2.6 % (2.4 )% 15,635 16,799 (6.9 )%
Occupancy expense 3,193 3,045 3,428 4.9 % (6.9 )% 6,238 7,052 (11.5 )%
ATM and debit card 648 576 713 12.5 % (9.1 )% 1,223 1,434 (14.7 )%
Legal and professional fees 1,100 1,689 936 (34.9 )% 17.5 % 2,789 1,321 111.1 %
FDIC premiums 507 430 430 17.9 % 17.9 % 937 827 13.3 %
Marketing 281 195 262 44.1 % 7.3 % 476 542 (12.2 )%
Corporate development 248 237 253 4.6 % (2.0 )% 485 569 (14.8 )%
Data processing 666 665 667 0.2 % (0.1 )% 1,331 1,288 3.3 %
Printing and supplies 133 123 135 8.1 % (1.5 )% 256 318 (19.5 )%
Expenses on ORE, net 138 76 92 81.6 % 50.0 % 214 171 25.1 %
Amortization of core deposit intangibles 276 277 276 (0.4 )% % 553 553 %
Severance and retention accruals (non-operating)(*) 1,341 % (100.0 )% 1,341 (100.0 )%
One-time charge related to closure of branches (non-operating)(*) 145 (100.0 )% % 145 %
Write-down of assets held for sale (non-operating) (*) 570 % (100.0 )% 570 (100.0 )%
Loss on transfer of loans to held for sale (non-operating)(*) 8 875 (99.1 )% % 883 %
Regulatory remediation costs (non-operating)(*) 5,323 3,926 35.6 % % 9,249 %
Legal fees related to bulk loan sale (non-operating)(*) 12 88 (86.4 )% % 100 %
Other non-interest expense 1,824   1,807   1,926   0.9 % (5.3 )% 3,631   3,584   1.3 %
Total non-interest expense 22,273   21,873   19,604   1.8 % 13.6 % 44,145   36,834   19.8 %
Earnings (loss) before income taxes (906 ) 326 (8,635 ) (377.9 )% (89.5 )% (579 ) (5,555 ) (89.6 )%
Income tax (benefit) expense (237 ) (34 ) (3,221 ) 597.1 % (92.6 )% (271 ) (2,632 ) (89.7 )%
Net earnings (loss) (669 ) 360 (5,414 ) (285.8 )% (87.6 )% (308 ) (2,923 ) (89.5 )%
Dividends on preferred stock 810   810   811   % (0.1 )% 1,620   1,622   (0.1 )%
Net (loss) earnings available to common shareholders $ (1,479 ) $ (450 ) $ (6,225 ) 228.7 % (76.2 )% $ (1,928 ) $ (4,545 ) (57.6 )%
 
(Loss) earnings per common share, diluted $ (0.09 ) $ (0.03 ) $ (0.51 ) 200.0 % (82.4 )% $ (0.12 ) $ (0.39 ) (69.2 )%
 
Operating earnings (loss) per common share, diluted (Non-GAAP)(*) $ 0.16   $ 0.21   $ (0.38 ) (23.8 )% (142.1 )% $ 0.37   $ (0.26 ) (242.3 )%
 
(*) See reconciliation of Non-GAAP financial measures on pages 17-19.
 
 
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Composition of Loans and Deposits and Asset Quality Data
(unaudited)
(in thousands)
   
COMPOSITION OF LOANS   June 30,   March 31,  

Jun 18 vs Mar 18

  December 31, September 30,   June 30,

Jun 18 vs Jun 17

2018 2018

% Change

2017 2017 2017

% Change

Commercial, financial, and agricultural $ 354,944 $ 401,048 (11.5 )% $ 435,207 $ 447,482 $ 451,767 (21.4 )%
Lease financing receivable 632 692 (8.7 )% 732 760 866 (27.0 )%
Real estate - construction 98,108 94,679 3.6 % 90,287 90,088 98,695 (0.6 )%
Real estate - commercial 414,526 438,779 (5.5 )% 448,406 473,046 461,064 (10.1 )%
Real estate - residential 141,104 145,671 (3.1 )% 146,751 155,676 156,394 (9.8 )%
Installment loans to individuals 47,406 50,888 (6.8 )% 56,398 63,148 70,031 (32.3 )%
Other 1,243   5,498   (77.4 )% 5,645   5,769   1,436   (13.4 )%
 
Total loans $ 1,057,963   $ 1,137,255   (7.0 )% $ 1,183,426   $ 1,235,969   $ 1,240,253   (14.7 )%
 
COMPOSITION OF DEPOSITS
June 30, March 31,

Jun 18 vs Mar 18

December 31, September 30, June 30,

Mar 18 vs Mar 17

2018 2018

% Change

2017 2017 2017

% Change

Noninterest bearing $ 419,517 $ 427,504 (1.9 )% $ 416,547 $ 428,183 $ 428,419 (2.1 )%
NOW & other 461,726 459,394 0.5 % 434,646 461,740 465,505 (0.8 )%
Money market/savings 466,711 441,801 5.6 % 446,215 473,023 493,232 (5.4 )%
Time deposits of less than $100,000 111,758 113,665 (1.7 )% 116,309 120,685 75,196 48.6 %
Time deposits of $100,000 or more 63,308   61,573   2.8 % 65,972   72,304   73,868   (14.3 )%
 
Total deposits $ 1,523,020   $ 1,503,937   1.3 % $ 1,479,689   $ 1,555,935   $ 1,536,220   (0.9 )%
 
ASSET QUALITY DATA
June 30, March 31, December 31, September 30, June 30,
2018 2018   2017 2017 2017
Nonaccrual loans $ 73,538 $ 82,275 $ 49,278 $ 51,289 $ 54,810
Loans past due 90 days and over 3   1   728   402   165  
Total nonperforming loans 73,541 82,276 50,006 51,691 54,975
Nonperforming loans held for sale 808 5,067
Other real estate 1,365 1,803 2,001 1,931 1,387
Other repossessed assets   194   192   234   36  
Total nonperforming assets $ 74,906   $ 85,081   $ 57,266   $ 53,856   $ 56,398  
 
Troubled debt restructurings, accruing $ 1,010   $ 1,153   $ 1,360   $ 1,557   $ 1,653  
 
Nonperforming assets to total assets 4.03 % 4.58 % 3.04 % 2.77 % 2.90 %
Nonperforming assets to total loans + ORE + other repossessed assets 7.07 % 7.47 % 4.83 % 4.35 % 4.54 %
ALLL to nonperforming loans 31.97 % 30.84 % 53.77 % 48.47 % 44.88 %
ALLL to total loans 2.22 % 2.23 % 2.27 % 2.03 % 1.99 %
 
Quarter-to-date charge-offs 2,801 1,836 8,931 4,381 12,659
Quarter-to-date recoveries 505 319 166 460 255
Quarter-to-date net charge-offs 2,296 1,517 8,765 3,921 12,404
Annualized QTD net charge-offs to total loans 0.87 % 0.54 % 2.94 % 1.26 % 4.01 %
 
 
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Loan Portfolio - Quarterly Roll Forward (unaudited)
(in thousands)
     
Three Months Ended
June 30, March 31, June 30,
2018 2018 2017
LOAN ACTIVITY
 
Loans originated $ 35,030 $ 26,121 $ 72,316
Repayments (118,118 ) (62,884 ) (116,885 )
Increases on renewals 2,574 3,026 2,531
Change in lines of credit (919 ) (10,051 ) 9,151
Change in allowance for loan losses 1,857 1,517 (96 )
Transfer of loans to held for sale (769 )
Other 2,141   (1,614 ) 1,140  
Net change in loans $ (77,435 ) $ (44,654 ) $ (31,843 )
 
 
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Tangible Common Equity to Tangible Assets and Regulatory Ratios
(unaudited)
(in thousands)
   
COMPUTATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS June 30, June 30,
2018 2017
Total equity $ 248,672 $ 261,570
Less preferred equity 40,987   41,092  
Total common equity 207,685 220,478
Less goodwill 42,171 42,171
Less intangibles 2,962   4,068  
Tangible common equity $ 162,552   $ 174,239  
 
Total assets $ 1,858,917 $ 1,945,569
Less goodwill 42,171 42,171
Less intangibles 2,962   4,068  
Tangible assets $ 1,813,784   $ 1,899,330  
 
Tangible common equity to tangible assets 8.96 % 9.17 %
 
REGULATORY CAPITAL
 
Common equity tier 1 capital $ 169,388 $ 175,827
Tier 1 capital 231,874 238,418
Total capital 248,014 256,589
 
Regulatory capital ratios:
Common equity tier 1 capital ratio 13.20 % 12.15 %
Tier 1 risk-based capital ratio 18.07 % 16.48 %
Total risk-based capital ratio 19.33 % 17.73 %
Tier 1 leverage ratio 12.71 % 12.66 %
 
 
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Quarterly Yield Analysis (unaudited)
(in thousands)
         
YIELD ANALYSIS Three Months Ended Three Months Ended Three Months Ended Three Months Ended Three Months Ended
June 30, 2018 March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017
                   
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 $ 340,080 $ 2,093 2.46 % $ 334,419 $ 2,047 2.45 % $ 348,267 $ 2,161 2.48 % $ 372,648 $ 2,276 2.44 % $ 387,441 $ 2,416 2.49 %
Tax-exempt securities 43,858   349   3.18 % 50,550   397   3.14 % 53,998   540   4.00 % 55,129   553   4.01 % 56,622   570   4.03 %
Total investment securities 383,938 2,442   2.54 % 384,969 2,444   2.54 % 402,265 2,701   2.69 % 427,777 2,829   2.65 % 444,063 2,986   2.69 %
Federal funds sold 5,008 21 1.63 % 4,978 18 1.45 % 4,441 15 1.32 % 4,319 13 1.18 % 3,573 9 1.00 %
Time and interest bearing deposits in other banks 201,281 912 1.79 % 132,940 514 1.55 % 94,394 314 1.30 % 94,675 305 1.26 % 55,331 150 1.07 %
Other investments 14,924 91 2.45 % 12,721 87 2.74 % 12,201 85 2.79 % 12,098 93 3.07 % 11,493 78 2.71 %
Loans 1,109,371   15,344   5.55 % 1,159,671   16,015   5.60 % 1,238,846   18,026   5.77 % 1,254,885   17,329   5.48 % 1,254,402   16,731   5.35 %
Total interest earning assets 1,714,522 18,810   4.40 % 1,695,279 19,078   4.56 % 1,752,147 21,141   4.79 % 1,793,754 20,569   4.55 % 1,768,862 19,954   4.52 %
Non-interest earning assets 146,384   164,791   155,588   160,589   157,546  
Total assets $ 1,860,906   $ 1,860,070   $ 1,907,735   $ 1,954,343   $ 1,926,408  
 
Interest-bearing liabilities:
Deposits $ 1,087,746 $ 1,409 0.52 % $ 1,071,484 $ 1,238 0.47 % $ 1,085,349 $ 1,097 0.40 % $ 1,118,593 $ 1,094 0.39 % $ 1,125,482 $ 973 0.35 %
Repurchase agreements 26,230 25 0.39 % 40,115 40 0.40 % 54,799 66 0.48 % 75,654 149 0.78 % 90,807 236 1.04 %
Short-term FHLB advances 27,500 75 1.08 % 28,722 84 1.17 % 18,478 58 1.23 % 6,522 19 1.14 % %
Long-term FHLB advances 10,014 45 1.79 % 10,019 45 1.80 % 21,803 64 1.15 % 25,155 92 1.43 % 25,260 91 1.43 %
Junior subordinated debentures 22,167   260   4.63 % 22,167   220   3.97 % 22,167   198   3.50 % 22,167   212   3.74 % 22,167   212   3.78 %
Total interest bearing liabilities 1,173,657 1,814   0.62 % 1,172,507 1,627   0.57 % 1,202,596 1,483   0.49 % 1,248,091 1,566   0.50 % 1,263,716 1,512   0.48 %
Non-interest bearing liabilities 435,971 447,460 435,766 437,217 433,821
Shareholders' equity 251,278   255,170   269,373   269,035   228,871  
Total liabilities and shareholders' equity 1,860,906   1,875,137   1,907,735   1,954,343   1,926,408  
 
Net interest income (TE) and spread $ 16,996   3.78 % $ 17,451   3.99 % $ 19,658   4.30 % $ 19,003   4.05 % $ 18,442   4.04 %
 
Net interest margin 3.98 % 4.17 % 4.45 % 4.20 % 4.18 %
 
Core net interest margin (Non-GAAP)(*) 3.95 % 4.14 % 4.36 % 4.12 % 4.09 %
 
 
(*) See reconciliation of Non-GAAP financial measures on pages 17-19.
 
 
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,
2018 2018 2017 2017 2017
Average Balance Sheet Data
 
Total average assets A $ 1,860,906 $ 1,860,070 $ 1,907,735 $ 1,954,343 $ 1,926,408
 
Total equity $ 251,278 $ 255,170 $ 269,373 $ 269,035 $ 228,871
Less preferred equity 40,987   40,987   40,988   41,087   41,109
Total common equity B $ 210,291 $ 214,183 $ 228,385 $ 227,948 $ 187,762
Less intangible assets 45,267   45,554   45,818   46,097   46,373
Tangible common equity C $ 165,024   $ 168,629   $ 182,567   $ 181,851   $ 141,389
 
 
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited)
(continued)
(in thousands except per share data)
       
Three Months Ended
June 30, March 31, December 31, September 30, June 30,
Core Net Interest Margin 2018 2018 2017 2017 2017
 
Net interest income (FTE) $ 16,996 $ 17,451 $ 19,658 $ 19,003 $ 18,442
Less purchase accounting adjustments (98 ) (115 ) (384 ) (355 ) (380 )
Core net interest income, net of purchase accounting adjustments D $ 16,898   $ 17,336   $ 19,274   $ 18,648   $ 18,062  
 
Total average earnings assets $ 1,714,522 $ 1,695,279 $ 1,752,147 $ 1,793,754 $ 1,768,862
Add average balance of loan valuation discount 859   971   1,242   1,504   1,720  
Average earnings assets, excluding loan valuation discount E $ 1,715,381   $ 1,696,250   $ 1,753,389   $ 1,795,258   $ 1,770,582  
 
Core net interest margin D/E 3.95 % 4.14 % 4.36 % 4.12 % 4.09 %
 
Three Months Ended
June 30, March 31, December 31, September 30, June 30,
Return Ratios 2018 2018 2017 2017 2017
 
Net (loss) earnings available to common shareholders $ (1,479 ) $ (450 ) $ (11,314 ) $ 856 $ (6,225 )
Net loss on equity securities not trading, after-tax 40
Severance and retention accruals, after-tax 111 872
One-time charge related to discontinued branch projects, after-tax 302
One-time charge related to closure of branches, after-tax 115 587
Write-down of assets held for sale, after-tax 512 371
Write-down of net deferred tax asset resulting from the Tax Cuts and
Jobs Act
3,595
Loss on transfer of loans to held for sale, after-tax 6 691 3,920
Regulatory remediation costs, after-tax 4,205 3,102 1,152 556
Gain on sale of branches, after-tax (484 )
Legal fees related to bulk loan sale 9 70
Net gain on sales of securities, after-tax       (220 ) (2 )
Net earnings (loss) available to common shareholders, operating F $ 2,781   $ 3,528   $ (2,508 ) $ 1,779   $ (4,682 )
 
Earnings (loss) before income taxes $ (906 ) $ 326 $ (11,044 ) $ 2,240 $ (8,635 )
Severance and retention accruals 171 1,341
One-time charge related to discontinued branch projects 465
One-time charge related to closure of branches 145 903
Write-down of assets held for sale 789 570
Loss on transfer of loans to held for sale 8 875 6,030
Regulatory remediation costs 5,323 3,926 1,772 856
Gain on sale of branches (744 )
Net gain on sales of securities (338 ) (3 )
Net loss on equity securities not trading 51
Legal fees related to bulk loan sale 12 88
Provision for loan losses 440     10,600   4,300   12,500  
Pre-tax, pre-provision earnings, operating G $ 4,928   $ 5,360   $ 7,574   $ 7,961   $ 6,238  
 
Annualized return on average assets, operating F/A 0.60 % 0.77 % (0.52 )% 0.36 % (0.97 )%
Annualized return on average common equity, operating F/B 5.30 % 6.68 % (4.36 )% 3.10 % (10.00 )%
Annualized return on average tangible common equity, operating F/C 6.76 % 8.48 % (5.45 )% 3.88 % (13.28 )%
Pre-tax, pre-provision annualized return on average assets, operating G/A 1.06 % 1.17 % 1.58 % 1.62 % 1.30 %
 
 
MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (unaudited)
(continued)
(in thousands except per share data)
       
Three Months Ended
June 30, March 31, December 31, September 30, June 30,
Per Common Share Data 2018 2018 2017   2017   2017
 
Diluted (loss) earnings per share $ (0.09 ) $ (0.03 ) $ (0.69 ) $ 0.05 $ (0.51 )
Effect of severance and retention accruals 0.01 0.08
Effect of one-time charge related to discontinued branch projects 0.02
Effect of one-time charge related to closure of branches 0.01 0.03
Effect of loss on transfer of loans to held for sale 0.04 0.24
Effect of regulatory remediation costs 0.25 0.19 0.07 0.03
Effect of gain on sale of branches (0.03 )
Effect of write-down of assets held for sale 0.03 0.03
Effect of write-down of net deferred tax asset resulting from the
Tax Cuts and Jobs Act
0.22
Effect of gain on sales of securities       (0.01 )  
Diluted earnings (loss) per share, operating $ 0.16   $ 0.21   $ (0.15 ) $ 0.10   $ (0.38 )
 
Book value per common share $ 12.50 $ 12.62 $ 12.87 $ 13.70 $ 13.76
Effect of intangible assets per share 2.72   2.73   2.76   2.78   2.89  
Tangible book value per common share $ 9.78   $ 9.89   $ 10.11   $ 10.92   $ 10.87  
 
 
Three Months Ended
June 30, March 31, December 31, September 30, June 30,
Efficiency Ratio 2018

2018

2017 2017 2017
 
Net interest income $ 16,925 $ 17,370 $ 19,472 $ 18,813 $ 18,246
 
Noninterest income $ 4,882 $ 4,829 $ 6,028 $ 5,486 $ 5,223
Net gain on sale of securities (338 ) (3 )
Net loss on equity securities not trading 51
Gain on sale of branches     (744 )    
Noninterest income (non-GAAP) $ 4,933   $ 4,829   $ 5,284   $ 5,148   $ 5,220  
 
Total revenue H $ 21,807 $ 22,199 $ 25,500 $ 24,299 $ 23,469
Total revenue (non-GAAP) I $ 21,858 $ 22,199 $ 24,756 $ 23,961 $ 23,466
 
Noninterest expense J $ 22,273 $ 21,873 $ 25,944 $ 17,759 $ 19,604
Severance and retention accruals (171 ) (1,341 )
One-time charge related to discontinued branch projects (465 )
One-time charge related to closure of branches (145 ) (903 )
Write-down of assets held for sale (789 ) (570 )
Loss on transfer of loans to held for sale (8 ) (875 ) (6,030 )
Regulatory remediation costs (5,323 ) (3,926 ) (1,772 ) (856 )
Legal fees related to bulk loan sale (12 ) (88 )
Net (loss) gain on sale/valuation of other real estate owned (100 ) (47 ) (335 ) 19   (72 )
Noninterest expense (non-GAAP) K $ 16,830   $ 16,792   $ 16,847   $ 16,019   $ 17,156  
 
Efficiency ratio (GAAP) J/H 102.14 % 98.53 % 101.74 % 73.09 % 83.53 %
 
Efficiency ratio (non-GAAP) K/I 77.00 % 75.64 % 68.05 % 66.85 % 73.11 %
 

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