8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)		July 25, 2007
MidSouth Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Louisiana	1-11826		72-1020809
(State or other jurisdiction of incorporation)	(Commission File Number)		(I.R.S. Employer Identification No.)
102 Versailles Boulevard, Lafayette, Louisiana			70501
(Address of principal executive offices)			(Zip Code)
Registrant’s telephone number, including area code    337-237-8343
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

  ¨   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

  ¨   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

  ¨   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

  ¨   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Item 8.01.  OTHER EVENTS AND REGULATION FD DISCLOSURE

On July 25, 2007, MidSouth Bancorp, Inc. (the “Company”) issued a press release regarding the Company’s earnings for the quarter ending June 30, 2007.  The Company’s earnings release, including financial highlights, is attached as Exhibit 99.1.

Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS

(d)           Exhibits

99.1  Press Release dated July 25, 2007.

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date   July 25, 2007

/s/   C. R. Cloutier

President & CEO

EX-99.1

CONTACT:	C.R. Cloutier or J.E. Corrigan, Jr.
TELEPHONE:	(337) 237-8343
RELEASE DATE:	July 25, 2007

MidSouth Bancorp, Inc. Reports Second Quarter 2007 Earnings

Lafayette, La.

Lafayette, La. July 25 2007  MidSouth Bancorp, Inc. (AMEX: MSL) today reported earnings of $2,495,000 for the second quarter ended June 30, 2007, an increase of 11.6% over net income of $2,236,000 reported for the second quarter of 2006 and an increase of 28.2% over net income of $1,946,000 reported for the first quarter of 2007.  Diluted earnings per share for the second quarter of 2007 were $0.38, an increase of 11.8% over the $0.34 per share for the second quarter of 2006 and 31.0% above the $0.29 per share for the first quarter of 2007.  These amounts reflect a five percent (5%) stock dividend recently announced to holders of record as of September 21, 2007 payable October 23, 2007.  Additionally, the Company announced an increase in the quarterly cash dividend from $.06 per quarter to $.07 per quarter.

For the six months ended June 30, 2007, earnings totaled $4,441,000, a 9.5% increase in earnings of $4,054,000 for the first six months of 2006.  Diluted earnings per share were $.67 for the first six months of 2007, compared to $.61 for the first six months of 2006.

Quarterly revenues for the Company, defined as net interest income and non-interest income, increased $1,561,000, or 13.7%, for the second quarter of 2007 compared to the second quarter of 2006.   The improvement in revenues resulted primarily from an increase of $947,000 in net interest income, driven by a 13.1% increase in average loan volume in quarterly comparison.  Non-interest income increased $614,000, primarily due to an increase in service charges on deposit accounts, including non-sufficient funds fees.  A $1,176,000 increase in non-interest expense attributed to the investment in franchise expansion offset the improvement in revenues.

Rusty Cloutier, President and Chief Executive Officer of MidSouth Bancorp, Inc., commented, “Our shareholders have realized a 16.03% return on equity and an 11.6% increase in earnings for the second quarter of 2007,” said Cloutier.  “Posting a strong return in such a challenging economic and competitive environment reflects the commitment of the MidSouth team to the execution of our strategic plan.”

The Company’s total assets ended the second quarter of 2007 at $824.0 million, a 5.7% increase over the $779.8 million in total assets recorded at June 30, 2006.  Deposits were $716.9 million as of June 30, 2007, compared to $704.1 million on June 30, 2006, an increase of $12.8 million, or 1.8%.  Total loans were $545.5 million, an increase of $56.0 million, or 11.4%, from $489.5 million as of June 30, 2006.  Credit quality remained strong, as nonperforming assets to total assets were 0.21% for the second quarter of 2007, compared to 0.35% for the second quarter of 2006 and 0.28% in linked-quarter comparison.

“We are pleased to report a strong second quarter of loan production in both Louisiana and Texas,” said Cloutier.  “In linked-quarter comparison loans grew $34.9 million.  We’re optimistic about the opportunities to add quality loans and core deposits throughout the second half of 2007 as new branches come on line, starting with the recent opening of our Siegen Lane branch in the Baton Rouge market.”

Earnings Analysis

Net Interest Income.  Net interest income totaled $9,242,000 for the second quarter of 2007, an increase of 11.4%, or $947,000, from the $8,295,000 reported for the second quarter of 2006.  The improvement in net interest income resulted primarily from an increase of $51.7 million in average earning assets.  Total interest income from earning assets increased $1.6 million for the second quarter of 2007 compared to 2006.  The volume increase in earning assets was supported by a 24 basis point increase in the yield on loans, from 8.88% to 9.12%, and a 26 basis point increase in the taxable-equivalent yield on investment securities, from 4.81% to 5.06%, in quarterly comparison.  Yields on loans improved as Prime rate loans adjusted to a 25 basis point increase at the end of the second quarter of 2006, adjusting the rates earned on the portion of MidSouth Bancorp’s loan portfolio that floats with changes in Prime.

The impact of increased interest income on earnings was partially offset by the increased volume and cost of interest-bearing liabilities realized in quarterly comparison.   A $42.0 million increase in average volume and a 22 basis point increase in the average rate paid on interest-bearing liabilities resulted in a $664,000 increase in interest expense for the second quarter of 2007 compared to the second quarter 2006.  The average rate paid on interest-bearing liabilities increased to 3.56% from 3.34%, respectively.  Growth in interest-bearing liabilities was primarily in deposit products earning rates tied to market rates of interest.

Net interest income increased $1,904,000, or 12.1% for the six months ended June 30, 2007 compared to the six months ended June 30, 2006.  The Company’s taxable-equivalent net interest margin improved 14 basis points, from 4.90% at June 30, 2006 to 5.04% at June 30, 2007.

In linked-quarter comparison, average earning assets increased $13.0 million as a $26.5 million increase in average loan volume was partially offset by a decrease in the average volume of federal funds sold.  With a higher volume of loans to total earning assets, net interest income increased $888,000.  Additionally, the taxable equivalent net yield on earning assets improved 35 basis points, from 4.86% for the first quarter of 2007 to 5.21% for the second quarter of 2007.

Non-interest income.  Non-interest income for the second quarter of 2007 totaled $3.7 million, or 20.0% above the $3.1 million earned in the second quarter of 2006 and 13.5% above the $3.2 million earned in the first quarter of 2007.  For the six months ended June 30, 2007, non-interest income increased $1.0 million, or 17.2% above non-interest income earned for the six months ended June 30, 2006.  The increases in prior year and linked-quarter comparisons resulted primarily from increases in fee income from service charges on deposit accounts, including non-sufficient funds (“NSF”) fees.  The total number of demand deposit accounts increased approximately 2,150, or 4.7%, from 45,400 accounts at June 30, 2006 to 47,550 at June 30, 2007, with the majority of the increase in consumer checking accounts.  

Operating Expenses.  Non-interest expense increased $1.2 million in prior year quarterly comparison and $2.8 million in year-to-date comparison, primarily due to increased salaries and benefits costs.  The number of full-time equivalent employees increased from 349 at June 30, 2006 to 398 at June 30, 2007 as a result of franchise expansion and recruitment of talented leaders to support corporate growth initiatives.  Additional increases were recorded in occupancy and data processing expenses, professional fees, education and travel costs and other growth-related expenses.  In linked-quarter comparison, non-interest expenses increased $166,000, as increases in the same growth-related expense categories, were mostly offset by decreases in benefits costs, marketing expenses and expenses on other real estate owned.

Included in professional fees recorded for the Company, are premiums associated with FDIC insurance assessments.  For several years, as a well-capitalized financial institution, the Company has not paid FDIC insurance premiums, but has been required to pay FICO (the Financing Corporation) assessments that currently total approximately $21,000 a quarter, or $84,000 annually.  FICO has assessment authority to collect funds from FDIC-insured institutions sufficient to pay interest on non-callable thrift bonds issued between 1987 and 1989, which expire with the bonds in 2019.  Beginning this year, the FDIC resumed deposit insurance assessments and also issued one-time credits against the assessments to qualifying institutions.  The Company qualified for a one-time credit totaling approximately $240,000, which offsets the new FDIC assessment through the third quarter of 2007.  Beginning in the fourth quarter of 2007, the Company expects to record approximately $86,000 in FDIC assessments, in addition to the $21,000 in FICO assessments.  FDIC and FICO assessments for 2008, based on current deposit growth projections, will average approximately $127,000 per quarter, or $508,000 for the year.

Asset Quality.  At June 30, 2007, nonperforming assets totaled $1,763,000 or 0.21% of total assets, as compared to the $2,704,000, or 0.35%, recorded at June 30, 2006.  Nonperforming assets decreased $508,000 in linked-quarter comparison, primarily due to a $734,000 reduction in nonaccrual loans.  Allowance coverage for nonperforming assets was 293.93% at June 30, 2007.  Net year-to-date charge-offs were 0.03% of total loans for the second quarter of 2007, compared to 0.02% at June 30, 2006 and at March 31, 2007.

Continued strong credit quality ratios, supported by management’s most recent analysis of the Allowance for Loan and Lease Losses (“ALLL”), indicated that the ALLL/total loans ratio of .95% was appropriate at June 30, 2007.  Due to the increase in loans, provision expense for loan losses of $350,000 was recorded in the second quarter 2007, compared to $300,000 in provision expense recorded in the second quarter of 2007.  No provision expense was recorded in the first quarter of 2007.

About MidSouth Bancorp

One of the fastest-growing bank holding companies in the South, MidSouth Bancorp, Inc. has 30 locations in Louisiana and Texas and more than 120 ATMs.  Through its wholly owned subsidiaries — MidSouth Bank, N.A. and MidSouth Bank, Texas — MidSouth Bancorp offers complete banking services to commercial and retail customers in south Louisiana and southeast Texas. The group is community oriented and focuses primarily on offering commercial and consumer loan and deposit services to individuals, small, and middle market businesses.

Founded in 1985, MidSouth Bank has 24 offices extending along the Interstate 10 corridor in south Louisiana: nine in Lafayette Parish, two in St. Martin Parish, one in Jefferson Davis Parish, one in St. Landry Parish, four in Iberia Parish, one in St. Mary Parish, two in Calcasieu Parish, one in Lafourche Parish, one in Terrebonne Parish and two in East Baton Rouge Parish. In addition, a new banking facility is under way in the Baton Rouge market and is scheduled to open in November. Also, a new retail location in Lake Charles is tentatively set to open in October, and the bank is expanding to Cut Off (south of Houma) in mid-August.

MidSouth Bank, Texas currently has six full-service offices in the southeast region of Texas, including Beaumont, Vidor, College Station and Conroe.  It also has a commercial loan production office in the greater Houston market that will be replaced by a full-service banking facility in the fall of 2007.  MidSouth Bank, Texas has three retail offices in Jefferson County, one in Orange County, one in Brazos County, and one in Montgomery County.  A new facility in Conroe is scheduled to open in September.

MidSouth Bancorp’s common stock is traded on the American Stock Exchange under the symbol MSL.

Forward Looking Statements

The Private Securities Litigation Act of 1995 provides a safe harbor for disclosure of information about a company’s anticipated future financial performance.  This act protects a company from unwarranted litigation if actual results differ from management expectations.  This press release reflects management’s current views and estimates of future economic circumstances, industry conditions, MidSouth’s performance and financial results.  A number of factors and uncertainties could cause actual results to differ from anticipated results and expectations.  These factors include, but are not limited to, factors identified in Management’s Discussion and Analysis under the caption “Forward Looking Statements” contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

MIDSOUTH BANCORP, INC. and SUBSIDIARIES

Condensed Consolidated Financial Information (unaudited)

(in thousands except per share data)
	For the Quarter Ended								For the Quarter Ended
	June 30,						%			Mar. 31			%
EARNINGS DATA	2007			2006			Change			2007			Change
Total interest income	$	14,302		$	12,691			12.7	%	$	13,442			6.4	%
Total interest expense		5,060			4,396			15.1	%		5,088			-0.6	%
Net interest income		9,242			8,295			11.4	%		8,354			10.6	%
Provision for loan losses		350			300			16.7	%		-			-
Non-interest income		3,685			3,071			20.0	%		3,247			13.5	%
Non-interest expense		9,245			8,069			14.6	%		9,079			1.8	%
Provision for income tax		837			762			9.8	%		576			45.3	%
Net income	$	2,495		$	2,235			11.6	%	$	1,946			28.2	%
PER COMMON SHARE DATA
Basic earnings per share (2)	$	0.38		$	0.34			11.8	%	$	0.30			26.7	%
Diluted earnings per share (2)	$	0.38		$	0.34			11.8	%	$	0.29			31.0	%
Book value at end of period (2)	$	9.53		$	8.36			14.0	%	$	9.36			1.8	%
Market price at end of period (2)	$	24.39		$	23.01			6.0	%	$	25.76			-5.3	%
Weighted avg shares outstanding
Basic (2)		6,570,697			6,508,437			1.0	%		6,552,272			0.3	%
Diluted (2)		6,647,146			6,635,395			0.2	%		6,646,364			0.0	%
AVERAGE BALANCE SHEET DATA
Total assets	$	816,542		$	761,294			7.3	%	$	803,458			1.6	%
Earning assets		744,537			692,869			7.5	%		731,564			1.8	%
Loans and leases		526,814			465,954			13.1	%		500,271			5.3	%
Interest-bearing deposits		545,084			509,732			6.9	%		541,808			0.6	%
Total deposits		725,075			684,896			5.9	%		717,808			1.0	%
Total stockholders' equity		62,438			54,408			14.8	%		60,372			3.4	%
SELECTED RATIOS	6/30/2007			6/30/2006						3/31/2007
Return on average assets		1.23	%		1.18	%		3.9	%		0.98	%		24.8	%
Return on average total equity		16.03	%		16.48	%		-2.7	%		13.07	%		22.6	%
Return on average realized equity (1)		15.76	%		15.91	%		-0.9	%		12.82	%		22.9	%
Average equity to average assets		7.65	%		7.15	%		7.0	%		7.51	%		1.8	%
Leverage capital ratio		8.63	%		8.32	%		3.7	%		8.50	%		1.5	%
Taxable-equivalent net interest margin		5.21	%		5.00	%		4.2	%		4.86	%		7.2	%
CREDIT QUALITY
Allowance for loan loses as a % of total loans		0.95	%		1.00	%		-5.0	%		0.96	%		-1.0	%
Nonperforming assets to total assets		0.21	%		0.35	%		-39.1	%		0.28	%		-23.9	%
Net YTD charge-offs to total loans		0.03	%		0.02	%		32.5	%		0.02	%		32.5	%

(1) Excluding net unrealized gain (loss) on securities available for sale.

(2) On July 18, 2007, the Company announced a 5% stock dividend on its common stock to holders on record as of September 21, 2007 to be paid on October 23, 2007. Per common share data has been adjusted accordingly.

MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)
BALANCE SHEET	June 30,			June 30,			%			Mar. 31,			Dec. 31,
	2007			2006			Change			2007			2006
Assets
Cash and cash equivalents	$	25,241		$	34,070			-25.9	%	$	55,027		$	57,404
Securities available-for-sale		185,626			188,344			-1.4	%		182,285			180,674
Securities held-to-maturity		12,132			17,519			-30.7	%		13,404			15,901
Total investment securities		197,758			205,863			-3.9	%		195,689			196,575
Total loans		545,447			489,475			11.4	%		510,561			499,046
Allowance for loan losses		(5,182	)		(4,887	)		6.0	%		(4,900	)		(4,977	)
Loans, net		540,265			484,588			11.5	%		505,661			494,069
Premises and equipment		33,477			28,572			17.2	%		31,488			30,609
Goodwill and other intangibles		9,852			10,092			-2.4	%		9,905			9,957
Other assets		17,433			16,663			4.6	%		16,890			16,408
Total assets	$	824,026		$	779,848			5.7	%	$	814,660		$	805,022
Liabilities and Stockholders' Equity
Non-interest bearing deposits	$	176,526		$	186,292			-5.2	%	$	180,435		$	182,596
Interest bearing deposits		540,366			517,812			4.4	%		548,404			533,584
Total deposits		716,892			704,104			1.8	%		728,839			716,180
Securities sold under agreements to repurchase and FHLB borrowings		25,737			2,797			820.2	%		4,791			10,125
Junior subordinated debentures		15,465			15,465			0.0	%		15,465			15,465
Other liabilities		3,235			2,664			21.4	%		3,889			3,509
Total liabilities		761,329			725,030			5.0	%		752,984			745,279
Total shareholders' equity		62,697			54,818			14.4	%		61,676			59,743
Total liabilities and shareholders' equity	$	824,026		$	779,848			5.7	%	$	814,660		$	805,022

MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)
	Three Months Ended							Six Months Ended
INCOME STATEMENT	June 30,		June 30,		%			June 30,		June 30,		%
	2007		2006		Change			2007		2006		Change
Interest income	$	14,302	$	12,691		12.7	%	$	27,744	$	23,726		16.9	%
Interest expense		5,060		4,396		15.1	%		10,148		8,034		26.3	%
Net interest income		9,242		8,295		11.4	%		17,596		15,692		12.1	%
Provision for loan losses		350		300		16.7	%		350		620		-43.5	%
Service charges on deposit accounts		2,489		2,174		14.5	%		4,796		4,100		17.0	%
Other charges and fees		1,196		897		33.3	%		2,136		1,814		17.8	%
Total non-interest income		3,685		3,071		20.0	%		6,932		5,914		17.2	%
Salaries and employee  benefits		4,714		3,937		19.7	%		9,501		7,723		23.0	%
Occupancy expense		1,616		1,499		7.8	%		3,187		2,860		11.4	%
Intangible amortization		52		83		-37.3	%		105		165		-36.4	%
Other non-interest expense		2,863		2,550		12.3	%		5,531		4,817		14.8	%
Total non-interest expense		9,245		8,069		14.6	%		18,324		15,565		17.7	%
Income before income taxes		3,332		2,997		11.2	%		5,854		5,421		8.0	%
Provision for income taxes		837		762		9.8	%		1,413		1,367		3.4	%
Net income	$	2,495	$	2,235		11.6	%	$	4,441	$	4,054		9.5	%
Earnings per share, diluted (1)	$	0.38	$	0.34		13.4	%	$	0.67	$	0.61		9.8	%

(1) On July 18, 2007, the Company announced a 5% stock dividend on its common stock to holders on record as of September 21, 2007 to be paid on October 23, 2007.  Per common share data has been adjusted accordingly.

MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)
INCOME STATEMENT	Second			First			Fourth			Third			Second
Quarterly Trends	Quarter			Quarter			Quarter			Quarter			Quarter
	2007			2007			2006			2006			2006
Interest income	$	14,302		$	13,442		$	13,405		$	13,104		$	12,691
Interest expense		5,060			5,088			4,955			4,662			4,396
Net interest income		9,242			8,354			8,450			8,442			8,295
Provision for loan losses		350			-			180			50			300
Net interest income after provision for loan loss		8,892			8,354			8,270			8,392			7,995
Total non-interest income		3,685			3,247			3,010			3,414			3,071
Total non-interest expense		9,245			9,079			9,070			8,489			8,069
Income before income taxes		3,332			2,522			2,210			3,317			2,997
Income taxes		837			576			461			900			762
Net income	$	2,495		$	1,946		$	1,749		$	2,417		$	2,235
Earnings per share, basic (1)	$	0.38		$	0.30		$	0.27		$	0.37		$	0.34
Earnings per share, diluted (1)	$	0.38		$	0.29		$	0.27		$	0.36		$	0.34
Book value per share (1)	$	9.53		$	9.36		$	9.12		$	8.96		$	8.36
Return on Average Equity		16.03	%		13.07	%		11.69	%		16.98	%		16.48	%

(1) On July 18, 2007, the Company announced a 5% stock dividend on its common stock to holders on record as of September 21, 2007 to be paid on October 23, 2007.  Per common share data has been adjusted accordingly.

MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)
	June 30,			June 30,			%			Mar. 30,			Dec. 31,
	2007			2006			Change			2007			2006
Asset Quality Data
Nonaccrual loans	$	840		$	543			54.7	%	$	1,574		$	1,793
Loans past due 90  days and over		596			2,104			-71.7	%		481			98
Total nonperforming loans		1,436			2,647			-45.7	%		2,055			1,891
Other real estate owned		251			32			684.4	%		158			368
Other foreclosed assets		76			25			204.0	%		58			55
Total nonperforming assets	$	1,763		$	2,704			-34.8	%	$	2,271		$	2,314
Nonperforming assets to  total assets		0.21	%		0.35	%		-39.1	%		0.28	%		0.29	%
Nonperforming assets to total loans + OREO + other  foreclosed assets		0.32	%		0.55	%		-41.8	%		0.44	%		0.46	%
ALL to nonperforming assets		293.93	%		180.73	%		62.6	%		215.76	%		215.08	%
ALL to nonperforming loans		360.86	%		184.62	%		95.5	%		238.44	%		263.19	%
ALL to total loans		0.95	%		1.00	%		-5.0	%		0.96	%		1.00	%
Year-to-date charge-offs	$	187		$	310			-39.7	%	$	95		$	542
Year-to-date recoveries		42			223			-81.2	%		18			314
Year-to-date net charge-offs	$	145		$	87			66.7	%	$	77		$	228
Net YTD charge-offs to total loans		0.03	%		0.02	%		32.5	%		0.02	%		0.05	%

MIDSOUTH BANCORP, INC. AND SUBSIDIARIES

Yield Analysis (unaudited)

(in thousands)

	Three Months Ended							Three Months Ended
	June 30, 2007							June 30, 2006
			Tax							Tax
	Average		Equivalent		Yield/			Average		Equivalent		Yield/
	Balance		Interest		Rate			Balance		Interest		Rate
Taxable securities	$	88,485	$	1,056		4.79	%	$	107,978	$	1,220		4.53	%
Tax-exempt securities		111,606		1,477		5.31	%		92,611		1,190		5.15	%
Equity securities		2,544		23		3.63	%		2,343		15		2.57	%
Federal funds sold		15,088		195		5.18	%		23,983		295		4.93	%
Loans		526,814		11,984		9.12	%		465,954		10,318		8.88	%
Total interest earning assets		744,537		14,735		7.94	%		692,869		13,038		7.55	%
Noninterest earning assets		72,005							68,425
Total assets	$	816,542						$	761,294
Interest bearing liabilities:
Deposits	$	545,084	$	4,600		3.38	%	$	509,732	$	4,032		3.17	%
Repurchase agreements and federal
funds purchased		9,228		116		5.04	%		2,724		29		4.27	%
Short term borrowings		108		1		5.13	%		-		-		-
Junior subordinated debentures		15,465		343		8.90	%		15,465		335		8.69	%
Total interest bearing liabilities		569,885		5,060		3.56	%		527,921		4,396		3.34	%
Noninterest bearing liabilities		184,219							178,965
Shareholders' equity		62,438							54,408
Total liabilities and shareholders' equity	$	816,542						$	761,294
Net interest income (TE) and margin			$	9,675		5.21	%			$	8,642		5.00	%

MIDSOUTH BANCORP, INC. AND SUBSIDIARIES

Yield Analysis (unaudited)

(in thousands)

	Six Months Ended							Six Months Ended
	June 30, 2007							June 30, 2006
			Tax							Tax
	Average		Equivalent		Yield/			Average		Equivalent		Yield/
	Balance		Interest		Rate			Balance		Interest		Rate
Taxable securities	$	86,938	$	2,036		4.72	%	$	96,870	$	2,137		4.45	%
Tax-exempt securities		110,736		2,913		5.30	%		87,151		2,209		5.11	%
Equity securities		2,528		44		3.51	%		2,185		39		3.60	%
Federal Funds Sold		24,268		625		5.19	%		30,629		701		4.62	%
Loans		513,616		22,978		9.02	%		454,844		19,283		8.55	%
Total interest earning assets		738,086		28,596		7.81	%		671,679		24,369		7.32	%
Noninterest earning assets		71,975							67,669
Total assets	$	810,061						$	739,348
Interest bearing liabilities:
Deposits	$	543,455	$	9,283		3.44	%	$	489,358	$	7,335		3.02	%
Repurchase agreements and federal
funds purchased		6,800		165		4.89	%		2,383		49		4.15	%
Short term borrowings		847		28		6.67	%		-		-		-
Junior subordinated debentures		15,465		672		8.76	%		15,465		650		8.48	%
Total interest bearing liabilities		566,567		10,148		3.61	%		507,206		8,034		3.19	%
Noninterest bearing liabilities		182,083							178,083
Shareholders' equity		61,411							54,059
Total liabilities and shareholders' equity	$	810,061						$	739,348
Net interest income (TE) and margin			$	18,448		5.04	%			$	16,335		4.90	%