10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C.  20549
FORM 10-Q
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2008           OR ¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____
COMMISSION FILE NUMBER 1-11826 MIDSOUTH BANCORP, INC. (Exact name of registrant as specified in its charter)
Louisiana	72 –1020809
(State of other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
102 Versailles Boulevard, Lafayette, Louisiana 70501 (Address of principal executive offices, including zip code) (337) 237-8343 (Registrant’s telephone number, including area code)
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES   x   NO   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. Large accelerated filer ¨                                                                Accelerated filer x                                           Non-accelerated filer ¨       Small reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) YES¨   NO   x
As of April 30, 2008, there were 6,615,942 shares of the registrant’s Common Stock, par value $0.10 per share, outstanding.

Part I – Financial Information 

 Item 1. Financial Statements. 

Consolidated Statements of Condition

Consolidated Statements of Earnings (Unaudited)

Consolidated Statement of Stockholders’ Equity (unaudited)

Consolidated Statement of Stockholders’ Equity (unaudited)

Consolidated Statements of Cash Flows (unaudited)

Notes to Interim Consolidated Financial Statements

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

Forward Looking Statements

Critical Accounting Policies

Results of Operations

Analysis of Statement of Condition

Liquidity

Impact of Inflation and Changing Prices

Item 3. Quantitative and Qualitative Disclosures About Market Risk. 

Item 4. Controls and Procedures. 

Part II – Other Information 

Item 1. Legal Proceedings. 

Item 1A. Risk Factors. 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Item 3. Defaults Upon Senior Securities. 

Item 4. Submission of Matters to a Vote of Security Holders.

Item 5. Other Information. 

Item 6. Exhibits.

Signatures 

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Part I – Financial Information

Item 1. Financial Statements.

MidSouth Bancorp, Inc. and Subsidiaries
Consolidated Statements of Condition
	March 31, 2008 (unaudited)			December 31, 2007 (audited)
Assets
Cash and due from banks	$	26,303,790		$	25,419,029
Interest bearing deposits in banks and federal funds sold		89,346,832			5,453,499
Total cash and cash equivalents		115,650,622			30,872,528
Securities available-for-sale, at fair value (cost of $178,747,679 at March 31, 2008 and $180,220,461 at December 31, 2007)		181,617,999			181,452,189
Securities held-to-maturity (estimated fair value of $10,002,956 at March 31, 2008 and $10,974,266 at December 31, 2007)		9,747,090			10,745,947
Loans, net of allowance for loan losses of $6,130,139 at March 31, 2008 and $5,611,582 at December 31, 2007		563,614,828			563,893,656
Other investments		3,553,334			4,020,537
Accrued interest receivable		5,246,276			5,748,784
Bank premises and equipment, net		39,967,219			39,229,018
Goodwill and intangibles		9,718,468			9,759,295
Cash surrender value of life insurance		4,257,432			4,219,117
Other assets		3,657,104			4,114,983
Total assets	$	937,030,372		$	854,056,054
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest bearing	$	184,109,401		$	182,588,179
Interest bearing		633,894,399			550,928,818
Total deposits		818,003,800			733,516,997
Securities sold under repurchase agreements		26,517,828			26,316,572
Federal Home Loan Bank advances		-			4,400,000
Accrued interest payable		1,143,887			1,314,110
Junior subordinated debentures		15,465,000			15,465,000
Other liabilities		5,568,340			4,574,495
Total liabilities		866,698,855			785,587,174
Stockholders’ Equity:
Preferred stock, no par value; 5,000,000 shares authorized, none issued or outstanding		-			-
Common stock, $0.10 par value; 10,000,000 shares authorized; 6,762,532 and 6,722,993 issued and 6,602,610 and 6,576,165 outstanding at March 31, 2008 and December 31, 2007, respectively		676,253			672,299
Capital surplus		51,732,461			51,326,349
Unearned ESOP shares		(101,893	)		(132,708	)
Accumulated other comprehensive income		1,894,411			812,941
Treasury stock- 159,922 shares at March 31, 2008 and 146,828 shares at December 31, 2007, at cost		(3,327,523	)		(3,040,489	)
Retained earnings		19,457,808			18,830,488
Total stockholders’ equity		70,331,517			68,468,880
Total liabilities and stockholders’ equity	$	937,030,372		$	854,056,054
See notes to unaudited consolidated financial statements.

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MidSouth Bancorp Inc. and Subsidiaries
Consolidated Statements of Earnings (Unaudited)
	Three Months Ended March 31,
	2008		2007
Interest income:
Loans, including fees	$	12,006,053	$	10,993,865
Investment securities:
Taxable		960,297		980,536
Nontaxable		1,040,674		1,016,138
Federal funds sold		305,009		451,472
Total interest income		14,312,033		13,442,011
Interest expense:
Deposits		4,477,601		4,682,230
Securities sold under repurchase agreements, federal funds purchased and advances		228,248		75,721
Junior subordinated debentures		332,309		346,169
Total interest expense		5,038,158		5,104,120
Net interest income		9,273,875		8,337,891
Provision for loan losses		1,200,000		-
Net interest income after provision for loan losses		8,073,875		8,337,891
Non-interest income:
Service charges on deposits		2,369,861		2,306,183
Credit life insurance		37,216		36,511
Other charges and fees		1,180,563		920,385
Total non-interest income		3,587,640		3,263,079
Non-interest expenses:
Salaries and employee benefits		5,177,942		4,786,564
Occupancy expense		1,949,983		1,571,502
Other		3,165,504		2,720,984
Total non-interest expenses		10,293,429		9,079,050
Income before income taxes		1,368,086		2,521,920
Provision for income taxes		168,738		575,677
Net earnings	$	1,199,348	$	1,946,243
Earnings per share:
Basic	$	0.18	$	0.30
Diluted	$	0.18	$	0.29

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MidSouth Bancorp, Inc. and Subsidiaries
Consolidated Statement of Stockholders’ Equity (unaudited)
For the Three Months Ended March 31, 2008
	Common Stock
	Shares		Amount		Capital Surplus		Unearned ESOP Shares			Accumulated Other Comprehensive Income		Treasury Stock			Retained Earnings			Total
Balance- January 1, 2008		6,722,993	$	672,299	$	51,326,349	$	(132,708	)	$	812,941	$	(3,040,489	)	$	18,830,488		$	68,468,880
Cumulative-effect adjustment resulting from the adoption of EITF 06-04		-		-		-		-			-		-			(114,954	)		(114,954	)
Net earnings		-		-		-		-			-		-			1,199,348			1,199,348
Comprehensive income:
Net change in unrealized gain on securities available-for-sale, net of taxes		-		-		-		-			1,081,470		-			-			1,081,470
Comprehensive income																			2,280,818
Cash dividends on common stock, $0.07 per share		-		-		-		-			-		-			(457,074	)		(457,074	)
Exercise of stock options		39,539		3,954		301,639		-			-		-			-			305,593
Tax benefit resulting from exercise of stock options		-		-		76,633		-			-		-			-			76,633
Purchase of treasury stock		-		-		-		-			-		(287,034	)		-			(287,034	)
ESOP obligation, net of repayments		-		-		-		30,815			-		-			-			30,815
Excess of market value over book value of ESOP shares released, net adjustment		-		-		10,500		-			-		-			-			10,500
Stock option expense		-		-		17,340		-			-		-			-			17,340
Balance- March 31, 2008		6,762,532	$	676,253	$	51,732,461	$	(101,893	)	$	1,894,411	$	(3,327,523	)	$	19,457,808		$	70,331,517
See notes to unaudited consolidated financial statements.

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MidSouth Bancorp, Inc. and Subsidiaries
Consolidated Statement of Stockholders’ Equity (unaudited)
For the Three Months Ended March 31, 2007
	Common Stock
	Shares		Amount		Capital Surplus		Unearned ESOP Shares			Accumulated Other Comprehensive Income			Treasury Stock			Retained Earnings			Total
Balance- January 1, 2007		6,355,946	$	635,595	$	42,907,597	$	(251,259	)	$	(858,133	)	$	(2,518,411	)	$	19,828,087		$	59,743,476
Net earnings		-		-		-		-			-			-			1,946,243			1,946,243
Comprehensive income:
Net change in unrealized losses on securities available-for-sale, net of taxes		-		-		-		-			70,692			-			-			70,692
Comprehensive income																				2,016,935
Cash dividends on common stock, $0.06 per share		-		-		-		-			-			-			(372,908	)		(372,908	)
Exercise of stock options		37,634		3,763		183,503		-			-			-			-			187,266
Tax benefit resulting from exercise of stock options		-		-		109,221		-			-			-			-			109,221
Purchase of treasury stock		-		-		-		-			-			(92,427	)		-			(92,427	)
ESOP obligation, net of repayments		-		-		-		29,013			-			-			-			29,013
Excess of market value over book value of ESOP shares released, net adjustment		-		-		31,250		-			-			-			-			31,250
Stock option expense		-		-		24,549		-			-			-			-			24,549
Balance- March 31, 2007		6,393,580	$	639,358	$	43,256,120	$	(222,246	)	$	(787,441	)	$	(2,610,838	)	$	21,401,422		$	61,676,375
See notes to unaudited consolidated financial statements.

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MidSouth Bancorp, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
	For the Three Months Ended March 31,
	2008			2007
Cash flows from operating activities:
Net earnings	$	1,199,348		$	1,946,243
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		786,889			688,140
Provision for loan losses		1,200,000			-
Deferred income tax benefit		(363,230	)		(83,896	)
Amortization of premiums on securities, net		107,102			159,230
Net loss (gain) on sale of premises and equipment		2,835			(4,807	)
Net loss on sale of other real estate owned		-			17,849
Impairment on premises and equipment		-			13,637
Stock option compensation expense		17,340			24,549
Change in accrued interest receivable		502,508			254,681
Change in accrued interest payable		(170,223	)		(225,703	)
Other, net		1,381,252			(51,628	)
Net cash provided by operating activities		4,663,821			2,738,295
Cash flows from investing activities:
Proceeds from maturities and calls of securities available-for-sale		24,418,752			8,245,043
Proceeds from maturities and calls of securities held-to-maturity		1,000,000			2,500,000
Proceeds from maturities and calls of other investments		1,158,900			-
Purchases of securities available-for-sale		(23,054,912	)		(9,911,640	)
Purchases of other investments		(691,000	)		(24,000	)
Loan originations, net of repayments		(890,357	)		(11,705,589	)
Purchase of premises and equipment		(1,492,604	)		(1,577,793	)
Proceeds from sale of premises and equipment		5,507			55,060
Proceeds from sales of other real estate owned		-			334,716
Net cash provided by (used in) investing activities		454,286			(12,084,203	)
Cash flows from financing activities:
Change in deposits		84,486,803			12,659,732
Change in repurchase agreements		201,256			316,408
Proceeds from FHLB advances		19,100,000			7,363,000
Repayments of FHLB advances		(23,500,000	)		(13,013,000	)
Purchase of treasury stock		(287,034	)		(92,427	)
Payment of dividends on common stock		(723,264	)		(561,329	)
Proceeds from exercise of stock options		305,593			187,266
Excess tax benefit from stock option exercises		76,633			109,221
Net cash provided by financing activities		79,659,987			6,968,871
Net increase (decrease) in cash and cash equivalents		84,778,094			(2,377,037	)
Cash and cash equivalents, beginning of period		30,872,528			57,404,341
Cash and cash equivalents, end of period	$	115,650,622		$	55,027,304
See notes to unaudited consolidated financial statements.

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MidSouth Bancorp, Inc. and Subsidiaries

Notes to Interim Consolidated Financial Statements

March 31, 2008

(Unaudited)

1.           Basis of Presentation

The accompanying unaudited consolidated financial statements and notes thereto contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company and its subsidiaries as of March 31, 2008 and the results of their operations and their cash flows for the periods presented. The interim financial information should be read in conjunction with the annual consolidated financial statements and the notes thereto included in the Company’s 2007 Annual Report and Form 10-K.

The results of operations for the three month period ended March 31, 2008 are not necessarily indicative of the results to be expected for the entire year.

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

Summary of Significant Accounting Policies — The accounting and reporting policies of the Company conform with accounting principles generally accepted in the United States of America and general practices within the banking industry.  There have been no material changes or developments in the application of accounting principles or in our evaluation of the accounting estimates and the underlying assumptions or methodologies that we believe to be Critical Accounting Policies and Estimates as disclosed in our Form 10-K for the year ended December 31, 2007.

Recent Accounting Pronouncements—In December 2007, FASB issued Statement No. 141R, Business Combinations (“SFAS No. 141R”).  Under SFAS No. 141, organizations utilized the announcement date as the measurement date for the purchase price of the acquired entity. SFAS No. 141R requires measurement at the date the acquirer obtains control of the acquiree, generally referred to as the acquisition date. SFAS No. 141R will have a significant impact on the accounting for transaction and restructuring costs, as well as the initial recognition of contingent assets and liabilities assumed during a business combination.  Under SFAS No. 141R, adjustments to the acquired entity’s deferred tax assets and uncertain tax position balances occurring outside the measurement period are recorded as a component of the income tax expense, rather than goodwill.  SFAS No. 141R is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.  As the provisions of SFAS No. 141R are applied prospectively, the impact to the Company cannot be determined until a transaction occurs.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements (“SFAS No. 160”), which will require noncontrolling interests (previously referred to as minority interests) to be treated as a separate component of equity, not as a liability or other item outside of permanent equity. SFAS No. 160 applies to the accounting for noncontrolling interests and transactions with noncontrolling interest holders in consolidated financial statements. SFAS No. 160 is effective for periods beginning on or after December 15, 2008. Earlier application is prohibited. SFAS No. 160 will be applied prospectively to all noncontrolling interests, including any that arose before the effective date except that comparative period information must be recast to classify noncontrolling interests in equity, attribute net income and other comprehensive income to noncontrolling interests, and provide other disclosures required by SFAS No. 160. The Company does not expect the adoption of SFAS No. 160 to have any impact on its financial position, results of operation, and cash flows.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (“SFAS No. 161”).  SFAS No. 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of derivative instruments and related gains and losses, and disclosures about credit-risk-related contingent features in derivative agreements. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.  The statement provides only for enhanced disclosures. Therefore, adoption will have no impact on our financial position, results of operations, and cash flows.

Reclassifications—Certain reclassifications have been made to the prior years’ financial statements in order to conform to the classifications adopted for reporting in 2008.  The reclassifications had no impact on stockholders equity or net income.

2.           Allowance for Loan Losses

A summary of the activity in the allowance for loan losses is as follows (in thousands):

	Three Months Ended March 31,
	2008			2007
Balance, beginning of period	$	5,612		$	4,977
Provision for loan losses		1,200			-
Recoveries		9			18
Loans charged-off		(691	)		(95	)
Balance, end of period	$	6,130		$	4,900

3.           Earnings Per Common Share

Following is a summary of the information used in the computation of earnings per common share as adjusted for a 5% stock dividend declared on July 18, 2007 (in thousands):

	Three Months Ended March 31,
	2008		2007
Net earnings	$	1,199	$	1,946
Weighted average number of common shares outstanding used in computation of basic earnings per common share		6,586		6,552
Effect of dilutive securities: Stock options		36		95
Weighted average number of common shares outstanding plus effect of dilutive securities – used in computation of diluted earnings per share		6,622		6,647

4.           Declaration of Dividends

On January 28, 2008, the Company declared a $0.07 per share quarterly dividend for holders of record on March 12, 2008.

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5.           Deferred Compensation and Postretirement Benefits

In September 2006, the FASB’s Emerging Issues Task Force (“EITF”) reached a consensus on the issue No. 06-4 Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Lift Insurance Arrangements (“EITF 06-4”).  The issue was ratified by FASB on March 28, 2007.  Entities affected by this issue purchase life insurance on “key” employees, which extend into the individual’s retirement period.  The issue requires affected entities to recognize a liability for future benefits based on the substantive agreement with the employee.  EITF 06-4 is effective for all financial statements issued for fiscal years beginning after December 15, 2007.  This issue was applied through a cumulative-effect adjustment to retained earnings as of January 1, 2008 in the amount of $114,954.

6.           Fair Value Measurement

Effective January 1, 2008, the Company adopted Statements of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“SFAS No. 157”) and SFAS No. 159 The Fair Value Option for Financial Assets and Liabilities (“SFAS No. 159”). SFAS No. 157, which was issued in September 2006, establishes a framework for using fair value. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS No. 159, which was issued in February 2007, generally permits the measurement of selected eligible financial instruments at fair value at specified election dates. Upon adoption of SFAS No. 159, the Company did not elect to apply the fair value measurement option

In accordance with SFAS No. 157, we group our financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1 — Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes securities that are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 — Valuations for assets and liabilities traded in less active dealer or broker markets. For example, municipal securities valuations are based on markets that are currently offering similar financial products. Valuations are obtained from third party pricing services for identical or comparable assets or liabilities.

Level 3 — Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections and projections in determining the fair value assigned to such assets or liabilities.

Below is a table that presents information about certain assets and liabilities measured at fair value on a recurring basis (in thousands):

					Fair Value Measurements at March 31, 2008 using:
Description	Total Carrying Amount in Statement of Financial Position at March 31, 2008		Assets / Liabilities Measured at Fair Value at March 31, 2008		Level 1		Level 2		Level 3
Available-for-sale securities	$	181,618	$	181,618	$	189	$	181,429	$	-

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

MidSouth Bancorp, Inc. (“the Company") is a bank holding company headquartered in Lafayette, Louisiana that conducts substantially all of its business through its wholly-owned subsidiary bank MidSouth Bank, N.A (“the Bank”).  MidSouth Bank, N.A. offers complete banking services to commercial and retail customers in south Louisiana and southeast Texas with 34 locations and more than 120 ATMs.  The Company is community oriented and focuses primarily on offering commercial and consumer loan and deposit services to individuals, small businesses, and middle market businesses.

Following is management's discussion of factors that management believes are among those necessary for an understanding of the Company's financial statements.  The discussion should be read in conjunction with the Company's consolidated financial statements and the notes thereto presented herein and with the financial statements, the notes thereto, and related Management’s Discussion and Analysis in the Company’s 10-K for the year ended December 31, 2007.

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 management’s discussion and analysis reflects management’s current views and estimates of future economic circumstances, industry conditions, the Company’s performance, and financial results based on reasonable assumptions.  A number of factors and uncertainties could cause actual results to differ materially from the anticipated results and expectations expressed in the discussion.  These factors and uncertainties include, but are not limited to:

· 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 that could adversely affect customers and their ability to repay borrowings under agreed upon terms and/or adversely affect the value of the underlying collateral related to the borrowings;

· increased competition for deposits and loans which could affect 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;

· a deviation in actual experience from the underlying assumptions used to determine and establish the Allowance for Loan Losses (“ALL”);

· changes in the availability of funds resulting from reduced liquidity or increased costs;

· 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;

· the ability to acquire, operate, and maintain effective and efficient operating systems;

· increased asset levels and changes in the composition of assets which would impact capital levels and regulatory capital ratios;

· loss of critical personnel and the challenge of hiring qualified personnel at reasonable compensation levels;

· changes in government regulations and accounting principles, policies, and guidelines applicable to financial holding companies and banking; and

· acts of terrorism, weather, or other events beyond the Company’s control.

Critical Accounting Policies

Certain critical accounting policies affect the more significant judgments and estimates used in the preparation of the consolidated financial statements.  The Company’s significant accounting policies are described in the notes to the consolidated financial statements included in Form 10-K for the year ended December 31, 2007.  The accounting principles followed by the Company and the methods of applying these principles conform with accounting principles generally accepted in the United States of America (“GAAP”) and general banking practices.  The Company’s most critical accounting policy relates to its allowance for loan losses, which reflects the estimated losses resulting from the inability of its borrowers to make loan payments.  If the financial condition of its borrowers were to deteriorate, resulting in an impairment of their ability to make payments, the Company’s estimates would be updated and additional provisions for loan losses may be required (see Asset Quality).

Another of the Company’s critical accounting policies relates to its goodwill and intangible assets.  Goodwill represents the excess of the purchase price over the fair value of net assets acquired.  In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, goodwill is not amortized but evaluated for impairment annually.  If the fair value of an asset exceeds the carrying amount of the asset, no charge to goodwill is made.  If the carrying amount exceeds the fair value of the asset, goodwill will be adjusted through a charge to earnings.

A third critical accounting policy relates to stock-based compensation.  SFAS No. 123R requires that stock based compensation transactions be recognized as compensation expense in the statement of earnings based on the fair market value on the date of the grant.  SFAS No. 123R further requires that management make assumptions including stock price volatility and employee turnover that are utilized to measure compensation expense.  The fair value of the stock options granted is estimated at the date of grant using the Black-Scholes option-pricing model.  This model requires the input of highly subjective assumptions.  The Company recognized stock option expense of $17,340, for the grant-date fair value of stock options vested in the three months ended March 31, 2008.  The Company did not grant any new stock options in the first quarter of 2008.

Results of Operations

First quarter 2008 earnings totaled $1.2 million, a 38.4% decrease from earnings of $1.9 million for the same period in 2007.  Diluted earnings per share were $0.18 for the first quarter of 2008, compared to $0.29 per share for the first quarter of 2007.  Earnings per share data for the first quarter of 2007 have been adjusted to reflect a 5% stock dividend declared on July 18, 2007.

First quarter 2008 earnings were impacted by a $1.2 million provision for loan losses prompted by credit downgrades related to borrower liquidity concerns and softness in the real estate market as a result of the ongoing housing crisis throughout the country.  General market conditions and concern for borrower deterioration was reflected in an increase of $1.8 million in loans past due 90 days and over and an increase of $325,000 in nonaccrual loans for the first quarter of 2008 compared to the first quarter of 2007.  Additionally, $189,000 of the provision expense was necessary to cover probable losses resulting from fraudulent activity in the indirect auto loan portfolio during the first quarter of 2008.  No loan loss provisions were expensed in the first quarter of 2007.

Revenues for the Company, defined as net interest income and non-interest income, increased $1.3 million for the first quarter of 2008 compared to the first quarter of 2007.  Net interest income for the first quarter of 2008 increased $936,000, or 11.2% compared to the first quarter of 2007, primarily due to an increase in average loan volume.  Net interest margin, on a fully taxable-equivalent basis, was 4.88% in the first quarter of 2008, an improvement of 3 basis points from 4.85% in the first quarter of 2007.  A $1.2 million increase in non-interest expenses attributed to franchise expansion offset the improvement in revenues.

First quarter 2008 results were positively impacted by a lower effective tax rate of approximately 12.35% that reduced income tax expense by $407,000 compared to the first quarter of 2007.  The effective tax rate for first quarter 2007 was 22.84%.  The lower effective tax rate resulted from decreased earnings due to the $1,200,000 expensed in provisions for loan losses combined with sustained nontaxable interest income from municipal securities within the investment portfolio.

Return on average equity was 6.90% for the first quarter of 2008 compared to 13.07% for the first quarter of 2007.  The leverage capital ratio was 8.44% at March 31, 2008 compared to 8.50% at March 31, 2007.

Total consolidated assets increased $82.9 million, or 9.7%, from $854.1 million at the year end 2007 to $937.0 million at the end of the first quarter of 2008.  Total loans were flat, increasing $240,000, from $569.5 million at December 31, 2007 to $569.7 million at March 31, 2008 due to a decline in loan demand and a higher volume of loans paid out in the first quarter of 2008.  Total deposits increased $84.5 million, or 11.5%, from $733.5 million at December 31, 2007 to $818.0 million at March 31, 2008.  Deposits grew primarily in the Company’s commercial and consumer Platinum money market accounts, consumer certificates of deposit, and in public funds deposits.

Nonperforming assets, including loans 90 days or more past due, totaled $4.6 million at March 31, 2008, as compared to the $3.0 million at December 31, 2007.  As a percentage of total assets, nonperforming assets were 0.49% and 0.35% for March 31, 2008 and December 31, 2007, respectively.  Net charge-offs to total loans were 0.12% for the first quarter of 2008.  As a percentage of total loans, the allowance for loan losses for the quarters ended March 31, 2008 and 2007 was 1.08% and 0.96%, respectively.

Earnings Analysis

Net Interest Income

The primary source of earnings for the Company is the difference between interest earned on loans and investments (earning assets) and interest paid on deposits and other liabilities (interest-bearing liabilities).  Changes in the volume and mix of earning assets and interest-bearing liabilities combined with changes in market rates of interest greatly affect net interest income.

The Company’s net interest margin on a taxable-equivalent basis, which is net interest income as a percentage of average earning assets, was 4.88% for the three months ended March 31, 2008, up 3 basis points from 4.85% for the three months ended March 31, 2007.  Tables 1 and 2 following this discussion analyze the changes in taxable-equivalent net interest income for the three months ended March 31, 2008 and 2007.

Taxable-equivalent net interest income totaled $9,707,000 for the first quarter of 2008, an increase of 10.8%, or $950,000, from the $8,757,000 reported for the first quarter of 2007.  The improvement in net interest income resulted primarily from an increase of $68.4 million in average earning assets.  Total taxable-equivalent interest income from earning assets increased $884,000 for the first quarter of 2008 compared to 2007.  The increase in taxable-equivalent interest income was primarily due to a $68.9 million increase in average loan volume, partially offset by a 43 basis point decrease in the average yield on loans, from 8.91% to 8.48%.

The taxable-equivalent yield on investment securities increased 21 basis points, from 4.93% to 5.14% in quarterly comparison, while the average volume decreased $5.9 million from the first quarter of 2008 to the same period in 2007.  A 235 basis point decrease in the yield on federal funds sold reduced interest income by $156,000 in quarterly comparison, despite a $5.4 million average volume increase in federal funds sold for the same period.  The yields on loans and overnight federal funds sold declined during the first quarter of 2008 as New York Prime (“Prime”) fell 200 basis points, from 7.25% at year-end 2007 to 5.25% at March 31, 2008, and the Federal Reserve Bank Target (“FRB Target”) rate was lowered to 2.25%.

Interest expense for the first quarter of 2008 decreased $66,000 in comparison to the first quarter of 2007.   A 49 basis point decrease in the average rate paid on interest-bearing liabilities lessened the impact of a $71.8 million increase in the average volume of interest-bearing liabilities in quarterly comparison.  The 49 basis point rate decrease reflects rate adjustments made in the first quarter of 2008 in response to the

200 basis point decreases in Prime and the 225 basis point decrease in FRB Target rates.  The increase in interest-bearing liabilities was primarily in commercial and consumer Platinum money market deposits, consumer certificates of deposit and public funds deposits.

The average volume of federal funds purchased and securities sold under repurchase agreements increased $21.8 million in quarterly comparison primarily due to a $12.5 million repurchase agreement entered into in July of 2007 with Citigroup Global Markets, Inc. (“CGMI”).  The repurchase agreement provided low cost funding to meet liquidity demands in the third quarter of 2007.  Under the terms of the repurchase agreement, interest is payable quarterly based on a floating rate equal to the 3-month LIBOR for the first 12 months of the agreement and a fixed rate of 4.57% for the remainder of the term.  The repurchase date is scheduled for August 9, 2017; however, the agreement may be called by CGMI on August 9, 2008, or every quarterly period thereafter.

The average rate paid on the Company’s junior subordinated debentures decreased 46 basis points from first quarter of 2007 to first quarter of 2008 on the $8.2 million of such debentures issued in the fourth quarter of 2004.  The debentures carry a floating rate equal to the 3-month LIBOR plus 2.50%, adjustable and payable quarterly.  The rate at March 31, 2008 was 5.04%.  The debentures mature on September 20, 2034 and, under certain circumstances, are subject to repayment on September 20, 2009 or thereafter.  In February 2001, the Company issued $7.2 million of junior subordinated debentures.  The debentures carry a fixed interest rate of 10.20% and mature on February 22, 2031.

-9-

Table 1
Consolidated Average Balances, Interest and Rates (in thousands)
	Three Months Ended March 31,
	2008								2007
	Average Volume			Interest		Average Yield/Rate			Average Volume			Interest		Average Yield/Rate
Assets
Investment securities and interest bearing deposits1
Taxable	$	79,211		$	960		4.85	%	$	85,373		$	981		4.60	%
Tax exempt2		108,933			1,474		5.41	%		109,859			1,435		5.22	%
Other investments		3,693			31		3.36	%		2,511			22		3.50	%
Total investments		191,837			2,465		5.14	%		197,743			2,438		4.93	%
Federal funds sold and securities purchased under agreements to resell		38,970			274		2.78	%		33,550			430		5.13	%
Loans
Commercial and real estate		456,435			9,419		8.30	%		395,224			8,721		8.95	%
Installment		112,719			2,587		9.23	%		105,047			2,272		8.77	%
Total loans3		569,154			12,006		8.48	%		500,271			10,993		8.91	%
Total earning assets		799,961			14,745		7.41	%		731,564			13,861		7.68	%
Allowance for loan losses		(5,531	)							(4,949	)
Nonearning assets		89,728								76,843
Total assets	$	884,158							$	803,458
Liabilities and stockholders’ equity
NOW, money market, and savings	$	450,702		$	2,929		2.61	%	$	419,573		$	3,469		3.35	%
Certificates of deposits		141,073			1,549		4.42	%		122,235			1,213		4.02	%
Total interest bearing deposits		591,775			4,478		3.04	%		541,808			4,682		3.50	%
Federal funds purchased and securities sold under repurchase agreements		26,150			212		3.21	%		4,346			49		4.51	%
FHLB advances		1,663			16		3.81	%		1,593			27		6.78	%
Junior subordinated debentures		15,465			332		8.49	%		15,465			346		8.95	%
Total interest bearing liabilities		635,053			5,038		3.19	%		563,212			5,104		3.68	%
Demand deposits		174,109								176,000
Other liabilities		5,095								3,874
Stockholders’ equity		69,901								60,372
Total liabilities and stockholders’ equity	$	884,158							$	803,458
Net interest income and net interest spread				$	9,707		4.22	%				$	8,757		4.01	%
Net yield on interest earning assets							4.88	%							4.85	%

 

1Securities classified as available-for-sale are included in average balances.  Interest income figures reflect interest earned on such securities.

 

2Interest income of $433,000 for 2008 and $419,000 for 2007 is added to interest earned on tax-exempt obligations to reflect tax equivalent yields using a 34% tax rate.

 

3Interest income includes loan fees of $929,000 for 2008 and $778,000 for 2007.  Nonaccrual loans are included in average balances and income on such loans is recognized on a cash basis.

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Table 2 Changes in Taxable-Equivalent Net Interest Income (in thousands)
	Three Months Ended March 31, 2008 compared to March 31, 2007
	Total Increase			Change Attributable To
	(Decrease)			Volume			Rates
Taxable-equivalent earned on:
Investment securities and interest bearing deposits
Taxable	$	(21	)	$	(73	)	$	52
Tax exempt		39			(12	)		51
Other investments		9			10			(1	)
Federal funds sold and securities purchased under agreement to resell		(156	)		61			(217	)
Loans, including fees		1,013			1,469			(456	)
Total	$	884		$	1,455		$	(571	)
Interest paid on:
Interest bearing deposits	$	(204	)	$	410		$	(614	)
Federal funds purchased and securities sold under repurchase agreements		163			181			(18	)
FHLB advances		(11	)		1			(12	)
Junior subordinated debentures		(14	)		-			(14	)
Total	$	(66	)	$	592		$	(658	)
Taxable-equivalent net interest income	$	950		$	863		$	87

Non-Interest Income

Non-interest income for the first quarter of 2008 totaled $3.6 million an increase of $320,000, or 9.9%, from $3.3 million for the first quarter of 2007.  The increase resulted primarily from a $115,000 increase in debit card and ATM transaction fee income due to a higher volume of transactions processed.  Additionally, a one-time payment totaling $131,000 was received from VISA during the first quarter 2008.  The one-time payment was related to VISA’s redemption of a portion of its Class B shares outstanding in connection with its initial public offering.

Non-interest Expenses

Non-interest expenses increased $1.2 million in quarterly comparison, primarily due to increased salaries and benefits costs and occupancy expenses.  Salaries and benefits costs increased $391,000 as the number of full-time equivalent employees increased from 387 at March 31, 2007, to 423 at March 31, 2008, due to franchise expansion and recruitment of talented leaders to support corporate growth initiatives.  Occupancy expenses increased $378,000, primarily in lease expense and depreciation expenses on fixed assets.  Additional increases were recorded in marketing expense, data processing expense, education and travel costs and other growth-related expenses.

Analysis of Statement of Condition

Consolidated assets totaled $937.0 million at March 31, 2008, up $83.0 million from $854.0 million at December 31, 2007 due to growth in federal funds sold, which was the direct result of an increase in deposits.  Deposits totaled $818.0 million at the end of the first quarter of 2008, an increase of $84.5 million from $733.5 million at December 31, 2007.  Deposit growth occurred primarily in commercial Platinum money market accounts, reflecting significant liquidity held by oil-related companies within the Company’s markets.  Additionally, increases were noted in public funds deposits, consumer Platinum money market deposits and consumer Certificates of Deposits (“CDs”).  The growth in CDs resulted from special promotions held in conjunction with grand opening events for newly constructed retail offices.  The special promotions offered short-term CDs at competitive rates within the selected markets for a limited time.

Loans totaled $569.7 million at March 31, 2008 compared to $569.5 million at December 31, 2007.  Decreased loan demand combined with an increased volume of loans paid off during the quarter, held the loan portfolio flat over the first three months of 2008, as reflected in Table 3 below.

Table 3 Composition of Loans (in thousands)
	March 31, 2008		December 31, 2007
Commercial, financial, and agricultural	$	181,540	$	187,544
Lease financing receivable		7,115		8,089
Real estate – mortgage		205,875		204,291
Real estate – construction		86,998		80,864
Installment loans to individuals		87,347		87,775
Other		870		942
Total loans	$	569,745	$	569,505

Within the $205.9 million real estate mortgage portfolio at March 31, 2008, $128.5 million represented loans secured by commercial real estate, 79% of which was owner-occupied.  Of the $77.4 million in real estate mortgage loans secured by 1-4 family residential properties, 76% represented loans secured by first liens. Within the $87.0 million real estate construction portfolio, 83% represented commercial construction and land development and 17% represented residential construction and consumer property.  Management believes the Company’s risk within the real estate and construction portfolios is diversified throughout its markets and that current exposure within the two portfolios is sufficiently provided for within the ALL at March 31, 2008.

Securities available-for-sale totaled $181.6 million at March 31, 2008, up $166,000 from $181.5 million at December 31, 2007. The portfolio of securities held-to-maturity decreased $1.0 million, from $10.7 million at December 31, 2007 to $9.7 million at March 31, 2008, due to maturities and calls within that portfolio.  Other investments decreased $467,000 from year-end 2007 due to the redemption of FHLB stock required with the decrease in borrowings under FHLB advances.

Liquidity

Liquidity is the availability of funds to meet operational cash flow requirements and to meet contractual obligations as they become due.  The Bank’s primary liquidity needs involve its ability to accommodate customers’ demands for deposit withdrawals as well as their requests for credit.  Liquidity is deemed adequate when sufficient cash to meet these needs can be promptly raised at a reasonable cost to the Bank.  Liquidity is provided primarily by three sources: a stable base of funding sources, an adequate level of assets that can be readily converted into cash, and borrowing lines with correspondent banks.  The Bank’s core deposits are its most stable and important source of funding.  Further, the low variability of the core deposit base lessens the need for liquidity.  Cash deposits at other banks, federal funds sold, principal payments received on loans and mortgage-backed securities, and maturities of investment securities provide additional primary sources of asset liquidity for the Bank.  The Bank also has significant borrowing capacity with the FHLB of Dallas, Texas and borrowing lines with other correspondent banks.  At March 31, 2008, the Bank did not have any borrowings with the FHLB or a correspondent bank.

At the parent company level, cash is needed primarily to meet interest payments on the junior subordinated debentures and to pay dividends on common stock.  An $8.2 million issuance of junior subordinated debentures was completed on September 20, 2004, the proceeds of which were used to partially fund the Lamar Bancshares acquisition.  The parent company previously issued $7.2 million in junior subordinated debentures in February 2001.  Dividends from the Bank primarily provide liquidity for the parent company.  As a publicly traded company, the parent company also has the ability to issue other securities instruments to provide funds as needed for operations and future growth.

Capital

The Company and the Bank are required to maintain certain minimum capital levels.  Risk-based capital requirements are intended to make regulatory capital more sensitive to the risk profile of an institution's assets.  At March 31, 2008, the Company and the Bank were in compliance with statutory minimum capital requirements and was classified as “well capitalized”.  Minimum capital requirements include a total risk-based capital ratio of 8.0%, with Tier 1 capital not less than 4.0%, and a leverage ratio (Tier 1 to total average adjusted assets) of 4.0% based upon the regulators latest composite rating of the institution.As of March 31, 2008, the Company’s leverage ratio was 8.44%, Tier 1 capital to risk-weighted assets was 11.07% and total capital to risk-weighted assets was 11.99%.  The Bank had a leverage capital ratio of 8.32% at March 31, 2008.

Asset Quality

Credit Risk Management

The Company manages its credit risk by observing written, board approved policies that govern all underwriting activities.  The credit risk management program requires that each individual loan officer review his or her portfolio on a scheduled basis and assign recommended credit ratings on each loan.  These efforts are supplemented by internal ireviews and other validations performed by the internal audit department.  The results of the reviews are reported directly to the Audit Committee of the Board of Directors.  Additionally, bank concentrations are monitored and reported to the Board of Directors quarterly whereby individual customer and aggregate industry leverage, profitability, risk rating distributions, and liquidity are evaluated for each major standard industry classification segment.

-11-

Nonperforming Assets and Allowance for Loan Losses

Table 4 summarizes the Company's nonperforming assets for the quarters ending March 31, 2008 and 2007, and December 31, 2007.

Table 4 Nonperforming Assets and Loans Past Due 90 Days or More (in thousands)
	March 31, 2008			March 31, 2007			December 31, 2007
Nonaccrual loans	$	1,899		$	1,574		$	1,602
Loans past due 90 days and over		2,275			481			980
Total nonperforming loans		4,174			2,055			2,582
Other real estate owned		143			158			143
Other foreclosed assets		315			58			280
Total nonperforming assets	$	4,632		$	2,271		$	3,005
Nonperforming assets to total assets		0.49	%		0.28	%		0.35	%
Nonperforming assets to total loans + OREO + other foreclosed assets		0.81	%		0.44	%		0.53	%
ALL to nonperforming assets		132.34	%		215.76	%		186.76	%
ALL to nonperforming loans		146.86	%		238.44	%		217.35	%
ALL to total loans		1.08	%		0.96	%		0.99	%
Quarter-to-date charge-offs	$	691		$	95		$	218
Quarter-to-date recoveries		9			18			8
Quarter-to-date net charge-offs	$	682		$	77		$	210
Net QTD charge-offs to total loans		0.12	%		0.02	%		0.04	%

At March 31, 2008, nonperforming assets, including loans past due 90 days and over, totaled $4.6 million, or 0.49% of total assets, as compared to the $2.3 million, or 0.28% of total assets, recorded at March 31, 2007.  The increase in non-performing assets in prior year comparison resulted primarily from an increase of $1.8 million in loans past due 90 days and over and an increase in nonaccrual loans of $325,000.

Of the $2.3 million in loans past due 90 days and over at March 31, 2008, one loan totaling $674,000 has been renewed and one loan totaling $87,000 has been paid off.  Of the remaining $1.5 million in loans past due 90 days or more, approximately $1.0 million represents two commercial credits.  Of the $1.9 million in nonaccrual loans, approximately $800,000 is expected to be returned to accrual status or to be paid off in the second quarter of 2008.

Allowance coverage for nonperforming loans was 146.86% at March 31, 2008, compared to 238.44% at March 31, 2007.  Net quarter-to-date charge-offs were 0.12% of total loans for the first quarter 2008 compared to 0.02 % the first quarter of 2007.  The increase resulted primarily from $353,000 in indirect auto loans charged-off due to fraudulent activity and a $232,000 commercial loan charged-off in the first quarter of 2008.  Management’s most recent analysis of the ALL indicated that the ALL to total loans ratio of 1.08% was appropriate at March 31, 2008.

Specific reserves have been established in the ALL to cover probable losses on nonperforming assets.  The ALL is analyzed quarterly and additional reserves, if needed, are allocated at that time.  Factors considered in determining provisions include estimated losses in significant credits; known deterioration in concentrations of credit; historical loss experience; trends in nonperforming assets; volume, maturity and composition of the loan portfolio; off balance sheet credit risk; lending policies and control systems; national and local economic conditions; the experience, ability and depth of lending management; and the results of examinations of the loan portfolio by regulatory agencies and others.  The processes by which management determines the appropriate level of the allowance, and the corresponding provision for probable credit losses, involves considerable judgment; therefore, no assurance can be given that future losses will not vary from current estimates.  Management believes the $6.1 million in the allowance as of March 31, 2008 is sufficient to cover probable losses in nonperforming assets and in the loan portfolio.

Impact of Inflation and Changing Prices

The consolidated financial statements of and notes thereto, presented herein, have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of the Company’s operations.  Unlike most industrial companies, nearly all the assets and liabilities of the Company are financial.  As a result, interest rates have a greater impact on the Company’s performance than do the effects of general levels of inflation.  Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

In the normal course of conducting business, the Company is exposed to market risk, principally interest rate risk, through operation of its subsidiaries.  Interest rate risk arises from market fluctuations in interest rates that affect cash flows, income, expense and values of financial instruments.  The Asset/Liability Management Committee (“ALCO”) is responsible for managing the Company’s interest rate risk position in compliance with the policy approved by the Board of Directors.

There have been no significant changes from the information regarding market risk disclosed under the heading “Interest Rate Sensitivity” in the Company’s Annual Report for the year ended December 31, 2007.

Item 4. Controls and Procedures.

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  As of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”), the principal executive officer and principal financial officer have concluded that such disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

During the first quarter of 2008, there were no significant changes in the Company’s internal controls over financial reporting that has materially affected, or is reasonably likely to affect, the Company’s internal controls over financial reporting.

-12-

Part II – Other Information

Item 1. Legal Proceedings.

The Bank has been named as a defendant in various legal actions arising from normal business activities in which damages of various amounts are claimed.  While the amount, if any, of ultimate liability with respect to such matters cannot be currently determined, management believes, after consulting with legal counsel, that any such liability will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows.

Item 1A. Risk Factors.

No change.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table provides information with respect to purchases made by or on behalf of the Company or any “affiliated purchaser,” as defined in Securities Exchange Act Rule 10b-8(a)(3), of equity securities during the quarter ended March 31, 2008.

	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Plan4		Maximum Number of Shares That May Yet be Purchased Under the Plan4
January 2008		2,958	$	22.19		2,958		188,342
February 2008		8,355	$	22.50		8,355		179,987
March 2008		1,782	$	18.75		1,782		178,205

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

(a)  Exhibits

Exhibit Number                                                      Document Description

31.1 Certification pursuant to Exchange Act Rules 13(a) – 15(e)

31.2 Certification pursuant to Exchange Act Rules 13(a) – 15(e)

32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b)  Reports Filed on Form 8-K

A press release regarding the Company’s earnings for the quarter ended March 31, 2008 was attached as Exhibit 99.1 to the Form 8-K filed on April 24, 2008.

 

4Under a share repurchase program approved by the Company’s Board of Directors on November 13, 2002, the Company can repurchase up to 5% of its common stock outstanding through open market or privately negotiated transactions.  The repurchase program does not have an expiration date.

-13-

Signatures

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MidSouth Bancorp, Inc. (Registrant)
Date:  May 8, 2008
	/s/ C. R. Cloutier
	C. R. Cloutier, President /CEO
	/s/ J. E. Corrigan, Jr.
	J. E. Corrigan, Jr., Executive Vice President/CFO

-14-

EX-3.2

AMENDED AND RESTATED BY-LAWS

OF MIDSOUTH BANCORP, INC.

December 19, 2007

SECTION 1

OFFICES

1.1Principal Office.  The principal office of the Corporation shall be located at 102 Versailles Boulevard, Lafayette, Louisiana 70501.

1.2Additional Offices.  The Corporation may have offices at such other places as the Board of Directors may from time to time determine or the business of the Corporation may require.

SECTION 2

SHAREHOLDERS’ MEETINGS

2.1Place of Meetings.  Unless otherwise required by law or the Articles of Incorporation, all meetings of the shareholders shall be held at the principal office of the Corporation or at such other place, within or without the State of Louisiana, as may be designated by the Board of Directors.

2.2Annual Meetings.  An annual meeting of the shareholders shall be held each year on the date and at the time as the Board of Directors shall designate, for the purpose of electing directors and for the transaction of such other business as may be properly brought before the meeting.  If no annual shareholders’ meeting is held for a period of eighteen months, any shareholder may call such meeting to be held at the registered office of the Corporation.

2.3Special Meetings.  Special meetings of the shareholders, for any purpose or purposes, may be called at any time by a majority of Continuing Directors, as defined in the Articles of Incorporation, the Chairman of the Board, if the Chairman of the Board is a Continuing Director, or the President if the selection of the President was approved by at least a majority of the Continuing Directors.  Special meetings of the shareholders may he called by the shareholders only in the manner set forth in Article VI of the Articles of Incorporation.

2.4Notice of Meetings.  Except as otherwise provided by law or the Articles of Incorporation, the authorized person or persons calling a shareholders’ meeting shall cause written notice of the time, place and purpose of the meeting to be given to all shareholders entitled to vote at such meeting, at least 10 days and not more than 60 days prior to the day fixed for the meeting.  Notice of the annual meeting need not state the purpose or purposes thereof, unless action is to be taken at the meeting as to which notice is required by law, the Articles of Incorporation or the By-laws.  Notice of a special meeting shall state the purpose or purposes thereof, and the business conducted at any special meeting shall be limited to the purpose or purposes stated in the notice.

2.5List of Shareholders.  At every meeting of shareholders, a list of shareholders entitled to vote, arranged alphabetically and certified by the Secretary or by the agent of the Corporation having charge of transfers of shares, showing the number and class of shares held by each such shareholder on the record date for the meeting, shall be produced on the request of any shareholder.

2.6Quorum.  At all meetings of shareholders, the holders of a majority of the Total Voting Power (as defined in Article III(D) of the Articles of Incorporation) shall constitute a quorum.  For purposes of determining whether a meeting has been duly organized, a shareholder deemed present for any purpose at the meeting shall be deemed present for purposes of determining whether the meeting is duly organized.

2.7Voting.  When any shareholders’ meeting has been duly organized, directors shall be elected by plurality vote, and each question brought before the meeting shall be decided by the vote specified in Article IX Paragraphs A and B of the Articles of Incorporation.

If a plurality vote or the affirmative vote of a majority of the votes cast is required to constitute shareholder action, abstentions shall be counted as votes not cast.  If the affirmative vote of a portion of the voting power present is required to constitute shareholder action, broker non votes shall be counted as not present and not cast.

2.8Proxies.  At any meeting of the shareholders, every shareholder having the right to vote shall be entitled to vote in person or by proxy.  A proxy must be appointed by an instrument in writing executed by such shareholder and bearing a date not more than eleven months prior to the meeting, unless the instrument provides for a longer period of validity, but in no case shall an outstanding proxy be valid for longer than three years from the date of its execution.  In no event, however, may a proxy be voted at a meeting called pursuant to La. RS. 12:138 unless it is executed and dated by the shareholder within 30 days of the date of such meeting.  The person appointed as proxy need not be a shareholder of the Corporation.  A proxy must be filed with the Secretary of the Corporation at or before the meeting.  The revocation of a revocable proxy shall not be effective until written notice thereof has been given to the Secretary of the Corporation or unless a proxy of a later date is filed with the Secretary of the Corporation at or before the meeting.  A shareholder present in person at the meeting who votes in person at the meeting in a manner inconsistent with a proxy filed on the shareholder’s behalf shall be deemed to have revoked such proxy as it relates to the matter voted upon in person­

2.9Adjournments.  Adjournments of any annual or special meeting of shareholders may be taken without new notice being given unless a new record date is fixed for the adjourned meeting, but any meeting at which directors are to be elected shall be adjourned only from day to day until such directors shall have been elected.

2.10Withdrawal.  If a quorum is present or represented at a duly organized shareholders’ meeting, such meeting may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum as fixed in Section 2.6 of these By-laws, or the refusal to vote or abstention of any shareholder.

2.11Lack of Quorum.  If a meeting cannot be organized because a quorum has not attended, those present may adjourn the meeting to such time and place as they may determine, subject, however, to the provisions of Section 2.9 hereof.  In the case of any meeting called for the election of directors, those who attend the second of such adjourned meetings, although less than a quorum, as fixed in Section 2.6 hereof, shall nevertheless be deemed to constitute a quorum for the purpose of electing directors.

2.12Presiding Officer, Secretary of the Meeting and Judges of Election.  The Chairman of the Board if a Continuing Director or, in his or her absence, the President, if at least a majority of Continuing Directors has approved the selection of the President, or, in their absence, a chairman designated by the Continuing Directors (defined in Article IV Paragraph C of the Articles of Incorporation), shall preside at all shareholders’ meetings.  The presiding officer shall determine the order of business and the procedure at any shareholders’ meeting, including such regulation of the manner of voting and the conduct of discussion as he or she deems appropriate.  The Secretary of the Corporation or, in his or her absence, a secretary designated by the presiding officer, shall be the secretary for shareholders’ meetings.  The Judges of Election for each shareholders’ meeting shall be appointed by the Continuing Directors.  All questions related to the qualification of voters, the validity of proxies and the acceptance or rejection of votes shall be decided by the Judges of Election.

SECTION 3

DIRECTORS

3.1Number.  All of the corporate powers shall be vested in, and the business and affairs of the Corporation shall be managed by, a Board of Directors.  Except as otherwise fixed by or pursuant to Article III of the Articles of Incorporation (as it may be duly amended from time to time) relating to the rights of the holders of Preferred Stock to elect additional directors by class vote, the Board of Directors shall consist of nine natural persons.  If, after proxy materials for any meeting of shareholders at which directors are to be elected are mailed to shareholders, any person or persons named therein to be nominated at the direction of the Board of Directors becomes unable or unwilling to serve, the foregoing number of authorized directors shall be automatically reduced by a number equal to the number of such persons unless the Board of Directors selects an additional nominee or nominees to replace such persons.  No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.  No director need be a shareholder.

3.2Powers.  The Board may exercise all such powers of the Corporation and do all such lawful acts and things which are not by law, the Articles of Incorporation or these By-laws directed or required to be done by the shareholders.

3.3Classes.  The Board of Directors shall be divided into classes in the manner described in Article IV(B) of the Articles of Incorporation.

3.4Nominations.  Only persons nominated in accordance with Article IV(H) of the Articles of Incorporation shall be eligible for election as directors.

3.5Vacancies.  The office of a director shall become vacant only if be or she dies, is interdicted, resigns or is removed from office as provided in Article IV(D) of the Articles of Incorporation.

3.6Filling Vacancies.  Any vacancy on the Board shall be filled only as provided in Article IV(D) of the Articles of Incorporation.

3.7Removal.  Any director may be removed only in the manner provided in Article IV(E) of the Articles of Incorporation

3.8Directors Elected by Preferred Shareholders.  Notwithstanding anything in these By-laws to the contrary, whenever the holders of Preferred Stock shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the provisions of the Articles of Incorporation (as they may be duly amended from time to tithe) fixing the rights and preferences of such preferred stock shall govern with respect to the nomination, election, term, removal, vacancies or other related matters with respect to such directors.

3.9Compensation of Directors.  Directors shall receive such compensation for their services, in their capacity as directors, as may be fixed by resolution of the Board of Directors; provided, however, that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

3.10Chairman of the Board.  The Board shall select and have the power to remove a Chairman who shall preside at all meetings of the Board of Directors and shall perform such other duties as the Board shall authorize.

3.11Advisory Directors.

(a)Subject to the following paragraphs, the Board of Directors may create one or more Advisory Boards, select the members of each to serve at the discretion of, and be subject to removal by, the Board of Directors, determine their compensation, determine how any such Board shall be designated (e.g. Texas Market Board) and specify their functions and meeting frequency.

(b)No person shall be a member of any Advisory Board,

(i)who shall not have executed a confidentiality agreement in form and substance satisfactory to counsel, or

(ii)whose appointment or service would be prohibited by the Depository Institution Management Interlocks Act and regulations thereunder.

(c)In order to assure that any member of an Advisory Board appointed pursuant hereto is not subject as such to Regulation O of the Federal Reserve Board, no Advisory Board or member thereof is or shall be authorized to vote on matters before the Board of Directors, and the functions of any Advisory Board or any member thereof shall not extend beyond providing general policy advice to the Board of Directors or its designated officials.

SECTION 4

MEETINGS OF THE BOARD

4.1Place of Meetings.  The meetings of the Board of Directors may be held at such place within or without the State of Louisiana as a majority of the directors may from time to time appoint.

4.2Initial Meetings; Notice.  The first meeting of each newly-elected Board shall be held immediately following the shareholders’ meeting at which the Board, or any class thereof, is elected and at the same place as such meeting, and no notice of such first meeting shall be necessary in order legally to constitute the meeting.

4.3Regular Meetings; Notice.  Regular meetings of the Board maybe held at such times as the Board may from time to time determine.  If regular nice Ling dates are fixed by the Board at a directors’ meeting, the Secretary shall give each director written notice of such dates by placing such notice in the United States mail, postage prepaid, addressed to the director at his or her address appearing on the Corporation’s records.  The notice shall be deemed given when so mailed at least five business days prior to the first meeting date.  No other notice of regular meetings shall be required.

4.4Special Meetings; Notice.  Special meetings of the Board may be called by the Chairman of the Board if the Chairman of the Board is a Continuing Director, or the President, if the selection of the President was approved by at least a majority of the Continuing Directors, on 24 hours’ notice given to each director, either personally or by telephone, telex telecopy or any other comparable form of facsimile communication.  Notice of special meetings of the Board shall also be deemed to have been given when delivered to a third party company or governmental entity providing delivery services in the ordinary course of business, that guaranteed delivery of the notice to the director at his or her address as it appears on the Corporation’s records no later than 24 hours before the special meeting.  Special meetings shall be called by the Secretary in like manner and on like notice on the written request of a majority of all of the Continuing Directors, and if such officer fails or refuses; or is unable within 24 hours, to call a meeting when requested, then the directors making the request may call the meeting on 48 hours’ notice given to each director in the manner described above.  The notice of a special meeting of directors need not state its purpose or purposes, but if the notice states a purpose or purposes, the business to be conducted at the special meeting shall be limited to the purpose or purposes stated in the notice.

4.5Quorum and Vote.  A majority of all of the directors shall be necessary to constitute a quorum for the transaction of business.  Except as otherwise provided by law, the Articles of Incorporation or these By-laws, the acts of a majority of the directors present at a duly-organized meeting shall be the acts of the Board.  If a quorum is not present at any meeting of the Board of Directors, the directors present may adjourn the meeting from time to time without notice other than announcement at the meeting, until a quorum is present­.

4.6Withdrawal.  If a quorum is present when the meeting convened, the directors present may continue to do business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum as fixed in Section 4.5 hereof or the refusal of any director present to vote.

4.7Action by Written Consent.  Any action that may be taken at a meeting of the Board, or any committee thereof, may be taken by a consent in writing, signed by all of the directors or by all members of the committee, as the case may be, and filed with the records of proceedings of the Board or committee.

4.8Meetings by Telephone or Similar Communication.  Members of the Board may participate at and be present at any meeting of the Board or any committee thereof by means of conference telephone or similar communications equipment if all persons participating in such meeting can hear and communicate with each other.

SECTION 5

COMMITTEES OF THE BOARD

5.1 The Board may designate one nr more committees, each committee to consist of two or more of the directors of the Corporation (and one or more directors may be named as alternate members to replace any absent or disqualified regular members).  As long as there are at least two Continuing Directors, a majority of any committee shall consist of Continuing Directors.  To the extent provided by resolution of the Board or these By-laws, each committee shall have and may exercise the powers of the Board in the management of the business and affairs of the Corporation, and may have power to authorize the seal of the Corporation to be affixed to documents.  Such committee or committees shall have such name or names as may be stated in these By-laws, or as may be determined, from time to time, by the Board.  Any vacancy occurring in any such committee shall be filled by the Board, but the President may designate another director to serve on the committee pending action by the Board.  Each member of a committee shall hold office during the term designated by the Board.

5.2Continuing Directors’ Committee.  The Continuing Directors’ Committee, the members of which shall be all Continuing Directors, shall have the power to act on any matter requiring approval or authorization of Continuing Directors.

SECTION 6

NOTICES

6.1Form of Delivery.  Whenever under the provisions of law, the Articles of Incorporation or these By-laws notice is required to be given to any shareholder or director, it shall not he construed to mean personal notice unless otherwise specifically provided by law, the Articles of Incorporation or these By-laws, but such notice may be given by mail, addressed to such shareholder or director at his or her address as it appears on the records of the Corporation, with postage thereon prepaid.  Notices given by mail shall be deemed to have been given at the time they are deposited in the United States mail.  Notwithstanding this Section 6.1, notices of regular and special meetings of the Board shall be governed by Section 43 and 4.4 of these By-laws, respectively.

6.2Waiver.  Whenever any notice is required to be given by law, the Articles of Incorporation or these By-laws, a waiver thereof in writing signed at any time by the person or persons entitled to such notice shall be deemed equivalent thereto.  In addition, notice shall be deemed to have been given to, or waived by, any shareholder or director who attends a meeting of shareholders or directors in person, or is represented at such meeting by proxy or, in the case of a director, participates in a meeting by telephone, without protesting at the commencement of the meeting the transaction of any business because the meeting is not lawfully called or convened.

SECTION 7

OFFICERS

7.1Designations.  The officers of the Corporation shall be elected by the directors and shall be the President, Secretary and Treasurer.  The Board of Directors may appoint one or more Vice Presidents and such other officers as it shall deem necessary, who shall bold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board.  More than one office may be held by one person, provided that no person holding more than one office may sign, in more than one capacity, any certificate or other instrument required .by law to be signed by two officers.

7.2Term of Office.  The officers of the Corporation shall hold office at the pleasure of the Board of Directors.  Except as otherwise provided in the resolution of the Board of Directors electing any officer, each officer shall hold office until the first meeting of the Board of Directors after the annual meeting of shareholders next succeeding his or her election, and until his or her successor is elected and qualified or until his or her earlier resignation or removal.  Any officer may resign at any time upon written notice to the Board, Chairman of the Board, President or Secretary of the Corporation.  Such resignation shall take effect at the time specified therein and acceptance of such resignation shall not be necessary to make it effective.  The Board may remove any officer with or without cause at any time.  Any such removal shall be without prejudice to the contractual rights of such officers, if any, with the Corporation, but the election of an officer shall not in and of itself create contractual rights.  Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board at any regular or special meeting.

7.3The President.  The President shall have general and active responsibility for the management of the business of the Corporation, and, unless otherwise provided by the Board, shall be the chief executive and chief operating officer of the Corporation.  The President shall supervise the daily operations of the business of the Corporation and shall ensure that all orders, policies and resolutions of the Board are carried out.

7.4The Vice Presidents.  The Vice Presidents (if any) shall perform such duties as the President or the Board of Directors shall prescribe.

7.5The Secretary.  The Secretary shall attend all meetings of the Board of Directors and all meetings of the shareholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose.  He or she shall give, or cause to be given, notice of all meetings of the shareholders and regular and special meetings of the Board, and shall perform such other duties as may be prescribed by the Board or President.  He or she shall keep in safe custody the seal of the Corporation, if any, and affix such seal to any instrument requiring it.  The Secretary shall have the power to certify at any time as to the number of directors authorized and as to L ho class to which each director has been elected or assigned.

7.6The Treasurer.  The Treasurer shall have custody of the corporate funds and shall keep or cause to be kept full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all monies and other valuable effects in the name and to the credit of the Corporation in such depositories as may he designated by the Board of Directors.  He or she shall disburse the funds of the Corporation only for proper corporate purposes or as may he ordered by the Board and shall render to the President and to the Board, whenever they may request it, an account of all his or her transactions as Treasurer and of the financial condition and results of operations of the Corporation.

SECTION 8

OFFICERS

8.1Certificates.  Every holder of stock in the Corporation shall be entitled to have a certificate signed by the President or a Vice President and the Secretary or an Assistant Secretary evidencing the number and class (and series, if any) of shares owned by him or her and containing such information as required by law.  Shares of stock of the Corporation may be certificated or uncertificated.  If any stock certificate is countersigned by a transfer agent or registrar other than the Corporation itself or an employee of the Corporation, the signature of any such officer may be a facsimile.  In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be an officer, transfer agent or registrar of the Corporation before such certificate is issued, it may be issued by the Corporation with the same effect as if such person or entity were an officer, transfer agent or registrar of the Corporation on the date of issue.  Within a reasonable time after the increase or transfer of any uncertificated shares, the Corporation shall cause to be sent to the holder a written statement of the information required by law to be contained on certificates for certificated shares.

8.2Missing Certificates.  The President may direct new certificates or uncertificated shares to be issued in place of any certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the Corporation’s receipt of an affidavit of that fact from the person claiming the certificate of stock to be lost, stolen or destroyed.  As a condition precedent to the issuance of a new certificate or certificates or uncertificated shares, the President shall, unless dispensed with by the Board of Directors, require the owner of such lost, stolen or destroyed certificates, or his legal representative, to (a) give the Corporation a bond or (b) enter into a written indemnity agreement, in each case in an amount appropriate to indemnify the Corporation against any claim that may be made against the Corporation with respect to the certificates alleged to have been lost, stolen or destroyed.

8.3Transfers.  Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.  Upon receipt of proper transfer instructions from the registered owner of uncertificated shares, such shares shall be cancelled, issuance of new equivalent uncertificated shares or certificated shares shall be made to the person(s) entitled thereto and the transfer shall be recorded on the books of the Corporation.

SECTION 9

DETERMINATION OF SHAREHOLDERS

9.1Record Date.  For the purpose of determining shareholders entitled to notice of and to vote at a meeting, or to receive a dividend, or to receive or exercise subscription or other rights, or to participate in a reclassification of stock, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may fix in advance a record date for determination of shareholders for such purpose, such date to be not more than 60 days and, if fixed for the purpose of determining shareholders entitled to notice of and to vote at a meeting not less than 10 days., prior to the date on which the action requiring the determination of shareholder is to he taken.

9.2Registered Shareholders.  Except as otherwise provided by law the Corporation and its directors, officers and agents may recognize and treat a person registered on its records as the owner of shares as the owner in fact thereof for all purposes, and as the person exclusively entitled to have and to exercise all rights and privileges incident to the ownership of such shares, and the Corporation’s and its directors’, officers’ and agents’ rights under this section shall not be affected by any actual or constructive notice that the ..Corporation, or any of its directors, officers or agents, mayhave to the contrary.

SECTION 10

INDEMNIFICATION

10.1Definitions.  As used in this section the following terms shall have the meanings set forth below:

(a)“Board” - - the Board of Directors of the Corporation.

(b)“Claim” - - any threatened, pending or completed claim, action, suit, or proceeding, whether civil, criminal, administrative or investigative and whether made judicially or extra judicially, or any separate issue or matter therein, as the context requires.

(c)“Determining Body” - (i) those members of the Board who are not named as parties to the Claim for which indemnification is being sought (‘Impartial Direc­tors”), If there are at least three Impartial Directors, (ii) a committee of at least three Impartial Directors appointed by the Board (regardless whether the members of the Board voting on such appointment are Impartial Directors) or (iii) if there are fewer than three Impartial Directors or if the Board so directs (regardless whether the members thereof are Impartial Directors), independent legal counsel, which may be the regular outside counsel of the Corporation.

(d)“Disbursing Officer” - the President- of the Corporation or, if the President is a parry to the Claim for which indemnification is being sought, any officer not a party to such Claim who is designated by the Board to be the Disbursing Officer with respect to indemnification requests related to the Claim, which designation shall be made promptly after receipt of the initial request for indemnification with respect to such Claim.

(e)“Expenses” - - any expenses or costs (including, without limitation, attorney’s, fees, judgments, punitive or exemplary damages, fines and amounts paid in settle­ment)­.

(f)“Indemnitee” - - each person who is or was a director or officer of the Corporation.

10.2Indemnity.

(a)The Corporation shall indemnify each Indemnitee against any Expenses actually and reasonably incurred by him or her (as they are incurred) in connection with any Claim either against the Indemnitee or as to which the Indemnitee is involved solely as a witness or person required to give evidence, by reason of his or her position (i) as a director or officer of the Corporation or its subsidiaries, (ii) as a fiduciary with respect to any employee benefit plan or trust of the Corporation or its subsidiaries, or (iii) as a director, officer, partner, employee or agent of another corporation, partnership, joint venture, trust or other profit or not-for-profit entity or enterprise, if such position is or was held at the request of the Corporation or its subsidiaries, whether relating to service in such position before or after the effective date of this Section, If the Indemnitee (i) is successful in his or her defense of the Claim on the merits or otherwise or (ii) has been found by the Deter­mining Body (acting in good faith) to have met the Standard of Conduct (defined below); provided that (1) the amount otherwise payable by the Corporation may be reduced by the Determining Body to such amount as it deems proper if it determines that the Claim involved the receipt of a personal benefit by Indemnitee, (ii) no indemnification shall be made in respect of any Claim as to which Indemnitee shall have been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable for willful or intentional misconduct in the performance of his or her duty to the Corporation or to have obtained an improper personal benefit, unless, and only to the extent that, a court shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as the court deems proper, (iii) the Corporation shall provide indemnification only for Expenses which exceed those reimbursed or paid under liability insurance policies maintained by the Corporation and its subsidiaries and (iv) if the Claim results from the Indemnitee’s position with a subsidiary or entity other than the Corporation, the Indemnitee must pursue indemnification from the other entity before seeking indemnification from the Corporation and any indemnification from the Corporation shall be reduced by the indemnification received from the other entity.

(b)The Standard of Conduct is met when the conduct by an Indemnitee with respect to which a Claim is asserted was conduct that was in good faith and that the Indemnitee reasonably believed to be in, or not opposed to, the best interest of the Corporation, and, in the case of a criminal action or proceeding, that the Indemnitee had no reasonable cause Lu believe was unlawful.  The termination of any Claim by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnitee did not meet the Standard of Conduct.

(c)Promptly upon becoming aware of the existence of any Claim as to which be or she may be indemnified hereunder, the Indemnitee shall notify the President of the Corporation of the Claim and whether he or she intends to seek indemnification hereunder.  If such notice indicates that Indemnitee does so intend, the President shall promptly advise the Board thereof and notify the Board that the establishment of the De­termining Body with respect to the Claim will be a matter presented at the next regularly scheduled meeting of the Board.  After the Determining Body has been established, the President shall inform the Indemnitee thereof and Indemnitee shall immediately provide the Determining Body with all facts relevant to the Claim known to him or her_ Within 60 days of the receipt of such information, together with such additional information as the Determining Body may request of Indemnitee, the Determining Body shall determine, and shall advise Indemnitee of its determination, whether Indemnitee has met the Standard of Conduct.

(d)During such 60-day period, Indemnitee shall promptly inform the Determining Body upon his or her becoming aware of any relevant facts not provided by him or her to the Determining Body, unless the Determining Body has obtained such facts by other means.

(e)In the case of any Claim not involving a proposed, threatened or pending criminal proceeding,

(i)if Indemnitee has, in the good faith judgment of the Determining Body, met the Standard of Conduct, the Corporation may, in its sole discretion after notice to Indemnitee, assume all responsibility for the defense of the Claim, and, in any event, the Corporation and the Indemnitee each shall keep the other informed as to the progress of the defense, including prompt disclosure of any proposals for settlement; provided that if the Corporation is a party to the Claim and Indemnitee reasonably determines that there is a conflict between the positions of the Corporation and Indemnitee with respect to the Claim, then Indemnitee shall be entitled to conduct his or her defense, with counsel of his or her choice; and provided further that Indemnitee shall in any event be entitled at his or her expense to employ counsel chosen by him or her to participate in the defense of the Claim; and

(ii)the Corporation shall fairly consider any proposals by Indemnitee for settlement of the Claim.  If the Corporation (A) proposes a settlement acceptable to the person asserting the Claim, or (B) believes a settlement proposed by the person asserting the Claim should be accepted, it shall inform Indemnitee of the terms thereof and shall fix a reasonable date by which Indemnitee shall respond.  If Indemnitee agrees to such terms, Indemnitee shall execute such documents as shall be necessary to effect the settlement.  If Indemnitee does not agree Indemnitee may proceed with the defense of the Claim in any manner he or she chooses, but If he or she is not successful on the merits or otherwise, the Corporation’s obligation to indemnify Indemnitee for any Expenses incurred following his or her disagreement shall be limited to the lesser of (A) the total Expenses incurred by Indemnitee following his or her decision not to agree to such proposed settlement or (B) the amount the Corporation would have paid pursuant to the terms of the proposed set­tlement.  If, however, the proposed settlement would impose upon Indemnitee any re­quirement to act or refrain from acting that would materially interfere with the conduct of his or her affairs, Indemnitee may refuse such settlement and proceed with the defense of the Claim, if Indemnitee so desires, at the Corporation’s expense without regard to the limitations imposed by the preceding sentence.  In no event, however, shall the Corporation be obligated to indemnify Indemnitee for any amount paid in a settlement that the Corpora­tion has not approved.

(f)In the case of a Claim involving a proposed, threatened or pending criminal proceeding, Indemnitee shall be entitled to conduct the defense of the Claim, and to make all decisions with respect thereto, with counsel of Indemnitee’s choice, provided, however, that the Corporation shall not be obligated to indemnify Indemnitee for an amount paid in settlement that the Corporation has not approved.

(g)After notifying the Corporation of the existence of a Claim, Indemnitee may from time to time request the Corporation to pay the Expenses (other than judgments, fines, penalties or amounts paid in settlement) that he or she incurs in pursuing a defense of the Claim prior to the time that the Determining Body determines whether the Standard of Conduct has been met.  If the Disbursing Officer believes the amount requested to be reasonable, the Disbursing Officer shall pay to Indemnitee the amount requested (regardless of Indemnitee’s apparent ability to repay such amount) upon receipt of an undertaking by or on behalf of Indemnitee to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation under the circumstances.  If the Disbursing Officer does not believe such amount to be reasonable, the Corporation shall pay the amount deemed by the Disbursing Office to be reasonable and Indemnitee mayapply directly to the Determining Body for the remainder of the amount requested.

(h)After the Determining Body has determined that the Standard of Conduct was met, for so long as and to the extent that the Corporation is required to indemnify Indemnitee under this Section, the provisions of Paragraph (g) shall continue to apply with respect to Expenses incurred after such time except that (i) no undertaking shall be required of 1ndenuvitee and (ii) the Disbursing Officer shall pay to Indemnitee such amount of any fines, penalties or judgments against Indemnitee which have become final and for which he or she is entitled to indemnification hereunder.

(i)Any determination by the Corporation with respect to settlements of a Claim shall be made by the Determining Body.

(j)The Corporation and Indemnitee shall keep confidential, to the extent permitted by law and their fiduciary obligations, all facts and determinations provided or made pursuant to or arising out of the operation of this Section, and the Corporation and Indemnitee shall instruct its or his or her agents and employees to do likewise.

10.3Enforcement.

(a)The rights provided by this Section shall be enforceable by Indemnitee in any court of competent jurisdiction.

(b)If Indemnitee seeks a judicial adjudication of his or her other rights under this Section, Indemnitee shall be entitled to recover from the Corporation, and shall he indemnified by the Corporation against, any and all Expenses actually and reasonably incurred by Indemnitee in connection with such proceeding but only if he or she prevails therein.  If it shall be determined that Indemnitee is entitled to receive part but not all of the relief sought, then the Indemnitee shall be entitled to be reimbursed for all Expenses incurred by him or her in connection with such judicial adjudication if the amount to which Indemnitee is determined to be entitled exceeds 50% of the amount of his or her claim Otherwise, the Expenses incurred by Indemnitee in connection with such judicial adjudication shall be appropriately prorated.

(c)In any judicial proceeding described in this subsection, the Corporation shall bear the burden of proving that Indemnitee is not entitled to any Expenses sought with respect to any Claim.

10.4Saving Clause.  If any provision of this Section is determined by a court having jurisdiction over the matter to require the Corporation to do or refrain from doing any act that is in violation of applicable law, the court shall be empowered to modify or reform such provision so that, as modified or reformed, such provision provides the maximum indemnification permitted by law, and such provision, as so modified or reformed, and the balance of this Section, shall be applied in accordance with their terms.  Without limiting the generality of the foregoing, if any portion of this Suction shall be invalidated on any ground, the Corporation shall nevertheless indemnify an Indemnitee to the full extent permitted by any applicable portion of this Section that shall not have been invalidated and to the full extent permitted by law with respect to that portion that has been invalidated.

10.5Non-Exclusivity.

(a)The indemnification and advancement of Expenses provided by or granted pursuant to this Section shall not be deemed exclusive of any other rights to which Indemnitee is or may become entitled under any statute, article of incorporation, by-law, authorization of shareholders or directors, agreement, or otherwise..

(b)It is the intent of the Corporation by this Section to indemnify and hold harmless Indemnitee to the full extent permitted by law, so that if applicable law would permit the Corporation to provide broader indemnification rights than are currently permitted, the Corporation shall indemnify and hold harmless Indemnitee to the full extent permitted by applicable law notwithstanding that the other terms of this Section would provide for lesser indemnification.

10.6Successors and Assigns.  This Section shall be binding upon the Corporation, its successors and assigns, and shall inure to the benefit of the Indemnitee’s heirs, personal representatives, and assigns and to the benefit of the Corporation, its successors and assigns.

10.7Indemnification of Other Persons. The Corporation may indemnify any person not covered by Sections 10.1 through 10.6 to the extent provided in a resolution of the Board or a separate section of these By-laws.

10.8Amendment.  No amendment to or repeal of this Section or any portion hereof shall limit any Indemnitee’s entitlement to indemnification in accordance with the provisions hereof with respect to any acts or omissions of Indemnitee which occur prior to such amendment or repeal.

SECTION 11

MISCELLANEOUS

11.1Checks.  All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.  Signatures of the authorized signatories may be by facsimile.

11.2Seal.  The Board of Directors may adopt a corporate seal, which shall have inscribed thereon the name of the Corporation.  The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.  Failure to affix the seal shall not, however, affect the validity of any instrument.

11.3Amendment.  These By-laws may be amended or repealed only as provided in Article VIII of the Articles of Incorporation.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, C. R. Cloutier, President and CEO, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of MidSouth Bancorp, Inc.;

2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.  The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report (the "Evaluation Date"); and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial data; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 8, 2008

/s/ C. R. Cloutier

Chief Executive Officer

EX-31.2

Exhibit 31.1

CERTIFICATION

I, J. E. Corrigan, Jr., Executive Vice President & CFO, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of MidSouth Bancorp, Inc.;

2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.  The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report (the "Evaluation Date"); and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial data; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 8, 2008

/s/ J.E. Corrigan, Jr.

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of MidSouth Bancorp, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2008 (the “Report”), I, C.R. Cloutier, Chief Executive Officer of the Company, certify that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ C. R. Cloutier

________________________

C.R. Cloutier

Chief Executive Officer

May 8, 2008

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of MidSouth Bancorp, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2008 (the “Report”), I, J. E. Corrigan, Jr., Chief Financial Officer of the Company, certify that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ J.E. Corrigan, Jr.

________________________

J. E. Corrigan, Jr.

Chief Financial Officer

May 8, 2008