earnings_release.htm

Lafayette, La. July 27, 2009 MidSouth Bancorp, Inc. (NYSE Amex: MSL) today reported net income available to common shareholders of $446,000 for the second quarter ended June 30, 2009, a decrease of $972,000 from net income of $1,418,000 reported for the second quarter of 2008 and $510,000 below net income available to common shareholders of $956,000 reported for the first quarter of 2009. Diluted earnings per share for the second quarter of 2009 were $0.07 per share, a decrease of 66.7% from the $0.21 per share for the second quarter of 2008 and 50.0% below the $0.14 per share for the first quarter of 2009. Beginning the first quarter of 2009, the Company recorded dividends on its Fixed Rate Cumulative Perpetual Preferred Stock, Series A (“Series A Preferred Stock”) issued to the U. S. Department of the Treasury on January 9, 2009 under the Capital Purchase Plan. Dividends recorded on the Series A Preferred Stock totaled $299,000 for the second quarter of 2009 and $277,000 for the first quarter of 2009.

The Company’s total assets ended the second quarter of 2009 at $924.2 million, a 1.5% decrease over the $937.9 million in total assets recorded at June 30, 2008. Deposits were $762.7 million as of June 30, 2009, compared to $810.1 million on June 30, 2008, a decrease of $47.4 million, or 5.9%. The decrease in deposits resulted from a $69.4 million decline in money market deposits, primarily in oil-related commercial and industrial accounts, offset by a $20.4 million increase in interest-bearing checking accounts. The decline in money market deposits reflected the effect of normal fluctuations in commercial deposits, the movement of some deposits to higher competitive rates and a shift to secured repurchase agreements. The Company’s securities sold under agreements to repurchase increased $8.6 million in prior year comparison, from $24.7 million at June 30, 2008 to $33.3 million at June 30, 2009.

Second quarter 2009 earnings were impacted by a $2.1 million provision recorded for loan losses, compared to $855,000 in the second quarter of 2008 and $1.0 million recorded in the first quarter of 2009. Deterioration in the performance of a $5.7 million national participation credit in the Company’s Baton Rouge market prompted a $1.1 million charge-off on the credit in the second quarter of 2009 and an increase of $200,000 in specific reserves allocated to the credit within the Allowance for Loan Losses (“ALL”). The remainder of the $2.1 million provision covered approximately $430,000 in charged-off loans associated with another Baton Rouge credit relationship and $333,000 in other credits charged-off in the second quarter of 2009.

Quarterly revenues for the Company, defined as net interest income and non-interest income, increased $137,000, or 1.0%, for the second quarter of 2009 compared to the second quarter of 2008. The slight improvement in revenues resulted primarily from a $1,414,000 decrease in interest expense on deposits and borrowings, which was mostly offset by a $1,331,000 decrease in interest income on earning assets. Non-interest income increased $54,000 due to a $138,000 increase in ATM/debit card income that was partially offset by decreases in mortgage banking fees and income from a third party investment advisory firm. Non-interest expense increased $39,000 in prior year quarterly comparison, as expense reductions in several categories offset a $649,000 increase in FDIC premiums. During the second quarter of 2009, the Company accrued for a special assessment as required by the FDIC and also incurred an increase in the regular assessment rate.

In linked-quarter comparison, net earnings before dividends on Series A Preferred Stock decreased $488,000, primarily due to the $2.1 million provision for loan losses recorded in the second quarter of 2009 compared to the $1.0 million provision recorded for the first quarter of 2009. Net interest income decreased $204,000 as a $298,000 decline in interest income on earning assets was partially offset by a $94,000 reduction in interest expense. Interest income on investment securities and other interest earning assets declined in linked-quarter comparison by $193,000 primarily due to calls and maturities within the portfolio. Non-interest income increased $328,000 primarily due to a higher volume of insufficient funds transactions on deposit accounts and rental income on safe deposit boxes recorded in June of each year. Non-interest expense decreased $134,000 as decreases in several expense categories offset increased FDIC insurance premiums and Visa credit card and merchant program expenses.

Asset Quality. Nonaccrual loans totaled $15.7 million as of June 30, 2009, compared to $2.4 million as of June 30, 2008. Of the $15.7 million, $12.9 million, or 82%, represents two large commercial real estate relationships in the Baton Rouge market. Loans totaling $974,000 were placed on nonaccrual during the second quarter of 2009, offsetting the reduction of $1.1 million charged-off on the national participation credit. Loans past due 90 days or more totaled $791,000 at June 30, 2009, an increase of $228,000 over the $563,000 at June 30, 2008 and a decrease of $459,000 from the $1,250,000 at March 31, 2009. The $1.1 million charge-off on the national participation credit and the $459,000 reduction in loans past due 90 days or more resulted in a decrease of $574,000 in total nonperforming assets in linked-quarter comparison. Total nonperforming assets to total assets were 1.89% for the second quarter of 2009, compared to 1.96% for the first quarter of 2009 and 0.37% for the second quarter of 2008.

Net Interest Income. Net interest income totaled $9,922,000 for the second quarter of 2009, an increase of 0.8%, or $83,000, from the $9,839,000 reported for the second quarter of 2008. The improvement in net interest income resulted primarily from a decrease of $1.4 million in interest expense which offset a decrease of $1.3 million in interest income. The impact to interest income of a $32.4 million increase in the average volume of loans, from $563.6 million at June 30, 2008 to $596.0 million at June 30, 2009, was partially offset by a 106 basis point reduction in the average yield on loans in quarterly comparison. The average yields on loans declined from 7.99% in the second quarter of 2008 to 6.93% in the second quarter of 2009 as New York Prime (“Prime”) fell 175 basis points, from 5.00% to 3.25% during the same period. The average volume of investment securities, including federal funds sold and other interest-earning assets, decreased $50.5 million in quarterly comparison, while the taxable-equivalent yield increased 20 basis points, from 4.08% to 4.28%. The volume decrease occurred primarily in federal funds sold and other interest-earning assets as deposits declined during the second half of 2008, following an influx of commercial money market deposits in the first quarter of 2008.

The decrease in interest expense in quarterly comparison resulted from a 71 basis point decrease in the average rate paid on interest-bearing liabilities combined with a $51.8 million decrease in the average volume of interest-bearing liabilities in quarterly comparison. The decrease in interest-bearing liabilities was primarily in commercial platinum money market deposits and certificates of deposit, partially offset by an increase in the average volume of repurchase agreements. The volume and rate decreases associated with interest-bearing liabilities, partially offset by the $32.4 million increase in the average volume of loans, primarily contributed to a 14 basis point improvement in the taxable-equivalent net interest margin, from 4.78% for the second quarter of 2008 to 4.92% for the second quarter of 2009.

In year-to-date comparison, net interest income increased $935,000 as interest expense decreased $3,784,000, offsetting a $2,849,000 decline in interest income. Interest expense decreased primarily due to a 108 basis point reduction in the average rate paid on interest-bearing liabilities, from 2.75% at June 30, 2008 to 1.67% at June 30, 2009. Additionally, the average volume of interest-bearing liabilities decreased $30.3 million in year-to-date comparison. The decrease in interest income on average earning assets resulted primarily from a 127 basis point decline in the average yield earned on loans, from 8.24% at June 30, 2008 to 6.97% at June 30, 2009. An average volume increase of $32.0 million in loans partially offset the impact of lower yields. As a result, the taxable-equivalent net interest margin improved 20 basis points, from 4.83% for the six months ended June 30, 2008 to 5.03% for the six months ended June 30, 2009.

In linked-quarter comparison, net interest income decreased $204,000, as a $298,000 decrease in loan and investment interest income exceeded a $94,000 reduction in interest expense on interest-bearing deposits and borrowings. Average loan volume declined $4.8 million and the average yield on loans decreased 9 basis points, from 7.02% to 6.93% in linked-quarter comparison. Interest income on investment securities and other interest-earning assets decreased primarily as a result of calls and maturities within the investment portfolio. Cash flows from both the loan and investment securities portfolio were invested in lower yielding overnight funds and short-term certificates of deposit. Accordingly, the average yield on earning assets decreased 28 basis points in linked-quarter comparison, from 6.43% at March 30, 2009 to 6.15% at June 30, 2009. Interest expense decreased due to an 8 basis point decrease in the average rate paid on interest-bearing deposits, from 1.71% to 1.63%. Balance sheet changes in linked-quarter comparison resulted in a 21 basis point decrease in the taxable-equivalent net interest margin, from 5.13% at March 31, 2009 to 4.92% at June 30, 2009.

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


MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)

										For the Quarter
	For the Quarter Ended									Ended
	June 30,						%			March 31,			%
EARNINGS DATA	2009			2008			Change			2009			Change
Total interest income	$	12,496		$	13,827			-9.6	%	$	12,794			-2.3	%
Total interest expense		2,574			3,988			-35.5	%		2,668			-3.5	%
Net interest income		9,922			9,839			0.8	%		10,126			-2.0	%
Provision for loan losses		2,100			855			145.6	%		1,000			110.0	%
Non-interest income		3,858			3,804			1.4	%		3,530			9.3	%
Non-interest expense		11,132			11,093			0.4	%		11,266			-1.2	%
Provision for income tax		(197	)		277			-171.1	%		157			-225.5	%
Net income		745			1,418			-47.5	%		1,233			-39.6	%
Dividends on preferred stock		299			-			100.0	%		277			7.9	%
Net income available to common shareholders	$	446		$	1,418			-68.5	%	$	956			-53.3	%

PER COMMON SHARE DATA
Basic earnings per share	$	0.07		$	0.22			-68.2	%	$	0.14			-50.0	%
Diluted earnings per share	$	0.07		$	0.21			-66.7	%	$	0.14			-50.0	%

Book value at end of period	$	11.28		$	10.54			7.0	%	$	11.28			0.0	%
Market price at end of period	$	16.80		$	16.55			1.5	%	$	10.24			64.1	%
Weighted avg shares outstanding
Basic		6,589,264			6,606,882			-0.3	%		6,617,341			-0.4	%
Diluted		6,607,366			6,620,211			-0.2	%		6,627,367			-0.3	%

AVERAGE BALANCE SHEET DATA
Total assets	$	926,878		$	946,005			-2.0	%	$	922,090			0.5	%
Earning assets		845,272			863,466			-2.1	%		837,350			0.9	%
Loans and leases		595,955			563,643			5.7	%		600,782			-0.8	%
Interest-bearing deposits		575,103			637,111			-9.7	%		566,005			1.6	%
Total deposits		765,200			820,785			-6.8	%		758,325			0.9	%
Total stockholders' equity (1)		96,229			70,821			35.9	%		93,853			2.5	%

SELECTED RATIOS	6/30/2009			6/30/2008						3/31/2009
Return on average assets		0.19	%		0.60	%		-68.5	%		0.42	%		-54.8	%
Return on average total equity		1.86	%		8.05	%		-76.9	%		4.13	%		-55.0	%
Return on average realized equity (2)		1.95	%		8.09	%		-75.9	%		4.27	%		-54.3	%
Average equity to average assets		10.38	%		7.49	%		38.7	%		10.18	%		2.0	%
Leverage capital ratio		10.63	%		8.01	%		32.7	%		10.66	%		-0.3	%
Taxable-equivalent net interest margin		4.92	%		4.78	%		2.9	%		5.13	%		-4.1	%

CREDIT QUALITY
Allowance for loan losses as a % of total loans		1.35	%		1.11	%		21.6	%		1.31	%		3.1	%
Nonperforming assets to total assets		1.89	%		0.37	%		410.8	%		1.96	%		-3.6	%
Annualized net YTD charge-offs to total loans		0.90	%		0.44	%		105.0	%		0.53	%		68.0	%

(1) On January 9, 2009, the Company participated in the Capital Purchase Plan of the U. S. Department of the Treasury, which added
$20 million in capital for the purpose of funding loans.
(2) Excluding net unrealized gain (loss) on securities available for sale.


MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)


BALANCE SHEET	June 30,			June 30,			%			March 31,			December 31,
	2009			2008			Change			2009			2008
Assets
Cash and cash equivalents	$	39,653		$	89,561			-55.7	%	$	36,981		$	24,786
Securities available-for-sale		204,918			211,093			-2.9	%		212,515			225,944
Securities held-to-maturity		3,668			7,783			-52.9	%		4,677			6,490
Total investment securities		208,586			218,876			-4.7	%		217,192			232,434
Total loans		596,114			567,087			5.1	%		597,209			608,955
Allowance for loan losses		(8,039	)		(6,286	)		27.9	%		(7,802	)		(7,586	)
Loans, net		588,075			560,801			4.9	%		589,407			601,369
Premises and equipment		39,580			40,375			-2.0	%		40,219			40,580
Time deposits held in banks		21,023			-			100.0	%		9,023			9,023
Goodwill and other intangibles		9,540			9,677			-1.4	%		9,572			9,605
Other assets		17,737			18,567			-4.5	%		20,697			19,018
Total assets	$	924,194		$	937,857			-1.5	%	$	923,091		$	936,815


Liabilities and Stockholders' Equity
Non-interest bearing deposits	$	185,332		$	182,220			1.7	%	$	198,803		$	199,899
Interest bearing deposits		577,320			627,863			-8.1	%		570,625			566,805
Total deposits		762,652			810,083			-5.9	%		769,428			766,704
Securities sold under agreements to repurchase and other short term borrowings		45,809			37,163			23.3	%		37,612			75,876
Junior subordinated debentures		15,465			15,465			-			15,465			15,465
Other liabilities		6,470			5,373			20.4	%		6,875			5,726
Total liabilities		830,396			868,084			-4.3	%		829,380			863,771
Total shareholders' equity (1)		93,798			69,773			34.4	%		93,711			73,044
Total liabilities and shareholders' equity	$	924,194		$	937,857			-1.5	%	$	923,091		$	936,815

(1) On January 9, 2009, the Company participated in the Capital Purchase Plan of the U. S. Department of the Treasury, which added
$20 million in capital for the purpose of funding loans.


MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)

	Three Months Ended								Six Months Ended
INCOME STATEMENT	June 30,					%			June 30,					%
	2009			2008		Change			2009			2008		Change

Interest income	$	12,496		$	13,827		-9.6	%	$	25,290		$	28,139		-10.1	%
Interest expense		2,574			3,988		-35.5	%		5,242			9,026		-41.9	%
Net interest income		9,922			9,839		0.8	%		20,048			19,113		4.9	%
Provision for loan losses		2,100			855		145.6	%		3,100			2,055		50.9	%
Service charges on deposit accounts		2,577			2,563		0.5	%		4,965			4,932		0.7	%
Other charges and fees		1,281			1,241		3.2	%		2,423			2,460		-1.5	%
Total non-interest income		3,858			3,804		1.4	%		7,388			7,392		-0.1	%
Salaries and employee benefits		5,272			5,199		1.4	%		10,752			10,377		3.6	%
Occupancy expense		2,295			2,048		12.1	%		4,629			3,998		15.8	%
Other non-interest expense		3,565			3,846		-7.3	%		7,017			7,012		0.1	%
Total non-interest expense		11,132			11,093		0.4	%		22,398			21,387		4.7	%
Income before income taxes		548			1,695		-67.7	%		1,938			3,063		-36.7	%
Provision for income taxes		(197	)		277		-171.1	%		(40	)		446		-109.0	%
Net income		745			1,418		-47.5	%		1,978			2,617		-24.4	%
Dividends on preferred stock		299			-		100.0	%		576			-		100.0	%
Net income available to common shareholders	$	446		$	1,418		-68.5	%	$	1,402		$	2,617		-46.4	%


Earnings per share, diluted	$	0.07		$	0.21		-66.7	%	$	0.21		$	0.39


MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands except per share data)

INCOME STATEMENT	Second			First			Fourth			Third			Second
Quarterly Trends	Quarter			Quarter			Quarter			Quarter			Quarter
	2009			2009			2008			2008			2008
Interest income	$	12,496		$	12,794		$	13,699		$	13,635		$	13,827
Interest expense		2,574			2,668			3,480			3,579			3,988
Net interest income		9,922			10,126			10,219			10,056			9,839
Provision for loan losses		2,100			1,000			2,000			500			855
Net interest income after provision for loan loss		7,822			9,126			8,219			9,556			8,984
Total non-interest income		3,858			3,530			3,755			3,981			3,804
Total non-interest expense		11,132			11,266			11,352			11,235			11,093
Income before income taxes		548			1,390			622			2,302			1,695
Income taxes		(197	)		157			(442	)		445			277
Net income		745			1,233			1,064			1,857			1,418
Dividends on preferred stock		299			277			-			-			-
Net income available to common shareholders	$	446		$	956		$	1,064		$	1,857		$	1,418

Earnings per share, basic	$	0.07		$	0.14		$	0.16		$	0.28		$	0.22
Earnings per share, diluted	$	0.07		$	0.14		$	0.16		$	0.28		$	0.21
Book value per share	$	11.28		$	11.28		$	11.04		$	10.65		$	10.54
Return on average equity		1.86	%		4.13	%		6.02	%		10.29	%		8.05	%


MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)

	June 30,		June 30,		%			March 31,		December 31,
	2009		2008		Change			2009		2008
Composition of Loans
Commercial, financial, and agricultural	$	200,192	$	184,930		8.3	%	$	202,315	$	210,058
Lease financing receivable		7,538		5,883		28.1	%		7,377		8,058
Real estate - mortgage		242,595		220,556		10.0	%		236,594		234,588
Real estate - construction		60,062		65,985		-9.0	%		64,389		65,327
Installment loans to individuals		84,602		88,737		-4.7	%		85,604		89,901
Other		1,125		996		13.0	%		930		1,023

Total loans	$	596,114	$	567,087		5.1	%	$	597,209	$	608,955


MIDSOUTH BANCORP, INC. and SUBSIDIARIES
Condensed Consolidated Financial Information (unaudited)
(in thousands)

	June 30,			June 30,			%			March 31,			December 31,
	2009			2008			Change			2009			2008
Asset Quality Data
Nonaccrual loans	$	15,664		$	2,368			561.5	%	$	15,713		$	9,355
Loans past due 90 days and over		791			563			40.5	%		1,250			1,005
Total nonperforming loans		16,455			2,931			461.4	%		16,963			10,360
Other real estate owned		829			143			479.7	%		843			329
Other foreclosed assets		203			384			-47.1	%		255			306
Total nonperforming assets	$	17,487		$	3,458			405.7	%	$	18,061		$	10,995

Nonperforming assets to total assets		1.89	%		0.37	%		410.8	%		1.96	%		1.17	%
Nonperforming assets to total loans +
OREO + other foreclosed assets		2.93	%		0.61	%		380.3	%		3.02	%		1.80	%
ALL to nonperforming loans		48.85	%		214.47	%		-77.2	%		45.99	%		73.22	%
ALL to total loans		1.35	%		1.11	%		21.6	%		1.31	%		1.25	%

Year-to-date charge-offs	$	2,779		$	1,317			111.0	%	$	856		$	2,624
Year-to-date recoveries		132			85			55.3	%		71			192
Year-to-date net charge-offs	$	2,647		$	1,232			114.9	%	$	785		$	2,432
Annualized net YTD charge-offs to total loans		0.90	%		0.44	%		103.5	%		0.53	%		0.40	%


MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
Yield Analysis (unaudited)
(in thousands)

	Three Months Ended							Three Months Ended
	June 30, 2009							June 30, 2008

			Tax							Tax
	Average		Equivalent		Yield/			Average		Equivalent		Yield/
	Balance		Interest		Rate			Balance		Interest		Rate

Taxable securities	$	93,010	$	1,001		4.30	%	$	95,039	$	1,044		4.39	%
Tax-exempt securities		115,933		1,554		5.36	%		106,791		1,458		5.46	%
Equity securities		4,404		29		2.63	%		4,283		32		2.99	%
Federal funds sold		25,826		18		0.28	%		64,536		334		2.05	%
Loans		595,955		10,294		6.93	%		563,643		11,202		7.99	%
Other interest earning assets		10,144		56		2.21	%		29,174		185		2.55	%
Total interest earning assets		845,272		12,952		6.15	%		863,466		14,255		6.64	%
Noninterest earning assets		81,606							82,539
Total assets	$	926,878						$	946,005

Interest bearing liabilities:
Deposits	$	575,103	$	2,039		1.42	%	$	637,111		3,531		2.23	%
Repurchase agreements and federal
funds purchased		44,093		273		2.45	%		33,907		167		1.95	%
Short term borrowings		-		-		-			-		-		-
Junior subordinated debentures		15,465		262		6.70	%		15,465		290		7.42	%
Total interest bearing liabilities		634,661		2,574		1.63	%		686,483		3,988		2.34	%
Noninterest bearing liabilities		195,988							188,701
Shareholders' equity		96,229							70,821
Total liabilities and shareholders' equity	$	926,878						$	946,005

Net interest income (TE) and margin			$	10,378		4.92	%			$	10,267		4.78	%

Net interest spread						4.52	%						4.30	%


MIDSOUTH BANCORP, INC. AND SUBSIDIARIES
Yield Analysis (unaudited)
(in thousands)

	Six Months Ended							Six Months Ended
	June 30, 2009							June 30, 2008

			Tax							Tax
	Average		Equivalent		Yield/			Average		Equivalent		Yield/
	Balance		Interest		Rate			Balance		Interest		Rate

Taxable securities	$	97,369	$	2,148		4.41	%	$	86,932	$	2,002		4.61	%
Tax-exempt securities		117,868		3,167		5.37	%		107,862		2,933		5.44	%
Equity securities		4,357		62		2.85	%		3,988		63		3.16	%
Federal funds sold		13,774		19		0.27	%		51,753		608		2.32	%
Loans		598,354		20,692		6.97	%		566,399		23,208		8.24	%
Other interest earning assets		9,610		131		2.75	%		14,780		187		2.54	%
Total interest earning assets		841,332		26,219		6.28	%		831,714		29,001		7.01	%
Noninterest earning assets		83,157							83,368
Total assets	$	924,489						$	915,082

Interest bearing liabilities:
Deposits	$	570,579	$	4,214		1.49	%	$	614,443	$	8,008		2.62	%
Repurchase agreements and federal
funds purchased		37,533		477		2.58	%		29,977		377		2.49	%
Short term borrowings		9,326		23		0.50	%		907		18		3.93	%
Junior subordinated debentures		15,465		528		6.79	%		15,465		623		7.97	%
Total interest bearing liabilities		632,903		5,242		1.67	%		660,792		9,026		2.75	%
Noninterest bearing liabilities		196,539							183,929
Shareholders' equity		95,047							70,361
Total liabilities and shareholders' equity	$	924,489						$	915,082

Net interest income (TE) and margin			$	20,977		5.03	%			$	19,975		4.83	%

Net interest spread						4.61	%						4.26	%

CONTACT:	C.R. Cloutier or Teri S. Stelly
TELEPHONE:	(337) 237-8343
RELEASE DATE:	July 27, 2009